Overstock.com 2004 Annual Report Download - page 91

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evaluates the performance of its segments and allocates resources to them based primarily on gross profit. The table below summarizes information about
reportable segments.
Direct
Fulfillment
partner Consolidated
2002
Revenue $ 79,405 $ 12,379 $ 91,784
Cost of goods sold 70,686 2,755 73,441
Gross profit (loss) 8,719 9,624 18,343
Operating expenses (22,397)
Other income, net (506)
Net loss $ (4,560)
2003
Revenue $138,134 $ 100,811 $ 238,945
Cost of goods sold 124,302 89,190 213,492
Gross profit 13,832 11,621 25,453
Operating expenses (37,840)
Other income, net 500
Net loss $ (11,887)
2004
Revenue $213,210 $ 281,425 $ 494,635
Cost of goods sold 185,390 243,468 428,858
Gross profit 27,820 37,957 65,777
Operating expenses (71,128)
Other income, net 349
Net loss $ (5,002)
The direct segment includes revenues, direct costs, and allocations associated with sales fulfilled from our warehouse. Costs for this segment include
product costs, inbound freight, warehousing, and fulfillment costs, credit card fees and customer service costs.
The fulfillment partner segment includes revenues, direct costs and cost allocations associated with the Company's third party fulfillment partner sales
and are earned from selling the merchandise of third parties over the Company's Websites. Prior to July 1, 2003, this was reported as the "commission
revenue" segment, as only the commission portion of the sales transactions were recorded as revenue (i.e., recorded "net"). The costs for the previous
commission segment only included credit card fees and customer service costs. From July 1, 2003 forward, due to a change in the company's business
practices, including the partner sales return process, these sales transactions are now recorded gross. As a result, this segment's name has been changed to the
"fulfillment partner" segment, and the costs for this segment include product costs, warehousing and fulfillment costs, credit card fees and customer service
costs.
Assets have not been allocated between the segments for management purposes, and as such, they are not presented here.
F-28