eBay 2003 Annual Report Download - page 24

U.S. dollar strengthens or weakens against foreign currencies, and, in particular, the Euro, the translation
of these foreign currency denominated transactions into U.S. dollars will impact our net revenues,
operating expenses and net income.
The detailed discussion of our Ñnancial condition and results of operations contained herein is
intended to provide information to assist investors, analysts and other parties reading this report understand
the key operating metrics and Ñnancial information summarized above as well as the changes in our results
of operations from year to year, the primary factors that accounted for those changes and how certain
accounting principles, policies, judgments, and estimates aÅect our Consolidated Financial Statements.
Business Combinations
Our historical Ñnancial statements reÖect the impact of various business combinations that have been
accounted for as pooling-of-interests and purchase transactions. Our Consolidated Financial Statements
have been retroactively restated to include the historical Ñnancial statements of all entities acquired in
pooling-of-interests transactions. The Ñnancial statements of entities acquired in purchase transactions are
reÖected in our consolidated results from the eÅective dates of each acquisition. The aggregate purchase
price for all acquisitions using the purchase method of accounting during the three years ended
December 31, 2003 totaled approximately $2.1 billion and was been allocated in our Consolidated
Financial Statements as follows (in thousands):
Net tangible assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 207,717
IdentiÑable intangible assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 326,353
Deferred tax liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (51,000)
Minority interests ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (21,690)
Unearned compensation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,943
Goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,665,257
$2,136,580
Tangible net assets were valued at their respective carrying amounts as we believe that these amounts
approximated their current fair values at the respective acquisition dates. The valuation of identiÑable
intangible assets acquired was based on management's estimates using valuation reports prepared by an
independent third-party valuation consultant. Such assets consist of customer lists, trademarks and
tradenames, developed technologies and other acquired intangible assets including contractual agreements.
IdentiÑable intangible assets are amortized using the straight-line method over the estimated useful lives of
one to seven years. We believe the straight-line method of amortization best represents the distribution of
the economic 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'' and ""Note 3 Ì Business
Combinations, Goodwill and Intangible Assets'' to our Consolidated Financial Statements, which we
incorporate by reference herein.
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