A Comparative Analysis of Overstock and Amazon

pecuniary Reporting, abbreviation and Ethics A Comparative Analysis of sprout. com and virago Robert Baird BU7545 worsening 2011 Financial Reporting, Analysis and Ethics A Comparative Analysis of buy in. com and virago Robert Baird BU7545 F every(prenominal) 2011 T able-bodied of Contents Executive Summary 2 Comp both and diligence Information 3 Accounting Issues 6 Accounting Policies and Disclosure Practices 9 Financial bidding Analysis 10 Corporate G everywherenance 13 decision 15 References 18 Appendices 21 Executive Summary This re throw offation covers the broadside errors related to pack be that led buy in. com in cc6 to fictionalise its pecuniary lines for 2002, 2003, 2004 and one-quarterly reports for 2004 and 2005, and the subsequent due s out(p)h investigation in which they were clear of wrongdoing. It excessively covers a second restatement from 2009, in which the mo geltary statements for 2009 and 2008 were restated and an separat e reciprocal ohm investigation related to those restatements.The write up point in times a glaring line of work for buy in related to its be controls and even the comp whatsoevers entrance money in its annual report that it does not pick up an appropriate go of qualified chronicle professionals able to produce pecuniary statements that ar forgive of tangible errors. stock is comp atomic number 18d against a direct competitor, amazon, who although is a much big company that stock up, has become the meter in the industry against which all recent(prenominal) companies argon judged.The fiscal statements and financial balances from 2006-2008 of both amazon and buy in are shown in comparison with one an opposite to offer some discernment into the strengths and weaknesses of to each one company and to evaluate their performance, and include unite statements of trading operations and consolidated balance sheets from 2005-2008 and common- surface statements of operations and balance sheets for each company from 2005-2008, as considerably as trend statements of operations and balance sheets for each company from 2005-2008.The paper also examines the in incorporate structure of each company, including the climb on of directors, the different wit commissions that exist and compensation practices for senior company executive directors. The paper concludes that stock must(prenominal) put in place the proper controls and hire competent compositioning and send wordvasing professionals to ensure the validity of their financial statements. phoner and perseverance Information buy in. com ( stock up) was compound in universal time in December 1998, originally as D2-Discounts identify, Inc. , later on reincorporated in the state of Delaware in 2002 and changed its name to Deals. om, Inc. in 1999. buy in choose its present name on October 25, 1999 and is based out of Salt Lake City, doh. overstock is an online betray merchant t hat sells terminate merc go byise to consumers done its online website. According to Mergent Online, Overstock. com is an online retailer providing discount brand name, non-brand name and approximateout merchandise, including bed-and-bath goods, home decor, kitchenware, furniture, watches and jewelry apparel, electronics and computers, sporting goods, and designer overtureories, among some opposite products (2011).Overstock also sells run books, magazines, compact discs, digital delineation disk and video games (Mergent Online, 2011). The company conducts direct melodic line, in which it orders are fulfilled at Overstocks warehouses in Salt Lake City, do and transferped to final consumers or crinkle, and business with fulfillment companions, which occurs when Overstock sells an separate manufacturers or retailers merchandise on their website and those ternion parties pack and ship orders. Overstock, however, does handle returns and customer renovation related to intima tely all orders placed by means of its website (Mergent Online, 2011).According to Mergent Online, as of the end of 2010, Overstock sells to customers in over 90 countries but does not ingest rough appraise income enhancement enhancement operations outside the United States and is development a United States based third caller to provide logistics and fulfillment for all international orders (2011). Overstock does ship goods to suppliers on consignment, and includes car and real estate listings, damages quotes and an online auction inspection and repair on its website. virago was originally incorporated in Washington in 1994 and later reincorporated in the state of Delaware in 1996. virago. om (virago), same Overstock is an online retailer that sells all sorts of different products and merchandise on its website. According to Mergent Online, the products on amazons website primarily include merchandise and matter purchased for re bargain from vendors and those provide d by party sellers, and it also manufactures and sells the Kindle e-reader and they also provide services such as Amazon Web Services (AWS), fulfillment, miscellaneous foodstuffing and promotional agreements, such as online advertising and co-branded credit cards. Amazon consists of two separate business segments, North America and International.North America consists of amounts pull in from retail gross sales of consumer products (including from sellers) and subscriptions through North America- localizeed websites such as www. amazon. com and www. amazon. ca and include amounts earned from AWS and includes the trade sales from the above mentioned websites (Mergent Online, 2011). The International business segment consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through internationally focused locations and the segment includes exportation sales from these internationally ased locations (including export sales from these sites to customers in the United States and Canada), but excludes export sales from the companys United States and Canadian locations (Mergent Online, 2011). According to step & scurvys send awayAdvantage, Amazon has virtually unlimited online shelf space, and raise offer customers a vast selection of products through an efficient assay and retrieval interface (2011). In addition to being the seller of account book for a broad range of new products, Amazon allows other businesses and psyches to sell new, used and collectible products on its websites through its Merchant and Amazon securities industry programs in which Amazon earns fixed fees, sales commissions and/or per social unit bodily function fees, as hygienic as serving developers and enterprises of all sizes through AWS, which provides access to engine room infrastructure that developers good deal use to virtually enable any type of business (S&P send awayAdvantage, 2011).The online retail industry is an industry that is lucky as more and more consumer purchase products online. As the supply compass and logistics processes bear become increasingly advanced and streamlined, online sell has taken study strides in the past two decades. According to the Standard & Poors Industry Surveys (Computers Consumer Services & the Inter top), United States online retail sales (excluding the auto, travel and prescription drug drug categories) increased 13% in 2010 to $17. billion and improvements in multi-channel initiatives, break out online merchandising, more personalized offerings and increasingly sophisticated foodstuffing efforts drove process in 2010, trance S&P Capital IQ forecasts meshwork retail sales volition rise to 11% in 2011 (2011, p. 10) . The S&P Industry Survey also states that worldwide business-to-consumer (B2C) inter scratch write down may increase from $708 billion in 2010 to $1. trillion in 2014 and the terzetto most popular categories of merchandise interchang e online in 2009 were (in order) apparel, accessories and footwear software system and peripherals and consumer electronics, and a nitty-gritty of exclusive online retailers have also been successful, among (them) major in public traded online retailers wish well Amazon. com Inc. and Overstock. com Inc. (2011, p. 17). Amazon, however, is far and away the leader of its industry. At first it seemed like a business place that was destined to ail, but is has since become the model for its industry and has been the breakaway leader in global e-commerce for a number of years (S&P Industry Surveys, 2011, p. 18). Overstock is trying to emulate the system used by Amazon, but it is difficult for any online retailer to strike off itself from a company like Amazon, with its huge market share and market crownworkization. Amazon is an incredibly tough act to follow and according to the S&P Industry Survey, it is predicted that in 2011, Amazon will achieve its one-sixth straight year with revenue growth of greater than 25% (2011, p. 18).Amazon has achieved upstanding and sustained success by continuing to focus on its customers and has fonted to acquaint and take risks, despite potential nest-term negative continues to its financial performance (S&P Industry Surveys, 2011, p. 18). Accounting Issues Overstock has had many instances of explanation and control errors that have resulted in restatements of financial statements and probes by the United States Securities and Exchange Commission (SEC). In 2006, Overstock announced that it would restate its antecedently reported financial statements pass back to 2002 due to an error in the way it accounted for its freight embodys.According to the Deseret word of honor on ring 1, 2006, the chronicle system errors relate to how the Salt Lake-based company now disbursementd inbound freight costs in the periods they were incurred, instead of capitalizing such costs as part of memorial and expensing them as it sold off the ancestry and the error effects annual financial reports for 2002, 2003, 2004 and quarterly reports for 2004 and 2005 (2006, p. E1). The compriseion of the freight cost error actually increased the fund by $3. one thousand thousand as of the third quarter of 2005, and discredited the brighten impairmentes for pecuniary years 2002, 2003 and 2004. In an inter linear perspective on CNBC in 2006, Overstock chief executive officer said of the restatement our restatement was $3. 5 million to the good and our analyzeors have said that we unpretentious our results by $3. 5 million ( chief executive officer Wire, 2006). He went on to say in the interview with Becky Quick on CNBC that it turns out we had turns out that we have unpretending our performance, that our books are too conservative, is what the size upors have said (CEO Wire, 2006).Overstock vice president of corporate affairs, echoed this sentiment in an interview with the ennoble Ridder Tribune Business bran- news, maxim when you look at what this restatement is really, it is positive (Sims, 2006, p. 1). In an interview with the Salt Lake Tribune, Overstock death chair Jonathan Johnson said of the accounting errors When we order comforters, we pay the manufacturer and the freight bill. Weve been accounting for the freight bill as we paid it, expensing it. We should have been capitalizing the freight bill as we sold the goods, as opposed to when we actually paid it (Keahey, 2009).These are just some examples from the corporate officers at Overstock that they just all the way do not get it, and do not to a lower placestand the impact of a financial restatement. The Deseret News describes the effects of the accounting error as follows, for 2005, the accounting change will narrow the reported winnings passing play by $1. 8 million for the quarter ended folk 30 and by $592,000 for the quarter ended June 30 and widen the make expiry by $107,000 for the quarter ended March 31. For 2004 , the correction will lower the full-year mischief by $461,000.The accounting change will also get the net losses for the 2002 and 2003 fiscal years (2006, p. E1). This restatement led to an investigation of Overstock by the SEC resulting in a subpoena from the SEC for privileged documents relating to its accounting policies, targets and projections (Wall Street Journal, 2006). On June 6, 2008 the SEC informed Overstock that it had finish its investigation of the company and its officers and does not intend to recommend any enforcement follow through (Financial Wire, 2008).Overstock apparently did not learn much from the above mentioned restatement and subsequent SEC investigation, and on September 15, 2009, Overstock commenced yet another tick off from the SEC, putting the company on notice that the SEC was conducting an investigation concerning Overstocks previously-announced restatements of its financial statements in 2006 and 2008 and other matters and the subpoena that a ccompanied the notice covers documents related to the restatements and also to Overstocks billings to its partners in the fourth quarter of 2008 and related collections, and Overstocks accounting for and implementation of software relating to its accounting for customer refunds and credit, including offsets to partners, and related matters (PR Newswire, 2009). In February 2010, Overstock announced it was restating its financial statements for 2008 and 2009, shifty $1. 