eBay 2003 Annual Report Download - page 105

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (CONTINUED)
days surrounding the July 8, 2002 acquisition announcement date. Total purchase price comprised of the
following (in thousands):
Fair value of eBay common stock issued ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,379,944
Fair value of PayPal stock options assumed by eBay ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 96,560
Estimated acquisition related costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 16,000
Aggregate purchase price ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,492,504
The acquisition related costs consist primarily of investment banking fees, legal and accounting fees,
printing costs, and other direct costs of the acquisition.
The intrinsic value of PayPal's unvested common stock options and restricted stock subject to
repurchase assumed in the merger totaled $9.9 million as of October 3, 2002, and was recorded as
unearned stock-based compensation. For purposes of purchase price allocation, PayPal's outstanding
options that vested solely as a result of the proposed merger were deemed to be vested as of the
October 3, 2002 acquisition date. The unearned stock-based compensation relating to the unvested options
and the restricted stock subject to repurchase will be amortized on an accelerated basis over the remaining
vesting period of less than one year to three years, consistent with the graded vesting approach described in
FASB Interpretation No. 28.
Acquisition-Related Liabilities Capitalized as a Cost of Acquisition
During the year ended December 31, 2003, we Ñnalized our formal plan to exit certain activities and
integrate certain facilities of PayPal. This plan includes provisions to terminate leases for redundant
facilities, dispose of redundant Ñxed assets and leasehold improvements, resolve certain pre-acquisition
legal contingencies, provide various employee-related beneÑts and exit certain contractual obligations. As
of December 31, 2002, the aggregate purchase price for PayPal included $38.5 million of accruals for
acquisition related liabilities and assumed lease liabilities totaling $4.7 million. As of December 31, 2003,
the total remaining accrual was $36.9 million.
The components of the acquisition related liabilities are as follows (in thousands):
Balance at Balance at
December 31, Cash Non-Cash December 31,
2002 Payments Amount Used Adjustments 2003
Excess facilities and Ñxed assets ÏÏÏÏÏÏÏÏÏ $36,705 $ (2,263) $(1,098) $ (392) $32,952
Other liabilities and contingencies ÏÏÏÏÏÏÏÏ 6,447 (17,119) Ì 14,621 3,949
Total liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $43,152 $(19,382) $(1,098) $14,229 $36,901
Excess facilities and Ñxed assets liabilities consist primarily of accruals for PayPal's remaining lease
obligations, net of estimated sublease income, and the write-oÅ of certain leasehold improvements and
other property and equipment at redundant facilities which we exited in February 2004. A substantial
portion of the excess facilities and Ñxed assets liabilities recorded as of December 31, 2003, are expected
to settle in cash during future periods.
Other liabilities and contingencies consist primarily of accruals for legal contingencies, employee
severance, relocation and other beneÑts, and contract termination costs. Accruals for legal contingencies
are based on our assessment of probable losses arising from pre-acquisition litigation, claims and
assessments. Accruals for employee severance, relocation and other beneÑts as well as for contract
terminations are based on estimated costs associated with the acquisition-related terminations of certain
PayPal employees and contracts. During the year ended December 31, 2003, cash payments were made to
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