eBay 2008 Annual Report Download - page 104

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hedge accounting treatment. During the years ended December 31, 2006 and 2007, the realized gains and losses
related to these hedges were not significant. During the year ended December 31, 2008 the realized gains on these
hedges were $17.1 million. The notional amount of our economic hedges receiving cash flow hedge accounting
treatment was $428.9 million as of December 31, 2008. The gains, net of losses, recorded to accumulated other
comprehensive income as of December 31, 2008 were $40.5 million. Amounts included in accumulated other
comprehensive income at December 31, 2008 will be subsequently reclassified into the financial statements line
item in which the hedged item is recorded in the same period the forecasted transaction affects earnings.
Note 7 — Fair Value Measurement of Assets and Liabilities
The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis
as of December 31, 2008 (in thousands):
Description
Balance as of
December 31,
2008
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant Other
Observable
Inputs (Level 2)
Assets:
Cash and cash equivalents:
Bank deposits and money market funds ....... $3,188,928 $3,188,928 $ —
Total cash and cash equivalents ............... 3,188,928 3,188,928 —
Short-term investments:
Restricted cash ......................... 21,258 21,258 —
Equity instruments ...................... 133,349 133,349 —
Time deposits .......................... 4,129 — 4,129
Corporate debt securities .................. 4,998 — 4,998
Total short-term investments ................. 163,734 154,607 9,127
Derivatives.............................. 71,149 — 71,149
Long-term restricted cash ................... 5,461 5,461 —
Long-term time deposits .................... 52 — 52
Total financial assets ....................... $3,429,324 $3,348,996 $80,328
Liabilities:
Derivatives.............................. $ 13,154 $ — $13,154
Our financial assets and liabilities are valued using market prices on both active markets (level 1) and less
active markets (level 2). Level 1 instrument valuations are obtained from real-time quotes for transactions in active
exchange markets involving identical assets. Level 2 instrument valuations are obtained from readily-available
pricing sources for comparable instruments. As of December 31, 2008, we did not have any assets or liabilities
without observable market values that would require a high level of judgment to determine fair value (level 3
assets). Our derivative instruments are valued using pricing models that take into account the contract terms as well
as multiple inputs where applicable, such as equity prices, interest rate yield curves, option volatility and currency
rates. Our derivative instruments are short-term in nature, typically one month to one year in duration. Cash and cash
equivalents are short-term, highly liquid investments with original or remaining maturities of three months or less
when purchased.
As of December 31, 2008, we held no direct investments in auction rate securities, collateralized debt
obligations, structured investment vehicles or mortgage-backed securities.
96
eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)