Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - EBAY INC | d93601d8k.htm |
| EX-10.5 - EX-10.5 - EBAY INC | d93601dex105.htm |
| EX-10.2 - EX-10.2 - EBAY INC | d93601dex102.htm |
| EX-10.4 - EX-10.4 - EBAY INC | d93601dex104.htm |
| EX-10.3 - EX-10.3 - EBAY INC | d93601dex103.htm |
| EX-10.1 - EX-10.1 - EBAY INC | d93601dex101.htm |
Exhibit 99.1
eBay Inc. Unaudited Pro Forma Consolidated Financial Information
San Jose, California, July 20, 2015 - On July 17, 2015, eBay Inc. (“eBay”) completed the previously announced distribution of 100% of the outstanding common stock of PayPal Holdings, Inc. (“PayPal”) to eBay’s shareholders (the “Distribution”). Beginning in the third quarter of 2015, PayPal’s historical financial results for periods prior to the Distribution will be reflected in eBay’s consolidated financial statements as discontinued operations.
The following unaudited pro forma consolidated statements of income of eBay for the three months ended March 31, 2015 and for the year ended December 31, 2014 are presented as if the Distribution had occurred as of January 1, 2014 and give effect to the elimination of the historical PayPal financial results due to the Distribution, as well as other pro forma adjustments to reflect the impact of certain service agreements entered into at the time of the Distribution. The following unaudited pro forma consolidated statements of income of eBay for the years ended December 31, 2012 and 2013 only give effect to the elimination of the historical PayPal financial results as if the Distribution had occurred as of January 1, 2012. The following unaudited pro forma consolidated balance sheet of eBay as of March 31, 2015 is presented as if the Distribution occurred on March 31, 2015.
The following pro forma financial statements are based on information currently available including certain assumptions and estimates. They are intended for informational purposes only, and do not purport to represent what eBay’s financial position and results of operations actually would have been had the Distribution occurred on the dates indicated, or to project eBay’s financial position or results of operations for any future date or period.
The following unaudited pro forma consolidated financial statements have been derived from eBay’s historical consolidated financial statements as of and for the three years ended December 31, 2014 and the interim unaudited period ending March 31, 2015. The unaudited pro forma consolidated financial statements and the accompanying notes should be read in conjunction with (i) the audited consolidated financial statements, the accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in eBay’s Annual Report on Form 10-K for the year ended December 31, 2014 and (ii) the unaudited consolidated financial statements, the accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in eBay’s Quarterly Report on Form 10-Q for the three months ended March 31, 2015.
The information in the “Historical” columns in the unaudited pro forma consolidated statements of income and the unaudited pro forma consolidated balance sheet was derived from eBay’s historical consolidated financial statements for the periods and as of the date presented and does not reflect any adjustments related to the Distribution and related events.
The information in the “PayPal Separation” columns in the unaudited pro forma consolidated statements of income was derived from eBay’s audited consolidated financial statements and the related accounting records for the years ended December 31, 2014, 2013, and 2012, and the unaudited consolidated financial statements for the three months ended March 31, 2015 and reflects the financial results of the PayPal business, adjusted to include certain costs directly attributable to PayPal and to exclude corporate overhead costs that were previously allocated to PayPal for each period, as described in PayPal’s audited combined financial statements for the three years ended December 31, 2014 and unaudited condensed combined financial statements as of and for the three months ended March 31, 2015 included in PayPal’s information statement dated June 29, 2015 (the “Information Statement”), which has been filed as an exhibit to eBay’s Current Report on Form 8-K with the SEC on June 30, 2015. The information in the “PayPal Separation” columns in the unaudited pro forma consolidated balance sheet was derived from eBay’s unaudited consolidated financial statements and the related accounting records as of March 31, 2015, adjusted to include certain assets and liabilities that were transferred to PayPal pursuant to the separation and distribution agreement. The information in the foregoing “PayPal Separation” columns should be read in conjunction with PayPal’s audited combined financial statements and notes thereto as of and for the three years ended December 31, 2014 and unaudited condensed combined financial statements and notes thereto as of March 31, 2015 included in the Information Statement.
The information in the “Other Pro Forma Adjustments” columns in the unaudited pro forma consolidated statements of income and the unaudited pro forma consolidated balance sheet reflects additional pro forma adjustments which are further described in the accompanying notes.
eBay Inc.
