eBay 2006 Annual Report Download - page 88

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Note 3 — Business Combinations, Goodwill and Intangible Assets:
Through both domestic and international acquisitions, we have continued to expand our business. The
following table summarizes our purchase acquisitions in 2005 and 2006 with aggregate purchase prices in excess of
$50 million (in thousands, except percentages):
Company Name
Year
Acquired
Net
Tangible
Assets/
(Liabilities)
Identifiable
Intangible
Assets
Deferred
Tax
Liabilities
Unearned
Stock-Based
Compensation Goodwill
Aggregate
Purchase
Price
Rent.com ........... 2005 $ 18,050 $ 61,800 $(24,924) $ — $ 380,439 $ 435,365
International classified
websites .......... 2005 (201) 13,800 (3,786) — 71,771 81,584
Shopping.com........ 2005 145,898 133,600 (29,683) 16,759 418,711 685,285
Skype.............. 2005 (1,610) 280,300 (71,474) 55,249 2,330,961 2,593,426
Verisign’s Payment
Gateway Business . . . 2005 (8,804) 106,600 — — 275,989 373,785
Tradera.com ......... 2006 2,949 6,200 — — 43,120 52,269
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 identifiable intangible
assets acquired reflects 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. Identifiable intangible assets are amortized
over the period of estimated benefit using the straight-line method and the estimated useful lives of one to eight
years. We believe the straight-line method of amortization represents our best estimate of the distribution of the
economic value of the identifiable intangible assets. Goodwill represents the excess of the purchase price over the
fair value of the net tangible and identifiable intangible assets acquired in each business combination. The following
table summarizes our acquired intangible assets by type related to the above purchase acquisitions (in thousands):
Company Name
Year
Acquired
Customer
List/
User Base
Trade
name/
Trademarks
Developed
Technologies
Other
Intangible
Assets
Total
Acquired
Intangible
Assets
Rent.com ........................ 2005 $34,500 $ 18,000 $ 8,200 $1,100 $ 61,800
International classified websites . . ..... 2005 2,600 11,200 — — 13,800
Shopping.com .................... 2005 73,600 38,700 21,300 — 133,600
Skype........................... 2005 27,700 243,800 8,000 800 280,300
Verisign’s Payment Gateway Business . . . 2005 86,700 400 19,500 — 106,600
Tradera.com ...................... 2006 4,600 1,000 600 — 6,200
The results of operations for periods prior to our acquisition for each acquisition during 2004, 2005 and 2006,
both individually and in the aggregate, except for Skype, were not material to our consolidated statement of income
and, accordingly, pro forma results of operations have not been presented.
Rent.com
On February 23, 2005, we acquired Viva Group, Inc., which does business under the name Rent.com, for a cash
purchase price of approximately $415 million plus payments for net cash and investments of approximately
$18 million. Rent.com is an Internet listing website in the apartment and rental housing industry. The acquisition
better enables our expansion into the online real estate market and is consistent with our strategy of growing our
global online marketplaces. The total purchase price recorded was approximately $435 million, including
approximately $2 million in estimated acquisition-related expenses. We accounted for the acquisition as a non-
84
eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)