eBay 2003 Annual Report Download - page 101

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (CONTINUED)
deferred tax assets is reduced by the amount of any tax beneÑts that are not expected to be realized based
on available evidence.
Consolidation of Variable Interest Entities
In accordance with the provisions of FIN 46, ""Consolidation of Variable Interest Entities,'' we have
included our San Jose corporate headquarters lease arrangement in our Consolidated Financial Statements
eÅective July 1, 2003. Under this new accounting standard, our balance sheet at December 31, 2003
reÖects additions for land and buildings totaling $126.4 million, lease obligations of $122.5 million and
non-controlling minority interests of $3.9 million. Our consolidated income statement for year ended
December 31, 2003, reÖects the reclassiÑcation of lease payments on our San Jose corporate headquarters
from operating expense to interest expense, beginning with quarters following our adoption of FIN 46 on
July 1, 2003, a $5.4 million after-tax charge for cumulative depreciation for periods from lease inception
through June 30, 2003, and incremental depreciation expense of approximately $400,000, net of tax, per
quarter for the third and fourth quarters of 2003. We have adopted the provisions of FIN 46 prospectively
from July 1, 2003, and as a result, prior periods have not been restated. The cumulative eÅect of the
change in accounting principle arising from the adoption of FIN 46 has been reÖected in net income in
2003.
Note 2 Ì Net Income Per Share:
Basic net income per share is computed by dividing the net income for the period by the weighted
average number of common shares outstanding during the period. Diluted net income per share is
computed by dividing the net income for the period by the weighted average number of common and
common equivalent shares outstanding during the period. Potentially dilutive securities, composed of
unvested, restricted common stock and incremental common shares issuable upon the exercise of stock
options and warrants, are included in diluted net income per share to the extent such shares are dilutive.
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