eBay 1998 Annual Report Download - page 65

eBAY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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available-for-sale securities and are carried at amortized cost, which approximates fair value. The following
schedule summarizes the estimated fair value of the Company’ s cash, cash equivalents and short-term investments,
(in thousands):
December 31,
1997 1998
Cash and cash equivalents:
Cash........................................................................................................................... $ 676 $ 6,397
Money market funds.................................................................................................. 3,047 2,828
Municipal bonds and notes........................................................................................ — 19,555
Corporate securities................................................................................................... — 3,010
$ 3,723 $31,790
Short-term investments:
Municipal bonds and notes........................................................................................ $ — $40,401
The estimated fair value of short-term investments classified by date of contractual maturity is as follows, (in
thousands):
December 31,
1997 1998
Due within one year or less ................................................................................................ $ — $12,287
Due after one year through two years................................................................................. — 28,114
$ — $40,401
Concentration of credit risk
Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash
equivalents, short-term investments and accounts receivable. Cash, cash equivalents and short-term investments are
deposited with high credit, quality financial institutions. The Company’ s accounts receivable are derived from
revenue earned from customers located in the U.S. and throughout the world and are denominated in U.S. dollars.
Accounts receivable balances are typically settled through customer credit cards and, as a result, the majority of
accounts receivable are collected upon processing of credit card transactions. The Company maintains an allowance
for doubtful accounts receivable based upon the expected collectibility of accounts receivable. During the years
ended December 31, 1997 and 1998, no customers accounted for more than 10% of net revenues or net accounts
receivable.
Fair value of financial instruments
The Company’ s financial instruments, including cash, cash equivalents, short-term investments, accounts
receivable, accounts payable and capital lease obligations are carried at cost, which approximates their fair value
because of the short-term maturity of these instruments.
Property and equipment
Property and equipment are stated at historical cost. Depreciation and amortization are computed using the
straight-line method over the estimated useful lives of the assets, generally five years or less, or the shorter of the
lease term or the estimated useful lives of the assets, if applicable.
Intangible assets
Goodwill and other intangible assets resulting from the acquisition of Jump Incorporated (“Jump”) were
estimated by management to be primarily associated with the acquired customer list, workforce and technological
know how. As a result of the rapid technological changes occurring in the Internet industry and the intense