eBay 2009 Annual Report Download - page 107

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
income or loss of Skype will be recognized on a quarter lag as a component of interest and other income, net in
our consolidated statement of income. Additional terms of our investment include the following:
• We purchased senior debt securities with a face value of $50.0 million as part of a Skype debt
financing.
• We entered into certain ancillary agreements, including agreements relating to intellectual property
cross-licenses, management services, transitional services and office space, and tax cooperation.
• Skype entered into a new commercial agreement with an affiliate of PayPal.
The sale resulted in the removal of all Skype related assets and liabilities, which offset the proceeds noted
above resulting in a net gain of $1.4 billion recorded in interest and other income, net in our consolidated
statement of income. Approximately $110.3 million of the gain is related to the remeasurement of our 30 percent
retained interest to its fair value. Furthermore, $528.4 million of the gain is related to realized foreign currency
translation reclassified from other comprehensive income.
In conjunction with the sale of Skype, we reached a legal settlement of a lawsuit between Skype, Joltid and
entities controlled by Joltid’s founders resulting in a $343.2 million charge to general and administrative
expense. The liability reduced our basis in Skype. As a part of the settlement agreement the parties agreed,
among other things, to transfer to the Skype Companies all software previously licensed from Joltid and to end
all currently pending litigation by Joltid against eBay and the members of the investor group upon completion of
the sale of Skype.
As of December 31, 2009, approximately $153.9 million was recorded in other assets for amounts due from
Skype related to the subordinated note and the senior debt security noted above.
Mr. Marc L. Andreessen, a member of the board of directors of eBay, is a general partner of Andreessen
Horowitz, which owns less than 5% of the Buyer.
Note 5—Goodwill and Intangible Assets:
Goodwill
Goodwill information for each reportable segment is as follows (in thousands):
Marketplaces Payments Communications Total
Goodwill at January 1, 2009 .................... $3,053,139 $2,163,057 $ 3,227,500 $ 8,443,696
Accumulated impairment losses ................. — — (1,390,938) (1,390,938)
3,053,139 2,163,057 1,836,562 7,052,758
Goodwill acquired ............................ 797,946 — 797,946
Adjustments ................................. 162,821 (6,516) 124,991 281,296
Goodwill disposed ............................ — — (1,961,553) (1,961,553)
4,013,906 2,156,541 — 6,170,447
Accumulated impairment losses ................. — — — —
Goodwill at December 31, 2009 ................. $4,013,906 $2,156,541 $ — $ 6,170,447
Investments accounted for under the equity method of accounting are classified on our balance sheet as
long-term investments. Such investments include any related identifiable intangible assets, deferred tax liabilities
and goodwill. Goodwill related to our equity method investments, included in the table above, was approximately
$27.4 million as of December 31, 2008 and 2009.
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