Overstock.com 2006 Annual Report Download - page 111

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23. RELATED PARTY TRANSACTIONS
On occasion, Haverford-Valley, L.C. (an entity owned by the Company's Chairman and Chief Executive Officer) and certain
affiliated entities make travel arrangements for our executives and pay the travel related expenses incurred by our executives on
Company business. In 2004, 2005, and 2006 we reimbursed Haverford-Valley L.C. $256,000, $274,000, and $267,000, respectively,
for these expenses.
24. 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 inter-segment sales or transfers during 2004, 2005 or 2006. The
Company evaluates the performance of its segments and allocates resources to them based primarily on gross profit. The table below
summarizes information about reportable segments (in thousands):
Direct
Fulfillment
partner Consolidated
2004
Revenue $213,210 $281,425 $ 494,635
Cost of goods sold 184,964 243,468 428,432
Gross profit 28,246 37,957 66,203
Operating expenses (71,092)
Other income (expense), net 349
Loss from continuing operations $ (4,540)
2005
Revenue $324,875 $474,441 $ 799,316
Cost of goods sold 282,383 400,057 682,440
Gross profit 42,492 74,384 116,876
Operating expenses (138,099)
Other income (expense), net (1,124)
Loss from continuing operations $ (22,347)
2006
Revenue $303,202 $484,948 $ 788,150
Cost of goods sold 284,943 408,407 693,350
Gross profit 18,259 76,541 94,800
Operating expenses (188,566)
Other income (expense), net (1,118)
Loss from continuing operations $ (94,884)
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. 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-33