eBay 2004 Annual Report Download - page 38

IndemniÑcation Provisions
In the ordinary course of business we have included limited indemniÑcation provisions in certain of our
agreements with parties with whom we have commercial relations, including our standard marketing,
promotions and application-programming-interface license agreements. Under these contracts, we generally
indemnify, hold harmless, and agree to reimburse the indemniÑed party for losses suÅered or incurred by the
indemniÑed party in connection with claims by any third party with respect to our domain names, trademarks,
logos and other branding elements to the extent that such marks are applicable to our performance under the
subject agreement. In a limited number of agreements, including agreements under which we have developed
technology for certain commercial parties, we have provided an indemnity for other types of third-party
claims, substantially all of which are indemnities related to our copyrights, trademarks, and patents. To date,
no signiÑcant costs have been incurred, either individually or collectively, in connection with our indemniÑca-
tion provisions.
Subsequent Events
On February 23, 2005, we acquired all outstanding securities of Rent.com for approximately $415 million
plus our acquisition costs, net of Rent.com's cash on hand. Rent.com is a leading Internet listing website in the
apartment and rental housing industry.
In January 2005, our Board of Directors approved a two-for-one split of our shares of common stock to be
issued in the form of a stock dividend. As a result of the stock split, our stockholders received one additional
share of our common stock for each share of common stock held of record on January 31, 2005. The additional
shares of our common stock were distributed on February 16, 2005. All share and per share amounts in this
Management's Discussion and Analysis of Financial Condition and Results of Operations have been
retroactively adjusted to reÖect the stock split for all periods presented.
Critical Accounting Policies, Judgments and Estimates
General
The preparation of our consolidated Ñnancial statements and related notes requires us to make judgments,
estimates and assumptions that aÅect the reported amounts of assets, liabilities, revenue and expenses, and
related disclosure of contingent assets and liabilities. We have based our estimates on historical experience and
on various other assumptions that are believed to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Our senior management has discussed the development, selection and disclosure
of these estimates with the Audit Committee of our Board of Directors. Actual results may diÅer from these
estimates under diÅerent assumptions or conditions.
An accounting policy is considered to be critical if it requires an accounting estimate to be made based on
assumptions about matters that are highly uncertain at the time the estimate is made, and if diÅerent
estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably
likely to occur periodically, could materially impact the consolidated Ñnancial statements. We believe the
following critical accounting policies reÖect the more signiÑcant estimates and assumptions used in the
preparation of the consolidated Ñnancial statements. The following descriptions of critical accounting policies,
judgments and estimates should be read in conjunction with our consolidated Ñnancial statements and other
disclosures included in this report.
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