Overstock.com 2004 Annual Report Download - page 90

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The income tax benefit differs from the amount computed by applying the U.S. federal income tax rate of 35% to loss before income taxes for the
following reasons:
Year ended December 31,
2002 2003 2004
U.S. federal income tax benefit at statutory rate $ 1,596 $ 4,166 $ 1,751
State income tax benefit, net of federal expense 38 385 164
Stock compensation expense (1,216) (384) (127)
Other (611) (71) 1,071
Unrecognized benefit due to valuation allowance 193 (4,096) (2,859)
Income tax benefit $ — $ — $ —
18. RELATED PARTY TRANSACTIONS
As indicated in Note 12, the Company sold shares of mandatorily redeemable convertible preferred stock in March 2002, for which a deemed dividend
was recorded as a result of the beneficial conversion feature. The total deemed dividend recorded for the year ended December 31, 2002 was $6,607, of which
$1,000 is attributable to preferred shares purchased by Haverford Internet, $1,200 is attributable to preferred shares purchased by members of the board of
directors, and $1,500 is attributable to preferred shares purchased by family members of management.
On occasion, Haverford-Valley, L.C. (an entity owned by the Company's president) and certain affiliated entities make travel arrangements for our
executives and pay the travel related expenses incurred by our executives on Company business. In 2002, 2003, and 2004 we reimbursed Haverford-Valley
L.C. $273, $236, and $256, respectively, for these expenses.
19. BUSINESS SEGMENTS
Segment information has been prepared in accordance with SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information.
Segments were determined based on products and services provided by each segment. Accounting policies of the segments are the same as those described in
Note 2. There were no intersegment sales or transfers during 2002, 2003 or 2004. The Company
F-27