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8-K Filing
eBay (EBAY) 8-KResults of Operations and Financial Condition
Filed: 19 Jan 05, 12:00am
Exhibit 99.1
eBAY INC. ANNOUNCES FOURTH QUARTER AND FULL YEAR
—Company Reports Record Q4 Net Revenues of $935.8 Million—
—Achieves Q4 GAAP Diluted EPS of $0.30 and Pro Forma Diluted EPS of $0.33—
—Announces a Two-for-One Stock Split——
San Jose, CA, January 19, 2005 – eBay Inc. (Nasdaq: EBAY; www.ebay.com), the World’s Online Marketplace, reported financial results for its quarter and full year ended December 31, 2004.
eBay reported record consolidated Q4-04 net revenues of $935.8 million, up 44% year over year; operating income of $284.7 million, up 40% year over year; and pro forma operating income of $313.9 million, up 44% year over year. Operating income was 30% of net revenues and pro forma operating income was 34% of net revenues.
Consolidated net income in Q4-04 was $205.4 million, or $0.30 per diluted share. eBay’s pro forma consolidated net income, excluding certain items, was $226.0 million, or $0.33 per diluted share.
These results exceeded the company’s guidance of $915 million for net revenues, met the guidance of $0.30 for earnings per diluted share, and exceeded the guidance of $0.32 for pro forma earnings per diluted share.
For the full year, eBay generated consolidated net revenues of $3.27 billion, a 51% increase over the $2.17 billion reported in 2003. Consolidated net income increased 76% year over year to $778.2 million, or $1.14 per diluted share. On a pro forma basis, eBay reported a 68% increase in consolidated net income year over year to $829.5 million, or $1.21 per diluted share.
In addition, eBay’s Board of Directors has approved a two-for-one split of all outstanding shares of the company’s common stock, payable February 16, 2005 to stockholders of record on January 31, 2005. These results have not been adjusted to reflect this stock split.
“Our strong Q4 results capped off outstanding success throughout the year, with exceptional growth across every part of the business,” said Meg Whitman, President and CEO of eBay. “We have tremendous momentum going into 2005, and I’m more confident than ever that the decisions and investments we’re making today will ensure a bright future for the company and our community of users around the world.”
Full Year Key Financial and Operating Metrics
Consolidated Net Revenues – Consolidated net revenues totaled a record $3.27 billion, which represented an increase of 51% from the $2.17 billion reported in the full year 2003.
Listings – Listings totaled a record 1.4 billion in the full year 2004, 45% higher than the 971 million listings reported in the full year 2003.
eBay Announces Q4-04 Earnings (cont.)
Gross Merchandise Volume (GMV) – GMV, the total value of all successfully closed listings on eBay’s trading platforms, was a record $34.2 billion, representing a 44% year-over-year increase from the $23.8 billion reported in the full year 2003.
Total Payment Volume (TPV) – TPV, the dollar volume of payments initiated through the PayPal system, was $18.9 billion, representing a 55% year-over-year increase from the $12.2 billion reported in the full year 2003.
Key Q4 Financial and Operating Metrics
Consolidated Net Revenues – Consolidated net revenues totaled a record $935.8 million, which represented an increase of 44% from the $648.4 million reported in Q4-03.
Net Transaction Revenues – Consolidated net transaction revenues totaled a record $907.3 million, which represented an increase of 43% from the $632.6 million reported in Q4-03.
• | eBay U.S. Net Transaction Revenues – eBay U.S. net transaction revenues totaled $362.7 million in Q4-04, representing 24% year-over-year growth. | |||
• | eBay International Net Transaction Revenues – eBay International net transaction revenues totaled $344.3 million in Q4-04, representing 64% year-over-year growth. | |||
• | Payments Net Transaction Revenues – Payments net transaction revenues totaled $200.2 million in Q4-04, representing 53% year-over-year growth. |
Confirmed Registered Users – Cumulative confirmed registered users at the end of Q4-04 totaled a record 135.5 million, representing a 43% increase over the 94.9 million users reported at the end of Q4-03.
Active Users – Active users, the number of users on the eBay platform who bid, bought, or listed an item within the previous 12 month period, increased to 56.1 million, a 36% increase over the 41.2 million active users reported in the same period a year ago.
Listings – New listings totaled a record 404.6 million in Q4-04, 39% higher than the 291.7 million listings reported in Q4-03. New listings in Q4-04 included 28.0 million new eBay Stores listings, versus 5.1 million new Stores listings in Q4-03.
Gross Merchandise Volume (GMV) – GMV was $9.8 billion, representing a 39% year-over-year increase from the $7.1 billion reported in Q4-03.
Total Payments Accounts – PayPal’s business had 63.8 million total accounts at the end of Q4-04, a 58% increase from the 40.3 million reported in Q4-03.
Total Payment Volume (TPV) – PayPal’s TPV was $5.6 billion in Q4-04, a 51% increase from the $3.7 billion reported in Q4-03.
2
eBay Announces Q4-04 Earnings (cont.)
Gross Profit – Gross profit was $759.4 million, or 81% of net revenues, which was down slightly from the 82% level reported in Q4-03.
Operating Income – Operating income was $284.7 million, or 30% of net revenues, a 40% increase over the $203.1 million reported in Q4-03. Pro forma operating income increased 44% year over year to $313.9 million, or 34% of net revenues.
GAAP Net Income – GAAP net income increased 44% year over year to $205.4 million, or $0.30 per diluted share.
Pro Forma Net Income – Pro forma net income increased 44% year over year to $226.0 million, or $0.33 per diluted share.
Operating and Free Cash Flows – Operating cash flows totaled $381.2 million. Free cash flows, representing operating cash flows less capital expenditures, totaled $298.3 million.
Key Category Performance* – Based on Q4-04 GMV, eBay has twelve categories that delivered $1 billion or more in worldwide annualized GMV: eBay Motors at $11.1 billion; Consumer Electronics at $3.5 billion; Computers at $3.0 billion; Clothing & Accessories at $2.9 billion; Books/Movies/Music at $2.4 billion; Collectibles at $2.2 billion; Home & Garden at $2.0 billion; Toys at $1.8 billion; Sports at $1.8 billion; Jewelry & Watches at $1.7 billion; Cameras & Photo at $1.3 billion; and Business & Industrial at $1.2 billion.
