Statement Of Financial Position
Statement Of Financial Position Classified (USD $) | ||
In Thousands | Sep. 30, 2009
| Dec. 31, 2008
|
Current assets: | ||
Cash and cash equivalents | $2,557,859 | $3,188,928 |
Short-term investments | 601,443 | 163,734 |
Accounts receivable, net | 419,982 | 435,197 |
Loans receivable, net | 511,809 | 570,071 |
Funds receivable and customer accounts | 1,993,294 | 1,467,962 |
Other current assets | 389,200 | 460,698 |
Total current assets | 6,473,587 | 6,286,590 |
Long-term investments | 479,285 | 106,178 |
Property and equipment, net | 1,293,775 | 1,198,714 |
Goodwill (see Note 4) | 8,016,465 | 7,025,398 |
Intangible assets, net | 909,401 | 736,134 |
Other assets | 183,859 | 239,425 |
Total assets | 17,356,372 | 15,592,439 |
Current liabilities: | ||
Accounts payable | 209,333 | 170,332 |
Funds payable and amounts due to customers | 1,993,294 | 1,467,962 |
Accrued expenses and other current liabilities | 961,966 | 784,774 |
Deferred revenue and customer advances | 231,992 | 181,596 |
Income taxes payable | 50,093 | 100,423 |
Borrowings from credit agreement | 200,000 | 1,000,000 |
Total current liabilities | 3,646,678 | 3,705,087 |
Deferred and other tax liabilities, net | 907,342 | 753,965 |
Other liabilities | 51,185 | 49,529 |
Total liabilities | 4,605,205 | 4,508,581 |
Stockholders' equity: | ||
Common stock, $0.001 par value; 3,580,000 shares authorized; 1,282,025 and 1,292,774 shares outstanding | 1,481 | 1,470 |
Additional paid-in capital | 9,870,102 | 9,585,853 |
Treasury stock at cost, 188,200 and 188,251 shares | (5,377,258) | (5,376,970) |
Retained earnings | 7,004,211 | 5,970,020 |
Accumulated other comprehensive income | 1,252,631 | 903,485 |
Total stockholders' equity | 12,751,167 | 11,083,858 |
Total liabilities and stockholders' equity | $17,356,372 | $15,592,439 |
1_Statement Of Financial Positi
Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
Share data in Thousands | Sep. 30, 2009
| Dec. 31, 2008
|
Common stock, par value | 0.001 | 0.001 |
Common stock, shares authorized | 3,580,000 | 3,580,000 |
Common stock, shares outstanding | 1,292,774 | 1,282,025 |
Treasury stock at cost, shares | 188,251 | 188,200 |
Statement Of Income
Statement Of Income (USD $) | ||||
In Thousands, except Per Share data | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Net revenues | $2,237,852 | $2,117,531 | $6,356,430 | $6,505,415 |
Cost of net revenues | 643,908 | 560,963 | 1,809,067 | 1,648,478 |
Gross profit | 1,593,944 | 1,556,568 | 4,547,363 | 4,856,937 |
Operating expenses: | ||||
Sales and marketing | 491,461 | 451,753 | 1,359,277 | 1,463,190 |
Product development | 205,207 | 190,842 | 605,126 | 554,393 |
General and administrative | 272,177 | 248,909 | 797,966 | 793,791 |
Provision for transaction and loan losses | 96,682 | 88,269 | 270,597 | 260,872 |
Amortization of acquired intangible assets | 72,803 | 52,720 | 200,066 | 162,472 |
Restructuring | 12,673 | 0 | 36,937 | 0 |
Total operating expenses | 1,151,003 | 1,032,493 | 3,269,969 | 3,234,718 |
Income from operations | 442,941 | 524,075 | 1,277,394 | 1,622,219 |
Interest and other income (expense), net | (4,606) | 38,567 | 8,957 | 88,077 |
Income before income taxes | 438,335 | 562,642 | 1,286,351 | 1,710,296 |
Provision for income taxes | (88,599) | (70,423) | (252,160) | (298,014) |
Net income | $349,736 | $492,219 | $1,034,191 | $1,412,282 |
Net income per share: | ||||
Basic | 0.27 | 0.38 | 0.8 | 1.08 |
Diluted | 0.27 | 0.38 | 0.8 | 1.07 |
Weighted average shares: | ||||
Basic | 1,293,511 | 1,288,937 | 1,288,150 | 1,311,501 |
Diluted | 1,311,274 | 1,297,484 | 1,299,279 | 1,322,126 |
Statement Of Other Comprehensiv
Statement Of Other Comprehensive Income (USD $) | ||||
In Thousands | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Net income | $349,736 | $492,219 | $1,034,191 | $1,412,282 |
Other comprehensive income: | ||||
Foreign currency translation | 329,745 | (597,518) | 284,759 | (367,276) |
Unrealized (losses) gains on investments, net | 94,724 | (114,953) | 179,646 | (432,424) |
Unrealized gains (losses) on hedging activities | (359) | 19,022 | (46,458) | 11,046 |
Tax benefit (provision) on above items | (36,534) | 44,974 | (68,801) | 168,487 |
Net change in accumulated other comprehensive (loss) income | 387,576 | (648,475) | 349,146 | (620,167) |
Comprehensive income | $737,312 | ($156,256) | $1,383,337 | $792,115 |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect (USD $) | ||
In Thousands | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Cash flows from operating activities: | ||