Unaudited Pro Forma Consolidated Statement of Income
Three Months Ended March 31, 2015
(dollars and shares in millions except per share data)
| Historical | PayPal Separation |
Other Pro Forma Adjustments |
Notes | Pro Forma eBay |
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| Net revenues |
$ | 4,448 | $ | (2,109 | ) | $ | 21 | (a)(b) | $ | 2,360 | ||||||||
| Cost of net revenues |
1,450 | (826 | ) | 16 | (c)(d)(e) | 640 | ||||||||||||
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| Gross profit |
2,998 | (1,283 | ) | 5 | 1,720 | |||||||||||||
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| Operating expenses: |
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| Sales and marketing |
794 | (245 | ) | 549 | ||||||||||||||
| Product development |
485 | (229 | ) | 256 | ||||||||||||||
| General and administrative |
665 | (338 | ) | 327 | ||||||||||||||
| Provision for transaction and loan losses |
264 | (188 | ) | 76 | ||||||||||||||
| Amortization of acquired intangible assets |
58 | (13 | ) | 45 | ||||||||||||||
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| Total operating expenses |
2,266 | (1,013 | ) | 1,253 | ||||||||||||||
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| Income from operations |
732 | (270 | ) | 5 | 467 | |||||||||||||
| Interest and other, net |
8 | 1 | 9 | |||||||||||||||
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| Income before income taxes |
740 | (269 | ) | 5 | 476 | |||||||||||||
| Provision for income taxes |
(114 | ) | 38 | (2 | ) | (f) | (78 | ) | ||||||||||
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| Net income (loss) |
$ | 626 | $ | (231 | ) | $ | 3 | $ | 398 | |||||||||
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| Net income (loss) per share: |
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| Basic |
$ | 0.51 | $ | 0.33 | ||||||||||||||
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| Diluted |
$ | 0.51 | $ | 0.32 | ||||||||||||||
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| Weighted average shares: |
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| Basic |
1,216 | 1,216 | ||||||||||||||||
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| Diluted |
1,229 | 1,229 | ||||||||||||||||
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See accompanying notes.
eBay Inc.
Unaudited Pro Forma Consolidated Statement of Income
Year End December 31, 2014
(dollars and shares in millions except per share data)
| Historical | PayPal Separation |
Other Pro Forma Adjustments |
Notes | Pro Forma eBay |
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| Net revenues |
$ | 17,902 | $ | (7,895 | ) | $ | 72 | (a)(b) | $ | 10,079 | ||||||||
| Cost of net revenues |
5,732 | (3,140 | ) | 57 | (c)(d)(e) | 2,649 | ||||||||||||
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| Gross profit |
12,170 | (4,755 | ) | 15 | 7,430 | |||||||||||||
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| Operating expenses: |
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| Sales and marketing |
3,587 | (1,028 | ) | 2,559 | ||||||||||||||
| Product development |
2,000 | (879 | ) | 1,121 | ||||||||||||||
| General and administrative |
1,843 | (892 | ) | 951 | ||||||||||||||
| Provision for transaction and loan losses |
958 | (689 | ) | 269 | ||||||||||||||
| Amortization of acquired intangible assets |
268 | (53 | ) | 215 | ||||||||||||||
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| Total operating expenses |
8,656 | (3,541 | ) | 5,115 | ||||||||||||||
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| Income from operations |
3,514 | (1,214 | ) | 15 | 2,315 | |||||||||||||
| Interest and other, net |
17 | 7 | 24 | |||||||||||||||
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| Income before income taxes |
3,531 | (1,207 | ) | 15 | 2,339 | |||||||||||||
| Provision for income taxes |
(3,485 | ) | 195 | (6 | ) | (f) | (3,296 | ) | ||||||||||
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| Net income (loss) |
$ | 46 | $ | (1,012 | ) | $ | 9 | $ | (957 | ) | ||||||||
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| Net income (loss) per share: |
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| Basic |
$ | 0.04 | $ | (0.77 | ) | |||||||||||||
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| Diluted |
$ | 0.04 | $ | (0.77 | ) | |||||||||||||
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| Weighted average shares: |
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| Basic |
1,251 | 1,251 | ||||||||||||||||
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| Diluted |
1,262 | 1,251 | ||||||||||||||||
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See accompanying notes.
eBay Inc.
