eBay 2002 Annual Report Download - page 17

Third parties have from time to time claimed, and others may claim in the future, that we have
infringed their past, current or future intellectual property rights. We are involved in several such legal
proceedings. Please see the information under ""Risk Factors That May AÅect Results of Operations and
Financial Condition Ì We are subject to intellectual property and other litigation'' and ""Ì We may be
unable to protect or enforce our own intellectual property rights adequately'' and ""Item 3: Legal
Proceedings.''
Employees
As of December 31, 2002, eBay Inc. and its consolidated subsidiaries employed approximately 4,000
persons, of whom approximately 3,100 were in the United States. Our future success is substantially
dependent on the performance of our executive and senior management and key technical personnel, and
our continuing ability to Ñnd and retain highly qualiÑed technical and managerial personnel.
Segments
Segment selection is based upon our internal organization structure, the manner in which our
operations are managed, the measurement of the performance of our operations evaluated by management
in the chief operating decision-maker capacity, the availability of separate Ñnancial information and overall
materiality considerations.
During the fourth quarter of 2002, the growth of our international operations and our acquisition of
PayPal prompted us to change the basis for measuring our Ñnancial performance and evaluating resource
allocations, and therefore our reportable segments. We changed our business segments from Online and
OÉine services to U.S., International, and Payments operations. This new segment structure reÖects the
new composition of our business. Additionally, we changed the internal measurement basis of segment
performance from operating income before certain items to a direct contribution measure of proÑtability.
Direct contribution consists of net revenues less direct costs. Direct costs include speciÑc costs of net
revenues, sales and marketing expenses, and general and administrative expenses over which segment
managers have direct discretionary control such as advertising and marketing programs, customer support
expenses, bank charges, provisions for doubtful accounts, authorized credits and transaction losses.
Expenses over which segment managers do not have discretionary control, such as site operations costs,
product development expenses, and general and administrative costs, are monitored by management
through shared cost centers and are not evaluated in the measurement of segment performance.
The U.S. segment comprises U.S. online trading platforms other than PayPal and Billpoint, Inc. The
International segment comprises our international online trading platforms. The Payments segment
comprises our global payments platform consisting of our PayPal and Billpoint subsidiaries. The Payments
amounts reÖect Billpoint's historical operations and PayPal's operations for the post-acquisition period from
October 4, 2002 through December 31, 2002. We have previously announced that we intend to discontinue
Billpoint's operations in the Ñrst half of 2003. Billpoint's operations will continue to be reÖected in the
Payments segment results until the wind-down of Billpoint operations is completed.
For geographic reporting purposes, net revenues and long-lived assets of the Payments segment are
allocated between the U.S. and International regions based upon the country in which the revenue was
generated or in which the asset is located. See ""Note 4 Ì Segment Information'' of the notes to our
Consolidated Financial Statements, which is incorporated by reference herein.
Available Information
Our Internet address is www.ebay.com. Our investor relations website is located at
www.shareholder.com/ebay. We make available free of charge on this website under ""SEC Filings'' our
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
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