Net income | $1,034,191 | $1,412,282 |
Adjustments: | ||
Provision for transaction and loan losses | 270,597 | 260,872 |
Depreciation and amortization | 610,162 | 517,917 |
Stock-based compensation | 302,769 | 269,481 |
Changes in assets and liabilities, net of acquisition effects | (80,233) | (262,500) |
Net cash provided by operating activities | 2,137,486 | 2,198,052 |
Cash flows from investing activities: | ||
Purchases of property and equipment, net | (394,156) | (406,739) |
Changes in principal loans receivable, net | 7,517 | 0 |
Purchases of investments | (468,371) | (107,990) |
Maturities and sales of investments | 26,971 | 42,248 |
Acquisitions, net of cash acquired | (1,209,433) | (159,064) |
Other | 5,889 | (51,369) |
Net cash used in investing activities | (2,031,583) | (682,914) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock, net | 51,796 | 115,615 |
Repurchases of common stock, net | 0 | (2,177,942) |
Excess tax benefits from stock-based compensation | 585 | 4,670 |
Tax witholdings related to net share settlements of restricted stock awards and units | (26,361) | (18,498) |
Net payments from borrowings under credit agreement | (800,000) | (200,000) |
Other | (8,063) | 0 |
Net cash used in financing activities | (782,043) | (2,276,155) |
Effect of exchange rate changes on cash and cash equivalents | 45,071 | (117,457) |
Net decrease in cash and cash equivalents | (631,069) | (878,474) |
Cash and cash equivalents at beginning of period | 3,188,928 | 4,221,191 |
Cash and cash equivalents at end of period | 2,557,859 | 3,342,717 |
Supplemental cash flow disclosures: | ||
Cash paid for interest | 5,921 | 1,257 |
Cash paid for income taxes | 278,117 | 329,160 |
Non-cash investing and financing activities: | ||
Common stock options assumed pursuant to acquisition | $5,361 | $4,398 |
Note 1 - The Company and Summar
Note 1 - The Company and Summary of Significant Accounting Policies | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 1 - The Company and Summary of Significant Accounting Policies | Note1 The Company and Summary of Significant Accounting Policies The Company eBay Inc. (eBay) was incorporated in California in May 1996, and reincorporated in Delaware in April 1998. eBays purpose is to pioneer new communities around the world, built on commerce, sustained by trust, and inspired by opportunity. eBay brings together millions of buyers and sellers every day on a local, national and international basis through an array of websites. eBay provides online marketplaces for the sale of goods and services, online payment services and online communication offerings to a diverse community of individuals and businesses. We operate three primary business segments: Marketplaces, Payments and Communications. Our Marketplaces segment provides the infrastructure to enable global online commerce on a variety of platforms, including the traditional eBay.com platform, our other online platforms, such as our online classifieds businesses, our secondary tickets marketplace (StubHub), our online shopping comparison website (Shopping.com), our apartment listing service platform (Rent.com), as well as our fixed price media marketplace (Half.com). Our Payments segment is comprised of our online payment solutions PayPal and Bill Me Later (which we acquired in November 2008). Our Communications segment, which consists of Skype, enables Internet communications between Skype users and provides low-cost connectivity to traditional fixed-line and mobile telephones. On September1, 2009, we entered into a definitive agreement to sell the share capital of Skype Luxembourg Holdings S.a.r.l., Skype Inc., Camino Networks, Inc. and Sonorit Holdings, A.S. (collectively with their respective subsidiaries, the Skype Companies) to an entity organized and owned by an investment group led by Silver Lake and that includes the Canada Pension Plan Investment Board, Index Ventures and Andreessen Horowitz (the Buyer). Upon completion of the sale, we will hold an approximately 35 percent equity investment in the Buyer. For further details please see Note4 Skype Assets Held for Sale. 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. Use of estimates The preparation of condensed consolidated financial statements in conformity with U.S.generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect 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. On an ongoing basis, we evaluate our estimates, including those related to provisions for transaction and loan losses, legal contingencies, income taxes, revenue recognition, stock-based compensation and the recoverability of goodwill and intangible assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates. Princip |
