eBay 2001 Annual Report Download - page 34

Minority Interests in Consolidated Companies
Percent Percent
1999 Change 2000 Change 2001
(in thousands, except percent changes)
Minority interests in consolidated
companies ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ (102) (3,102)% $3,062 145% $7,514
As a percentage of net revenue ÏÏÏÏÏÏÏÏÏ 0% 1% 1%
Minority interests in consolidated companies represents the minority investor's percentage share of
income or losses from subsidiaries in which we hold a majority ownership interest and consolidate the
subsidiaries results in our Ñnancial statements.
For the periods presented, third parties held minority interests in Billpoint, Internet Auction and eBay
Japan. The successive year over year increases from 1999 to 2001, are primarily a result of consolidated,
but not wholly owned operations that produced net losses. In February 2001, we acquired a majority
interest in Internet Auction, a South Korean company. In July 2001, we purchased the outstanding 30%
interest in eBay Japan that we did not already own for approximately $1.7 million. In January 2002, we
purchased the outstanding 35% interest in Billpoint that we did not already own for $43.5 million (subject
to an upward adjustment upon the occurrence, if any, of certain events). See ""Note 17 Ì Subsequent
Events.'' We expect that minority interests in consolidated companies, in aggregate, will continue to
Öuctuate in future periods. If the consolidated subsidiaries continue to be unproÑtable, the minority
interests adjustment on the statement of income will continue to increase our net income by the minority
investor's share of the subsidiaries' net losses. If our less than wholly owned consolidated subsidiaries
become proÑtable, the minority interests adjustment will decrease our net income by the minority
investor's share of the subsidiaries' net income.
Liquidity and Capital Resources
Cash Flows
Since inception, we have Ñnanced operations primarily from net cash generated from operating
activities. In addition, we obtained additional Ñnancing from the sale of preferred stock and warrants,
proceeds from the exercise of those warrants, proceeds from the exercise of stock options and proceeds
from our initial and follow-on public oÅerings. During 2001, we were primarily Ñnanced by our income
from operations and from the proceeds of stock option exercises.
Net cash provided by operating activities was $62.9 million in 1999, $100.1 million in 2000, and
$252.1 million in 2001. Net cash provided by operating activities resulted primarily from our net income,
non-cash charges for depreciation and amortization, tax beneÑts on the exercise of stock options, other
non-cash charges and were partially oÅset by changes in assets and liabilities.
Net cash used in investing activities was $603.4 million in 1999, $206.1 million in 2000, and
$29.8 million in 2001. The primary use for invested cash in the periods presented was for purchases of
property and equipment, purchases of investments, net of maturities and acquisitions.
Net cash provided by Ñnancing activities was $725.0 million in 1999, $86.0 million in 2000, and
$101.5 million in 2001. In 1999, net cash provided by Ñnancing activities was primarily due to our
follow-on public oÅering. In 2000 and 2001, net cash provided by Ñnancing activities was primarily due to
the issuance of common stock associated with stock option exercises.
Commitments and Contingencies
We had no material commitments for capital expenditures at December 31, 2001, but expect such
expenditures to approximate $95 million during 2002, without taking into account any acquisitions. Of the
$95 million, approximately $22 million has been allocated for capital expenditures relating to hardware and
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