Fixed Price Trading – eBay’s fixed price trading contributed approximately $3.0 billion or 30.7% of total GMV during Q4-04, primarily from eBay’s “Buy It Now” feature.
eBay Stores – At the end of Q4-04, eBay hosted approximately 254,000 stores worldwide, with approximately 161,000 stores hosted on the U.S. site.
Acquisitions
Internet Auction Co., Ltd. – During the quarter ended December 31, 2004, eBay purchased an aggregate of approximately 372,000 additional shares in Internet Auction Co., Ltd. (IAC) for an aggregate purchase price of approximately $41 million in cash. As a result, eBay increased its investment in IAC from approximately 97.0% to approximately 99.9%.
Marktplaats.nl – On November 10, 2004, eBay completed its acquisition of Marktplaats.nl, an online classifieds website in the Netherlands. eBay acquired all outstanding securities of Marktplaats.nl for approximately $291 million in cash.
Rent.com – On December 16, 2004, eBay agreed to acquire Rent.com, an Internet listing website in the apartment and housing rental industry. eBay will acquire all outstanding securities of Rent.com for total consideration of approximately $415 million, net of cash. The acquisition amount will be paid with
3
eBay Announces Q4-04 Earnings (cont.)
approximately $30 million in cash and the remainder in eBay common stock. The acquisition, which is subject to regulatory approval and approval of Rent.com’s stockholders, is expected to close in the first quarter of 2005.
Consolidated Financial and Operating Summary
eBay reported record consolidated net revenues of $935.8 million in Q4-04, representing a 44% year-over-year increase. On a year-over-year basis, consolidated net revenues reflected a foreign currency translation benefit in Q4-04 of approximately $34.5 million. On a sequential basis, consolidated net revenues reflected a foreign currency translation benefit in Q4-04 of approximately $19.7 million.
Gross profit was $759.4 million, or 81% of net revenues, which was down slightly from the 82% level reported in Q4-03. The decrease in gross margin was primarily due to the relative growth of the lower-margin Payments segment.
Sales and marketing expenses totaled $268.9 million, or 29% of net revenues, which was up from the 27% reported in Q4-03. The year-over-year increase as a percentage of net revenues primarily reflects global increases in on-line marketing and in international off-line marketing.
Product development expenses totaled $64.6 million, or 7% of net revenues, which was consistent with the percentage reported in Q4-03. Total product development expenses in Q4-04 do not include $10.6 million of required cost capitalization for major site and other product development efforts.
General and administrative costs totaled $116.3 million, or 12% of net revenues, down from the 15% of net revenues reported in Q4-03. While general and administrative costs decreased as a percentage of net revenues, the absolute dollars increased, primarily as a result of increases in headcount.
Income from operations totaled $284.7 million during Q4-04, a 40% increase over the $203.1 million reported in Q4-03. On a pro forma basis, income from operations totaled $313.9 million, a 44% increase over the $218.5 million reported in Q4-03. Included in both the GAAP and pro forma Q4-04 consolidated income from operations was a $12.4 million year-over-year net benefit from changes in foreign exchange rates. On a sequential basis, both the GAAP and pro forma consolidated income from operations reflected a foreign currency translation benefit in Q4-04 of approximately $5.0 million.
Interest and other income, net, totaled $18.8 million in Q4-04, up from the $11.4 million reported in Q4-03. The increase in Q4-04 was primarily the result of increased interest income earned on larger cash, cash equivalents, and investment balances, partially offset by foreign exchange losses.
The GAAP and pro forma effective tax rate for Q4-04 was 32%, consistent with the GAAP effective tax rate for Q4-03, and an increase from the pro forma effective tax rate of 30% for Q4-03. The higher pro forma effective tax rate for Q4-04, as compared to Q4-03, reflects an increase in our non-deductible expenses related primarily to international acquisitions.
At the end of Q4-04, the company had nearly $3.4 billion in aggregate cash and investments and more than $7.9 billion in total assets.
4
eBay Announces Q4-04 Earnings (cont.)
The company reported $381.2 million in operating cash flows and $82.9 million of capital expenditures in Q4-04, resulting in free cash flows of $298.3 million.
Business Outlook
The following updated guidance reflects the continuing favorable momentum in the business as well as the inclusion of our potential acquisition of Rent.com, beginning in mid Q1-05, and revised outlooks for exchange rates that reflect current levels. The guidance does not include the impact of any other potential acquisitions. This updated guidance also includes the effect of a significantly increased investment pool for the company’s 2005 strategic initiatives.
Net Revenues – eBay now expects consolidated net revenues for 2005 to fall in the range of $4.25 billion to $4.35 billion. From a quarterly perspective, eBay expects consolidated net revenues to fall in the range of $1.01 billion to $1.03 billion in Q1-05, $1.025 billion to $1.04 billion in Q2-05, $1.035 billion to $1.06 billion in Q3-05 and $1.18 billion to $1.22 billion in Q4-05.
GAAP Diluted EPS – eBay now estimates GAAP earnings per diluted share for the full year 2005 to fall in the range of $1.37 to $1.41. From a quarterly perspective, eBay estimates GAAP earnings per diluted share to fall in the range of $0.32 to $0.33 in Q1-05, $0.32 to $0.33 in Q2-05, $0.33 to $0.34 in Q3-05 and $0.41 to $0.42 in Q4-05. The updated guidance now includes the impact of the amortization of acquired intangible assets in relation to our acquisition of the outstanding common stock of Marktplaats.nl and the potential acquisitions of Rent.com and Kurant Corporation. The estimated earnings per diluted share does not include the impact of expensing stock options upon the adoption of Financial Accounting Standards Board Statement No. 123® “Share-Based Payment.”
Pro Forma Diluted EPS – eBay now estimates pro forma earnings per diluted share for the full year 2005 to fall in the range of $1.48 to $1.52. From a quarterly perspective, eBay estimates pro forma earnings per diluted share to fall in the range of $0.34 to $0.35 in Q1-05, $0.34 to $0.35 in Q2-05, $0.35 to $0.36 in Q3-05, and $0.43 to $0.44 in Q4-05.
Capital Expenditures – eBay expects its capital expenditures to total approximately $525 million for the full year 2005, which is 12% of eBay’s guidance for net revenues. Excluding the one time payment from restricted cash of approximately $126 million in relation to the repayment of our San Jose corporate headquarters lease obligation in Q1-05, eBay expects its capital expenditures to total approximately $400 million for the full year 2005, which is 9% of eBay’s guidance for net revenues.
