|
|
 | | | |
- close
- close
- close
- close
This excerpt taken from the EBAY 10-Q filed Apr 28, 2009. Note 1 — The Company and Summary of Significant Accounting Policies The Company eBay Inc. (“eBay”) was incorporated in California in May 1996, and reincorporated in Delaware in April 1998. eBay’s purpose is to pioneer new communities around the world, built on commerce, sustained by trust, and inspired by opportunity. eBay brings together millions of buyers and sellers every day on a local, national and international basis through an array of websites. eBay provides online marketplaces for the sale of goods and services, online payment services and online communication offerings to a diverse community of individuals and businesses. We operate three primary business segments: Marketplaces, Payments and Communications. Our Marketplaces segment provides the infrastructure to enable global online commerce on a variety of platforms, including the traditional eBay.com platform, our other online platforms, such as our online classifieds businesses, our secondary tickets marketplace (StubHub), our online shopping comparison website (Shopping.com), our apartment listing service platform (Rent.com), as well as our fixed price media marketplace (Half.com). Our Payments segment is comprised of our online payment solutions PayPal and Bill Me Later (which we acquired in November 2008). Our Communications segment, which consists of Skype, enables Voice over Internet Protocol (VoIP) calls between Skype users and provides low-cost connectivity to traditional fixed-line and mobile telephones. When we refer to “we,” “our,” “us” or “eBay” in this document, we mean the current Delaware corporation (eBay Inc.) and its California predecessor, as well as all of our consolidated subsidiaries. Use of estimates The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to provisions for transaction and loan losses, legal contingencies, income taxes, revenue recognition, stock-based compensation and the recoverability of goodwill and intangible assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates. Principles of consolidation and basis of presentation The accompanying financial statements are consolidated and include the financial statements of eBay and our majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements include 100% of the assets and liabilities of these majority-owned subsidiaries and the ownership interests of minority investors are recorded as a non-controlling interest. Investments in private entities where we hold 20% or more but less than a 50% ownership interest are accounted for using the equity method of accounting and the investment balance is included in long-term investments, while our share of the investees’ results of operations is included in interest and other income, net. Investments in private entities where we hold less than a 20% ownership interest and where we do not have the ability to significantly influence the operations of the investee are accounted for using the cost method of accounting, where our share of the investees’ results of operations is not included in our condensed consolidated statement of income, and the cost basis of our investments is included in long-term investments. Recent Accounting Pronouncements In April 2009, the Financial Accounting Standards Board (FASB) issued three related Staff Positions (FSP): (i) FSP 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP 157-4), (ii) FSP Statement of Financial Accounting Standard (SFAS) 115-2 and SFAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, (FSP SFAS 115-2 and SFAS 124-2), and (iii) FSP SFAS 107-1 and Accounting Principles Board (APB) 28-1, Interim Disclosures about Fair Value of Financial Instruments, (FSP SFAS 107 and APB 28-1),
6
each of which will be effective for interim and annual periods ending after June 15, 2009. FSP 157-4 provides guidance on how to determine the fair value of assets and liabilities under SFAS 157 Fair Value Measurements, in the current economic environment and reemphasizes that the objective of a fair value measurement remains the determination of an exit price. If we were to conclude that there has been a significant decrease in the volume and level of activity of the asset or liability in relation to normal market activities, quoted market values may not be representative of fair value and we may conclude that a change in valuation technique or the use of multiple valuation techniques may be appropriate. FSP SFAS 115-2 and SFAS 124-2 modify the requirements for recognizing other-than-temporarily impaired debt securities and revise the existing impairment model for such securities by modifying the current intent and ability indicator in determining whether a debt security is other-than-temporarily impaired. FSP SFAS 107 and APB 28-1 enhance the disclosure of instruments under the scope of SFAS 157 for both interim and annual periods. We are currently evaluating the potential impact of these Staff Positions. In April 2009, the FASB issued FSP No. 141R-1 Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies (FSP 141R-1). FSP 141R-1 amends the provisions in FASB Statement 141R for the initial recognition and measurement, subsequent measurement and accounting, and disclosures for assets and liabilities arising from contingencies in business combinations. FSP 141R-1 eliminates the distinction between contractual and non-contractual contingencies, including the initial recognition and measurement criteria in Statement 141R and instead carries forward most of the provisions in SFAS 141 for acquired contingencies. FSP 141R-1 is effective for contingent assets and contingent liabilities acquired in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We expect that FSP 141R-1 will have an impact on our consolidated financial statements, but the nature and magnitude of the specific effects will depend upon the nature, term and size of the acquired contingencies. This excerpt taken from the EBAY 10-Q filed Apr 25, 2007. Note 1 —
The Company and Summary of Significant Accounting
Policies
The
Company
eBay Inc. (“eBay”) was incorporated in California in
May 1996, and reincorporated in Delaware in April 1998.