Note 2 - Net Income Per Share
Note 2 - Net Income Per Share | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 2 - Net Income Per Share | Note2 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): Three Months Ended September30, Nine Months Ended September30, 2008 2009 2008 2009 Numerator: Net income $ 492,219 $ 349,736 $ 1,412,282 $ 1,034,191 Denominator: Weighted average common shares - basic 1,288,937 1,293,511 1,311,501 1,288,150 Dilutive effect of equity incentive plans 8,547 17,763 10,625 11,129 Weighted average common shares - diluted 1,297,484 1,311,274 1,322,126 1,299,279 Net income per share: Basic $ 0.38 $ 0.27 $ 1.08 $ 0.80 Diluted $ 0.38 $ 0.27 $ 1.07 $ 0.80 Common stock equivalents excluded from income perdiluted share because their effect would have been anti-dilutive 102,322 81,225 94,978 105,255 |
Note 3 - Business Combinations
Note 3 - Business Combinations | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 3 - Business Combinations | Note3 Business Combinations Acquisition of Gmarket Inc. On June15, 2009, we acquired 99.0% of the outstanding securities of Gmarket Inc. (Gmarket), a company organized under the laws of the Republic of Korea. We paid $24 per security, net to the holders in cash, through a cash tender offer resulting in a total cash purchase price of approximately $1.2 billion and assumed Gmarket outstanding stock options. Gmarket is a retail ecommerce marketplace in Korea, and is included in our Marketplaces segment. The rationale for acquiring Gmarket was to strengthen our ecommerce business in Korea and provide a platform for expansion throughout Asia. The fair value of Gmarkets stock options assumed was determined using the Black-Scholes model. The fair value of the non-controlling interest was determined based on the number of shares held by minority securityholders multiplied by the offer price of $24 per security. The following table summarizes the consideration paid for Gmarket (in thousands): Cash $ 1,209,433 Assumed stock options 5,361 Fair value of total consideration 1,214,794 Fair value of non-controlling interest 12,174 Total $ 1,226,968 The purchase price was allocated to the tangible assets and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the remaining unallocated purchase price recorded as goodwill. The fair value assigned to identifiable intangible assets acquired has been determined primarily by using the income approach and variation of the income approach known as the profit allocation method, which discounts expected future cash flows to present value using estimates and assumptions determined by management. Purchased identifiable intangible assets are amortized on a straight-line basis over their respective useful lives. Our preliminary allocation of the purchase price is summarized in the table below (in thousands): Net tangible assets acquired $ 50,526 Goodwill 797,946 Trade name 264,604 User base 76,512 Developed technology 33,076 Other intangible assets 4,304 Total $ 1,226,968 Our estimated useful life of the identifiable intangible assets acquired is three years for developed technology, five years for the trade name and user base and one year for other intangibles. The allocation of the purchase price for the acquisition has been prepared on a preliminary basis and changes to that allocation may occur as additional information becomes available. Gmarkets financial results have been included in our condensed consolidated statement of income as of June16, 2009. The amount of revenue and earnings included in the condensed consolidated income statement for the three and nine months ended September30, 2009 were not material to the respective periods. The noncontrolling ownership interest in Gmarket is included in additional paid-in capital in our condensed consolidated balance sheet as it is not significant. Earnings attributable to noncontrolling interests for the three and nine months ended Septem |
Note 4 - Skype Assets Held for
