eBay 2008 Annual Report Download - page 95

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In February 2008, the FASB issued Staff Position No. 157-2 (FSP 157-2), which delays the effective date of
FAS 157 one year for all nonfinancial assets and nonfinancial liabilities, except those recognized or disclosed at fair
value in the financial statements on a recurring basis. FSP 157-2 is effective for us beginning January 1, 2009. We do
not believe the adoption of FSP 157-2 will have a material impact on our consolidated financial statements.
In March 2008, the FASB issued FAS No. 161, “Disclosures about Derivative Instruments and Hedging
Activities” (FAS 161). FAS 161 amends and expands the disclosure requirements of FAS 133, “Accounting for
Derivative Instruments and Hedging Activities” and requires qualitative disclosures about objectives and strategies
for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instru-
ments, and disclosures about credit-risk-related contingent features in derivative agreements. This statement is
effective for financial statements issued for fiscal periods beginning after November 15, 2008. Earlier adoption is
not permitted. We do not believe the adoption of FAS 161 will have a material impact on our consolidated financial
statements.
In April 2008, the FASB issued FASB Staff Position FAS 142-3, “Determination of Useful Life of Intangible
Assets” (FSP 142-3). FSP 142-3 amends the factors that should be considered in developing the renewal or
extension assumptions used to determine the useful life of a recognized intangible asset under FAS 142, “Goodwill
and Other Intangible Assets.” FSP 142-3 also requires expanded disclosure regarding the determination of
intangible asset useful lives. FSP 142-3 is effective for fiscal years beginning after December 15, 2008. Earlier
adoption is not permitted. We do not believe the adoption of FSP 142-3 will have a material impact on our
consolidated financial statements.
Note 2 — 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. The dilutive effect of outstanding options and restricted stock is
reflected in diluted earnings per share by application of the treasury stock method. The calculation of diluted net
income per share excludes all anti-dilutive shares. 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):
2006 2007 2008
Year Ended December 31,
Numerator:
Net income ................................. $1,125,639 $ 348,251 $1,779,474
Denominator:
Weighted average common shares — basic .......... 1,399,251 1,358,797 1,303,454
Dilutive effect of equity incentive plans ........... 26,221 17,377 9,154
Weighted average common shares — diluted ......... 1,425,472 1,376,174 1,312,608
Net income per share:
Basic ...................................... $ 0.80 $ 0.26 $ 1.37
Diluted .................................... $ 0.79 $ 0.25 $ 1.36
Common stock equivalents excluded from income per
diluted share because their effect would have been
anti-dilutive................................. 73,651 83,422 102,642
87
eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)