eBay 2001 Annual Report Download - page 79

Download and view the complete annual report

Please find page 79 of the 2001 eBay annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 101

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (CONTINUED)
$2.3 million in cash to certain shareholders and incurred acquisition-related costs of approximately
$2.9 million. The shares issued in the acquisition were valued on May 18, 2001, the Ñrst date on which the
number of eBay's shares and the amount of other consideration became Ñxed, using the average closing
price of eBay shares for the Ñve days prior to and including the closing date of May 18, 2001. The
aggregate purchase price of approximately $125.6 million has been allocated to the net tangible and
identiÑable intangible assets acquired and liabilities assumed on the basis of their estimated fair values on
the acquisition date.
Tangible assets were valued at their respective carrying amounts as we believe that these amounts
approximate their current fair values. The valuation of the identiÑable intangible assets acquired was based
on management's estimates using a valuation report prepared by an independent third-party valuation
consultant and consists of customer base, assembled workforce, developed technology and trade names.
IdentiÑable intangible assets are amortized using estimated useful lives ranging from two to Ñve years. We
also identiÑed certain assets as held for sale and valued these assets based on the expected sale proceeds
adjusted for losses expected to be incurred during the holding period.
We have established plans to exit certain activities of iBazar and to involuntarily terminate certain
iBazar employees. In accordance with this exit plan included in our purchase accounting, approximately
$2.0 million has been accrued for the estimated costs associated with severance, contract terminations and
Ñnancial advisory and legal fees and has been included in net tangible assets. As of December 31, 2001,
$1.4 million has been charged against this liability.
The excess of the purchase price over the fair value of the identiÑable net assets acquired of
$119.6 million has been recorded as goodwill and is being amortized over a Ñve-year useful life. See
""Note 1 Ì The Company and Summary of SigniÑcant Accounting Policies, Recent Accounting
Pronouncements.''
The aggregate purchase price was allocated as follows (in thousands):
Net tangible assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 4,696
IdentiÑable intangible assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,140
Deferred tax liabilityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (856)
GoodwillÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 119,606
Aggregate purchase price ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $125,586
In September 2001, we entered into a strategic business relationship with MercadoLibre, a leading
online auction site serving Latin America. In exchange for our equity interest in iBazar Com Ltda, a
Brazilian subsidiary of iBazar, we received a 19.5% ownership interest in MercadoLibre. We accounted for
this investment in MercadoLibre using the cost method, and no gain or loss was recognized on the
exchange.
Pro forma Ñnancial information
The following unaudited pro forma Ñnancial information presents the combined results of eBay,
Internet Auction and iBazar as if the acquisitions had occurred as of the beginning of 2000 and 2001,
75