eBay 2002 Annual Report Download - page 111

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (CONTINUED)
value of the identiÑable intangible assets. Goodwill represents the excess of the purchase price over the fair
value of the net tangible and identiÑable intangible assets acquired in each business combination. In
accordance with SFAS No. 142, goodwill is no longer subject to amortization. Rather, goodwill is subject
to at least an annual assessment for impairment, applying a fair-value based test. See ""Note 1 Ì The
Company and Summary of SigniÑcant Accounting Policies.''
We account for our investment in EachNet using the equity method of accounting and the total
investment, including identiÑable intangible assets, deferred tax liabilities and goodwill, is classiÑed on our
balance sheet as a long-term investment.
The following table presents details of the purchased intangible assets acquired during 2002 (in
thousands, except number of years):
Estimated Estimated Estimated
Acquisition Developed Useful Life Customer Useful Life Trade Useful Life
Company Name Date Technologies (in years) Lists (in years) Names (in years)
Billpoint ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ January 2002 $ 1,750 3 $ Ì Ì $ Ì Ì
EachNet ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ March 2002 228 2 266 4 1,786 4
NeoCom ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ April 2002 78 2 87 4 Ì Ì
PayPal ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ October 2002 16,500 3 196,900 7 63,600 7
eBay Australia and New Zealand ÏÏÏÏ October 2002 Ì Ì 4,650 4 Ì Ì
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $18,556 $201,903 $65,386
Billpoint
On May 25, 1999, eBay acquired a 100% interest in Billpoint, Inc. a leading provider of billing and
payment fulÑllment services. On February 24, 2000, Billpoint reincorporated in Delaware and sold 350
shares of common stock and 1,399,965 shares of Series A preferred stock to Wells Fargo Bank, which
represented an approximately 35% ownership interest in Billpoint. Simultaneously, we exchanged
25,999,350 of Billpoint's common shares for 2,599,935 shares of Series A preferred stock. The merger was
accounted for as a pooling of interests.
In January 2002, we acquired the 35% minority interest in Billpoint held by Wells Fargo Bank in a
purchase acquisition for approximately $43.5 million in cash.
In October 2002, we acquired PayPal, Inc. The combined operations of PayPal and Billpoint form our
Payments segment. We will be phasing out Billpoint operations during the Ñrst half of 2003 and we expect
the goodwill and identiÑable intangible assets related to the acquisition of the 35% minority interest to
continue to beneÑt the ongoing operations.
eBay Japan
On February 17, 2000, eBay Japan Inc., a wholly owned subsidiary of eBay, entered into a
shareholder and marketing services agreement with NEC Corporation. In accordance with the shareholder
agreement, NEC acquired 30% of eBay Japan and provided marketing services to eBay Japan in an eÅort
to deliver a minimum level of conÑrmed registered users. As compensation for the marketing and other
services performed by NEC, eBay Japan paid NEC an annual up-front fee of approximately $1.5 million.
On July 18, 2001, eBay purchased the outstanding 30% interest in eBay Japan held by NEC for
approximately $1.7 million. In March 2002, eBay Japan ceased business operations.
Half.com
On July 11, 2000, we acquired a 100% interest in Half.com, Inc. Half.com was incorporated in
Pennsylvania in June 1999 and provides a Ñxed-price, online e-commerce site that allows people to buy
109