EBay (EBAY)

Note 4 — Sale of Skype:

On November 19, 2009, we sold all of the share capital of Skype Luxembourg Holdings S.a.r.l., Skype Inc. and Sonorit Holdings, A.S. (collectively with their respective subsidiaries, the “Skype Companies”) to Springboard Group S.à.r.l. (the “Buyer”), an entity organized and owned by an investor group led by Silver Lake and including Joltid Limited and certain of its affiliated parties, the Canada Pension Plan Investment Board and Andreessen Horowitz. We received cash proceeds of approximately $1.9 billion, a subordinated note issued by a subsidiary of the Buyer in the principal amount of $125.0 million and an equity stake of approximately 30 percent in the outstanding capital stock of the Buyer.

We determined the fair value of our retained 30 percent equity interest to be approximately $620.0 million. Our investment is accounted for under the equity method of accounting, and our proportionate share of the

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eBay Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

income or loss of Skype will be recognized on a quarter lag as a component of interest and other income, net in our consolidated statement of income. Additional terms of our investment include the following:

The sale resulted in the removal of all Skype related assets and liabilities, which offset the proceeds noted above resulting in a net gain of $1.4 billion recorded in interest and other income, net in our consolidated statement of income. Approximately $110.3 million of the gain is related to the remeasurement of our 30 percent retained interest to its fair value. Furthermore, $528.4 million of the gain is related to realized foreign currency translation reclassified from other comprehensive income.

In conjunction with the sale of Skype, we reached a legal settlement of a lawsuit between Skype, Joltid and entities controlled by Joltid’s founders resulting in a $343.2 million charge to general and administrative expense. The liability reduced our basis in Skype. As a part of the settlement agreement the parties agreed, among other things, to transfer to the Skype Companies all software previously licensed from Joltid and to end all currently pending litigation by Joltid against eBay and the members of the investor group upon completion of the sale of Skype.

As of December 31, 2009, approximately $153.9 million was recorded in other assets for amounts due from Skype related to the subordinated note and the senior debt security noted above.

Mr. Marc L. Andreessen, a member of the board of directors of eBay, is a general partner of Andreessen Horowitz, which owns less than 5% of the Buyer.