8 million of income from 2009 to 2008. Overstock attributed this restatement to some accounting confusion involving other companies that sell goods on its website and a related problem involving incorrect invoices from a freight vendor (Deseret News, 2010, p. A10).Overstock also stated in a file with the SEC that it was applying different accounting standards for its stock option plans that will symbolise decreased income of $350,000 for 2008 and about $900,000 for 2009 (Harvey, 2010). As if the restatement of financ ial reports was not bad enough, Overstock admitted to a deficiency in its financial controls related to its relationship with trustworthy business partners and informed the SEC that managements report on internal control over financial reportage for fiscal 2008 can no longer be relied upon (Harvey, 2010). On his blog on Phils depot sphere, Sam Antar (who discloses that he is a convicted felon and former certified public accountant who now works almost with government and law enforcement agencies in cases of skilled crimes and regularly refers cases to them) wrote that in 2009Overstock. om violated generally accepted accounting regulations in accounting for its recoveries of sure offsetting costs and reimbursements amounts due to the company from its fulfillment partners (suppliers) who were under-billed in previous reporting periods and that Overstock should have restated its financial reports to recognize income when those offsetting costs and reimbursements were actually ea rned by the company in those previous reporting periods (Phils Stock World, 2010). Antar claims that accounting errors are bordering on criminal and that the company improperly recognized income as those amounts were collected in future accounting periods on a non-GAAP exchange basis and that Overstock even reported emoluments in the fourth quarter of 2008 when they should have reported a loss under GAAP (Phils Stock World, 2010).Antar made some even stronger claims against Overstock, saying that accounting errors have become commonplace at Overstock at that the officers of the company do not seemed interested or inclined to put the proper controls in place to detect these errors. Antar writes that so far, from 1999 to Q3 2009 every undivided financial report issued by Overstock. com had to be restated at least once, some clock twice or even three times to correct material accounting errors with the company even claiming that the last two restatements were caused by technology p roblems (Phils Stock World, 2010). In the 2009 10-K issued by Overstock it stated that Overstocks information technology program change and program education controls were inadequately designed to prevent changes in our accounting systems which led to the disappointment to appropriately dumbfound and accurately process data (2010, p. 18).The two previously mentioned instances of financial report restatements mean that in 2006, the annual financial statements for 2002, 2003 and 2004 were restated thus the 2006 financial statements were restated again along with the statements for 2008. Both restatements had little or no effect on the stock footing of the company and after each restatement was announced the stock price either fall modestly or even went up slightly. Accounting Policies and Disclosure Practices As shown in the numerous instances of accounting errors and restatements, Overstock clearly has an issue with its internal controls over financial reporting to detect basic GAAP errors before their financial statement are re meshd to the SEC.In its 2010 10-K, Overstock acknowledges that they have a problem and states, we lacked a ample number of accounting professionals with the necessary knowledge, experience and training to adequately account for and perform adequate supervisory reviews of real transactions that resulted in misapplications of GAAP (2010, p. 22). This is a fascinating admittance by a major publicly traded company that it simply does not have accountants to properly produce correct financial statements free of epochal accounting errors. Amazon, for its part, is the leader in online retailing and a much larger company with a global remnant that outstretches most companies, and especially that of Overstock, yet their accounting policies are sound.There exists nothing in their annual reports to the SEC that outlines anything of the sort that Overstock has admitted related to not having a enough number of accountants. The information listed in their financial reports seems to be standard language related to GAAP. Both companies, Amazon and Overstock account for their broth using the first-in, first-out (FIFO) method, assessd at lower of cost or market value and depreciate their fixed assets on a straight-line basis. Financial Statement Analysis In its 2009 10-K report, Amazon gives an interesting overview to its business. It states that its primary source of revenue is the sale of a wide range of products and services to customers and that their financial focus is on long-run, sustainable growth in free property mix per share (2009, p. 21).It also states that we seek to reduce our variable costs per unit and work to leverage our fixed costs and because of our model we are able to turn over inventory quicker and have a cash-generating operate cycle (2009, p. 22). Amazons inventory turnover, as shown in the financial ratios in the appendix, was 11. 46 times in 2008 (consistent with 11. 06 times in 2007 and 1 1. 44 times in 2006) and with a receivables turnover of 24. 95 times in 2008 and account dues turnover of 5. 98 times in 2008, they have a sufficient operating cycle and cash conversion cycle. Overstocks inventory turnover was 31. 68 times in 2008, up from 12. 21 times in 2006, and means their sales are stronger and they are moving inventory at a much better rate. The receivables turnover for Overstock 75. 49 times in 2008 and accounts collectable turnover of 12. 53 times in 2008.Amazon gets more bang for their buck than Overstock, and is able to leverage their considerable size and operational capacity to achieve significant returns on their assets, integrity and income. In 2008, Amazons return on assets (ROA) was 8. 69 per centum, compared with Overstocks -6. 23 per centum ROA. Overstocks ROA has improved from 2006 when it was -34. 43 share but because of consistent net losses their return ratios are negative. Overstocks return on integrity ( roe) was -105. 88 per centum, and improvement from -131. 38 part in 2006, but nothing compared to Amazons ROE of 33. 25 part in 2008. Amazon also has a significant return on operating income (ROI) of 28. 93 pct in 2008, as contrasted with Overstocks ROI of -12. 82 pct in 2008 (up from -57. 89 share in 2006).A look at the common-size consolidated statement of operations of Amazon and Overstock (restated) offers some insights into the considerable differences in the midst of a company with the size and stature of Amazon and a company that would like to achieve that status, like Overstock. Amazon had a gross profit in 2008 of 22. 3 percent of sales (consistent to the gross profit for 2005 through 2007), whereas Overstock had a gross profit of 17. 1 percent of revenue (consistent with gross profit percentages from 2005 through 2007). Both Amazon and Overstock had similar get operating expenses, 17. 9 percent of sales for Amazon in 2008 and 18. 4 percent of revenue for Overstock in 2008. The numbers that are th e most telling are the income statistics, with Amazon having a net income as a percentage of sales of 3. 4 percent in 2008, whereas Overstock had a net loss s a percentage of revenue of -1. 5 percent, which improved importantly from 2006 when it was -13. 7 percent and 2007 when it was -6. 3 percent. The trend consolidate statements of operations for Amazon and Overstock (restated), in which the base year of 2005 equals cytosine percent, the discrepancies between a global leader in its industry, Amazon, and its competitor, Overstock, are even more compelling. displace sales for Amazon more than doubled from 2005 to 2008, and in 2008 net sales were 225. 7 percent of the net sales from 2005. occur revenue for Overstock was only up slightly from 2005 to 2008, and in 2008 summation revenues were 104. 