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8-K - CURRENT REPORT ON FORM 8-K - EBAY INCd8k.htm
EX-2.2 - AMENDMENTS TO SHARE PURCHASE AGREEMENT - EBAY INCdex22.htm
EX-99.1 - PRESS RELEASE - EBAY INCdex991.htm

Exhibit 99.2

eBay Inc.

Unaudited Pro Forma Financial Statement Information

On November 19, 2009, eBay Inc. (“eBay” or the “Company”) sold all of the share capital of Skype Luxembourg Holdings S.a.r.l., Skype Inc. and Sonorit Holdings, A.S. (collectively with their respective subsidiaries, the “Skype Companies”) to an entity organized and owned by an investor group led by Silver Lake and including Joltid Limited and certain of its affiliated parties, the Canada Pension Plan Investment Board and Andreessen Horowitz (the “Buyer”). The Company received cash proceeds of approximately $1.9 billion, a note from a subsidiary of the Buyer in the principal amount of $125.0 million and a 30 percent equity interest in the outstanding capital stock of the Buyer. The Company also purchased senior debt securities with a face value of $50.0 million as part of a Skype debt financing. We will account for the minority equity interest using the equity method of accounting.

The unaudited Pro Forma Condensed Consolidated Balance Sheet Information as of September 30, 2009 set forth below has been presented to give effect to the sale of the controlling interest in the Skype Companies as if it had occurred on September 30, 2009. The unaudited Pro Forma Condensed Consolidated Statements of Income for the year ended December 31, 2008 and the nine month period ended September 30, 2009 set forth below have been presented after giving effect to the sale as if it had occurred on January 1, 2008, and do not assume any interest income on cash proceeds.

The unaudited pro forma financial statements have been derived from the historical audited consolidated financial statements of the Company included in its Annual Report on Form 10-K for the year ended December 31, 2008 and interim financial statements in its Quarterly Report on Form 10-Q for the period ended September 30, 2009. The unaudited pro forma financial statements are based upon available information and assumptions that the Company believes are reasonable under the circumstances and were prepared to illustrate the estimated effects of the sale.

The unaudited pro forma financial statements have been provided for informational purposes and should not be considered indicative of the financial condition or results of operations that would have been achieved had the sale occurred as of the periods presented. In addition, the unaudited pro forma financial statements do not purport to indicate balance sheet data or results of operations as of any future date or for any future period. The unaudited pro forma financial statements, including the notes thereto, should be read in conjunction with the historical financial statements of the Company included in its Annual Report on Form 10-K for the year ended December 31, 2008 and interim financial statements in its Quarterly Report on Form 10-Q for the nine month period ended September 30, 2009.


eBay Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Income

For the Year Ended December 31, 2008

(In thousands, except per share amounts)

 

     As Reported (a)     Skype
Companies
(b)
    Pro Forma
Adjustments
    Pro Forma  

Net revenues

   $ 8,541,261      $ (550,841   $ —        $ 7,990,420   

Cost of net revenues

     2,228,069        (284,202     —          1,943,867   
                                

Gross profit

     6,313,192        (266,639     —          6,046,553   
                                

Operating expenses:

        

Sales and marketing

     1,881,551        (91,481     —          1,790,070   

Product development

     725,600        (31,124     —          694,476   

General and administrative

     998,871        (51,067     —          947,804   

Provision for transaction and loan losses

     347,453        (243     —          347,210   

Amortization of acquired intangible assets

     234,916        (69,832     —          165,084   

Restructuring

     49,119        —          —          49,119   
                                

Total operating expenses

     4,237,510        (243,747     —          3,993,763   
                                

Income from operations

     2,075,682        (22,892     —          2,052,790   

Interest and other income (expense), net

     107,882        (10,229     (28,037 )(c)      89,451   
         19,835  (d)   
                                

Income before income taxes

     2,183,564        (33,121     (8,202     2,142,241   

Provision for income taxes

     (404,090     (8,447     (7,299 )(e)      (419,836
                                

Net income

   $ 1,779,474      $ (41,568   $ (15,501   $ 1,722,405   
                                

Net income per share:

        

Basic

   $ 1.37          $ 1.32   
                    

Diluted

   $ 1.36          $ 1.31   
                    

Weighted average shares:

        

Basic

     1,303,454            1,303,454   
                    

Diluted

     1,312,608            1,312,608   
                    


eBay Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Income

For the Nine Months Ended September 30, 2009

(In thousands, except per share amounts)

 

     As Reported (f)     Skype
Companies
(b)
    Pro Forma
Adjustments
    Pro Forma  

Net revenues

   $ 6,356,430      $ (508,377   $ —        $ 5,848,053   

Cost of net revenues

     1,809,067        (243,439     —          1,565,628   
                                

Gross profit

     4,547,363        (264,938     —          4,282,425   
                                

Operating expenses:

        