Note 4 - Skype Assets Held for Sale | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 4 - Skype Assets Held for Sale | Note4 Skype Assets Held for Sale On September1, 2009, we entered into a definitive agreement to sell the share capital of Skype Luxembourg Holdings S.a.r.l., Skype Inc., Camino Networks, Inc. and Sonorit Holdings, A.S. (collectively with their respective subsidiaries, the Skype Companies) to an entity organized and owned by an investment group led by Silver Lake and including the Canada Pension Plan Investment Board, Index Ventures and Andreessen Horowitz (the Buyer). The transaction values Skype at $2.75 billion. Upon completion of the sale, we will hold an approximately 35 percent equity investment in the Buyer, which will be recorded at fair value within long-term investments in our condensed consolidated balance sheet. Mr.Mark Andreessen, a member of our Board of Directors, is a general partner in Andreessen Horowitz, which will own less than five percent of the Buyer. The transaction is expected to close in the fourth quarter of 2009. The amortization of intangible assets held for sale has been suspended. The major classes of assets and liabilities classified as held for sale are as follows (in thousands): September30, 2009 Assets: Current assets 109,929 Non-current assets 1,962,975 Total assets $ 2,072,904 Liabilities: Current liabilities 246,686 Non-current liabilities 53 Total liabilities $ 246,739 Included in the table above within non-current assets is goodwill of approximately $1.9 billion. As part of the sale of Skype, we will recognize a portion of our accumulated foreign currency translation adjustment. We estimate the gain on the pending sale of Skype will be approximately $1.0 billion. |
Note 5 - Goodwill and Intangibl
Note 5 - Goodwill and Intangible Assets | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 5 - Goodwill and Intangible Assets | Note5 Goodwill and Intangible Assets Goodwill The following table presents goodwill balances and the movements for each of our reportable segments during the nine months ended September30, 2009 (in thousands): December31, 2008 Goodwill Acquired Adjustments September30, 2009 Reportable segments: Marketplaces $ 3,053,139 $ 797,946 $ 142,690 $ 3,993,775 Payments 2,163,057 (9,124 ) 2,153,933 Communications (see Note 4) 1,836,562 59,555 1,896,117 $ 7,052,758 $ 797,946 $ 193,121 $ 8,043,825 Investments accounted for under the equity method of accounting are classified on our balance sheet as long-term investments. Such investments include identifiable intangible assets, deferred tax liabilities and goodwill. As of December31, 2008 and September30, 2009, the goodwill related to our equity investments, included above, was approximately $27.4million. The adjustments to goodwill during the nine months ended September30, 2009 were due primarily to foreign currency translation. Goodwill is subject to at least an annual assessment for impairment, applying a fair-value based test. We conducted our annual impairment test as of August31, 2009 and determined there was no impairment. There were no events or circumstances from that date through September30, 2009 indicating that a further assessment was necessary. Intangible Assets The components of identifiable intangible assets are as follows (in thousands, except years): December31, 2008 September30, 2009 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Useful Life (years) (years) Intangible assets: Customer lists and user base $ 756,829 $ (415,238 ) $ 341,591 6 $ 852,872 $ (517,530 ) $ 335,342 6 Trademarks and trade names 638,930 (393,353 ) 245,577 5 925,698 (506,042 ) 419,656 5 Developed technologies 199,893 (111,973 ) 87,920 3 230,856 (147,330 ) 83,526 3 All other 126,381 (64,803 ) 61,578 4 157,504 (86,627 ) 70,877 4 $ 1,722,033 $ (985,367 ) $ 736,666 $ 2,166,930 $ (1,257,529 ) $ 909,401 As of December31, 2008, the net carrying amount of intangible assets related to our equity investments included above was approximately $532,500. All of our identifiable intangible assets, with the exception of intangible assets of Skype classified as held for sale, are subject to amortization. Aggregate amortization expense for intangible assets was $66.3million and $92.2 million for the three months ended September30, 2008 and 2009, respectively. Aggregate amortization expense for intangible assets wa |
Note 6 - Segments