Unaudited Pro Forma Consolidated Statement of Income
Year End December 31, 2013
(dollars and shares in millions except per share data)
| Historical | PayPal Separation |
Pro Forma eBay |
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| Net revenues |
$ | 16,047 | $ | (6,640 | ) | $ | 9,407 | |||||
| Cost of net revenues |
5,036 | (2,696 | ) | 2,340 | ||||||||
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| Gross profit |
11,011 | (3,944 | ) | 7,067 | ||||||||
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| Operating expenses: |
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| Sales and marketing |
3,060 | (794 | ) | 2,266 | ||||||||
| Product development |
1,768 | (712 | ) | 1,056 | ||||||||
| General and administrative |
1,703 | (724 | ) | 979 | ||||||||
| Provision for transaction and loan losses |
791 | (551 | ) | 240 | ||||||||
| Amortization of acquired intangible assets |
318 | (41 | ) | 277 | ||||||||
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| Total operating expenses |
7,640 | (2,822 | ) | 4,818 | ||||||||
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| Income from operations |
3,371 | (1,122 | ) | 2,249 | ||||||||
| Interest and other, net |
95 | 7 | 102 | |||||||||
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| Income before income taxes |
3,466 | (1,115 | ) | 2,351 | ||||||||
| Provision for income taxes |
(610 | ) | 189 | (421 | ) | |||||||
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| Net income (loss) |
$ | 2,856 | $ | (926 | ) | $ | 1,930 | |||||
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| Net income (loss) per share: |
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| Basic |
$ | 2.20 | $ | 1.49 | ||||||||
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| Diluted |
$ | 2.18 | $ | 1.47 | ||||||||
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| Weighted average shares: |
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| Basic |
1,295 | 1,295 | ||||||||||
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| Diluted |
1,313 | 1,313 | ||||||||||
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See accompanying notes.
eBay Inc.
Unaudited Pro Forma Consolidated Statement of Income
Year End December 31, 2012
(dollars and shares in millions except per share data)
| Historical | PayPal Separation |
Pro Forma eBay |
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| Net revenues |
$ | 14,072 | $ | (5,591 | ) | $ | 8,481 | |||||
| Cost of net revenues |
4,216 | (2,236 | ) | 1,980 | ||||||||
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| Gross profit |
9,856 | (3,355 | ) | 6,501 | ||||||||
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| Operating expenses: |
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| Sales and marketing |
2,913 | (672 | ) | 2,241 | ||||||||
| Product development |
1,573 | (655 | ) | 918 | ||||||||
| General and administrative |
1,567 | (669 | ) | 898 | ||||||||
| Provision for transaction and loan losses |
580 | (401 | ) | 179 | ||||||||
| Amortization of acquired intangible assets |
335 | (45 | ) | 290 | ||||||||
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| Total operating expenses |
6,968 | (2,442 | ) | 4,526 | ||||||||
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| Income from operations |
2,888 | (913 | ) | 1,975 | ||||||||
| Interest and other, net |
196 | (10 | ) | 186 | ||||||||
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| Income before income taxes |
3,084 | (923 | ) | 2,161 | ||||||||
| Provision for income taxes |
(475 | ) | 105 | (370 | ) | |||||||
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| Net income (loss) |
$ | 2,609 | $ | (818 | ) | $ | 1,791 | |||||
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| Net income (loss) per share: |
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| Basic |
$ | 2.02 | $ | 1.39 | ||||||||
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| Diluted |
$ | 1.99 | $ | 1.36 | ||||||||
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| Weighted average shares: |
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| Basic |
1,292 | 1,292 | ||||||||||
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| Diluted |
1,313 | 1,313 | ||||||||||
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See accompanying notes.
eBay Inc.
Unaudited Pro Forma Consolidated Balance Sheet
As of March 31, 2015
(dollars in millions)
| Historical | PayPal Separation |
Other Pro Forma Adjustments |
Notes | Pro Forma eBay |
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| ASSETS | ||||||||||||||||||
| Current assets: |
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| Cash and cash equivalents |
$ | 5,473 | $ | (2,352 | ) | $ | (2,100 | ) | (g) | $ | 1,021 | |||||||
| Short-term investments |
4,206 | (23 | ) | (470 | ) | (g) | 3,713 | |||||||||||
| Accounts receivable, net |
703 | (49 | ) | 654 | ||||||||||||||
| Loans and interest receivable, net |
3,578 | (3,566 | ) | 12 | ||||||||||||||
| Funds receivable and customer accounts |
10,891 | (10,891 | ) | — | ||||||||||||||
| Other current assets |
1,663 | (482 | ) | 1,181 | ||||||||||||||
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| Total current assets |
26,514 | (17,363 | ) | (2,570 | ) | 6,581 | ||||||||||||
| Long-term investments |
5,647 | (31 | ) | (1,230 | ) | (g) | 4,386 | |||||||||||
| Property and equipment, net |
2,947 | (1,185 | ) | 1,762 | ||||||||||||||
