eBay 2011 Annual Report Download - page 116

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Our financial assets and liabilities are valued using market prices on both active markets (level 1) and less active markets (level 2). Level 1
instrument valuations are obtained from real-
time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument
valuations are obtained from readily available pricing sources for comparable instruments or identical instruments in less active markets. Our
derivative instruments are valued using pricing models that take into account the contract terms as well as multiple inputs where applicable, such
as equity prices, interest rate yield curves, option volatility and currency rates. Our derivative instruments are short-term in nature, typically one
month to one year in duration. Cash and cash equivalents and short-term, highly liquid investments with original or remaining maturities of three
months or less when purchased are mainly comprised of bank deposits and money market funds.
In addition to the long-term investments noted above, we had approximately $189.9 million and $729.4 million of cost and equity method
investments included in long-term investments on our consolidated balance sheet at December 31, 2011 and 2010 , respectively.
As of December 31, 2011 , we held no direct investments in auction rate securities, collateralized debt obligations, structured investment
vehicles or mortgage-backed securities.
In Europe, we have two cash pooling arrangements with a financial institution for cash management purposes. These arrangements allow for
cash withdrawals from this financial institution based upon our aggregate operating cash balances held in Europe within the same financial
institution (“Aggregate Cash Deposits”). These arrangements also allow us to withdraw amounts exceeding the Aggregate Cash Deposits up to an
agreed-upon limit. The net balance of the withdrawals and the Aggregate Cash Deposits are used by the financial institution as a basis for
calculating our net interest expense or income. As of December 31, 2011 , we had a total of $4.9 billion in cash withdrawals offsetting our $4.9
billion in Aggregate Cash Deposits held within the same financial institution under these cash pooling arrangements.
Other financial instruments, including accounts receivable, loans and interest receivable, funds receivable, customer accounts, short-term
debt, accounts payable, funds payable and amounts due to customers are carried at cost, which approximates their fair value because of the short-
term nature of these instruments.
F-24
Description
Balance as of
December 31, 2010
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
(In thousands)
Assets:
Cash and cash equivalents
$
5,577,411
$
5,577,411
$
—
Short-term investments:
Restricted cash
20,351
20,351
—
Corporate debt securities
372,225
—
372,225
Government and agency securities
66,534
—
66,534
Time deposits
44,772
—
44,772
Equity instruments
541,521
541,521
—
Total short-term investments
1,045,403
561,872
483,531
Derivatives
37,196
—
37,196
Long-term investments:
Restricted cash
1,332
1,332
—
Corporate debt securities
1,605,770
—
1,605,770
Government and agency securities
150,966
—
150,966
Total long-term investments
1,758,068
1,332
1,756,736
Total financial assets
$
8,418,078
$
6,140,615
$
2,277,463
Liabilities:
Derivatives
$
4,963
$
—
$
4,963