Overstock.com 2004 Annual Report Download - page 78

dollars at exchange rates existing at the balance sheet dates, revenue and expenses are translated at weighted average exchange rates, and stockholders' equity
is recorded at historical exchange rates. The resulting foreign currency translation adjustments are recorded as a separate component of stockholders' equity in
the consolidated balance sheets as part of accumulated other comprehensive income (loss). Transaction gains and losses are included in other income
(expense) in the consolidated financial statements and have not been significant for any periods presented.
Recently issued accounting pronouncements
In December 2004, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standard ("SFAS") No. 123 (revised
2004) Share-Based Payment. This standard requires companies to measure and recognize the cost of employee services received in exchange for an award of
equity instruments based on the grant-date fair value. The effective date is the first interim reporting period beginning after June 15, 2005. The Company is
currently evaluating pricing models and the transition provisions of this standard and will begin expensing stock options in the third quarter of 2005.
In November 2004, the FASB issued SFAS No. 151, Inventory Costs—an Amendment of ARB No. 43, Chapter 4. This standard provides clarification
that abnormal amounts of idle facility expense, freight, handling costs, and spoilage should be recognized as current-period charges. Additionally, this
standard requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The
provisions of this standard are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of this standard is not
expected to have a material impact to the Company's financial statements.
In March 2004, the FASB issued EITF Issue No. 03-1 ("EITF 03-1"), The Meaning of Other-than-Temporary Impairments and its Application to Certain
Investments, which provides new guidance for assessing impairment losses on investments. Additionally, EITF 03-1 includes new disclosure requirements for
investments that are deemed to be temporarily impaired. In September 2004, the FASB delayed the accounting provisions of EITF 03-1; however, the
disclosure requirements remain effective for annual periods ending after June 15, 2004. The Company will evaluate the impact of EITF 03-1 once final
guidance is issued.
3. PUBLIC OFFERINGS
On June 4, 2002, the Company closed its initial public offering, pursuant to which it sold 2,155 shares of its common stock, and a selling shareholder
sold 845 shares of common stock at a price of $13.00 per share. The offering resulted in proceeds to the Company of approximately $24,880, net of $2,014 of
issuance costs. As part of the offering, the Company granted the underwriter the right to purchase up to 450 additional shares within thirty days after the
offering to cover over-allotments. On June 27, 2002, the underwriter purchased an additional 101 shares of stock for $1,260. At the closing of the offering, all
issued and outstanding shares of the Company's redeemable convertible preferred stock were automatically converted into common stock on a 1:1 basis.
As part of the initial public offering, the Company paid $439 of selling costs on behalf of the selling shareholder. This amount was recorded in other
income (expense) in the statement of operations for the year ended December 31, 2002.
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