Note 6 - Segments | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 6 - Segments | Note6 Segments Operating segments are based upon our internal organization structure, the manner in which our operations are managed, the criteria used by our Chief Operating Decision Maker to evaluate segment performance and the availability of separate financial information. We have three operating segments: Marketplaces, Payments and Communications. For details related to the pending sale of our Communications segment, please see Note4 Skype Assets Held for Sale. The following tables summarize the financial performance of our operating segments (in thousands): Three Months Ended September30, 2008 Marketplaces Payments Communications Consolidated Net revenues from external customers $ 1,376,853 $ 597,211 $ 143,467 $ 2,117,531 Direct costs 789,109 483,713 105,766 1,378,588 Direct contribution $ 587,744 $ 113,498 $ 37,701 738,943 Operating expenses and indirect costs of net revenues 214,868 Income from operations 524,075 Interest and other income, net 38,567 Income before income taxes $ 562,642 Three Months Ended September 30, 2009 Marketplaces Payments Communications Consolidated Net revenues from external customers $ 1,364,583 $ 688,063 $ 185,206 $ 2,237,852 Direct costs 790,964 586,265 140,372 1,517,601 Direct contribution $ 573,619 $ 101,798 $ 44,834 720,251 Operating expenses and indirect costs of net revenues 277,310 Income from operations 442,941 Interest and other expense, net (4,606 ) Income before income taxes $ 438,335 Nine Months Ended September 30, 2008 Marketplaces Payments Communications Consolidated Net revenues from external customers $ 4,319,201 $ 1,780,585 $ 405,629 $ 6,505,415 Direct costs 2,440,797 1,417,231 322,880 4,180,908 Direct contribution $ 1,878,404 $ 363,354 $ 82,749 2,324,507 Operating expenses and indirect costs of net revenues 702,288 Income from operations 1,622,219 Interest and other income, net 88,077 Income before income taxes $ 1,710,296 Nine Months Ended September30, 2009 Marketplaces Payments Communications Consolidated Net revenues from external customers $ 3,847,731 $ 2,000,322 $ 508,377 $ 6,356,430 Direct costs 2,186,923 1,678,788 387,152 4,252,863 Direct contribution $ 1,660,808 $ 321,534 $ 121,225 2,103,567 |
Note 7 - Fair Value Measurement
Note 7 - Fair Value Measurement of Assets and Liabilities | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 7 - Fair Value Measurement of Assets and Liabilities | Note7 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 September30, 2009 (in thousands): Description Balance as of September30,2009 QuotedPricesin ActiveMarketsfor Identical Assets (Level 1) SignificantOther ObservableInputs (Level 2) Assets: Cash and cash equivalents: Bank deposits and money market funds $ 2,557,859 $ 2,557,859 $ Total cash and cash equivalents 2,557,859 2,557,859 Short-term investments: Restricted cash 29,745 29,745 Equity instruments 312,521 312,521 Corporate debt securities 13,782 13,782 Time deposits 245,395 245,395 Total short-term investments 601,443 342,266 259,177 Derivatives 10,243 10,243 Long-term restricted cash 1,162 1,162 Corporate debt securities 396,744 396,744 Long-term time deposits 5,132 5,132 Total financial assets $ 3,572,583 $ 2,901,287 $ 671,296 Liabilities: Derivatives $ 12,030 $ $ 12,030 Our financial assets and liabilities are valued using market prices on both active markets (level1)and less active markets (level2). Level1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level2 instrument valuations are obtained from readily-available pricing sources for comparable instruments. As of September30, 2009, we did not have any assets or liabilities without observable market values that would require a high level of judgment to determine fair value (level3). 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 September30, 2009, we held no direct investments in auction rate securities, collateralized debt obligations, structured investment vehicles or mortgage-backed securities. In Europe, we have a cash pooling arrangement with a financial institution for cash management purposes. This arrangement allows for cash withdrawals from this financial institution based upon our aggregate operating cash balances held in Europe within the same financial institution (Aggregate Cash Deposits). This arrangement also allows us to withdraw amounts exceeding the Aggregate Cash Deposits up to an agreed-upon limit. The net balance of the withdrawals and the Aggregate Cash Deposits are used by the financial institution as a basis for calculating our net interest expense |
Note 8 - Derivative Instruments
