eBay 2002 Annual Report Download - page 124

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (CONTINUED)
Note 6 Ì Derivative Instruments:
We entered into two interest rate swaps on June 19, 2000 and July 20, 2000, with notional amounts of
$45 million and $50 million respectively, that allow eBay to receive Öoating rate receipts based on London
Interbank OÅered Rate, or LIBOR, in exchange for making Ñxed rate payments of approximately 7% of
the notional amount. These interest rate swaps eÅectively change the interest rate exposure on a portion of
the operating lease payments relating to eBay's corporate oÇce facilities from a Öoating rate to a Ñxed
rate. The fair value of the interest rate swaps as of December 31, 2002 was an unrealized loss of
$10.9 million and is recorded in accumulated other comprehensive loss on the balance sheet.
On January 1, 2001, we adopted Statement of Financial Accounting Standards No. 133, as amended,
and the cumulative eÅect of this change in accounting method relating to the interest rate swaps was an
immaterial gain on net income and an unrealized loss, net of tax, of approximately $2.6 million on other
comprehensive income. During the year ended December 31, 2002, the derivative losses reclassiÑed into
rent expense were oÅset by decreases in rent expense relating to the operating lease. At December 31,
2002, we expect to reclassify $3.5 million of losses, net of tax, on the interest rate swaps from accumulated
other comprehensive income to rent expense during the next twelve months.
As of December 31, 2002, we had outstanding forward foreign exchange contracts with notional values
equivalent to approximately $69 million with maturity dates within 92 days. The forward contracts are
used as to oÅset changes in the value of assets and liabilities denominated in foreign currencies as a result
of currency Öuctuations. Transaction gains and losses on the contracts and the assets and liabilities are
recognized each period in our statement of income and generally are oÅsetting. As of December 31, 2002,
the fair values of the forward contracts were immaterial.
Note 7 Ì Balance Sheet Components:
December 31,
2001 2002
(in thousands)
Accounts receivable, net:
Accounts receivable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $130,727 $162,155
Allowance for doubtful accounts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (26,451) (27,731)
Allowance for authorized credits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (2,573) (2,971)
$101,703 $131,453
Write-oÅs against the allowance for doubtful accounts and authorized credits were $12.5 million,
$10.3 million, and $23.8 million in the years ended December 31, 2000, 2001 and 2002, respectively.
December 31,
2001 2002
(in thousands)
Other current assets:
Prepaid expenses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $27,735 $32,315
Restricted cash and investments, current ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5,739 21,448
Deferred tax asset, current ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 13,615 16,030
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11,594 27,195
$58,683 $96,988
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