eBay 2003 Annual Report Download - page 94

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Ì The Company and Summary of SigniÑcant Accounting Policies:
The Company
eBay Inc. (""eBay'') was incorporated in California in May 1996, and reincorporated in Delaware in
April 1998. As of December 31, 2003, through our wholly-owned and majority-owned subsidiaries and
aÇliates, we had websites directed toward the United States, Australia, Austria, Belgium, Canada, China,
France, Germany, Hong Kong, Ireland, Italy, the Netherlands, New Zealand, Singapore, South Korea,
Spain, Sweden, Switzerland, Taiwan and the United Kingdom. We pioneered online trading by developing
an Internet-based community in which buyers and sellers are brought together to buy and sell almost
anything. The eBay online service permits sellers to list items for sale, buyers to bid on items of interest,
and all eBay users to browse through listed items in a fully-automated, topically-arranged service that is
available online seven days a week. Through our PayPal service, we enable any business or consumer with
email in 38 countries to send and receive online payments.
On October 3, 2002, we completed our acquisition of PayPal, Inc. (""PayPal'') in a tax-free, stock-for-
stock transaction. PayPal provides an online global payments platform and is headquartered in San Jose,
California. The PayPal Ñnancial statements are included in our Consolidated Financial Statements from
October 4, 2002.
When we refer to ""we,'' ""our,'' ""us'' or ""eBay'' in this document, we mean the current Delaware
corporation (eBay Inc.) and its California predecessor, as well as all of our consolidated subsidiaries.
When we refer to ""eBay.com'' we mean the online marketplace located at www.ebay.com. When we refer
to ""PayPal'', we mean the global payments platform located at www.paypal.com.
Stock split
On July 24, 2003, our Board of Directors approved a two-for-one split of our shares of common stock
eÅected in the form of a stock dividend. As a result of the stock split, our stockholders received one
additional share of our common stock for each share of common stock held of record on August 4, 2003.
The additional shares of our common stock were distributed on August 28, 2003. All share and per share
amounts in these Consolidated Financial Statements and related notes have been retroactively adjusted to
reÖect this and all prior stock splits for all periods presented.
Use of estimates
The preparation of Consolidated Financial Statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that aÅect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
Consolidated Financial Statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could diÅer from those estimates.
Principles of consolidation and basis of presentation
The accompanying Ñnancial statements are consolidated and include the Ñnancial statements of eBay
and our majority-owned subsidiaries. All signiÑcant intercompany balances and transactions have been
eliminated in consolidation.
The consolidated accounts include 100% of the assets and liabilities of these majority-owned
subsidiaries and the ownership interests of minority investors are recorded as minority interests.
Investments in entities where we hold more than a 20% but less than a 50% ownership interest and have
the ability to signiÑcantly inÖuence the operations of the investee are accounted for using the equity
method of accounting and the investment balance is included in long term investments, while our share of
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