eBay 2006 Annual Report Download - page 89

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taxable purchase transaction and, accordingly, the purchase price has been allocated to the tangible and intangible
assets acquired and liabilities assumed on the basis of their respective estimated fair values on the acquisition date.
The estimated useful economic lives of the identifiable intangible assets acquired in the Rent.com acquisition
are six years for the customer list, five years for the trade name, three years for the developed technology and the
advertising relationships, and one year for the user base.
International Classifieds Websites
During the second quarter of 2005, we announced our acquisitions of three international classifieds websites,
Gumtree.com, LoQUo, and opusforum, which operate in select international cities. These acquisitions were made
to help us expand our global network of classifieds websites and to create a more efficient place for local consumers
to come together online. The aggregate purchase price recorded for these acquisitions was approximately
$81.6 million, including approximately $1.3 million in estimated acquisition-related expenses. We accounted
for two of these acquisitions as non-taxable and one as a taxable purchase transaction and, accordingly, the purchase
price for each acquisition has been allocated to the tangible and intangible assets acquired and liabilities assumed on
the basis of their respective estimated fair values on the applicable acquisition date.
The estimated useful economic lives of the identifiable intangible assets acquired in these acquisitions are five
years for both the trade names and for the customer lists.
Shopping.com
On August 30, 2005, we acquired Shopping.com Ltd., or Shopping.com, for a purchase price of approximately
$685.3 million. We acquired all outstanding shares of Shopping.com’s common stock for $21 per share in cash
totaling approximately $634.5 million and we assumed Shopping.com’s outstanding common stock options, valued
at approximately $43.2 million. The total purchase price also includes approximately $7.6 million in estimated
acquisition-related expenses. Shopping.com is a provider of online comparison shopping and consumer reviews.
This acquisition is consistent with our strategy of growing our global online marketplaces and we believe that it will
create a premier online shopping experience for individuals and businesses of all sizes. We accounted for the
acquisition as a taxable purchase transaction and, accordingly, the purchase price has been allocated to the tangible
and intangible assets acquired and liabilities assumed on the basis of their respective estimated fair values on the
acquisition date.
The intrinsic value of Shopping.com’s unvested common stock options assumed in the acquisition totaled
approximately $16.8 million and was recorded as unearned stock-based compensation. The unearned stock-based
compensation relating to the unvested options is being amortized on an accelerated basis over the remaining vesting
period of less than one year to four years, consistent with the graded vesting approach under FASB Interpretation
No. 28.
The estimated useful economic lives of the identifiable intangible assets acquired in the Shopping.com
acquisition are four years for the customer base and five years for the trade names and the developed technology.
Skype
On October 14, 2005, we acquired all of the outstanding securities of Skype Technologies S.A. (“Skype”), for a
total initial consideration of approximately $2.6 billion, plus potential performance-based payments of up to
approximately $1.3 billion (based on the Euro-dollar exchange rate at the time of the acquisition). In addition, we
agreed to assume Skype’s stock options outstanding as of the closing date and convert them into options to acquire
approximately 1.9 million shares of our common stock. The initial consideration of approximately $2.6 billion was
comprised of approximately $1.3 billion in cash and 32.8 million shares of our common stock. For accounting
purposes, the stock portion of the initial consideration was valued at approximately $1.3 billion based on the
average closing price of our common stock surrounding the acquisition announcement date of September 12, 2005.
85
eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)