Note 8 - Derivative Instruments | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 8 - Derivative Instruments | Note8 Derivative Instruments We have significant international revenues as well as costs denominated in foreign currencies, subjecting us to foreign currency risk. We purchase foreign currency exchange contracts that qualify as cash flow hedges, generally with maturities of 12months or less, to reduce the volatility of cash flows primarily related to forecasted revenue and intercompany transactions denominated in certain foreign currencies. All outstanding derivatives that qualify for hedge accounting are recognized on the balance sheet at fair value, and changes in their fair value are recorded in accumulated other comprehensive income (loss) until the underlying forecasted transaction occurs. The effective portion of the derivatives gain or loss is initially reported as a component of accumulated other comprehensive income (loss), and is subsequently reclassified into the financial statement line item in which the hedged item is recorded in the same period the forecasted transaction affects earnings. We also hedge our exposure to foreign currency denominated monetary assets and liabilities with foreign currency contracts. Since these derivatives hedge existing exposures that are denominated in foreign currencies, the contracts do not qualify for hedge accounting. Accordingly, these outstanding non-designated derivatives are recognized on the balance sheet at fair value and changes in fair value from these contracts are recorded in interest and other income (expense), net, in the condensed consolidated statement of income. Our derivatives program is not designed or operated for trading or speculative purposes. Our derivative instruments expose us to credit risk to the extent that our counterparties may be unable to meet the terms of the agreements. We seek to mitigate this risk by limiting our counterparties to major financial institutions and by spreading the risk across several major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored on an ongoing basis. Fair Value of Derivative Contracts: Derivative instruments are reported at fair value as follows (in thousands): DerivativeAssets Reported in Other Current Assets Derivative Liabilities Reported in OtherCurrent Liabilities September30, September30, 2009 2009 Foreign exchange contracts designated as cash flow hedges $ 4,643 $ 10,749 Foreign exchange contracts not designated as hedging instruments 5,600 1,281 Total fair value of derivative instruments $ 10,243 $ 12,030 Effect of Derivative Contracts on Accumulated Other Comprehensive Income (Loss): The following table represents the activity of derivative contracts which qualify for hedge accounting as of December31, 2008 and September30, 2009, and the impact of designated derivative contracts on accumulated other comprehensive income for the nine months ended September30, 2009 (in thousands): December31,2008 Amountofgain(loss) recognized in other comprehensiveincome (effective portion) Amountofgain(loss) r |
Note 9 - Commitments and Contin
Note 9 - Commitments and Contingencies | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 9 - Commitments and Contingencies | Note9 Commitments and Contingencies Credit Agreement As of September30, 2009, we had $200.0 million outstanding and approximately $1.6 billion available under our credit agreement. The interest rate at September30, 2009 was 0.45%. As of September30, 2009, we were in compliance with the financial covenants associated with the credit agreement. Lehman Brothers Commercial Bank was a participating lender in our $2.0 billion credit agreement. As a result of the bankruptcy of its parent company, the availability under our credit agreement was effectively reduced by Lehmans commitment of $160.0 million. Litigation and Other Legal Matters In August 2006, Louis Vuitton Malletier and Christian Dior Couture filed two lawsuits in the Paris Court of Commerce against eBay Inc. and eBay International AG. Among other things, the complaint alleges that we violated French tort law by negligently broadcasting listings posted by third parties offering counterfeit items bearing plaintiffs trademarks, and by purchasing certain advertising keywords. Around September 2006, Parfums Christian Dior, Kenzo Parfums, Parfums Givenchy, and Guerlain Socit also filed a lawsuit in the Paris Court of Commerce against eBay Inc. and eBay International AG. The complaint alleged that we had interfered with the selective distribution network the plaintiffs established in France and the European Union by allowing third parties to post listings offering genuine perfumes and cosmetics for sale on our websites. In June 2008, the Paris Court of Commerce ruled that eBay and eBay International AG were liable for failing to prevent the sale of counterfeit items on its websites that traded on plaintiffs brand names and for interfering with the plaintiffs selective distribution network. The court awarded plaintiffs approximately EUR38.6million in damages and issued an injunction (enforceable by daily fines of up to EUR 100,000) prohibiting all sales of