In addition, eBay’s Board of Directors has approved a two-for-one split of all outstanding shares of the company’s common stock, payable February 16, 2005 to stockholders of record on January 31, 2005. The guidance has not been updated to reflect the impact of this stock split.
Quarterly Conference Call
eBay will host a conference call to discuss fourth quarter and full year results at 2 pm Pacific Standard Time today. A live webcast of the conference call can be accessed through the company’s Investor Relations website athttp://investor.ebay.com. In addition, an archive of the webcast will be accessible through the same link.
5
eBay Announces Q4-04 Earnings (cont.)
Non-GAAP Measures
To supplement the company’s consolidated financial statements presented in accordance with GAAP, eBay uses non-GAAP measures of certain components of financial performance, including gross profit, operating income, net income, earnings per share, cash flows, and effective tax rate, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP measures are provided to enhance investors’ overall understanding of the company’s current financial performance and the company’s prospects for the future. Specifically, the company believes the non-GAAP results provide useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of its core operating results. In addition, because eBay has historically reported certain non-GAAP results to investors, the company believes the inclusion of non-GAAP measures provides consistency in the company’s financial reporting. These measures should be considered in addition to results prepared in accordance with generally accepted accounting principles, but should not be considered a substitute for, or superior to, GAAP results. Consistent with the company’s historical practice, the non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure.
About eBay
eBay is The World’s Online Marketplace®. Founded in 1995, eBay created a powerful platform for the sale of goods and services by a passionate community of individuals and businesses. On any given day, there are millions of items across thousands of categories for sale on eBay. eBay enables trade on a local, national and international basis with customized sites in markets around the world. Through an array of services, such as its payment solution provider PayPal, eBay is enabling global e-commerce for an ever-growing online community.
Forward-Looking Statements
This press release contains forward-looking statements relating to the future performance of eBay and its consolidated subsidiaries. Those statements involve risks and uncertainties, and the company’s actual results could differ materially from those discussed. Factors that could cause or contribute to such differences include, but are not limited to: the company’s need to manage an increasingly large company with a broad range of businesses of varying degrees of maturity; the company’s need to increasingly achieve growth from its existing users as well as from new users in its more established markets; the company’s ability to deal with the increasingly competitive e-commerce environment, including competition for its sellers from other trading sites and other means of selling, and competition for its buyers from other merchants, online and offline; the company’s ability to upgrade and develop its systems, infrastructure and customer service capabilities to accommodate growth at a reasonable cost; the litigation, regulatory, credit card association, and other risks specific to PayPal; the company’s need to manage other regulatory, tax, and litigation risks even as its product offerings expand and its services are offered in more jurisdictions; the company’s ability to maintain site stability and performance on all of its sites while adding new products and features in a timely fashion; the company’s ability to profitably expand its model to new types of merchandise and sellers; the company’s ability to profitably expand outside of the US; fluctuations in foreign exchange rates; the costs and benefits of recent and future acquisitions and other commercial transactions; and, the need to manage the integration of recent and future acquisitions. The forward looking statements in this release do not include the potential impact of any acquisitions that may be completed after the date hereof.
6
eBay Announces Q4-04 Earnings (cont.)
More information about factors that could affect the company’s operating results is included under the captions “Risk Factors That May Affect Results of Operations and Financial Condition” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by visiting the company’s investor relations site athttp://investor.ebay.com. The company expects to file its annual report on Form 10-K for the year ended December 31, 2004 on or about March 1, 2005. Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to the company on the date hereof. eBay assumes no obligation to update such statements.
Investor Relations Contact: | Tracey Ford | 408-376-7205 | ||||
Media Relations Contact: | Hani Durzy | 408-376-7458 | ||||
Investor Information Request: | 408-376-7493 | |||||
Company News: | http://www.businesswire.com | |||||
Investor Relations Website: | http://investor.ebay.com |
7
eBay Inc.
Unaudited Condensed Consolidated Balance Sheet
(U.S. Dollars In Thousands)
December 31, | December 31, | |||||||
2003 | 2004 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,381,513 | $ | 1,330,045 | ||||
Short-term investments | 340,576 | 682,004 | ||||||
Accounts receivable, net | 225,871 | 240,856 | ||||||
Funds receivable | 79,893 | 123,424 | ||||||
Restricted cash and investments | 14,859 | 155,405 | ||||||
Other current assets | 103,170 | 379,415 | ||||||
Total current assets | 2,145,882 | 2,911,149 | ||||||
Long-term investments | 934,171 | 1,266,289 | ||||||
Restricted cash and investments | 127,432 | 1,418 | ||||||
Property and equipment, net | 601,785 | 709,773 | ||||||
Goodwill | 1,719,311 | 2,709,794 | ||||||
Intangible assets, net | 274,057 | 362,909 | ||||||
Other assets | 17,496 | 29,719 | ||||||
$ | 5,820,134 | $ | 7,991,051 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 64,633 | $ | 37,958 | ||||
Funds payable and amounts due to customers | 106,568 | 331,805 | ||||||
Accrued expenses and other current liabilities | 356,491 | 421,969 | ||||||
Deferred revenue and customer advances | 28,874 | 50,439 | ||||||
Short-term obligations | 2,840 | 124,272 | ||||||
Income taxes payable | 87,870 | 118,427 | ||||||
Total current liabilities | 647,276 | 1,084,870 | ||||||
Long-term obligations | 124,476 | 75 | ||||||
Deferred tax liabilities, net | 79,238 | 135,971 | ||||||
Other liabilities | 33,494 | 37,698 | ||||||
Minority interests | 39,408 | 4,096 | ||||||
Total liabilities | 923,892 | 1,262,710 | ||||||
Total stockholders’ equity | 4,896,242 | 6,728,341 | ||||||
$ | 5,820,134 | $ | 7,991,051 | |||||
8
eBay Inc.