4 percent of the fare revenues from 2005.Amazon also doubled its gross profit from 2005 in, up 209. 4 percent, whereas Overstocks gross profit in 2008 was 122. 3 percent of its 2005 gro ss profit. Overstocks total operating expenses stayed relatively close to their 2005 level in 2006, 2007 and 2008, only rising slightly. Amazon, on the other hand had a significant increase in total operating expenses. direct expenses in 2008 were 213. 3 percent of the 2005 total operating expenses. Net income for Amazon for 2008 was 179. 7 percent of its 2005 net income and increased from 132. 6 in 2007 and from a very off year in 2006, when net income was 52. 9 percent of the previous year 2005.Overstock has lowered its net losses, and in 2008 the net loss was half (50. 8 percent) of the 2005 level, and they too had a rough year in 2006 when the net loss was four times (428. 5 percent) that of 2005. Analysis of the restated common-size consolidate balance sheet for Overstock and the common-size consolidate balance sheet for Amazon show that both companies have a similar number of trustworthy assets, as would be expected from two companies that sell products online and have signi ficant sales and inventory turnover, but Overstock has more cash and cash equivalents when compared to Amazon. Overstock had, as a percentage of total assets, 58. 3 percent of cash and cash equivalents, up drastically from 17. percent in 2005, while Amazon had cash and cash equivalents of one-third (33. 3 percent) of total sales, up slightly from 27. 4 percent in 2005. Amazons total latest assets were 74 percent of total assets, whereas Overstock had total contemporary assets that totaled 84. 7 percent of total assets, which increased from 72. 1 percent of total assets in 2005. Since reliable assets were a large percentage of total assets, the reverse would be expected, and total authentic liabilities for an online retailer would also be a significant portion of total liabilities and stockholders candor. Most consumers make purchases online using credit cards and those purchases are often paid off deep down a year, making them accredited. correspond reliable liabilities for Amazon in 2008 were 57 percent of total assets, remaining stable year over year between 2008 and 2005, while total current liabilities for Overstock were 61. 6 percent of total assets, up from 47. 5 percent in 2005. Corporate Governance Overstock has a board of directors that is comprised of four members, three of whom are autonomous, and is chaired by the CEO Patrick Byrne. According to the legate statement (DEF 14A) filed on April 2, 2009, the board of directors held ten concussion during 2008 and each director attended at least 75 percent of the meetings of the board (2009, p. 14). Overstock has an audit committee and compensation committee, but no standing nominations committee.According to the proxy statement, the audit committee held 11 meetings during 2008 and the compensation committee held six meetings, and like board meetings each director attended at least 75 percent of the committee meetings on which he or she served in 2008 (2009, p. 14). The audit committee is chair ed by Allison Abraham and includes two financial experts, as defined by the SEC. The audit committee is responsible for reviewing and monitoring our financial statements and internal accounting procedures, selecting, reviewing and monitoring our independent registered public accounting dissipated, evaluating the chain of the annual audit, reviewing audit results and consulting with management and our independent registered public accounting firm prior to presentation of financial statements to stockholders (2009, p. 15).The compensation committee is responsible for find out salaries, incentives and other forms of compensation for our directors, officers and other employees and administering various incentive compensation and get ahead plans (2009, p. 15). The 208 proxy statement says the compensation objectives are to seek to attract and view as highly competent executive management who will build semipermanent economic value for the confederation and that our compensation phi losophy is that the executive net profit and bonus levels should be modest in comparison to those paid at comparable companies, and that executives opportunities for more significant compensation should be tied closely to the follows performance (2009, p. 20).The elements of total compensation, as laid out by the 2009 proxy statement include base salary, annual individual cash bonuses, payments under our Performance Share Plan, awards under our 2005 Equity inducement Plan, matching contributions under our 401 (k) plan and benefits under our health and welfare benefits plans (2009, p. 20-21). The board of directors for Amazon consists of nine members, eight of whom are independent, and is chaired by the CEO of Amazon, Jeffrey Bezos. The 2009 proxy statement reads that the board is responsible for the control and direction of the Company and represents the Companys shareholders and its primary purpose is to build semipermanent shareholder value (2009, p. 8). In 2008, the board of directors met nine times and that all directors attended at least 75 percent of the aggregate of the meetings of the board and committees occurring while they were members (2009, p. 9).Amazon has an audit committee, leadership development and compensation committee and a nominating and corporate political science committee. The audit committee is chaired by Tom Alberg, who meets the requirement of a financial expert as defined by the SEC. According to the 2009 proxy statement, the audit committee represents and assists the board in fulfilling its oversight responsibility relating to the Companys financial statements and reporting process, the qualifications, independence and performance of the Companys independent registered public accounting firm, the performance of the Companys internal audit function and the Companys compliance with legal and regulatory requirements (2009, p. 9).The leadership development and compensation committee, as stated in the 2009 proxy statement, evalua tes the Companys programs and practices relating to leadership development, reviews and establishes compensation of the Companys executive officers, and administers the Companys stock-based and certain other compensation plans, all with a view toward maximizing long-term shareholder value (2009, p. 10). The proxy statement for 2009, also lays out the responsibilities of the nominating and corporate governance committee, and says it reviews and assesses the composition of the board, assists in identifying potential new candidates for director, recommends candidates for election as director and provides a leadership role with complaisance to corporate governance of the Company (2009, p. 10).According to the 2009 proxy statement, Amazons executive compensation approach is to tie total compensation to long-term shareholder value, as reflected primarily in the Companys stock price and on that pointfore the primary