eBay’s purpose is to pioneer new communities around the
world, built on commerce, sustained by trust and inspired by
opportunity. eBay brings together millions of buyers and sellers
every day on a local, national and international basis through
an array of websites. eBay provides online marketplaces for the
sale of goods and services, online payment services and online
communication offerings to a diverse community of individuals
and businesses.
eBay has three operating segments: Marketplaces, Payments and
Communications. The Marketplaces segment enables online commerce
through a variety of different platforms, including the
traditional eBay auction site, our classifieds websites, our
comparison shopping site, Shopping.com, and our secondary
tickets platform, StubHub. The Payments segment, which consists
of our PayPal, Inc. (“PayPal”) business, enables
individuals or businesses to securely, easily and quickly send
and receive payments online. The Communications segment, which
consists of our Skype Technologies SA (“Skype”)
business, enables Voice over Internet Protocol
(“VoIP”) calls between Skype users, and provides
low-cost connectivity to traditional fixed-line and mobile
telephones.
When we refer to “we,” “our,” “us”
or “eBay” in this document, we mean the current
Delaware corporation (eBay Inc.) and its California predecessor,
as well as all of our consolidated subsidiaries.
Use of
estimates
The preparation of consolidated financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts
of revenues and expenses during the reporting period. On an
ongoing basis, we evaluate our estimates, including those
related to provisions for doubtful accounts and authorized
credits, the provision for transaction losses, legal
contingencies, income taxes, advertising and other net revenues,
stock-based compensation expense and goodwill and intangible
assets. We base our estimates on historical experience and on
various other assumptions that we believe to be reasonable under
the circumstances. Actual results could differ from those
estimates.
Principles
of consolidation and basis of presentation
The accompanying financial statements are consolidated and
include the financial statements of eBay and our majority-owned
subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
The consolidated financial statements include 100% of the assets
and liabilities of these majority-owned subsidiaries, and the
ownership interests of minority investors are recorded as
minority interests. Investments in entities where we hold more
than a 20% but less than a 50% ownership interest and have the
ability to significantly influence the operations of the
investee are accounted for using the equity method of accounting
and the investment balance is included in long-term investments,
while our share of the investees’ results of operations is
included in interest and other income, net. For the three month
periods ended March 31, 2006 and 2007, the equity method
income recorded in interest and other income, net was not
material to our operating results. Investments in entities where
we hold less than a 20% ownership interest and where we do not
have the ability to significantly influence the operations of
the investee are accounted for using the cost method of
accounting and are included in long-term investments.