Unaudited Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2003 | 2004 | 2003 | 2004 | |||||||||||||
Net revenues | $ | 648,393 | $ | 935,782 | $ | 2,165,096 | $ | 3,271,309 | ||||||||
Cost of net revenues | 115,457 | 176,405 | 416,058 | 614,415 | ||||||||||||
Gross profit | 532,936 | 759,377 | 1,749,038 | 2,656,894 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | 172,781 | 268,879 | 567,565 | 857,874 | ||||||||||||
Product development | 46,427 | 64,568 | 159,315 | 240,647 | ||||||||||||
General and administrative | 95,989 | 116,278 | 302,703 | 415,725 | ||||||||||||
Patent litigation expense | — | — | 29,965 | — | ||||||||||||
Payroll tax on employee stock options | 1,606 | 5,190 | 9,590 | 17,479 | ||||||||||||
Amortization of acquired intangible assets | 12,991 | 19,739 | 50,659 | 65,927 | ||||||||||||
Total operating expenses | 329,794 | 474,654 | 1,119,797 | 1,597,652 | ||||||||||||
Income from operations | 203,142 | 284,723 | 629,241 | 1,059,242 | ||||||||||||
Interest and other income, net | 11,384 | 18,762 | 37,803 | 77,867 | ||||||||||||
Interest expense | (1,979 | ) | (2,265 | ) | (4,314 | ) | (8,879 | ) | ||||||||
Impairment of certain equity investments | (1,000 | ) | — | (1,230 | ) | — | ||||||||||
Income before cumulative effect of accounting change, income taxes and minority interests | 211,547 | 301,220 | 661,500 | 1,128,230 | ||||||||||||
Provision for income taxes | (67,040 | ) | (95,782 | ) | (206,738 | ) | (343,885 | ) | ||||||||
Minority interests | (2,045 | ) | (59 | ) | (7,578 | ) | (6,122 | ) | ||||||||
Income before cumulative effect of accounting change | 142,462 | 205,379 | 447,184 | 778,223 | ||||||||||||
Cumulative effect of accounting change, net of tax | — | — | (5,413 | ) | — | |||||||||||
Net income | $ | 142,462 | $ | 205,379 | $ | 441,771 | $ | 778,223 | ||||||||
Net income per basic share: | ||||||||||||||||
Income before cumulative effect of accounting change | $ | 0.22 | $ | 0.31 | $ | 0.70 | $ | 1.18 | ||||||||
Cumulative effect of accounting change | — | — | (0.01 | ) | — | |||||||||||
Net income per basic share | $ | 0.22 | $ | 0.31 | $ | 0.69 | $ | 1.18 | ||||||||
Net income per diluted share: | ||||||||||||||||
Income before cumulative effect of accounting change | $ | 0.21 | $ | 0.30 | $ | 0.68 | $ | 1.14 | ||||||||
Cumulative effect of accounting change | — | — | (0.01 | ) | — | |||||||||||
Net income per diluted share | $ | 0.21 | $ | 0.30 | $ | 0.67 | $ | 1.14 | ||||||||
Weighted average shares: | ||||||||||||||||
Basic | 646,819 | 666,743 | 638,288 | 659,729 | ||||||||||||
Diluted | 666,165 | 692,847 | 656,657 | 683,860 | ||||||||||||
9
eBay Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)
Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||
December 31, 2003 | December 31, 2004 | |||||||||||||||||||||||||||||||
Reported | Pro Forma Entries | Pro Forma | Reported | Pro Forma Entries | Pro Forma | |||||||||||||||||||||||||||
Net revenues | $ | 648,393 | $ | — | $ | 648,393 | $ | 935,782 | $ | — | $ | 935,782 | ||||||||||||||||||||
Cost of net revenues | 115,457 | (32 | ) | (a | ) | 115,425 | 176,405 | (146 | ) | (a | ) | 176,259 | ||||||||||||||||||||
Gross profit | 532,936 | 32 | 532,968 | 759,377 | 146 | 759,523 | ||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||
Sales and marketing | 172,781 | (109 | ) | (a | ) | 172,672 | 268,879 | (11 | ) | (a | ) | 268,868 | ||||||||||||||||||||
Product development | 46,427 | (144 | ) | (a | ) | 46,283 | 64,568 | (162 | ) | (a | ) | 64,406 | ||||||||||||||||||||
General and administrative | 95,989 | (475 | ) | (a | ) | 95,514 | 116,278 | (3,888 | ) | (a | ) | 112,390 | ||||||||||||||||||||
Payroll tax on employee stock options | 1,606 | (1,606 | ) | (b | ) | — | 5,190 | (5,190 | ) | (b | ) | — | ||||||||||||||||||||
Amortization of acquired intangible assets | 12,991 | (12,991 | ) | (c | ) | — | 19,739 | (19,739 | ) | (c | ) | — | ||||||||||||||||||||
Total operating expenses | 329,794 | (15,325 | ) | 314,469 | 474,654 | (28,990 | ) | 445,664 | ||||||||||||||||||||||||
Income from operations | 203,142 | 15,357 | 218,499 | 284,723 | 29,136 | 313,859 | ||||||||||||||||||||||||||
Interest and other income, net | 11,384 | — | 11,384 | 18,762 | — | 18,762 | ||||||||||||||||||||||||||
Interest expense | (1,979 | ) | — | (1,979 | ) | (2,265 | ) | — | (2,265 | ) | ||||||||||||||||||||||
Impairment of certain equity investments | (1,000 | ) | 1,000 | (d | ) | — | — | — | — | |||||||||||||||||||||||
Income before income taxes and minority interests | 211,547 | 16,357 | 227,904 | 301,220 | 29,136 | 330,356 | ||||||||||||||||||||||||||
Provision for income taxes | (67,040 | ) | (1,836 | ) | (e | ) | (68,876 | ) | (95,782 | ) | (8,484 | ) | (e | ) | (104,266 | ) | ||||||||||||||||
Minority interests | (2,045 | ) | — | (2,045 | ) | (59 | ) | — | (59 | ) | ||||||||||||||||||||||
