eBay 2004 Annual Report Download - page 104

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
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 shares of common stock and
potentially dilutive common stock outstanding during the period. Potentially dilutive common stock,
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 using the treasury stock method to the
extent such shares are dilutive. The following table sets forth the computation of basic and diluted net income
per share for the periods indicated (in thousands, except per share amounts):
Year Ended December 31,
2002 2003 2004
Numerator:
Income before cumulative eÅect of accounting changeÏÏÏÏÏÏÏÏ $ 249,891 $ 447,184 $ 778,223
Cumulative eÅect of accounting, net of tax ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì (5,413) Ì
Net incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 249,891 $ 441,771 $ 778,223
Denominator:
Weighted average common shares ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,150,720 1,276,674 1,319,548
Weighted average unvested common stock subject to
repurchaseÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (736) (98) (90)
Denominator for basic calculation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,149,984 1,276,576 1,319,458
Weighted average eÅect of dilutive securities:
Weighted average unvested common stock subject to
repurchaseÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 736 98 90
Employee stock optionsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20,560 36,640 48,172
Denominator for diluted calculation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,171,280 1,313,314 1,367,720
Net income per share:
Income before cumulative eÅect of accounting changeÏÏÏÏÏÏÏÏ $ 0.22 $ 0.35 $ 0.59
Cumulative eÅect of accounting change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì (0.00) Ì
Net income per basic share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.22 $ 0.35 $ 0.59
Net income per diluted share:
Income before cumulative eÅect of accounting changeÏÏÏÏÏÏÏÏ $ 0.21 $ 0.34 $ 0.57
Cumulative eÅect of accounting change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì (0.00) Ì
Net income per diluted share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.21 $ 0.34 $ 0.57
The calculation of diluted net income per share excludes all anti-dilutive shares. For the years ended
December 31, 2002, 2003 and 2004, the number of anti-dilutive shares, as calculated based on the weighted
average closing price of our common stock for the period, amounted to approximately 53.2 million, 7.0 million
and 3.4 million shares, respectively.
102