eBay 2001 Annual Report Download - page 97

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (CONTINUED)
in eÅect for the year in which the diÅerences are expected to reverse. SigniÑcant deferred tax assets and
liabilities consist of the following (in thousands):
December 31,
2000 2001
Deferred tax assets:
Net operating loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 103,628 $ 129,211
Accruals and allowances ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,819 21,405
Depreciation and amortization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10,313 11,381
Net unrealized lossesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,080 2,372
Net deferred tax assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 124,840 164,369
Valuation allowanceÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (101,586) (129,212)
23,254 35,157
Deferred tax liabilities:
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì (3,629)
$ 23,254 $ 31,528
As of December 31, 2001, our federal and state net operating loss carryforwards for income tax
purposes were approximately $345.1 million and $149.8 million, respectively. If not utilized, the federal net
operating loss carryforwards will begin to expire in 2019, and the state net operating loss carryforwards will
begin to expire in 2004. Deferred tax assets on net operating losses of approximately $129.2 million at
December 31, 2001 pertain primarily to certain net operating loss carryforwards resulting from the exercise
of employee stock options of $122.0 million and the remainder relates to losses at certain subsidiaries. We
have a full valuation allowance against these amounts at December 31, 2001 due to the impact that
uncertainties associated with our future stock price and timing of employee stock option exercises have on
the likelihood that we will realize future beneÑts from these amounts. To the extent that we generate
taxable income in future years, we will have the ability, subject to carryforward limitations, to beneÑt from
these amounts. When recognized, the tax beneÑt of tax deductions related to stock options are accounted
for as a credit to additional paid-in-capital rather than a reduction of the income tax provision.
Note 17 Ì Subsequent Events-Unaudited:
In January 2002, we purchased the 35% interest in Billpoint held by Wells Fargo Bank for
approximately $43.5 million in cash, subject to an upward adjustment upon the occurrence, if any, of
certain events. This acquisition increased our ownership of Billpoint to a 100% interest and will be
accounted for using the purchase method of accounting. The aggregate purchase price will be allocated to
tangible and identiÑable intangible assets acquired and liabilities assumed based on estimates of fair value.
Although we have not Ñnalized our basis for allocating the purchase price, it is expected that a substantial
portion of the purchase price will be accounted for as goodwill. See ""Note 1 Ì The Company and
Summary of SigniÑcant Accounting Policies, Recent Accounting Pronouncements.''
In February 2002, we signed a deÑnitive agreement to purchase 100% of NeoCom Technology Co.,
Ltd. for cash totaling $9.5 million, subject to certain working capital adjustments. NeoCom provides an
online Chinese language marketplace for the trading of goods and services for both individual and business
customers in Taiwan. NeoCom's corporate oÇce is located in Taipei, Taiwan and the acquisition is
expected to close in April 2002.
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