eBay 2004 Annual Report Download - page 69

foreign currency cash Öow exposure. To reduce foreign exchange risk relating to these forecasted inter-
company transactions, we entered into forward foreign exchange contacts during the year ended December 31,
2004. The objective of the forward contracts is to ensure that the U.S. dollar-equivalent cash Öows are not
adversely aÅected by changes in the U.S. dollar/Euro exchange rate. Pursuant to Statement of Financial
Accounting Standards No. 133 ""Accounting for Derivative Instruments and Hedging Activities'' (FAS 133),
we expect the hedge of these forecasted transactions to be highly eÅective in oÅsetting potential changes in
cash Öows attributed to a change in the U.S. dollar/Euro exchange rate. Accordingly, we record as a
component of other comprehensive income all unrealized gains and losses related to the forward contracts that
receive hedge accounting treatment. We record all unrealized gains and losses in interest and other income,
net, related to the forward contracts that do not receive hedge accounting treatment pursuant to FAS 133.
There were no outstanding forward contracts that receive hedge accounting treatment at December 31, 2004.
The following table shows the notional amount of our economic hedges entered into in 2004, together with the
associated losses, net of gains, recorded in our consolidated statement of income for the year ended
December 31, 2004, and the amounts included in accumulated other comprehensive income at December 31,
2004:
Accumulated
Net Loss Recorded Other
Notional to Interest and Comprehensive
Amount Other Income, Net Income
(In thousands)
Amount receiving hedge accounting treatment
under FAS 133ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $140,196 $(3,357) $Ì
Amount not receiving hedge accounting treatment
under FAS 133ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 30,772 (333) Ì
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $170,968 $(3,690) $Ì
No economic hedges were entered into during the year ended December 31, 2003.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Annual Financial Statements and Selected Quarterly Financial Data: The consolidated financial
statements and accompanying notes listed in Part IV, Item 15(a)(1) of this Annual Report on Form 10-K are
included elsewhere in this Annual Report.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. Based on the evaluation of our disclosure
controls and procedures (as deÑned in the Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of 1934, as amended (the ""Exchange Act'')) required by Exchange Act Rules 13a-15(b) or 15d-15(b), our
Chief Executive OÇcer and our Chief Financial OÇcer have concluded that as of the end of the period
covered by this report, our disclosure controls and procedures were eÅective.
(b) Changes in internal controls. There were no changes in our internal controls over Ñnancial
reporting that occurred during our most recent Ñscal quarter that have materially aÅected, or are reasonably
likely to materially aÅect, our internal control over Ñnancial reporting.
(c) Management's Report on Internal Control Over Financial Reporting. Our management is responsi-
ble for establishing and maintaining adequate internal control over Ñnancial reporting, as such term is deÑned
in Exchange Act Rules 13a-15(f). Our management, including our principal executive oÇcer and principal
Ñnancial oÇcer, conducted an evaluation of the eÅectiveness of our internal control over Ñnancial reporting
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