Net income | $ | 142,462 | $ | 14,521 | $ | 156,983 | $ | 205,379 | $ | 20,652 | $ | 226,031 | ||||||||||||||||||||
Net income per share: | ||||||||||||||||||||||||||||||||
Basic | $ | 0.22 | $ | 0.24 | $ | 0.31 | $ | 0.34 | ||||||||||||||||||||||||
Diluted | $ | 0.21 | $ | 0.24 | $ | 0.30 | $ | 0.33 | ||||||||||||||||||||||||
Weighted average shares: | ||||||||||||||||||||||||||||||||
Basic | 646,819 | 646,819 | 666,743 | 666,743 | ||||||||||||||||||||||||||||
Diluted | 666,165 | 666,165 | 692,847 | 692,847 | ||||||||||||||||||||||||||||
Operating margin | 31 | % | 2 | % | 34 | % | 30 | % | 4 | % | 34 | % | ||||||||||||||||||||
Notes:
(a) | Non-cash stock based compensation expense | |||
(b) | Employer payroll taxes on employee non-qualified stock option gains | |||
(c) | Amortization of acquired intangible assets | |||
(d) | Impairment of certain equity investments | |||
(e) | Income taxes associated with certain pro forma entries |
10
eBay Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Income
(U.S. Dollars In Thousands, Except Per Share Amounts)
Year Ended | Year Ended | |||||||||||||||||||||||||||||||
December 31, 2003 | December 31, 2004 | |||||||||||||||||||||||||||||||
Reported | Pro Forma Entries | Pro Forma | Reported | Pro Forma Entries | Pro Forma | |||||||||||||||||||||||||||
Net revenues | $ | 2,165,096 | $ — | $ | 2,165,096 | $ | 3,271,309 | $ — | $ | 3,271,309 | ||||||||||||||||||||||
Cost of net revenues | 416,058 | (228 | ) | (a | ) | 415,830 | 614,415 | (233 | ) | (a | ) | 614,182 | ||||||||||||||||||||
Gross profit | 1,749,038 | 228 | 1,749,266 | 2,656,894 | 233 | 2,657,127 | ||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||
Sales and marketing | 567,565 | (976 | ) | (a | ) | 566,589 | 857,874 | (136 | ) | (a | ) | 857,738 | ||||||||||||||||||||
Product development | 159,315 | (1,239 | ) | (a | ) | �� | 158,076 | 240,647 | (654 | ) | (a | ) | 239,993 | |||||||||||||||||||
General and administrative | 302,703 | (3,049 | ) | (a | ) | 299,654 | 415,725 | (4,809 | ) | (a | ) | 410,916 | ||||||||||||||||||||
Patent litigation expense | 29,965 | — | 29,965 | — | — | — | ||||||||||||||||||||||||||
Payroll tax on employee stock options | 9,590 | (9,590 | ) | (b | ) | — | 17,479 | (17,479 | ) | (b | ) | — | ||||||||||||||||||||
Amortization of acquired intangible assets | 50,659 | (50,659 | ) | (c | ) | — | 65,927 | (65,927 | ) | (c | ) | — | ||||||||||||||||||||
Total operating expenses | 1,119,797 | (65,513 | ) | 1,054,284 | 1,597,652 | (89,005 | ) | 1,508,647 | ||||||||||||||||||||||||
Income from operations | 629,241 | 65,741 | 694,982 | 1,059,242 | 89,238 | 1,148,480 | ||||||||||||||||||||||||||
Interest and other income, net | 37,803 | (979 | ) | (d | ) | 36,824 | 77,867 | (6,485 | ) | (e | ) | 71,382 | ||||||||||||||||||||
Interest expense | (4,314 | ) | — | (4,314 | ) | (8,879 | ) | — | (8,879 | ) | ||||||||||||||||||||||
Impairment of certain equity investments | (1,230 | ) | 1,230 | (h | ) | — | — | — | — | |||||||||||||||||||||||
Income before cumulative effect of accounting change, income taxes and minority interests | 661,500 | 65,992 | 727,492 | 1,128,230 | 82,753 | 1,210,983 | ||||||||||||||||||||||||||
Provision for income taxes | (206,738 | ) | (18,595 | ) | (f | ) | (225,333 | ) | (343,885 | ) | (31,520 | ) | (f | ) | (375,405 | ) | ||||||||||||||||
Minority interests | (7,578 | ) | — | (7,578 | ) | (6,122 | ) | — | (6,122 | ) | ||||||||||||||||||||||
Net income before cumulative effect of accounting change | 447,184 | 47,397 | 494,581 | 778,223 | 51,233 | 829,456 | ||||||||||||||||||||||||||
Cumulative effect of accounting change, net of tax | (5,413 | ) | 5,413 | (g | ) | — | — | — | — | |||||||||||||||||||||||
Net income | $ | 441,771 | $ 52,810 | $ | 494,581 | $ | 778,223 | $ 51,233 | $ | 829,456 | ||||||||||||||||||||||
Net income per share: | ||||||||||||||||||||||||||||||||
Basic | $ | 0.69 | $ | 0.77 | $ | 1.18 | $ | 1.26 | ||||||||||||||||||||||||
Diluted | $ | 0.67 | $ | 0.75 | $ | 1.14 | $ | 1.21 | ||||||||||||||||||||||||
Weighted average shares: | ||||||||||||||||||||||||||||||||
Basic | 638,288 | 638,288 | 659,729 | 659,729 | ||||||||||||||||||||||||||||
Diluted | 656,657 | 656,657 | 683,860 | 683,860 | ||||||||||||||||||||||||||||
Operating margin | 29 | % | 3 | % | 32 | % | 32 | % | 3 | % | 35 | % | ||||||||||||||||||||
Notes:
(a) | Non-cash stock based compensation expense | |||
(b) | Employer payroll taxes on employee non-qualified stock option gains | |||
(c) | Amortization of acquired intangible assets | |||
(d) | Gain on sale of certain real estate properties and recovery of fully reserved receivables | |||
(e) | Gain on sale of equity investment and loss on sale of certain real estate properties | |||
(f) | Income taxes associated with certain pro forma entries | |||
(g) | Cumulative effect of accounting changes, net of tax | |||
(h) | Impairment of certain equity investments |
11
eBay Inc.
