eBay 1998 Annual Report Download - page 42

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42
negotiate or finance future acquisitions successfully, or to integrate successfully any acquisitions with our current
business. Future acquisitions could result in potentially dilutive issuances of equity securities, the incurrence of debt,
contingent liabilities or amortization expenses related to goodwill and other intangible assets, any of which could
harm our business. Future acquisitions may require us to obtain additional equity or debt financing, which may not
be available on favorable terms or at all. Even if available, this financing may be dilutive.
Item 7A: Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
The primary objective of eBay’ s investment activities is to preserve the principal while at the same time
maximizing yields without significantly increasing risk. To achieve this objective, the Company maintains its
portfolio of cash equivalents and short-term investments in a variety of securities, including both government and
corporate obligations and money market funds. As of December 31, 1998, approximately 55% of the Companys
total portfolio matures in one year or less, with the remainder maturing in less than two years. See Note 1 of Notes
to Consolidated Financial Statements.
The following table presents the amounts of the Company’ s cash equivalents and short-term investments that
are subject to interest rate risk by year of expected maturity and average interest rates as of December 31, 1998:
1999 2000 Total Fair Value
(Dollars in thousands)
Cash equivalents and short-term investments.................................... . $34,852 $28,114 $62,966 $ 62,966
Average interest rates.......................................................................... 3.8% 3.5%
eBay did not hold derivative financial instruments as of December 31, 1998, and has never held such
instruments in the past. In addition, eBay had no outstanding debt as of December 31, 1998.
Foreign Currency Risk
Currently the majority of eBay’ s sales and expenses are denominated in U.S. dollars and as a result the
Company has experienced no significant foreign exchange gains and losses to date. While the Company does expect
to effect some transactions in foreign currencies during 1999, it does not anticipate that foreign exchange gains or
losses will be significant. The Company has not engaged in foreign currency hedging activities to date.
Item 8: Financial Statements and Supplementary Data
Annual Financial Statements: See Part IV, Item 14 of this Form 10-K.
Selected Quarterly Data: See Part II, Item 7 of this Form 10-K.
Item 9: Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None.