eBay 1999 Annual Report Download - page 57

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eBAY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1—The Company and Summary of Significant Accounting Policies:
The Company
eBay Inc. (‘‘eBay’’ or the ‘‘Company’’) was incorporated in California in May 1996, and reincorporated in
Delaware in April 1998 and by December 31, 1999 had operations in the United Kingdom, Germany, Australia,
Canada, and Japan. eBay pioneered online personal trading by developing a Web-based community in which
buyers and sellers are brought together to buy and sell almost anything. The eBay online service permits sellers
to list items for sale, buyers to bid on items of interest and all eBay users to browse through listed items in a
fully-automated, topically-arranged service that is available online seven-days-a-week. eBay also engages in the
traditional auction business through its subsidiaries, Butterfield & Butterfield (‘‘B&B’’) and Kruse International
(‘‘Kruse’’), and in online payment processing through its Billpoint, Inc. (‘‘Billpoint’’) subsidiary.
Reincorporation
As a result of the reincorporation in April 1998, the Company was authorized to issue 180,000,000 shares
of $0.001 par value Common Stock and 6,000,000 shares of $0.001 par value Preferred Stock. The Board of
Directors and the stockholders subsequently amended the number of authorized shares such that the Company
was authorized to issue 900,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock. The
Board of Directors has the authority to issue the undesignated Preferred Stock in one or more series and to fix
the rights, preferences, privileges and restrictions thereof.
Public offerings
On September 24, 1998, the Company completed its initial public offering of 4,025,000 shares of its
Common Stock, the net proceeds of which aggregated approximately $66.1 million. At the closing of the
offering, all issued and outstanding shares of the Company’s Convertible Preferred Stock and Mandatorily
Redeemable Convertible Preferred Stock were converted into an aggregate of 27,827,019 shares of Common
Stock.
On April 16, 1999, the Company completed its follow-on public offering of Common Stock. A total of
4,250,000 shares were sold by the Company at a price of $170.00 per share. The offering resulted in net proceeds
to the Company of approximately $696.2 million, net of an underwriting discount of $25.3 million and offering
expenses of $1.0 million.
Stock split
During January 1999, the Company’s Board of Directors approved a three-for-one Common Stock split.
Shareholders of record on February 9, 1999 received two additional shares on March 1, 1999. All share and per
share amounts in these consolidated financial statements and notes thereto for all periods presented reflect the
stock split.
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. Actual results could
differ from those estimates.
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