Unaudited Condensed Consolidated Statement of Cash Flows
(U.S. Dollars In Thousands)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2003 | 2004 | 2003 | 2004 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income | $ | 142,462 | $ | 205,379 | $ | 441,771 | $ | 778,223 | ||||||||
Adjustments: | ||||||||||||||||
Cumulative effect of accounting change | — | — | 5,413 | — | ||||||||||||
Provision for doubtful accounts and authorized credits | 14,085 | 32,947 | 46,049 | 90,942 | ||||||||||||
Provision for transaction losses | 11,510 | 17,767 | 36,401 | 50,459 | ||||||||||||
Depreciation and amortization | 45,118 | 72,849 | 159,003 | 253,690 | ||||||||||||
Amortization of unearned stock-based compensation | 760 | 4,207 | 5,492 | 5,832 | ||||||||||||
Tax benefit on the exercise of employee stock options | 24,991 | 77,528 | 130,638 | 261,983 | ||||||||||||
Impairment of certain equity investments | 1,000 | — | 1,230 | — | ||||||||||||
Minority interests | 3,802 | 69 | 7,784 | 6,122 | ||||||||||||
Changes in assets and liabilities, net of acquisition effects: | ||||||||||||||||
Accounts receivable | (82,723 | ) | 32,327 | (153,373 | ) | (105,540 | ) | |||||||||
Funds receivable | 4,766 | 30,463 | (38,879 | ) | (44,751 | ) | ||||||||||
Other current assets | (3,835 | ) | (164,302 | ) | (13,133 | ) | (312,756 | ) | ||||||||
Other non-current assets | 2,313 | 3,617 | (4,111 | ) | (308 | ) | ||||||||||
Deferred tax liabilities, net | 57,172 | (7,082 | ) | 69,770 | 28,652 | |||||||||||
Accounts payable | 10,795 | (38,943 | ) | 17,348 | (33,975 | ) | ||||||||||
Funds payable and amounts due to customers | (3,502 | ) | 67,759 | 56,172 | 216,967 | |||||||||||
Accrued expenses and other liabilities | 35,980 | 16,601 | 85,704 | 39,618 | ||||||||||||
Deferred revenue and customer advances | 2,626 | 6,459 | 8,864 | 20,061 | ||||||||||||
Income taxes payable | 98 | 23,562 | 11,976 | 30,096 | ||||||||||||
Net cash provided by operating activities | 267,418 | 381,207 | 874,119 | 1,285,315 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchases of property and equipment, net | (95,768 | ) | (82,888 | ) | (365,384 | ) | (292,838 | ) | ||||||||
Purchases of investments | (554,006 | ) | (492,634 | ) | (2,035,053 | ) | (1,754,808 | ) | ||||||||
Maturities and sales of investments | 165,264 | 168,375 | 1,297,262 | 1,079,548 | ||||||||||||
Purchases of intangibles and other non-current assets | — | (1,389 | ) | — | (8,646 | ) | ||||||||||
Acquisitions, net of cash acquired | (109,206 | ) | (332,770 | ) | (216,367 | ) | (1,036,476 | ) | ||||||||
Net cash used in investing activities | (593,716 | ) | (741,306 | ) | (1,319,542 | ) | (2,013,220 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||||
Proceeds from issuance of common stock, net | 130,628 | 221,396 | 700,817 | 650,638 | ||||||||||||
Principal payments on long-term obligations | (10,224 | ) | (370 | ) | (11,951 | ) | (2,969 | ) | ||||||||
Net cash provided by financing activities | 120,404 | 221,026 | 688,866 | 647,669 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | 3,532 | 33,208 | 28,757 | 28,768 | ||||||||||||
Net increase (decrease) in cash and cash equivalents | (202,362 | ) | (105,865 | ) | 272,200 | (51,468 | ) | |||||||||
Cash and cash equivalents at beginning of period | 1,583,875 | 1,435,910 | 1,109,313 | 1,381,513 | ||||||||||||
Cash and cash equivalents at end of period | $ | 1,381,513 | $ | 1,330,045 | $ | 1,381,513 | $ | 1,330,045 | ||||||||
Net cash provided by operating activities | $ | 267,418 | $ | 381,207 | $ | 874,119 | $ | 1,285,315 | ||||||||
Less: Purchases of property and equipment, net | (95,768 | ) | (82,888 | ) | (365,384 | ) | (292,838 | ) | ||||||||
Free cash flow | $ | 171,650 | $ | 298,319 | $ | 508,735 | $ | 992,477 | ||||||||
12
eBay Inc.
Unaudited Summary of Consolidated Net Revenues
(U.S. Dollars In Thousands, Except Percentages)
Net Revenues by Type
December 31, | March 31, | June 30, | September 30, | December 31, | ||||||||||||||||
2003 | 2004 | 2004 | 2004 | 2004 | ||||||||||||||||
Net Transaction Revenues | ||||||||||||||||||||
U.S. | $291,578 | $ | 326,217 | $ | 319,119 | $330,643 | $362,736 | |||||||||||||
Current quarter vs prior quarter | 14 | % | 12 | % | (2 | %) | 4 | % | 10 | % | ||||||||||
Current quarter vs prior year quarter | 38 | % | 39 | % | 32 | % | 29 | % | 24 | % | ||||||||||
International | 210,500 | 257,090 | 273,740 | 282,294 | 344,348 | |||||||||||||||
Current quarter vs prior quarter | 36 | % | 22 | % | 6 | % | 3 | % | 22 | % | ||||||||||
Current quarter vs prior year quarter | 96 | % | 87 | % | 76 | % | 82 | % | 64 | % | ||||||||||
Payments | 130,561 | 155,513 | 158,815 | 166,282 | 200,203 | |||||||||||||||
Current quarter vs prior quarter | 23 | % | 19 | % | 2 | % | 5 | % | 20 | % | ||||||||||
Current quarter vs prior year quarter | 68 | % | 67 | % | 60 | % | 56 | % | 53 | % | ||||||||||
Total net transaction revenues | 632,639 | 738,820 | 751,674 | 779,219 | 907,287 | |||||||||||||||
Current quarter vs prior quarter | 22 | % | 17 | % | 2 | % | 4 | % | 16 | % | ||||||||||
Current quarter vs prior year quarter | 60 | % | 59 | % | 51 | % | 51 | % | 43 | % | ||||||||||
Advertising and other non-transaction revenues | ||||||||||||||||||||
U.S. | 11,540 | 12,353 | 15,361 | 16,700 | 16,718 | |||||||||||||||
Current quarter vs prior quarter | 15 | % | 7 | % | 24 | % | 9 | % | 0 | % | ||||||||||
Current quarter vs prior year quarter | (16 | %) | 63 | % | 75 | % | 67 | % | 45 | % | ||||||||||
International | 2,261 | 2,400 | 3,705 | 4,222 | 5,961 | |||||||||||||||
Current quarter vs prior quarter | 28 | % | 6 | % | 54 | % | 14 | % | 41 | % | ||||||||||
Current quarter vs prior year quarter | 32 | % | 83 | % | 159 | % | 140 | % | 164 | % | ||||||||||
Payments | 1,953 | 2,666 | 2,672 | 5,735 | 5,816 | |||||||||||||||
Current quarter vs prior quarter | (4 | %) | 37 | % | 0 | % | 115 | % | 1 | % | ||||||||||
Current quarter vs prior year quarter | (5 | %) | 32 | % | 24 | % | 183 | % | 198 | % | ||||||||||
Total advertising and other non-transaction revenues | 15,754 | 17,419 | 21,738 | 26,657 | 28,495 | |||||||||||||||
Current quarter vs prior quarter | 14 | % | 11 | % | 25 | % | 23 | % | 7 | % | ||||||||||
Current quarter vs prior year quarter | (10 | %) | 59 | % | 76 | % | 93 | % | 81 | % | ||||||||||
Total net revenues | $648,393 | $ | 756,239 | $ | 773,412 | $805,876 | $935,782 | |||||||||||||
Current quarter vs prior quarter | 22 | % | 17 | % | 2 | % | 4 | % | 16 | % | ||||||||||
Current quarter vs prior year quarter | 57 | % | 59 | % | 52 | % | 52 | % | 44 | % |
13
eBay Inc.