These unaudited interim financial statements reflect our
condensed consolidated financial position as of
December 31, 2006 and March 31, 2007. These statements
also show our condensed consolidated statement of
Table of Contents
eBay
Inc.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
income, our condensed consolidated statement of comprehensive
income and our condensed consolidated statement of cash flows
for the three months ended March 31, 2006 and 2007. These
statements include all normal recurring adjustments that we
believe are necessary to fairly state our financial position,
operating results and cash flows. Because all of the disclosures
required by generally accepted accounting principles in the
United States of America for annual consolidated financial
statements are not included herein, these interim financial
statements should be read in conjunction with the audited
financial statements and the notes thereto for the year ended
December 31, 2006, included in our Annual Report on
Form 10-K
filed with the Securities and Exchange Commission on
February 28, 2007. The condensed consolidated statements of
income and cash flows for the periods presented are not
necessarily indicative of results that we expect for any future
period.
Certain prior period balances have been reclassified to conform
to the current period presentation.
Recent
accounting pronouncements
In February 2007, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 159,
“The Fair Value Option for Financial Assets and Financial
Liabilities — Including an Amendment of FASB Statement
No. 115” which is effective for fiscal years beginning
after November 15, 2007. This statement permits an entity
to choose to measure many financial instruments and certain
other items at fair value at specified election dates.
Subsequent unrealized gains and losses on items for which the
fair value option has been elected will be reported in earnings.
We are currently evaluating the potential impact of this
statement.
This excerpt taken from the EBAY 10-Q filed Jul 28, 2006. Note 1 —
The Company and Summary of Significant Accounting
Policies
The
Company
eBay Inc. (“eBay”) was incorporated in California in
May 1996, and reincorporated in Delaware in April 1998. eBay,
together with its subsidiaries, pioneers new communities around
the world, built on commerce, sustained by trust, and inspired
by opportunity. eBay brings together millions of buyers and
sellers every day on a local, national and international basis
through an array of websites. eBay provides online marketplaces
for the sale of goods and services, online payment services and
online communication offerings to a diverse community of
individuals and businesses.
eBay currently has three primary businesses: the eBay
Marketplaces, Payments and Communications. The eBay Marketplaces
segments, comprised of U.S. Marketplaces and International
Marketplaces, provide the infrastructure to enable online
commerce in a variety of formats, including the traditional
auction platform, along with our other online platforms, such as
Rent.com, Shopping.com, Kijiji, mobile.de, and Marktplaats.nl.
The Payments segment, which consists of our PayPal, Inc.
(“PayPal”) business, enables individuals or businesses
to securely, easily and quickly send and receive payments
online. The Communications segment, which consists of our Skype
Technologies S.A. (“Skype”) business, enables Voice
over Internet Protocol (“VoIP”) calls between Skype
users, and provides low-cost connectivity to traditional
fixed-line and mobile telephones.
When we refer to “we,” “our,” “us”
or “eBay” in this document, we mean the current
Delaware corporation (eBay Inc.) and its California predecessor,
as well as all of our consolidated subsidiaries.
Use of
estimates
The preparation of condensed consolidated financial statements
in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the condensed consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period. On
an ongoing basis, we evaluate our estimates, including those
related to provisions for doubtful accounts and authorized
credits, the provision for transaction losses, legal
contingencies, income taxes, advertising and other
non-transaction revenues, stock-based compensation expense and
goodwill and intangible assets. We base our estimates on
historical experience and on various other assumptions that we
believe to be reasonable under the circumstances. Actual results
could differ from those estimates.
Principles
of consolidation and basis of presentation
The accompanying financial statements are consolidated and
include the financial statements of eBay and our majority-owned
subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
The condensed consolidated financial statements include 100% of
the assets and liabilities of these majority-owned subsidiaries
and the ownership interests of minority investors are recorded
as minority interests. Investments in entities where we
generally hold more than a 20% but less than a 50% ownership
interest and have the ability to significantly influence the
operations of the investee are accounted for using the equity
method of accounting and the investment balance is included in
long-term investments, while our share of the investees’
results of operations is included in interest and other income,
net. For the three and six months ended June 30, 2005 and
2006, the equity method income recorded in interest and other
income, net were not material to our operating results.
Investments in entities in which we hold less than a 20%
ownership interest and do not have the ability to significantly
influence the operations of the investee are accounted for using
the cost method of accounting and are included in long-term
investments.