Sales and marketing

     1,359,277        (89,012     —          1,270,265   

Product development

     605,126        (29,022     —          576,104   

General and administrative

     797,966        (38,034     —          759,932   

Provision for transaction and loan losses

     270,597        (1,387     —          269,210   

Amortization of acquired intangible assets

     200,066        (47,390     —          152,676   

Restructuring

     36,937        —          —          36,937   
                                

Total operating expenses

     3,269,969        (204,845     —          3,065,124   
                                

Income from operations

     1,277,394        (60,093     —          1,217,301   

Interest and other income (expense), net

     8,957        5,379        (16,671 )(c)      12,541   
         14,876  (d)   
                                

Income before income taxes

     1,286,351        (54,714     (1,795     1,229,842   

Provision for income taxes

     (252,160     4,032        (5,474 )(e)      (253,602
                                

Net income

   $ 1,034,191      $ (50,682   $ (7,269   $ 976,240   
                                

Net income per share:

        

Basic

   $ 0.80          $ 0.76   
                    

Diluted

   $ 0.80          $ 0.75   
                    

Weighted average shares:

        

Basic

     1,288,150            1,288,150   
                    

Diluted

     1,299,279            1,299,279   
                    


eBay Inc.

Unaudited Pro Forma Condensed Consolidated Balance Sheet Information

September 30, 2009

(In Thousands)

 

     As Reported (g)    Skype
Companies
(h)
    Pro Forma
Adjustments
    Pro Forma

ASSETS

         

Current assets:

         

Cash and cash equivalents

   $ 2,557,859    $ (50,000   $ 1,916,633  (i)    $ 4,374,492
          (50,000 )(j)   

Short-term investments

     601,443      —          —          601,443

Accounts receivable, net

     419,982      (37,540     —          382,442

Loans and interest receivable, net

     511,809      —          —          511,809

Funds receivable and customer accounts

     1,993,294      —          —          1,993,294

Other current assets

     389,200      (22,389     —          366,811
                             

Total current assets

     6,473,587      (109,929     1,866,633        8,230,291

Long-term investments

     479,285      —          708,768  (k)      1,238,053
          50,000  (j)   

Property and equipment, net

     1,293,775      (11,718     —          1,282,057

Goodwill

     8,016,465      (1,896,117     —          6,120,348

Intangible assets, net

     909,401      (71,664     —          837,737

Other assets

     183,859      (1,731     125,000  (l)      307,128
                             

Total assets

   $ 17,356,372    $ (2,091,159   $ 2,750,401      $ 18,015,614
                             

LIABILITIES AND STOCKHOLDERS’ EQUITY

         

Current liabilities:

         

Accounts payable

   $ 209,333    $ (9,338   $ —        $ 199,995

Funds payable and amounts due to customers

     1,993,294      —          —          1,993,294

Accrued expenses and other current liabilities

     961,966      (96,337     —          865,629

Deferred revenue and customer advances

     231,992      (134,661     —          97,331

Income taxes payable

     50,093      (6,350     —          43,743

Borrowings from credit agreement

     200,000      —          —          200,000
                             

Total current liabilities

     3,646,678      (246,686     —          3,399,992

Deferred and other tax liabilities, net

     907,342      —          —          907,342

Other liabilities

     51,185      (18,307     —          32,878
                             

Total liabilities

     4,605,205      (264,993     —          4,340,212
                             

Total stockholders’ equity

     12,751,167      (1,826,166     2,750,401  (m)      13,675,402
                             

Total liabilities and stockholders' equity

   $ 17,356,372    $ (2,091,159   $ 2,750,401      $ 18,015,614
                             


eBay Inc.

Unaudited Notes to the Pro Forma Condensed Consolidated

Statements of Income and Balance Sheet Information

 

a) Represents Condensed Consolidated Statement of Income included in eBay’s financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2008.

 

b) Represents the operations of the Skype Companies while wholly owned by eBay during the respective periods presented.

 

c) Represent income from eBay’s retained equity interest in the Skype Companies accounted for under the equity method of accounting.

 

d) Represents interest income on a $125.0 million note from a subsidiary of the Buyer and $50.0 million in senior debt securities purchased as part of a Skype debt financing. The $125.0 million note carries an interest rate of 12% per annum paid in kind (accrued interest is included in the principal amount). The senior debt securities in the principal amount of $50.0 million carry an interest rate of Libor plus 700 basis points.

 

e) Represents provision for income taxes on interest income.

 

f) Represents Condensed Consolidated Statement of Income included in eBay’s financial statements included in its Quarterly Report on Form 10-Q for the nine months ended September 30, 2009.

 

g) Represents Condensed Consolidated Balance Sheet included in eBay’s financial statements included in its Quarterly Report on Form 10-Q for the nine months ended September 30, 2009.

 

h) Represents the balance sheet of the Skype Companies while wholly owned by eBay.

 

i) Represents the contractual cash received as a result of the sale of the Skype Companies.

 

j) Represents senior debt securities purchased as part of a Skype debt financing.

 

k) Represents the estimated fair value of eBay’s 30 percent interest in the outstanding capital stock of the Buyer.

 

l) Represents a note receivable from a subsidiary of the Buyer in connection with the sale of the Skype Companies.

 

m) The estimated nonrecurring gain on the sale of the Skype Companies has been reflected in stockholders’ equity.