Unaudited Summary of Consolidated Net Revenues
(U.S. Dollars In Thousands, Except Percentages)
Net Revenues by Segment
December 31, | March 31, | June 30, | September 30, | December 31, | ||||||||||||||||
2003 | 2004 | 2004 | 2004 | 2004 | ||||||||||||||||
U.S. | $303,118 | $338,570 | $334,481 | $347,343 | $379,454 | |||||||||||||||
Current quarter vs prior quarter | 14 | % | 12 | % | (1 | %) | 4 | % | 9 | % | ||||||||||
Current quarter vs prior year quarter | 35 | % | 40 | % | 33 | % | 31 | % | 25 | % | ||||||||||
International | 212,761 | 259,490 | 277,444 | 286,516 | 350,309 | |||||||||||||||
Current quarter vs prior quarter | 36 | % | 22 | % | 7 | % | 3 | % | 22 | % | ||||||||||
Current quarter vs prior year quarter | 95 | % | 87 | % | 77 | % | 83 | % | 65 | % | ||||||||||
Payments | 132,514 | 158,179 | 161,487 | 172,017 | 206,019 | |||||||||||||||
Current quarter vs prior quarter | 22 | % | 19 | % | 2 | % | 7 | % | 20 | % | ||||||||||
Current quarter vs prior year quarter | 66 | % | 66 | % | 59 | % | 59 | % | 55 | % | ||||||||||
Percent of Payments revenue which is international | 23.2 | % | 26.2 | % | 28.7 | % | 30.1 | % | 33.0 | % | ||||||||||
Total net revenues | $648,393 | $756,239 | $773,412 | $805,876 | $935,782 | |||||||||||||||
Current quarter vs prior quarter | 22 | % | 17 | % | 2 | % | 4 | % | 16 | % | ||||||||||
Current quarter vs prior year quarter | 57 | % | 59 | % | 52 | % | 52 | % | 44 | % |
Net Revenues by Geography
December 31, | March 31, | June 30, | September 30, | December 31, | ||||||||||||||||
2003 | 2004 | 2004 | 2004 | 2004 | ||||||||||||||||
U.S. net revenues | $404,833 | $455,355 | $ | 449,571 | $467,545 | $517,465 | ||||||||||||||
Current quarter vs prior quarter | 15 | % | 12 | % | (1 | %) | 4 | % | 11 | % | ||||||||||
Current quarter vs prior year quarter | 39 | % | 43 | % | 36 | % | 33 | % | 28 | % | ||||||||||
% of total | 62 | % | 60 | % | 58 | % | 58 | % | 55 | % | ||||||||||
International net revenues | 243,560 | 300,884 | 323,841 | 338,331 | 418,317 | |||||||||||||||
Current quarter vs prior quarter | 35 | % | 24 | % | 8 | % | 4 | % | 24 | % | ||||||||||
Current quarter vs prior year quarter | 97 | % | 91 | % | 82 | % | 88 | % | 72 | % | ||||||||||
% of total | 38 | % | 40 | % | 42 | % | 42 | % | 45 | % | ||||||||||
Total net revenues | $648,393 | $756,239 | $773,412 | $805,876 | $935,782 | |||||||||||||||
Current quarter vs prior quarter | 22 | % | 17 | % | 2 | % | 4 | % | 16 | % | ||||||||||
Current quarter vs prior year quarter | 57 | % | 59 | % | 52 | % | 52 | % | 44 | % |
14
eBay Inc.
eBay Unaudited Supplemental Operating Data
(In Millions, Except Percentages)
December 31, | March 31, | June 30, | September 30, | December 31, | ||||||||||||||||
2003 | 2004 | 2004 | 2004 | 2004 | ||||||||||||||||
Confirmed Registered Users (1) | 94.9 | 104.8 | 114.0 | 125.0 | 135.5 | |||||||||||||||
Current quarter vs prior quarter | 11 | % | 10 | % | 9 | % | 10 | % | 8 | % | ||||||||||
Current quarter vs prior year quarter | 54 | % | 52 | % | 51 | % | 46 | % | 43 | % | ||||||||||
Active Users (2) | 41.2 | 45.1 | 48.0 | 51.7 | 56.1 | |||||||||||||||
Current quarter vs prior quarter | 10 | % | 9 | % | 6 | % | 8 | % | 9 | % | ||||||||||
Current quarter vs prior year quarter | 49 | % | 45 | % | 41 | % | 38 | % | 36 | % | ||||||||||
Number of Listings (3) | 291.7 | 327.7 | 332.3 | 348.0 | 404.6 | |||||||||||||||
Current quarter vs prior quarter | 24 | % | 12 | % | 1 | % | 5 | % | 16 | % | ||||||||||
Current quarter vs prior year quarter | 49 | % | 49 | % | 48 | % | 48 | % | 39 | % | ||||||||||
Gross Merchandise Volume (4) | $7,052 | $8,039 | $8,012 | $8,307 | $9,810 | |||||||||||||||
Current quarter vs prior quarter | 22 | % | 14 | % | 0 | % | 4 | % | 18 | % | ||||||||||
Current quarter vs prior year quarter | 53 | % | 51 | % | 42 | % | 44 | % | 39 | % |
Marktplaats.nl in the Netherlands and mobile.de in Germany are not included in these metrics.
(1) | Cumulative total of all users who have completed their registration process on one of eBay’s trading platforms. | |||
(2) | All users, excluding users of Baazee.com, Half.com, Internet Auction, Marktplaats.nl, and mobile.de, who bid on, bought, or listed an item within the previous 12-month period. Includes users of eBay EachNet in China since the migration to the eBay platform in September 2004. | |||
(3) | All listings on eBay’s trading platforms during the quarter, regardless of whether the listing subsequently closed successfully. | |||
(4) | Total value of all successfully closed listings between users on eBay’s trading platforms during the quarter, regardless of whether the buyer and seller actually consummated the transaction. |
15
eBay Inc.
