eBay 2007 Annual Report Download - page 99

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The calculation of diluted income per share excludes all anti-dilutive shares. For the years ended December 31,
2005, 2006 and 2007, the number of anti-dilutive shares, as calculated based on the average closing price of our
common stock for the period, amounted to approximately 26.7 million, 73.7 million and 83.4 million shares,
respectively.
Note 3 — Business Combinations, Goodwill and Intangible Assets:
Our purchase acquisitions in 2007, 2006 and 2005 with aggregate purchase prices in excess of $100 million
were as follows:
StubHub, Inc.
On February 13, 2007, we acquired all of the outstanding shares of StubHub, Inc. (“StubHub”) for a total
purchase price of $292.4 million. The purchase price was comprised of cash totaling $283.2 million, $1.1 million in
estimated acquisition-related expenses and the assumption of StubHub’s outstanding common stock options, valued
at approximately $8.1 million. The fair value of StubHub stock options assumed was determined using a Black-
Scholes model. StubHub is an online marketplace that facilitates the resale of event tickets and is included within
our Marketplaces segment.
We accounted for the acquisition as a taxable purchase transaction and, accordingly, the purchase price has
been allocated to the tangible assets, liabilities assumed, and identifiable intangible assets acquired based on their
estimated fair values on the acquisition date. The excess of the purchase price over the aggregate fair values was
recorded as goodwill. The fair value assigned to identifiable intangible assets acquired is determined using the
income approach, which discounts expected future cash flows to present value using estimates and assumptions
determined by management. Purchased intangible assets are amortized on a straight-line basis over the respective
useful lives. Our preliminary allocation of the purchase price is summarized below (in thousands):
Net liabilities assumed, net of cash of $25,780 ................................ $(15,663)
Goodwill ............................................................ 221,604
Trade name .......................................................... 44,400
User base ............................................................ 29,000
Developed technology................................................... 13,100
Total ............................................................. $292,441
The estimated useful economic lives of the identifiable intangible assets acquired are three years for the trade
name and developed technology and five years for the user base.
The results of operations for periods prior to our acquisition of StubHub, were not material to our consolidated
statement of income and, accordingly, pro forma results of operations have not been presented.
In 2006, we did not make any acquisitions with a total aggregate purchase price in excess of $100 million.
In 2005, we acquired Rent.com, Shopping.com, Skype and VeriSign’s payment gateway business for an
aggregate purchase price of approximately $4.1 billion, resulting in goodwill of $3.4 billion and identifiable
intangible assets of $0.6 billion.
89
eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)