component of a named executive officers total compensation is stock-base d compensation (2009, p. 17). In addition to stock-based compensation, executives also receive a base salary, new-hire cash bonuses and other compensation and benefits, including vacation, medical, 401 (k) and relocation benefits. Conclusion When it comes to online retailing, Amazon is far and away the leader of the industry and the model for all companies to follow. Amazon has an enormous share of the market and their market capitalization is tremendous. Their financial ratios are sound and their year over year statistics are quite impressive. Overstock, on the other hand, is a company that leaves a lot to be desired.They have had numerous restatements of their financial reports, and two instances of these restatements have been covered in detail above. Overstock has yet to have a positive net income and has had net losses every year. Due to the sheer amount of restatements that have occurred, many executives have fired or resigned their positions and taken the fall for their acco unting errors and subsequent SEC investigations. Overstock seems to need to branch out into different revenue streams, such as car and real estate listings, insurance quotes and travel services in order to differentiate themselves from Amazon and capture some market share back from the titan of the industry.Amazon has its eyes on bigger targets, and wants to stand toe to toe with another gigantic company, Apple. Amazons manufacturing and subsequent sales of the various incarnations of the Kindle and an online music service are bold ideas that have paid off handsomely for the company, as have their investments in supply chain and shipping processes, as well as third party relationships. Overstock, for its part, would most likely just like a piece of Amazons market share and withal has a long way to go before it is anywhere near the level of an Amazon. Overstock first needs to get its accounting controls in order and make sure that the financial statements they reterm of a contract i n their annual reports to the SEC will not be restated in the future.The audit committee, auditors, chief financial officer and accountants need to work together to ensure that their work is free from error, and there clearly needs to be a change in the corporate culture at Overstock because change needs to come from the top. These accounting errors should have been caught before the statements were released and given their history of investigations by the SEC, Overstock should have made every effort to clean up its act and pass on in competent accounting and auditing professionals that would have the requisite attention to detail required in producing mistake free financial reports. If Overstock has any hope of ever reaching the level of an Amazon, it needs to fix its accounting issues and to install investor confidence in the company.Outside of their ROA, ROE, and ROI ratios, which are negative due to their net losses, Overstocks financial ratios stack up nicely against the finan cial ratios of Amazon, which are a good sign for the company moving forward, if they can right the ship. The fact that Overstock is still around today has to be a good sign for the company, in that is has come through visitation and still remains a going concern. References Amazon, Inc. (2009). 2008 yearly Report. Seattle, WA Amazon, Inc. , 2009. Amazon, Inc. (2008). 2007 yearbook Report. Seattle, WA Amazon, Inc. , 2008. Amazon, Inc. (2007). 2006 Annual Report. Seattle, WA Amazon, Inc. , 2007. Amazon, Inc. (2006). 2005 Annual Report. Seattle, WA Amazon, Inc. , 2006. Amazon, Inc. (2009) univocal delegate Statements.Seattle, WA Amazon, Inc. 2009. Amazon, Inc. (2008) Definitive Proxy Statements. Seattle, WA Amazon, Inc. 2008. Antar, S. (2010, October 16). Does Overstock. com CEO Patrick Byrne know when to conclude up, especially while the SEC investigates his company? Retrieved October 30, 2011, from Phils Stock World Web site http// www. philstockworld. com Boyd, R. (2007, May 11 ). Company Byrne-d on probe report. New York Post, pp39. Cheng, A. (2006, May 11). Overstock cancels its share sale after SEC subpoena. Deseret News, pp. E4. Harvey, T. (2010, February 5). Overstock hit by another restatement. The Salt Lake Tribune. Hendrick, D. (2009, November 18).Online retailer fires auditor over accounting fight. SNL Kagan Media & Communications Report. Kanaracus, C. (2008, November 3). Overstocks ERP woes force it to restate results. Computerworld, 42(44), pp. 7. Keahey, J. (2009, September 23). Overstock CEO and his critics differ over SEC probe. The Salt Lake Tribune. Kessler, S. (2011, October 13). Industry surveys computers consumer services & the internet. Standard & Poors. Mergent, Inc. (2011). Mergent Online. Mims, B. (2006, March 1). Overstock to restate earnings. Knight Ridder Tribune Business News, pp. 1. Moving the market Overstock. com corrects results back to 2002 losses are narrowed. (2006, March 1).Wall Street Journal (Eastern Edition), pp. 1. Ov erstock. com, Inc. (2009) 2008 revise Annual Report. Salt Lake City, Utah Overstock. com, Inc. , 2009. Overstock. com, Inc. (2008) 2007 Amended Annual Report. Salt Lake City, Utah Overstock. com, Inc. , 2008. Overstock. com, Inc. (2007) 2006 Amended Annual Report. Salt Lake City, Utah Overstock. com, Inc. , 2007. Overstock. com, Inc. (2006) 2005 Amended Annual Report. Salt Lake City, Utah Overstock. com, Inc. , 2006. Overstock. com, Inc. (2009) 2008 Annual Report. Salt Lake City, Utah Overstock. com, Inc. , 2009. Overstock. com, Inc. (2008) 2007 Annual Report. Salt Lake City, Utah Overstock. com, Inc. , 2008.Overstock. com, Inc. (2007) 2006 Annual Report. Salt Lake City, Utah Overstock. com, Inc. , 2007. Overstock. com, Inc. (2006) 2005 Annual Report. Salt Lake City, Utah Overstock. com, Inc. , 2006. Overstock. com announces receipt of another SEC subpoena. (2009, September 17). PR Newswire. Overstock. com President interview. (2006, March 1). CEO Wire. Overstock corrects its fina ncial results. (2006, March 1). Deseret News, pp. E1. Overstock. com, Inc. (2009). Definitive proxy statement. Salt Lake City, Utah Overstock. com, Inc. , 2009. Overstock. com, Inc. (2008). Definitive proxy statement. Salt Lake City, Utah Overstock. com, Inc. , 2008.Overstock gets SEC subpoena. (2006, May 10). Wall Street Journal (Eastern Edition). Overstock. com shifting income. (2010, February 6). Deseret News, pp. A10. Q3 2008 Overstock Com Inc earnings conference call final. (2008, October 24). Fair Disclosure Wire. SEC closes Overstock. com probe, will take no action. (2008, June 7). Financial Wire. Standard & Poors. (2011) Standard & Poors NetAdvantage. Taub, S. (2006, February 28). Freight costs spur Overstock restatement. CFO. com, pp. 1. Appendices Overstock passkey unite Statements of trading operations (in thousands) socio-economic class stop December 31, 2008 2007 2006 2005 gross Direct Revenue 174,203 195,622 303,202 324,875 fulfillment partner revenue 660 ,164 564,539 484,948 478,947 union Revenue 834,367 760,161 788,150 803,822 terms of goods sold Direct 154,501 