eBay 2004 Annual Report Download - page 115

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Economic Exposure:
We currently charge our foreign subsidiaries on a monthly basis for their use of eBay's intellectual
property and technology and for corporate services provided by eBay Inc. such as insurance, tax and legal. This
charge is denominated in Euros and these forecasted inter-company transactions at eBay Inc. represent a
foreign currency cash Öow exposure. To reduce foreign exchange risk relating to these forecasted inter-
company transactions, we entered into forward foreign exchange contacts during the year ended December 31,
2004. The objective of the forward contracts is to ensure that the U.S. dollar-equivalent cash Öows are not
adversely aÅected by changes in the U.S. dollar/Euro exchange rate. Pursuant to Statement of Financial
Accounting Standards No. 133 ""Accounting for Derivative Instruments and Hedging Activities'' (FAS 133),
we expect the hedge of these forecasted transactions to be highly eÅective in oÅsetting potential changes in
cash Öows attributed to a change in the U.S. dollar/Euro exchange rate. Accordingly, we record as a
component of other comprehensive income all unrealized gains and losses related to the forward contracts that
receive hedge accounting treatment. We record all unrealized gains and losses in interest and other income,
net, related to the forward contracts that do no receive hedge accounting treatment pursuant to FAS 133.
There were no outstanding forward contracts that receive hedge accounting treatment at December 31, 2004.
The following table shows the notional amount of our economic hedges entered into in 2004, together with the
associated losses, net of gains, recorded in our consolidated statement of income for the year ended
December 31, 2004, and the amounts recorded to accumulated other comprehensive income at December 31,
2004:
Accumulated
Net Loss Recorded Other
Notional to Interest and Comprehensive
Amount Other Income, Net Income
(In thousands)
Amount receiving hedge accounting treatment
under FAS 133ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $140,196 $(3,357) $Ì
Amount not receiving hedge accounting treatment
under FAS 133ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 30,772 (333) Ì
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $170,968 $(3,690) $Ì
No economic hedges were entered into during the year ended December 31, 2003.
Note 7 Ì Balance Sheet Components:
December 31,
2003 2004
(In thousands)
Accounts receivable, net:
Accounts receivable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $273,940 $319,489
Allowance for doubtful accounts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (43,194) (67,853)
Allowance for authorized credits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (4,875) (10,780)
$225,871 $240,856
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