eBay 2003 Annual Report Download - page 126

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (CONTINUED)
of employee stock options of $391.1 million and the remainder relates to losses at certain subsidiaries. We
receive tax deductions from the gains realized by employees on the exercise of certain non-qualiÑed stock
options for which the beneÑt is recognized as a component of stockholders' equity. We have evaluated the
deferred tax assets relating to these stock option deductions along with our other deferred tax assets and
concluded that a valuation allowance is required for that portion of the total deferred tax assets that are
not considered more likely than not to be realized in future periods. To the extent that the deferred tax
assets with a valuation allowance become realizable in future periods, 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.
We have not provided for U.S. federal income and foreign withholding taxes on non-U.S. subsidiaries'
undistributed earnings as of December 31, 2003, because such earnings are intended to be reinvested in
the operations and potential acquisitions of our International segment indeÑnitely. Upon distribution of
those earnings in the form of dividends of otherwise, we would be subject to U.S. income taxes (subject to
an adjustment for foreign tax credits).
Note 17 Ì Subsequent Events:
On January 26, 2004, we entered into an agreement with mobile.de to acquire all of its outstanding
shares for 121 million Euros (approximately $153 million at the January 26, 2004 exchange rate), subject
to certain closing adjustments, plus acquisition costs. mobile.de is a classiÑeds website for vehicles in
Germany. The acquisition, which is subject to regulatory approval in Germany by the Federal Cartel
OÇce, is expected to close in the second quarter of 2004. The acquisition will be accounted for under the
purchase method of accounting.
In February 2004, we elected not to exercise certain rights to extend the lease period for our San Jose
corporate headquarters. The lease on these facilities will end on March 1, 2005, and we are obligated to
make payments to the lessor of $126.4 million at lease expiration.
124