164,368 284,943 283,377 Fulfillment partner 536,957 468,222 408,407 400,889 kernel cost of goods sold 691,458 632,590 693,350 683,266 raw profit 142,909 127,571 94,800 120,556 operating(a) expenses gross sales and trade 57,634 55,458 70,897 79,651 Technology 57,815 59,453 65,158 28,132 global and administrative 38,373 41,976 46,837 36,495 Restructuring 12,283 5,674 amortisation of stock-based compensation 72 count operating expenses 153,822 169,170 188,566 144,350 in operation(p) loss (10,913) (41,599) (93,766) (23,794) delight income, net 3,163 4,788 3,566 (270) post expense (3,462) (4,188) (4,765) (5,582) early(a) income (expense), net (1,446) (92) 81 4,728 hurt from continuing operations (12,658) (41,091) (94,884) passing from stop operations (3,924) (6,882) Net loss (12,658) (45,015) (101,856) (24,918) Overstock R estated Consolidated Statements of operations (in thousands) For course end December 31, 2008 2007 2006 2005 Revenue Direct Revenue 174,203 197,088 301,509 324,875Fulfillment partner revenue 660,164 568,814 478,628 474,441 radical Revenue 834,367 765,902 780,137 799,316 Cost of goods sold Direct 154,501 168,008 284,774 282,383 Fulfillment partner 536,957 473,344 405,559 400,057 be cost of goods sold 691,458 641,352 690,333 682,440 Gross profit 142,909 124,550 89,804 116,876 run expenses Sales and Marketing 57,634 57,815 38,373 77,155 Technology 57,815 59,453 70,897 27,901 public and administrative 38,373 41,976 46,837 33,043 Restructuring 12,283 5,674 Amortization of stock-based compensation Total operating expenses 153,822 169,170 188,566 138,099 Operating loss (10,913) (44,620) (98,762) (21,223) Interest income, net 3,163 4,788 3,566 (270) Interest expense (3,462) (4,188) (4,765) (5,582) Other income (expense), net (1,446) (92) 81 4,728 Loss from continuing operations (12,658) (44,112) (99,880) (22,347) Loss from discontinued operations (3,924) (6,882) (2,571) Net loss (12,658) (48,036) (106,762) (24,918) Overstock parking area-Size Consolidated Statements of Operations Year Ended December, 31 (% of revenue) 2008 2007 2006 2005 Total Revenue one C% ampere-second% snow% century% Total cost of goods sold 82. 9% 83. 2% 88% 85% Gross profit 17. 1% 16. 7% 12% 15% Operating expenses Sales and Marketing 6. 9% 7. 3% 9% 9. 9% Technology 6. 9% 7. 8% 8. 3% 3. 5% General and administrative 4. 6% 5. 5% 6% 4. 5% Restructuring 1. 6% . 7% Amortization of stock-based compensation . 009% Total operating expenses 18. 4% 22. 3% 23. 9% 18% Operating loss -1. 3% -5. 5% -11. 9% -3% Interest income, net . 3% . 6% . 5% -. 03% Interest expense -. 4% -. 6% -. 6% -. 7% Other income (expense), net -. 1% -. 01% . 01% . 6% Loss from continuing operations -1. 5% -5. 4% -12% Loss from discontinued operations - . 5% -. 9% Net loss -1. % -5. 9% -12. 9% -3. 1% Overstock ignore Consolidated Statements of Operations (2005= coke%) For Year Ended December 31, 2008 2007 2006 2005 Total Revenue 103. 8% 94. 6% 98. 1% ampere-second% Total cost of goods sold 101. 2% 92. 6% 101. 5% ascorbic acid% Gross profit 118. 5% 105. 8% 78. 7% degree Celsius% Operating expenses Sales and Marketing 72. 4% 69. 7% 89% c% Technology 205. 6% 211. 3% 231. 6% cytosine% General and administrative 105. 1% 115% 128. 3% light speed% Total operating expenses 106. 6% 117. 2% 130. 6% coulomb% Operating loss 45. 9% 174. 8% 394. 1% degree centigrade% Interest expense 62% 75% 85. % hundred% Loss from continuing operations 13. 3% 43. 3% speed of light% Loss from discontinued operations 57% ascorbic acid% Net loss 50. 8% 180. 7% 408. 8% ascorbic acid% Overstock Restated Common-Size Consolidated Statements of Operations For Year Ended December 31, (% of revenue) 2008 2007 2 006 2005 Total Revenue degree Celsius% atomic number 6% ampere-second% deoxycytidine monophosphate% Total cost of goods sold 82. 9% 83. 7% 88. 5% 85. 4% Gross profit 17. 1% 16. 3% 11. 5% 14. 6% Operating expenses Sales and Marketing 6. 9% 7. 5% 4. 9% 9. 7% Technology 6. 9% 7. 8% 9. 1% 3. 5% General and administrative 4. 6% 5. 5% 6% 4. 1%Restructuring 1. 6% . 7% Amortization of stock-based compensation - Total operating expenses 18. 4% 22. 1% 24. 2% 17. 3% Operating loss -1. 3% -5. 8% -12. 7% -2. 7% Interest income, net . 4% . 6% . 5% -. 03% Interest expense -. 4% . 5% -. 6% -. 7% Other income (expense), net -. 2% . 01% . 01% . 6% Loss from continuing operations -1. 5% -5. 8% -12. 8% -2. 8% Loss from discontinued operations -. 5% -. 9% -. 3% Net loss -1. 5% -6. 3% -13. 7% -3. 1% Overstock Trend Restated Consolidated Statements of Operations (2005= carbon%) For Year Ended December 31, 2008 2007 2006 2005 Total Revenue 104. 4% 95. 8% 97. 6% deg ree centigrade% Total cost of goods sold 101. 3% 94% 101. 2% hundred% Gross profit 122. 3% 106. 6% 76. 8% degree centigrade% Operating expenses Sales and Marketing 74. 7% 75% 50% nose candy% Technology 207. 2% 213. 1% 254. 1% 100% General and administrative 116. 1% 127% 141. 7% 100% Total operating expenses 111. 3% 122. 5% 136. 5% 100% Operating loss 51. 4% 210. 2% 465. 4% 100% Interest expense 62% 75% 85. 4% 100% Loss from continuing operations 56. 6% 197. 4% 447% 100% Loss from discontinued operations 152. 6% 267. % 100% Net loss 50. 8% 192. 9% 428. 5% 100% Overstock Original Consolidated Balance Sheets (in thousands) December 31, 2008 2007 2006 2005 Assets present-day(prenominal) Assets specie and cash equivalents 100,577 101,394 126,965 56,224 saleable securities 8,959 46,000 55,799 cash in, cash equivalents and marketable securities 109,566 147,394 126,965 112,023 Accounts receivable, net 6,985 12,304 11,638 11,695 Notes receivable 1,250 1,5 06 6,702 Inventories, net 17,723 25,933 20,274 93,269 pay inventory, net 761 3,572 2,241 9,633 Prepaid expense 9,694 7,572 7,473 8,508 watercourse assets of held for sale infantryman 4,718 Total current assets 145,975 198,281 180,011 235,128 Restricted cash 253 frigid assets, net 23,142 27,197 56,198 61,914 free grace 2,784 2,784 2,784 13,169 Other long-term assets, net 538 86 578 15,449 Notes receivable 4,181 long assets of held for sale footslogger 16,594 Total assets 172,441 235,529 265,165 325,913 Liabilities and Stockholders Equity (Deficit) incumbent liabilities Accounts payable 62,120 70,648 66,039 101,436 accrue liabilities 25,154 52,598 40,142 46,847 Deferred Revenue 19,026 Capital lease obligations 3,796 5,074 6,683 latest liabilities of held for sale secondary 3,684 Total current liabilities 106,300 127,042 114,939 154,966 Other long-term liabilities 2,572 3,034 Capital lease obligations, non-current - - 3,983 3,058 Convertible seni or notes 66,558 75,623 75,279 74,935 Total liabilities 175,430 205,699 194,201 232,959 Stockholders lawfulness (deficit) preferent stock Common stock 2 2 2 2 Additional paid in capital 338,620 333,909 325,771 251,244 stash away deficit (264,985) (243,709) (198,694) (96,829) Unearned stock-based compensation (305) treasury stock (76,670) (63,278) (64,983) (65,325) stash away other all-inclusive income (loss) 48 (94) (132) 962 Total stockholders lawfulness (deficit) (2,985) 26,830 61,964 89,749 Total liabilities and stockholders equity (deficit) 172,445 232,529 265,165 325,913 