PayPal Unaudited Supplemental Operating Data
(In Millions, Except Percentages)
December 31, | March 31, | June 30, | September 30, | December 31, | ||||||||||||||||
2003 | 2004 | 2004 | 2004 | 2004 | ||||||||||||||||
Total accounts (1) | 40.3 | 45.6 | 50.4 | 56.7 | 63.8 | |||||||||||||||
Current quarter vs prior quarter | 14 | % | 13 | % | 11 | % | 13 | % | 13 | % | ||||||||||
Current quarter vs prior year quarter | 73 | % | 67 | % | 62 | % | 61 | % | 58 | % | ||||||||||
Active accounts (2) | 13.2 | 14.5 | 15.5 | 17.4 | 20.2 | |||||||||||||||
Total number of payments (3) | 68.2 | 79.2 | 77.7 | 83.4 | 99.6 | |||||||||||||||
Current quarter vs prior quarter | 19 | % | 16 | % | (2 | %) | 7 | % | 19 | % | ||||||||||
Current quarter vs prior year quarter | 74 | % | 57 | % | 45 | % | 45 | % | 46 | % | ||||||||||
Total payment volume (4) | $3,711 | $4,321 | $4,350 | $4,637 | $5,607 | |||||||||||||||
Current quarter vs prior quarter | 22 | % | 16 | % | 1 | % | 7 | % | 21 | % | ||||||||||
Current quarter vs prior year quarter | 74 | % | 64 | % | 53 | % | 52 | % | 51 | % | ||||||||||
Auction as % of total payment volume | 69 | % | 70 | % | 69 | % | 70 | % | 71 | % | ||||||||||
Transaction rates: | ||||||||||||||||||||
Transaction revenue rate | 3.52 | % | 3.60 | % | 3.64 | % | 3.59 | % | 3.57 | % | ||||||||||
Transaction processing expense rate | 1.23 | % | 1.25 | % | 1.34 | % | 1.30 | % | 1.27 | % | ||||||||||
Transaction loss rate | 0.31 | % | 0.27 | % | 0.25 | % | 0.22 | % | 0.31 | % |
(1) | Cumulative total of all personal, premier, or business accounts opened, excluding accounts that have been closed or locked. | |||
(2) | All accounts that sent or received at least one payment through the PayPal system during the quarter. | |||
(3) | Total number of payments initiated through the PayPal system during the quarter, regardless of whether the payment was actually sent successfully, or was reversed, rejected, or pending at the end of the quarter. | |||
(4) | Total dollar volume of payments initiated through the PayPal system during the quarter, regardless of whether the payment was actually sent successfully, or was reversed, rejected, or was pending at the end of the quarter. |
16
eBay Inc.
Guidance Summary
(In Millions, Except Per Share Amounts And Percentages)
The guidance figures provided below and elsewhere in this press release are approximate in nature because eBay’s future performance is difficult to predict. Such guidance is based on information available on the date hereof, and eBay assumes no obligation to update it.
eBay’s future performance involves risks and uncertainties, and the company’s actual results could differ materially from such guidance. Some of the factors that could affect the company’s operating results are set forth under the caption “Forward-Looking Statements” above in this press release. More information about factors that could affect eBay’s operating results is included under the captions “Risk Factors That May Affect Results of Operations and Financial Condition” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in its most recent annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by visiting the company’s investor relations site athttp://investor.ebay.com. The company expects to file its annual report on Form 10-K for the year ended December 31, 2004 on or about March 1, 2005.
Three months ending March 31, 2005 (c) | ||||||||||||
GAAP | Adjustments | Pro Forma (a) | ||||||||||
Net revenues | $ | 1,010-$1,030 | — | $ | 1,010-$1,030 | |||||||
Diluted EPS | $ | 0.32-$0.33 | $ | 0.02 | (b) | $ | 0.34-$0.35 |
Three months ending June 30, 2005 (c) | ||||||||||||
GAAP | Adjustments | Pro Forma (a) | ||||||||||
Net revenues | $ | 1,025-$1,040 | — | $ | 1,025-$1,040 | |||||||
Diluted EPS | $ | 0.32-$0.33 | $ | 0.02 | (b) | $ | 0.34-$0.35 |
Three months ending September 30, 2005 (c) | ||||||||||||
GAAP | Adjustments | Pro Forma (a) | ||||||||||
Net revenues | $ | 1,035-$1,060 | — | $ | 1,035-$1,060 | |||||||
Diluted EPS | $ | 0.33-$0.34 | $ | 0.02 | (b) | $ | 0.35-$0.36 |
Three months ending December 31, 2005 (c) | ||||||||||||
GAAP | Adjustments | Pro Forma (a) | ||||||||||
Net revenues | $ | 1,180-$1,220 | — | $ | 1,180-$1,220 | |||||||
Diluted EPS | $ | 0.41-$0.42 | $ | 0.02 | (b) | $ | 0.43-$0.44 |
Year ending December 31, 2005 (c) | ||||||||||||
GAAP | Adjustments | Pro Forma (a) | ||||||||||
Net revenues | $ | 4,250-$4,350 | — | $ | 4,250-$4,350 | |||||||
Operating margin | 31 | % | 3 | %(a) | 34 | % | ||||||
Diluted EPS* | $ | 1.37-$1.41 | $ | 0.11 | (b) | $ | 1.48-$1.52 |
(a) | Pro forma guidance reflects estimated quarterly adjustments for amortization of acquired intangible assets of approximately $24 million, payroll taxes on employee stock options of approximately $3 – $5 million, stock based compensation of approximately $4 million and other adjustments estimated to result in an operating margin adjustment of approximately 3% for each of the quarters in the year ending December 31, 2005. | |||
(b) | Net of tax, the above pro forma items are estimated to result in a $0.02 per diluted share adjustment for each of the quarters in the year ending December 31, 2005. | |||
(c) | The guidance has not been updated to reflect the impact of the stock split described under “Business Outlook.” In addition, the estimated earnings per diluted share does not include the impact of expensing stock options upon the adoption of Financial Accounting Standards Board Statement No. 123(R) “Share-Based Payment.” |
17