eBay 2004 Annual Report Download - page 110

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
trading platforms other than our PayPal and Billpoint subsidiaries. The Payments segment includes 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, 2004. We completed our planned wind-down of Billpoint in the Ñrst half of 2003.
Direct contribution consists of 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 currently have discretionary control, such as site operations costs,
product development expenses, and certain general and administrative costs, are monitored by management
through shared cost centers and are not evaluated in the measurement of segment performance.
The following table summarizes the Ñnancial performance of our reporting segments (in thousands):
Year Ended December 31, 2002
U.S. International
Marketplace Marketplace Payments Consolidated
Net revenues from external customers ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $816,596 $302,136 $95,368 $1,214,100
Direct costsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 300,659 123,784 68,107 492,550
Direct contributionÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 515,937 178,352 27,261 721,550
Operating expenses and indirect costs of net
revenues ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 367,353
Income from operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 354,197
Interest and other income, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 49,209
Interest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1,492)
Impairment of certain equity investmentsÏÏÏÏÏÏÏÏÏÏÏÏ (3,781)
Income before income cumulative eÅect of accounting
change, taxes and minority interests ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 398,133
Year Ended December 31, 2003
U.S. International
Marketplace Marketplace Payments Consolidated
Net revenues from external customers ÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,062,834 $664,640 $437,622 $2,165,096
Direct costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 389,376 257,888 243,179 890,443
Direct contribution ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 673,458 406,752 194,443 1,274,653
Operating expenses and indirect costs of net
revenues ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 645,412
Income from operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 629,241
Interest and other income, netÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 37,803
Interest expenseÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (4,314)
Impairment of certain equity investments ÏÏÏÏÏÏÏÏÏÏ (1,230)
Income before income cumulative eÅect of
accounting change, taxes and minority interests ÏÏÏ $ 661,500
108