eBay 1999 Annual Report Download - page 62

The following table sets forth the computation of basic and diluted net income per share for the periods
indicated, (in thousands, except per share amounts):
Year Ended December 31,
1997 1998 1999
Numerator:
Net income ............................................. $ 7,061 $ 7,273 $ 10,828
Accretion of Series B Mandatorily Redeemable Convertible Preferred
Stock to redemption value ................................ (46) (46) —
Net income available to common stockholders ................... $ 7,015 $ 7,227 $ 10,828
Denominator:
Weighted average shares ................................... 63,315 91,642 127,301
Weighted average unvested common shares subject to repurchase
agreements ........................................... (38,887) (39,578) (19,066)
Denominator for basic calculation ............................ 24,428 52,064 108,235
Weighted average effect of dilutive securities:
Series A Preferred Stock ............................... 15,088 11,037 —
Series B Preferred Stock ............................... 6,372 8,054 —
Series B Preferred Stock warrants ......................... — 1,098 —
Unvested common shares subject to repurchase agreements ...... 38,887 39,578 19,066
Employee stock options ................................ — 4,928 8,609
Denominator for diluted calculation ........................... 84,775 116,759 135,910
Net income per share:
Basic ................................................. $ 0.29 $ 0.14 $ 0.10
Diluted ................................................ $ 0.08 $ 0.06 $ 0.08
Note 3—Acquisitions:
Jump Incorporated
Effective June 30, 1998, the Company acquired all the outstanding shares of Jump, an online personal
trading community. The acquisition has been accounted for using the purchase method of accounting and
accordingly, the purchase price has been allocated to the tangible and intangible assets acquired and liabilities
assumed on the basis of their respective fair values on the acquisition date. The fair value of intangible assets
was determined using a combination of methods, including replacement cost estimates for acquired research and
development and completed technology, a risk-adjusted income approach for the acquired customer list and the
amounts paid for covenants not to compete.
The total purchase price of approximately $2.3 million consisted of 428,544 shares of the Company’s
Common Stock with an estimated fair value of approximately $2.0 million and other acquisition related expenses
of approximately $335,000, consisting primarily of payments for non-compete agreements totaling approximately
$208,000 and legal and other professional fees. Of the total purchase price, approximately $150,000 was
allocated to in-process technology and was immediately charged to operations because such in-process
technology had not reached the stage of technological feasibility at the acquisition date and had no alternative
future use. The remainder of the purchase price was allocated to net tangible liabilities assumed ($31,000) and
intangible assets, including completed technology ($500,000), customer list ($1.5 million), covenants not to
compete ($208,000) and goodwill ($24,000). The intangible assets are being amortized over their estimated
useful lives of eight to 24 months.
eBAY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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