perfumes and cosmetics bearing the Dior, Guerlain, Givenchy and Kenzo brands over all worldwide eBay sites to the extent that they are accessible from France. A hearing took place in September 2009 regarding our compliance with the injunction and a decision is expected in late 2009. We have taken measures to comply with the injunction and have appealed these rulings. However, these and similar suits may force us to modify our business practices, which could lower our revenue, increase our costs, or make our websites less convenient to our customers. Any such results could materially harm our business. Other luxury brand owners have also filed suit against us or have threatened to do so, seeking to hold us liable for, among other things, alleged counterfeit items listed on our websites by third parties, for tester and other not for resale consumer products listed on our websites by third parties, for the alleged misuse of trademarks in listings, for alleged violations of selective distribution channel laws, for alleged violations of parallel import laws, for alleged non-compliance of consumer protection laws or in connection with paid search advertisements. We continue to believe that we have meritorious defenses to these suits a |
Note 10 - Stock-Based Plans
Note 10 - Stock-Based Plans | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 10 - Stock-Based Plans | Note10 Stock-Based Plans Stock Option Exchange Program On August10, 2009, the Company launched a one-time stock option exchange program (the Program) pursuant to which eligible employees were able to exchange certain outstanding stock options with an exercise price greater than or equal to $27.01 per share, a grant date on or before August10, 2008 and an expiration date after September11, 2010, for a lesser amount of new restricted stock units (RSUs) or, under certain circumstances, for new stock options or a cash payment. Our named executive officers and members of our Board of Directors were not eligible to participate in the Program. The Program expired on September11, 2009. As a result of the Program, 42.6million shares of our common stock were accepted for exchange (representing approximately 75% of the total options eligible for exchange). All surrendered options were cancelled effective as of the expiration of the Program, and in exchange for those options, we issued a total of approximately 5.0million new RSUs. The number of new stock options granted, and the amount of cash payments issued, in exchange for outstanding stock options were insignificant. In general, the new RSUs have a vesting period that is at least one year longer than the original vesting period for the corresponding exchanged option grant. The Program did not result in any significant incremental stock-based compensation expense. Stock Options The following table summarizes stock option activity for the nine-month period ended September30, 2009 (inthousands): Shares Outstanding at January1, 2009 116,060 Granted and assumed 9,347 Exercised (4,336 ) Options exchanged in connection with the stock option exchange program (42,630 ) Forfeited/expired/cancelled (19,801 ) Outstanding at September30, 2009 58,640 Stock options granted under our equity incentive plans generally vest 25% one year from the date of grant (for new hires) and 12.5% six months from the date of grant (for existing employees) and the remainder generally vest at a rate of 2.08%per month thereafter, in either case based on the recipients continuing service to eBay, and generally expire seven to 10 years from the date of grant. The weighted average exercise price of stock options granted and assumed during the period was $12.64 per share and the related weighted average grant date fair value was $4.36 per share. Restricted Stock Units The following table summarizes RSU activity for the nine-month period ended September30, 2009 (in thousands): Units Outstanding at January1, 2009 26,821 Awarded 22,916 Awarded in connection with the stock option exchange program 5,047 Vested (6,387 ) Forfeited (3,017 ) Outstanding at September30, 2009 45,380 In general, RSUs vest over four years at the rate of 25% a year on each anniversary of the grant date, subject to the recipients continuing service to eBay. The cost of RSUs is determined using the fair value of our common stock on the date of grant. The weighted average grant date fair value for RSUs awarded |
Note 11 - Restructuring