| Goodwill |
8,965 | (3,134 | ) | 5,831 | ||||||||||||||
| Intangible assets, net |
481 | (152 | ) | 329 | ||||||||||||||
| Other assets |
287 | (30 | ) | 157 | (h) | 414 | ||||||||||||
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| Total assets |
$ | 44,841 | $ | (21,895 | ) | $ | (3,643 | ) | $ | 19,303 | ||||||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||
| Current liabilities: |
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| Short-term debt |
$ | 868 | $ | — | $ | 868 | ||||||||||||
| Accounts payable |
393 | (124 | ) | 269 | ||||||||||||||
| Funds payable and amounts due to customers |
10,891 | (10,891 | ) | — | ||||||||||||||
| Accrued expenses and other current liabilities |
5,145 | (1,841 | ) | 21 | (h) | 3,325 | ||||||||||||
| Deferred revenue |
190 | — | 190 | |||||||||||||||
| Income taxes payable |
124 | (46 | ) | 78 | ||||||||||||||
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| Total current liabilities |
17,611 | (12,902 | ) | 21 | 4,730 | |||||||||||||
| Deferred and other tax liabilities, net |
768 | (345 | ) | 157 | (h) | 580 | ||||||||||||
| Long-term debt |
6,795 | — | 6,795 | |||||||||||||||
| Other liabilities |
129 | (40 | ) | 89 | ||||||||||||||
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| Total liabilities |
25,303 | (13,287 | ) | 178 | 12,194 | |||||||||||||
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| Commitments and contingencies |
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| Stockholders’ equity: |
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| Common stock, $0.001 par value; 3,580 shares authorized; 1,210 shares outstanding |
2 | — | 2 | |||||||||||||||
| Additional paid-in capital |
14,084 | — | 14,084 | |||||||||||||||
| Treasury stock at cost, 402 shares |
(15,054 | ) | — | (15,054 | ) | |||||||||||||
| Retained earnings |
19,526 | (8,466 | ) | (3,821 | ) | (g)(h) | 7,239 | |||||||||||
| Accumulated other comprehensive income |
980 | (142 | ) | 838 | ||||||||||||||
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| Total stockholders’ equity |
19,538 | (8,608 | ) | (3,821 | ) | 7,109 | ||||||||||||
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| Total liabilities and stockholders’ equity |
$ | 44,841 | $ | (21,895 | ) | $ | (3,643 | ) | $ | 19,303 | ||||||||
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See accompanying notes.
eBay Inc.
Unaudited Pro Forma Consolidated Financial Information
Note 1. Other Pro Forma Adjustments
(a) Reflects the impact of fees earned by eBay from PayPal for referral services and user penetration, pursuant to the terms of the operating agreement. These fees would have been $59 million and $17 million for the year ended December 31, 2014 and the quarter ended March 31, 2015, respectively, consisting of fees for customers acquired and incentives for the usage of PayPal products (including credit products) on certain eBay properties.
(b) Reflects the impact of fees earned by eBay from PayPal for shared data centers and information technology facility owned by eBay which are governed by the colocation services agreements. After the Distribution, eBay will manage and own data centers and information technology facilities shared with PayPal and will charge PayPal based on actual usage of those data centers, inclusive of management fees. These fees would have been $13 million and $4 million for the year ended December 31, 2014 and the quarter ended March 31, 2015, respectively.
(c) Reflects the impact of transaction fees for payment services provided by PayPal to eBay pursuant to the terms of certain commercial agreements negotiated between the parties. These charges would have been $77 million and $20 million for the year ended December 31, 2014 and the quarter ended March 31, 2015, respectively.
(d) Reflects the impact of charges to PayPal from eBay for shared data centers and information technology facilities that eBay leases which are governed by the colocation services agreements. After the Distribution, eBay will manage data centers and information technology facilities shared with PayPal and will charge PayPal based on actual usage of those data centers, inclusive of management fees. These charges would have been $32 million and $8 million for the year ended December 31, 2014 and the quarter ended March 31, 2015, respectively.
(e) Reflects the impact of charges to eBay from PayPal for usage of the Phoenix and Denver data centers, owned by PayPal, pursuant to the colocation services agreement. After the Distribution, PayPal will charge eBay a percentage of depreciation based on actual usage of those data centers. These charges would have been $12 million and $4 million for the year ended December 31, 2014 and the quarter ended March 31, 2015, respectively.
(f) Reflects the tax effect of pro forma adjustments using the respective statutory tax rate for the year ended December 31, 2014 and the quarter ended March 31, 2015.
(g) Reflects a cash contribution of $3.8 billion to PayPal from eBay that was made subsequent to March 31, 2015.
(h) Reflects $157 million indemnification asset and $21 million indemnification liability. In addition, a $157 million long term income tax payable is required to be reported gross of the related indemnification asset. Pursuant to the terms of the tax matters agreement, PayPal and eBay will indemnify the other party for certain taxes payable and uncertain tax positions.