eBay 1998 Annual Report Download - page 73

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eBAY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
73
Under SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences of
differences between the carrying amounts of assets and liabilities and their respective tax bases using enacted tax
rates in effect for the year in which the differences are expected to reverse. Significant deferred tax assets and
liabilities consist of the following, (in thousands):
December 31,
1996 1997 1998
Deferred tax assets:
Depreciation .......................................................................................................... $ — $ — $ 61
State income taxes................................................................................................. — — 43
Amortization.......................................................................................................... — — 17
— — 121
Deferred tax liabilities:
Accruals and reserves not currently deductible ..................................................... 54 154 1,724
Depreciation .......................................................................................................... 1 3 —
55 157 1,724
Valuation allowance...................................................................................................... — — —
Net deferred tax liabilities ............................................................................................. $55 $157 $1,603
Note 8—Preferred Stock and Convertible Preferred Stock:
Preferred Stock
The Company is authorized, subject to limitations prescribed by Delaware law, to provide for the issuance of
Preferred Stock in one or more series, to establish from time to time the number of shares included within each
series, to fix the rights, preferences and privileges of the shares of each wholly unissued series and any
qualifications, limitations or restrictions thereon, and to increase or decrease the number of shares of any such series
(but not below the number of shares of such series then outstanding) without any further vote or action by the
stockholders. At December 31, 1998, there were 5,000,000 shares of Preferred Stock authorized for issuance, and no
shares issued or outstanding.
Convertible Preferred Stock
Convertible Preferred Stock prior to the initial public offering at September 24, 1998 was composed of the
following, (in thousands):
Shares Liquidation Redemption
Authorized Outstanding Amount Amount
Series A ...................................................................................... . 1,676 1,676 $ 1,000 $ —
Series B ....................................................................................... 1,415 1,415 6,300 5,093
Undesignated............................................................................... 2,909 — — —
6,000 3,091 $ 7,300 $5,093
On September 24, 1998, the Company completed its initial public offering of Common Stock. At that time, all
issued and outstanding shares of the Company’ s Series A and Series B Convertible Preferred Stock were converted
into an aggregate of 27,827,019 shares of Common Stock.