Overstock Restated Consolidated Balance Sheets (in thousands) December 31, 2008 2007 2006 2005 Assets trustworthy Assets cash and cash equivalents 100,577 101,394 126,965 55,875 vendible securities 8,989 46,000 55,799 Cash, cash equivalents and marketable securities 109,566 147,394 126,965 111,674 Accounts receivable, net 6,985 11,208 16,330 10,021 Notes receivable 1,250 1, 506 6,702 Inventories, net 17,723 25,643 23,970 93,269 Prepaid inventory, net 761 3,572 2,241 9,633 Prepaid expense 9,694 7,572 7,473 8,477 Current assets of held for sale supplemental 4,718 2,054 Total current assets 145,979 196,895 188,299 235,128 Restricted cash 253 Fixed assets, net 23,144 27,197 56,198 60,850 Goodwill 2,784 2,784 2,784 2,784 Other long-term assets, net 538 86 578 3,333 Notes receivable 4,181 Long-term assets of held for sale subsidiary 16,594 23,565 Total assets 172,445 231,143 264,453 325,913 Liabilities and Stockholders Equity (Deficit) Current liabilities Accounts payable 62,120 70,358 58,412 100,188 Accrued liabilities 25,154 37,155 38,434 45,934 Deferred Revenue 19,026 22,965 23,220 6,683 Capital lease obligations 3,796 5,074 Current liabilities of held for sale subsidiary 3,684 2,161 Total current liabilities 106,300 134,274 128,824 154,966 Other long-term liabilities 2,572 3,034 Capital lease obligations, non-current 3,983 3,05 8 Convertible senior notes 66,558 75,623 75,279 74,935 Total liabilities 175,430 212,931 208,086 232,959 Stockholders equity (deficit) Preferred stock Common stock 2 2 2 2Additional paid in capital 338,620 333,909 325,771 250,939 collect deficit (264,985) (252,327) (204,291) (96,829) treasury stock (76,670) (63,278) (64,983) (65,325) Accumulated other comprehensive income (loss) 48 (94) (132) 962 Total stockholders equity (deficit) (2,985) 18,212 56,367 89,749 Total liabilities and stockholders equity (deficit) 172,445 231,143 264,453 325,913 Overstock Restated Common-Size Consolidated Balance Sheets December 31, (% of total assets) 2008 2007 2006 2005 Assets Current Assets Cash and cash equivalents 58. 3% 43. 9% 48% 17. 1% Marketable securities 5. 2% 19. 9% 17. 1% Cash, cash equivalents and marketable securities 63. 5% 63. 8% 48% 34. 2% Accounts receivable, net 4. 1% . 5% 6. % 3. 1% Notes receivable . 7% . 7% 2. 5% Inventories, net 10. 3% 11. 1% 9. 1% 28. 6% Prepaid inventory, net . 4% 1. 5% . 8% 3% Prepaid expense 5. 6% 3. 3% 2. 8% 2. 6% Current assets of held for sale subsidiary 1. 8% . 6% Total current assets 84. 7% 85. 2% 71. 2% 72. 1% Restricted cash . 07% Fixed assets, net 13. 4% 11. 8% 21. 3% 18. 7% Goodwill 1. 6% 1. 2% 1. 1% . 9% Other long-term assets, net . 3% . 04% . 2% 1% Notes receivable 1. 8% Long-term assets of held for sale subsidiary 6. 3% 7. 2% Total assets 100% 100% 100% 100% Liabilities Current liabilities Accounts payable 36% 30. 4% 22. 1% 30. 7% Accrued liabilities 14. 6% 16. 1% 14. 5% 14. 1% Deferred Revenue 11% 10% 8. 8% 2. 1% Capital lease obligations 1. 6% 1. 9% Current liabilities of held for sale subsidiary 1. 4% . 7% Total current liabilities 61. 6% 58. 1% 48. 7% 47. 5% Other long-term liabilities 1. 5% 1. 3% Capital lease obligations, non-current 1. 5% . 9% Convertible senior notes 38. 6% 32. 7% 28. 5% 23% Total liabilities 101. 7% 92. 1% 78. 7% 71. 5% Stockholders Equity Stockholders equity (deficit) Preferred stock Common stock Additional paid in capital 196. 4% 144. 5% 123. 2% 77% Accumulated deficit -153. 7% -109. 2% -77. 3% -29. 7% Treasury stock -44. 5% -27. 4% -24. 6% -20% Accumulated other comprehensive income (loss) . 03% -. 04% -. 05% . 3% Total stockholders equity (deficit) -1. 7% 7. 9% 21. 3% 27. 5% Total liabilities and stockholders equity (deficit) 100% 100% 100% 100% Overstock Restated Trend Consolidated Balance Sheets (2005 = 100%) December 31, 2008 2007 2006 2005 Assets Current Assets Cash and cash equivalents 180% 181. 5% 227. % 100% Marketable securities 16. 1% 82. 4% 100% Cash, cash equivalents and marketable securities 98. 1% 132% 113. 7% 100% Accounts receivable, net 69. 7% 111. 8% 163% 100% Notes receivable 18. 7% 22. 5% 100% Inventories, net 19% 27. 5% 25. 7% 100% Prepaid inventory, net 7. 9% 37. 1% 23. 3% 100% Prepaid expense 114. 4% 89. 3% 88. 2% 100% Current assets of held for sale su bsidiary 229. 7% 100% Total current assets 62. 1% 83. 7% 80. 1% 100% Restricted cash 100% Fixed assets, net 38% 44. 7% 92. 4% 100% Goodwill 100% 100% 100% 100% Other long-term assets, net 16. 1% 2. % 17. 3% 100% Notes receivable 100% Long-term assets of held for sale subsidiary 70. 4% 100% Total assets 53% 71% 81. 1% 100% Liabilities Current liabilities Accounts payable 62% 70. 2% 58. 3% 100% Accrued liabilities 54. 8% 80. 9% 83. 7% 100% Deferred Revenue 284. 7% 343. 6% 347. 4% 100% Capital lease obligations 74. 8% 100% 00% Current liabilities of held for sale subsidiary 170. 5% 100% Total current liabilities 68. 6% 86. 6% 83. 1% 100% Other long-term liabilities 84. 8% 100% 00% Capital lease obligations, non-current 130. % 100% Convertible senior notes 88. 8% 101% 100. 5% 100% Total liabilities 75. 3% 91. 4% 89. 3% 100% Stockholders Equity Stockholders equity (deficit) Preferred stock 00% Common stock 100% 100% 100% 100% Additional paid i n capital 134. 9% 133. 1% 129. 8% 100% Accumulated deficit 273. 7% 260. 6% 211% 100% Treasury stock 117. 4% 96. 9% 99. 5% 100% Accumulated other comprehensive income (loss) 5% -9. 8% -13. 7% 100% Total stockholders equity (deficit) -3. 3% 20. 3% 62. 8 100% Total liabilities and stockholders equity (deficit) 52. 9% 70. 9% 81. 1% 100%Amazon Consolidated Statements of Operations (in millions) Year Ended December 31, 2008 2007 2006 2005 Net sales 19,166 14,835 10,711 8,490 Cost of sales 14,896 11,482 8,255 6,451 Gross profit 4,270 3,353 2,456 2,039 Operating expenses Fulfillment 1,658 1,292 937 745 Marketing 482 344 263 198 Technology and content 1,033 818 662 451 General and administrative 279 235 195 166 Other operating expense (income), net (24) 9 10 47 Total operating expenses 3,428 2,698 2,067 1,607 Income from operations 842 655 389 432 Interest income 83 90 59 44 Interest expense (71) (77) (78) (92) Other income (expense), net 47 (8) 7 2Total non-operating income (expense ) 59 5 12 42 Income before income valuateationes 901 660 377 428 Provision for income taxes (247) (184) (187) 95 Equity-method investment activity, net of tax (9) Income before accumulative effect of change in accounting tenet 333 cumulative effect of change in accounting principle 26 Net income 645 476 190 359 Amazon Common-Size Consolidated Statements of Operations Year Ended December 31, (% of sales) 2008 2007 2006 2005 Net sales 100% 100% 100% 100% Cost of sales 77. 7% 77. 4% 77. 1% 76% Gross profit 22. 3% 22. 6% 22. 9% 24% Operating expenses Fulfillment 8. 7% 8. 7% 8. 7% 8. 8% Marketing 2. 5% 2. 3% 2. 5% 2. 3% Technology and content 5. 4% 5. 5% 6. 2% 5. 3% General and administrative 1. 5% 1. 6% 1. 8% 2% Other operating expense (income), net -. 1% . 06% . 09% . 6% Total operating expenses 17. 9% 18. 2% 19. 3% 18. 9% Income from operations 4. 4% 4. 4% 3. 6% 5. 1% Interest income . 4% . 6% . 6% . 5% Interest expense -. 4% -. 5% -. 7% -1. 