eBay 2004 Annual Report Download - page 118

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Approximately $122.5 million of the 2005 obligation payable represents the payment to the lessor, which
excludes the $3.9 million in relation to the non-controlling minority interest, for the corporate headquarters in
San Jose, California. The future lease payments through March 2005 under this lease arrangement are
included within our obligations under operating leases. See ""Note 9 Ì Operating Lease Arrangements'' of
these consolidated Ñnancial statements.
Lease payments related to our corporate headquarters in San Jose, California are estimated based on
market interest rates (LIBOR) at December 31, 2004, adjusted to reÖect our two interest rate swaps and
certain collateral assumptions. We entered into two interest rate swaps on June 19, 2000 and July 20, 2000 to
reduce the impact of changes in interest rates on a portion of the Öoating rate operating lease for this facility.
The interest swap will mature in March 2005. See ""Note 6 Ì Derivative Instruments'' of these consolidated
Ñnancial statements.
Note 9 Ì Operating Lease Arrangements:
We also have lease obligations under certain other non-cancelable operating leases. Future minimum
rental payments under our non-cancelable operating leases, at December 31, 2004, are as follows (in
thousands):
Operating
Year Ending December 31, Leases
2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $19,987
2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 15,522
2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11,238
2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,371
2009 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7,435
Thereafter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 26,634
Total minimum lease payments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $90,187
Rent expense in the years ended December 31, 2002, 2003 and 2004, totaled $3.6 million, $8.6 million,
and $7.7 million, excluding payments under our consolidated facilities lease, respectively.
Note 10 Ì Commitments and Contingencies:
Litigation and Other Legal Matters
In April 2001, two of our European subsidiaries, eBay GmbH and eBay International AG, were sued by
Montres Rolex S.A. and certain of its aÇliates in the regional court of Cologne, Germany. The suit
subsequently was transferred to the regional court in Dusseldorf, Germany. Rolex alleged that our subsidiaries
were infringing Rolex's trademarks as a result of users selling counterfeit Rolex watches through our German
website. The suit also alleged unfair competition. Rolex sought an order enjoining the sale of Rolex-branded
watches on the website as well as damages. In December 2002, a trial was held in the matter and the court
ruled in favor of eBay on all causes of action. Rolex appealed the ruling to the Higher Regional Court of
Dusseldorf, and the appeal was heard in October 2003. In February 2004, the court rejected Rolex's appeal
and ruled in our favor. Rolex has appealed the ruling to the German Federal Supreme Court. In March 2004,
the German Federal Supreme Court ruled in favor of Rolex in a case involving an unrelated company,
ricardo.de AG, but somewhat comparable legal theories. The court issued its written decision in that case in
September 2004. Although it is not yet clear what eÅect the reasoning of the German Federal Supreme
Court's ricardo.de decision would have when applied to eBay, we believe the Court's decision will likely not
require any signiÑcant change in our business practices.
116