eBay 2001 Annual Report Download - page 59

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Our international business is subject to risks typical of an international business, including, but not limited
to diÅering economic conditions, changes in political climate, diÅering tax structures, other regulations and
restrictions and foreign exchange rate volatility. Accordingly, our future results could be materially
adversely impacted by changes in these or other factors. These Ñnancial statements are typically
denominated in the functional currency of the foreign subsidiary in order to centralize foreign exchange
risk with the parent company. We are also exposed to foreign exchange rate Öuctuations as the Ñnancial
results of foreign subsidiaries are translated into U.S. dollars in preparing our consolidated Ñnancial
statements. As exchange rates vary, these results, when translated, may vary from expectations and
adversely impact overall expected proÑtability. The eÅect of foreign exchange rate Öuctuations on eBay for
the year ended December 31, 2001, was a translation loss of approximately $5.8 million. This loss is
recognized as an adjustment to stockholders' equity through other comprehensive income.
As of December 31, 2001, we had one outstanding forward foreign exchange contract to purchase
Euros equivalent to $17.7 million with a maturity date of April 2, 2002. The forward contract is used as an
economic hedge of a liability denominated in Euros. Transaction gains and losses on the contract and the
hedged liability are recognized each period in the statement of income and generally oÅset one another. As
of December 31, 2001, the fair value of the forward contract was immaterial.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Annual Financial Statements: See Part IV, Item 14(a)(1) of this Annual Report on Form 10-K.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
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