eBay 2004 Annual Report Download - page 96

Download and view the complete annual report

Please find page 96 of the 2004 eBay annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 134

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Ì The Company and Summary of SigniÑcant Accounting Policies:
The Company
eBay Inc. (""eBay'') was incorporated in California in May 1996, and reincorporated in Delaware in April
1998. As of December 31, 2004, through our wholly-owned and majority-owned subsidiaries and aÇliates, we
had websites directed toward the United States, Australia, Austria, Belgium, Canada, China, France,
Germany, Hong Kong, India, Ireland, Italy, Malaysia, the Netherlands, New Zealand, the Philippines,
Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan and the United Kingdom. We pioneered online
trading by developing an Internet-based community in which buyers and sellers are brought together to buy
and sell almost anything. The eBay online service permits sellers to list items for sale, buyers to bid on items of
interest, and all eBay users to browse through listed items in a fully-automated, topically-arranged service that
is available online seven days a week. Through our PayPal service, we enable any business or consumer with
email in 45 countries to send, and in 44 countries to receive online payments. As of December 31, 2004,
through its wholly-owned subsidiaries, PayPal had websites directed towards the United States, Austria,
Belgium, France, Germany, the Netherlands, Switzerland and the United Kingdom.
On October 3, 2002, we completed our acquisition of PayPal, Inc. (""PayPal'') in a tax-free, stock-for-
stock transaction. PayPal provides an online global payments platform and is headquartered in San Jose,
California. The PayPal Ñnancial statements are included in our consolidated Ñnancial statements from
October 4, 2002.
When we refer to ""we,'' ""our,'' ""us'' or ""eBay'' in this document, we mean the current Delaware
corporation (eBay Inc.) and its California predecessor, as well as all of our consolidated subsidiaries.
Stock split
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 these
consolidated Ñnancial statements and related notes have been retroactively adjusted to reÖect this and all prior
stock splits for all periods presented.
Use of estimates
The preparation of consolidated Ñnancial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that aÅect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated Ñnancial
statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing
basis, we evaluate our estimates, including those related to provisions for doubtful accounts and authorized
credits, the provision for transaction losses, legal contingencies, income taxes, advertising and other non-
transaction revenues, and goodwill and intangible assets. We base our estimates on historical experience and
on various other assumptions that are believed to be reasonable under the circumstances. Actual results could
diÅer from those estimates.
Principles of consolidation and basis of presentation
The accompanying Ñnancial statements are consolidated and include the Ñnancial statements of eBay and
our majority-owned subsidiaries. All signiÑcant intercompany balances and transactions have been eliminated
in consolidation.
94