eBay 2004 Annual Report Download - page 105

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 3 Ì Business Combinations, Goodwill and Intangible Assets:
Through both domestic and international acquisitions, we have continued to expand eBay's global online
marketplace. The following table summarizes our purchase acquisitions in 2003 and 2004 with aggregate
purchase prices in excess of $30 million (in thousands):
Post IdentiÑable Deferred Aggregate
Year Acquisition Net Tangible Intangible Tax Minority Purchase
Company Name Acquired Ownership Assets/Liabilities Assets Liabilities Interest Goodwill Price
EachNet ÏÏÏÏÏÏÏÏÏ 2003 100% $12,345 $11,212 $ (3,599) $ Ì $124,932 $144,890
Internet Auction ÏÏ 2003 62% N/A 14,981 (4,449) 12,144 71,227 93,903
mobile.de ÏÏÏÏÏÏÏÏ 2004 100% 11,183 30,500 (13,115) Ì 123,885 152,453
Baazee.com ÏÏÏÏÏÏ 2004 100% 2,747 2,350 (905) Ì 46,125 50,317
Marketplaats ÏÏÏÏÏ 2004 100% (1,902) 38,500 (11,778) Ì 266,570 291,390
Internet Auction ÏÏ 2004 99.9% N/A 60,143 (17,864) 43,833 438,684 524,796
Tangible net assets were valued at their respective carrying amounts as we believe that these amounts
approximated their current fair values at the respective acquisition dates. The valuation of identiÑable
intangible assets acquired reÖects management's estimates based on, among other factors, use of established
valuation methods. Such assets consist of customer lists and user base, trademarks and trade names, developed
technologies and other acquired intangible assets including contractual agreements. IdentiÑable intangible
assets are amortized using the straight-line method over the estimated useful lives of one to eight years. We
believe the straight-line method of amortization best represents the distribution of the economic value of the
identiÑable intangible assets. Goodwill represents the excess of the purchase price over the fair value of the net
tangible and identiÑable intangible assets acquired in each business combination. The purchase price of our
acquisitions in 2003 and 2004 exceeded the estimated fair value of the related identiÑable intangible and
tangible assets because we believe these acquisitions will assist with our strategy of establishing and expanding
our global online marketplace. The following table summarizes our acquired intangible assets by type related
to the above purchase acquisitions (in thousands):
Year Customer List/ Trade Name/ Developed Other Intangible Total Acquired
Company Name Acquired User Base Trademarks Technology Assets Intangible Assets
EachNet ÏÏÏÏÏÏÏÏÏ 2003 $ 919 $ 5,381 $ 525 $4,387 $11,212
Internet AuctionÏÏÏ 2003 11,080 3,462 439 Ì 14,981
mobile.deÏÏÏÏÏÏÏÏÏ 2004 20,400 4,600 5,500 Ì 30,500
Baazee.comÏÏÏÏÏÏÏ 2004 600 150 100 1,500 2,350
MarketplaatsÏÏÏÏÏÏ 2004 Ì 37,000 1,500 Ì 38,500
Internet AuctionÏÏÏ 2004 46,510 12,239 1,394 Ì 60,143
The results of operations for periods prior to our acquisition for each acquisition during 2003 and 2004,
both individually and in the aggregate, were not material to our consolidated statement of income and,
accordingly, pro forma results of operations have not been presented.
EachNet, Inc. Acquisition
On March 17, 2002, we acquired an approximate 38% interest in the outstanding common stock of
EachNet, Inc. (""EachNet''), which was an approximate 33% interest on a fully diluted basis, in a purchase
acquisition for $30.0 million in cash. EachNet provided an online marketplace for the trading of goods and
services for both individual and business customers in the People's Republic of China. We accounted for our
investment using the equity method of accounting and the total investment, including identiÑable intangible
assets, deferred tax liabilities and goodwill, was classiÑed on our balance sheet as a long-term investment.
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