eBay 2000 Annual Report Download - page 53

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Equity Price Risk
We are exposed to equity price risk on the marketable portion of equity investments as such investments
we hold, typically as the result of strategic investments in strategic partners are subject to considerable market
risk due to their volatility. We typically do not attempt to reduce or eliminate our market exposure in these
equity investments. As of December 31, 2000, the position in equity investments included a net unrealized loss
of $1.6 million, net of tax.
Foreign Currency Risk
International sales are made mostly from our sales in the respective countries by our foreign subsidiaries
and are typically denominated in the local currency of each country. These subsidiaries also incur most of their
expenses in the local currency. Accordingly, all foreign subsidiaries use the local currency as their functional
currency. Our international business is subject to risks typical of an international business, including, but not
limited to diÅering economic conditions, changes in political climate, diÅering tax structures, other regulations
and restrictions, and foreign exchange rate volatility. Accordingly, our future results could be materially
adversely impacted by changes in these or other factors. These Ñnancial statements are typically denominated
in the functional currency of the foreign subsidiary in order to centralize foreign exchange risk with the parent
company in the United States. We are also exposed to foreign exchange rate Öuctuations as the Ñnancial
results of foreign subsidiaries are translated into U.S. dollars in consolidation. As exchange rates vary, these
results, when translated, may vary from expectations and adversely impact overall expected proÑtability. The
eÅect of foreign exchange rate Öuctuations on eBay as of December 31, 2000 was a translation gain of
approximately $745,000.
Item 8: Financial Statements and Supplementary Data
Annual Financial Statements: See Part IV, Item 14 of this Form 10-K.
Item 9: Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None.
48