eBay 2000 Annual Report Download - page 69

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
for employer payroll taxes on stock-based compensation under Accounting Principles Board Opinion No. 25,
""Accounting for Stock Issued to Employees,'' and SFAS No. 123, ""Accounting for Stock-Based Compensa-
tion.'' This Issue addresses eBay's timing for recognizing the payroll tax liability and requires that this liability
be recognized when the tax obligation becomes due and payable. eBay adopted EITF 00-16 eÅective July 31,
2000 and such adoption did not have a material impact on its consolidated Ñnancial statements.
Note 2 Ì Net Income per Share:
eBay computes net income per share in accordance with SFAS No. 128, ""Earnings per Share.'' Under
the provisions of SFAS No. 128, basic net income per share is computed by dividing the net income available
to common stockholders for the period by the weighted average number of common shares outstanding during
the period. Diluted net income per share is computed by dividing the net income for the period by the
weighted average number of common and common equivalent shares outstanding during the period. Common
equivalent shares, composed of unvested, restricted common stock and incremental common shares issuable
upon the exercise of stock options and warrants and upon conversion of Series A and Series B Convertible
Preferred Stock, are included in diluted net income per share to the extent such shares are dilutive.
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,
1998 1999 2000
Numerator:
Net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 7,273 $ 9,567 $ 48,294
Accretion of Series B Mandatorily Redeemable
Convertible Preferred Stock to redemption value ÏÏÏÏÏ (46) Ì Ì
Net income available to common stockholders ÏÏÏÏÏÏÏÏÏ $ 7,227 $ 9,567 $ 48,294
Denominator:
Weighted average shares ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 183,284 255,806 266,826
Weighted average unvested common shares subject to
repurchase agreements ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (79,156) (38,132) (15,050)
Denominator for basic calculationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 104,128 217,674 251,776
Weighted average eÅect of dilutive securities:
Series A Preferred Stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 22,074 Ì Ì
Series B Preferred Stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 16,108 Ì Ì
Warrants ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,197 7 93
Weighted average common shares subject to
repurchase agreements ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 79,156 38,132 15,050
Employee stock options ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,856 17,220 13,427
Denominator for diluted calculation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 233,519 273,033 280,346
Net income per share:
BasicÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.07 $ 0.04 $ 0.19
Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.03 $ 0.04 $ 0.17
Note 3 Ì Acquisitions:
Jump Incorporated
EÅective June 30, 1998, eBay acquired all the outstanding shares of Jump Incorporated (""Jump''), an
online personal trading community. The total purchase price of approximately $2.3 million consisted of
64