Note 11 - Restructuring | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 11 - Restructuring | Note11 Restructuring 2009 Customer Service Consolidation In 2009, we began the consolidation of certain customer service facilities in North America and Europe to streamline our operations and deliver better and more efficient customer support to our users. As previously announced, the consolidation will potentially impactapproximately 1,100 employees. We estimate that we will incur aggregate costs of $45.0 million to $55.0 million. During the third quarter and first nine months of 2009, we incurred restructuring charges of $11.1 million and $25.5 million, respectively, in connection with this consolidation. We expect to complete these activities by mid-2010. 2008 Restructuring Plan In 2008, we implemented a strategic reduction of our existing global workforce by approximately 800employees worldwide to simplify and streamline our organization and strengthen the overall competitiveness of our existing businesses. During the third quarter and first nine months of 2009, we incurred $1.6 million and $11.5 million, respectively, in restructuring charges related to this plan. Since the inception of the plan we have incurred $60.6 million in restructuring related charges. The restructuring activities in connection with this plan are substantially complete. Summary of All Restructuring Plans The following table summarizes the restructuring and other related costs by segment recognized during the third quarter and first nine months of 2009 (in thousands): ThreeMonthsEnded September30,2009 NineMonthsEnded September30,2009 Employee Severanceand Benefits Facilities Total Employee Severanceand Benefits Facilities Total Marketplaces $ 6,617 $ 6,062 $ 12,679 $ 28,901 $ 7,836 $ 36,737 Payments (3 ) (3 ) (6 ) 190 10 200 $ 6,614 $ 6,059 $ 12,673 $ 29,091 $ 7,846 $ 36,937 The following table summarizes the restructuring activity during the nine months ended September30, 2009 (in thousands): EmployeeSeverance and Benefits Facilities Total Accrued liability as of January 1, 2009 $ 14,200 $ 946 $ 15,146 Charges 29,091 7,846 36,937 Payments (32,370 ) (1,404 ) (33,774 ) Non-cash items (3,696 ) (3,696 ) Adjustment (63 ) (639 ) (702 ) Accrued liability as of September 30, 2009 $ 10,858 $ 3,053 $ 13,911 In the table, above non-cash items pertain to the write-down of assets to their estimated fair value. Adjustments reflect the impact of foreign currency translation. |
Note 12 - Income Taxes
Note 12 - Income Taxes | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 12 - Income Taxes | Note12 Income Taxes The following table reflects changes in unrecognized tax benefits for the nine-month period ended September30, 2009 (in thousands): Gross amounts of unrecognized tax benefits as of January1, 2009 $ 701,374 Increases in unrecognized tax benefits for tax positions taken during the period 87,737 Increases in unrecognized tax benefits for prior period tax positions 38,524 Gross amounts of unrecognized tax benefits as of September30, 2009 $ 827,635 As of September30, 2009, our liabilities for unrecognized tax benefits were included in deferred and other tax liabilities, net. The total liabilities for unrecognized tax benefits and the increase for the current period of these liabilities relate primarily to the allocations of revenue and costs among our global operations, the impact from acquisitions and the impact of tax rulings made during the period affecting our tax positions. Over the next 12 months, our existing tax positions will continue to generate an increase in liabilities for unrecognized tax benefits. We recognize interest and/or penalties related to uncertain tax positions in provision for income taxes. The amount of interest and penalties accrued at September30, 2009 was approximately $79.7 million. We are subject to taxation in the U.S.and various states and foreign jurisdictions. We are under examination by certain tax authorities for the 2003 to 2008 tax years. The material jurisdictions in which we are subject to potential examination by tax authorities for tax years after 2002 include, among others, the U.S., California, France, Germany, Italy, Korea, Switzerland and Singapore. |
Document Information
Document Information | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Document Information [Text Block] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | 2009-09-30 |
Entity Information
Entity Information (USD $) | ||
9 Months Ended
Sep. 30, 2009 | Oct. 14, 2009
| |
Entity [Text Block] | ||
Trading Symbol | EBAY | |
Entity Registrant Name | EBAY INC | |
Entity Central Index Key | 0001065088 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 1,292,961,679 |