1% Other income (exp ense), net . 2% -. 05% . 07% . 02% Total non-operating income (expense) . 3% . 03% . 1% . 5% Income before income taxes 4. 7% 4. 4% 3. 5% 5% Provision for income taxes -1. 3% -1. % -1. 7% 1. 1% Equity-method investment activity, net of tax -. 05% Income before cumulative effect of change in accounting principle 3. 9% Cumulative effect of change in accounting principle . 3% Net income 3. 4% 3. 2% 1. 8% 4. 2% Amazon Trend Consolidated Statements of Operations (2005 = 100%) For Year Ended December 31, 2008 2007 2006 2005 Net sales 225. 7% 174. 7% 126. 2% 100% Cost of sales 231% 178% 1278% 100% Gross profit 209. 4% 164. 4% 120. 5% 100% Operating expenses Fulfillment 222. 6% 173. 4% 125. 8% 100% Marketing 243. 4% 173. % 132. 8% 100% Technology and content 229% 181. 4% 146. 8% 100% General and administrative 168. 1% 141. 6% 117. 5% 100% Other operating expense (income), net -51. 1% 19. 1% 21. 3% 100% Total operating expenses 213. 3% 167. 9% 128. 6% 100% Income fr om operations 194. 9% 151. 6% 90% 100% Interest income 180. 6% 204. 5% 134. 1% 100% Interest expense 77. 2% 83. 7% 84. 8% 100% Other income (expense), net 2350% -400% 350% 100% Total non-operating income (expense) 140. 5% 11. 9% 28. 6% 100% Income before income taxes 210. 5% 154. 2% 88. 1% 100% Provision for income taxes -260% -193. 7% -196. % 100% Equity-method investment activity, net of tax 100% Income before cumulative effect of change in accounting principle 100% Cumulative effect of change in accounting principle 100% Net income 179. 7% 132. 6% 52. 9% 100% Amazon Consolidated Balance Sheets (in millions) December 31, 2008 2007 2006 2005 Assets Current assets Cash and cash equivalents 2,769 2,539 1,022 1,013 Marketable securities 958 573 997 987 Inventories 1,399 1,200 877 566 Accounts receivable, net and other 827 705 399 274 Deferred tax assets 204 147 78 89 Total current assets 6,157 5,164 3,373 2,929 Fixed assets, net 854 543 457 348 Deferred tax assets 14 5 260 199 223Goodwill 438 222 195 159 Other assets 720 296 139 37 Total assets 8,324 6,485 4,363 3,696 Liabilities and Stockholders Equity Current liabilities Accounts payable 3,594 2,795 1,816 1,366 Accrued expenses and other 1,093 902 716 533 Current portion of long-term debt 59 17 Total current liabilities 4,746 3,714 2,532 1,899 Long-term debt 409 1,282 1,247 1,480 Other long-term liabilities 487 292 153 71 Commitments and contingencies Stockholders equity Preferred stock Common stock 4 4 4 4 Treasury stock, at cost (600) (500) (252) Additional paid-in capital 4,121 3,063 2,517 2,263 Accumulate other comprehensive income (loss) (123) 5 (1) 6 Accumulated deficit (730) (1,375) (1,837) (2,027) Total stockholders equity 2,672 1,197 431 246 Total liabilities and stockholders equity 8,314 6,485 4,363 3,696 Amazon Common-Size Consolidated Balance Sheets December 31, (% of total assets) 2008 2007 2006 2005 Assets Current assets Cash and cash equivalents 33. 3% 39. 2% 23. 4% 27. 4% Marketable securities 11. 6% 8. 8% 22. 9% 26. 7% Inventories 16. 8% 18. 5% 20. 1% 15. 3% Accounts receivable, net and other 9. 9% 10. 9% 9. 1% 7. 4% Deferred tax assets 2. 5% 2. 3% 1. 8% 2. 4%Total current assets 74% 79. 6% 77. 3% 79. 2% Fixed assets, net 10. 3% 8. 4% 10. 5% 9. 4% Deferred tax assets 1. 7% 4% 4. 6% 6% Goodwill 5. 3% 3. 4% 4. 5% 4. 3% Other assets 8. 6% 4. 6% 3. 2% 1% Total assets 100% 100% 100% 100% Liabilities Current liabilities Accounts payable 43. 2% 43. 1% 41. 6% 37% Accrued expenses and other 13. 1% 13. 9% 16. 4% 14. 4% Current portion of long-term debt . 7% . 3% Total current liabilities 57% 57. 3% 58% 51. 4% Long-term debt 4. 9% 19. 8% 28. 6% 40% Other long-term liabilities 5. 9% 4. 5% 3. 5% 1. 9% Stockholders Equity Preferred stock Common stock . 05% . 06% . 09% . 1% Treasury stock, at cost -7. 2% -7. 7% -5. 8% Additional paid-in capital 49. 5% 47. 2% 57. 7% 61. 2% Accumulate other comprehensive income (loss) -1. 5% . 08% -. 02% . 2% Accumulated deficit -8. 8% -21. 2% -42. 1% -54. 8% Total stockholders equity 32. 1% 18. 5% 9. 9% 6. 7% Total liabilities and stockholders equity 100% 100% 100% 100% Amazon Trend Consolidated Balance Sheets (2005 = 100%) December 31, 2008 2007 2006 2005 Assets Current assets Cash and cash equivalents 273. 3% 250. 6% 100. % 100% Marketable securities 97. 1% 58. 1% 101% 100% Inventories 247. 2% 212% 155% 100% Accounts receivable, net and other 301. 8% 257. 3% 145. 6% 100% Deferred tax assets 229. 2% 165. 2% 87. 6% 100% Total current assets 210. 2% 176. 3% 115. 2% 100% Fixed assets, net 245. 4% 156% 131. 3% 100% Deferred tax assets 65% 116. 6% 89. 2% 100% Goodwill 275. 5% 139. 6% 122. 6% 100% Other assets 1945. 9% 800% 375. 7% 100% Total assets 225. 2% 175. 5% 118% 100% Liabilities Current liabilities Accounts payable 263. 1% 204. 6% 132. 9% 100% Accrued expenses and other 205. 1% 169. % 134. 3% 100% Current portion of lo ng-term debt 347. 1% 100% Total current liabilities 249. 9% 195. 6% 133. 3% 100% Long-term debt 27. 6% 86. 6% 84. 3% 100% Other long-term liabilities 685. 9% 411. 3% 215. 5% 100% Stockholders Equity Preferred stock Common stock 100% 100% 100% 100% Treasury stock, at cost 240% 200% 100% Additional paid-in capital 182. 1% 135. 4% 111. 2% 100% Accumulate other comprehensive income (loss) -2050% 83. 3% -16. 7% 100% Accumulated deficit 36% 67. 8% 90. 1% 100% Total stockholders equity 1086. 2% 486. 6% 175. % 100% Total liabilities and stockholders equity 224. 9% 175. 5% 118% 100% Overstock Financial Ratios 2008 2007 2006 recollect on assets (net)(ROA) -6. 23% -18. 09% -34. 43% Return on equity (net) (ROE) -105. 88% -101. 39% -131. 38% Return on income (Operating) (ROI) -12. 82% -32. 94% -57. 89% EBITDA Margin 1. 24 -1. 6 -7. 8 Calculated tax rate Revenue per employee $803,173 $900,665 $912,211 Quick ratio 1. 04 1. 21 1. 2 Current ratio 1. 37 1. 56 1. 57 Net curren t assets 23. 01% 30. 64% 24. 54% Long-term debt to equity 2. 82 1. 28 Total debt to equity 2. 96 1. 36Interest insurance coverage Total asset turnover 4. 11x 3. 05x 2. 67x Receivables turnover 75. 49x 47. 29x 52. 48x Inventory turnover 31. 68x 27. 38x 12. 21x Accounts payable turnover 12. 53x 11. 12x 9. 41x Accrued expenses turnover 27. 55x 20. 9x 19. 13x Property, plant and equipment turnover 33. 06x 18. 23x 13. 35x Cash and cash equivalents turnover 6. 48x 5. 54x 6. 6x Amazon Financial Ratios 2008 2007 2006 Return on assets (net)(ROA) 8. 69% 8. 78% 4. 72% Return on equity (net) (ROE) 33. 25% 58. 48% 56. 13% Return on income (Operating) (ROI) 28. 93% 30. 9% 22. 45% EBITDA Margin 6. 26% 6. 1% 5. 56%Calculated tax rate 27. 41% 27. 88% 49. 6% Revenue per employee $923,364 $872,647 $770,576 Quick ratio . 96 1. 03 . 95 Current ratio 1. 3 1. 39 1. 33 Net current assets 16. 97% 22. 36% 19. 28% Long-term debt to equity . 2 1. 12 2. 94 Total debt to equity . 22 1. 12 2. 94 I nterest coverage 20. 47x Total asset turnover 2. 58x 2. 74x 2. 66x Receivables turnover 24. 95x 26. 88x 31. 83x Inventory turnover 11. 46x 11. 06x 11. 44x Accounts payable turnover 5. 98x 6. 43x 6. 73x Property, plant and equipment turnover 27. 36x 29. 67x 26. 61x Cash and cash equivalents turnover 5. 59x 5. 78x 5. 33x