Table of Contents
eBay
Inc.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
These unaudited interim financial statements reflect our
condensed consolidated financial position as of
December 31, 2005 and June 30, 2006. These statements
also show our condensed consolidated statement of income and
condensed consolidated statement of comprehensive income for the
three and six months ended June 30, 2005 and 2006 and our
condensed consolidated statement of cash flows for the six
months ended June 30, 2005 and 2006. These statements
include all normal recurring adjustments that we believe are
necessary to fairly state our financial position, operating
results and cash flows. Because all of the disclosures required
by U.S. generally accepted accounting principles for annual
consolidated financial statements are not included herein, these
interim financial statements should be read in conjunction with
the audited financial statements and the notes thereto for the
year ended December 31, 2005, included in our Annual Report
on
Form 10-K
filed with the Securities and Exchange Commission on
February 23, 2006. The condensed consolidated statements of
income and cash flows for the periods presented are not
necessarily indicative of results that we expect for any future
period.
Certain prior period balances have been reclassified to conform
to the current period presentation.
Stock-based
compensation
On January 1, 2006, we adopted Financial Accounting
Standards No. 123 (revised 2004), “Share-Based
Payment” (FAS 123(R)), which requires companies to
recognize in the statement of operations all share-based
payments to employees, including grants of employee stock
options, based on their fair value. The statement eliminates the
ability to account for share-based compensation transactions, as
we formerly did, using the intrinsic value method as prescribed
by Accounting Principles Board, or APB, Opinion No. 25,
“Accounting for Stock Issued to Employees”.
We adopted FAS 123(R) using the modified prospective
method, which requires the application of the accounting
standard as of January 1, 2006. Our condensed consolidated
financial statements as of and for the three and six months
ended June 30, 2006 reflect the impact of adopting
FAS 123(R). In accordance with the modified prospective
method, the condensed consolidated financial statements for
prior periods have not been restated to reflect, and do not
include, the impact of FAS 123(R). See Note 7
“Stock-based Benefit Plans” for further details.
Stock-based compensation expense recognized during the period is
based on the value of the portion of stock-based payment awards
that is ultimately expected to vest. Stock-based compensation
expense recognized in the condensed consolidated statement of
operations during the three and six months ended June 30,
2006 included compensation expense for stock-based payment
awards granted prior to, but not yet vested, as of
January 1, 2006 based on the grant date fair value
estimated in accordance with the pro forma provisions of
FAS No. 148, “Accounting for Stock-Based
Compensation — Transition and Disclosures”
(FAS 148) and compensation expense for the stock-based
payment awards granted subsequent to December 31, 2005,
based on the grant date fair value estimated in accordance with
FAS 123(R). As stock-based compensation expense recognized
in the statement of income for the three and six months ended
June 30, 2006 is based on awards ultimately expected to
vest, it has been reduced for estimated forfeitures.
FAS 123(R) requires forfeitures to be estimated at the time
of grant and revised, if necessary, in subsequent periods if
actual forfeitures differ from those estimates. In the pro forma
information required under FAS 148 for the periods prior to
2006, we accounted for forfeitures as they occurred.
Recent
Accounting Pronouncements
In July 2006, the Financial Accounting Standards Board (FASB)
issued FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes — an Interpretation of
FASB Statement No. 109” (FIN 48), which clarifies
the accounting for uncertainty in tax positions. This
Interpretation requires that we recognize in our financial
statements the impact of a tax position if that position is more
likely than not of being sustained on audit, based on the
technical merits of the position. The provisions of FIN 48
are effective as of the beginning of our 2007 fiscal year, with
the cumulative effect, if any, of the change in accounting
principle recorded as an adjustment to opening retained
earnings. We are currently evaluating the impact of adopting
FIN 48 on our condensed consolidated financial statements.
Table of Contents
eBay
Inc.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| EXCERPTS ON THIS PAGE:
|
| |||||||
