This excerpt taken from the EBAY 8-K filed Dec 1, 2005.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined balance sheet as of September 30, 2005 and the unaudited pro forma condensed combined statements of income for the nine months ended September 30, 2005 are based on the historical financial statements of eBay Inc. and Skype Technologies S.A. after giving effect to eBays acquisition of Skype using the purchase method of accounting and applying the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements as if such acquisition had occurred as of September 30, 2005, for pro forma balance sheet purposes and as of January 1, 2004, for pro forma income statement purposes.
The acquisition has been accounted for under the purchase method of accounting in accordance with Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations. Under the purchase method of accounting, the total estimated purchase price, calculated as described in Note 1 to these unaudited pro forma condensed combined financial statements, is allocated to the net tangible and intangible assets acquired and liabilities assumed of Skype in connection with the acquisition, based on their estimated fair values. Management has made a preliminary allocation of the estimated purchase price to the tangible and intangible assets acquired and liabilities assumed based on various preliminary estimates. The allocation of the estimated purchase price is preliminary pending finalization of those estimates and analyses. Final purchase accounting adjustments may differ materially from the pro forma adjustments presented herein.
The unaudited pro forma condensed combined financial statements have been prepared by management for illustrative purposes only and are not necessarily indicative of the condensed consolidated financial position or results of income in future periods or the results that actually would have been realized had eBay and Skype been a combined company during the specified periods. Certain reclassification adjustments have been made in the presentation of the Skype historical amounts to conform Skypes financial statement basis of presentation to that followed by eBay. The pro forma adjustments are based on the preliminary information available at the time of the preparation of this document. The unaudited pro forma condensed combined financial statements, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with, eBays historical consolidated financial statements included in its Form 10-Q for the nine months ended September 30, 2005, and Skypes historical consolidated financial statements for the year ended December 31, 2004 and for the six months ended June 30, 2005, which are included as Exhibits 99.2 and 99.3, respectively, to this Form 8-K/A.