eBay 2008 Annual Report Download - page 101

Marketplaces Payments Communications Consolidated
Year Ended December 31, 2008
Net revenues from external customers ......... $5,586,751 $2,403,669 $550,841 $8,541,261
Direct costs . ............................ 3,135,611 1,922,897 434,588 5,493,096
Direct contribution...................... 2,451,140 480,772 116,253 3,048,165
Operating expenses and indirect costs of net
revenues ........................... 972,483
Income from operations .................. 2,075,682
Interest and other income, net ............... 115,919
Interest expense.......................... (8,037)
Income before income taxes ................ $2,183,564
Direct contribution consists of net revenues from external customers less direct costs. Direct costs include
specific costs of net revenues, sales and marketing expenses, and general and administrative expenses, such as
advertising and marketing programs, customer support expenses, bank charges, Bill Me Later related interest
charges, site operations expenses, product development expenses, billing operations, certain technology and
facilities expenses, transaction expenses and provision for transaction and loan losses. Expenses such as our
corporate center costs (consisting of certain costs such as corporate management, human resources, finance and
legal), amortization of intangible assets, stock-based compensation expense and impairment of goodwill, are
excluded from direct costs as they are not included in the measurement of segment performance.
The following tables summarize the allocation of net revenues and the long-lived assets based on geography (in
thousands):
2006 2007 2008
December 31,
U.S. ........................................ $3,108,986 $3,742,670 $3,969,466
Germany ..................................... 895,993 1,030,165 1,220,691
United Kingdom ............................... 778,185 1,074,486 1,072,863
Rest of world.................................. 1,186,577 1,825,008 2,278,241
Total net revenues ............................ $5,969,741 $7,672,329 $8,541,261
2007 2008
December 31,
U.S. ................................................... $1,018,645 $1,103,243
International ............................................. 142,537 170,382
Total long-lived tangible assets .............................. $1,161,182 $1,273,625
Net revenues are attributed to U.S. and international geographies primarily based upon the country in which
the seller, payment recipient, customer, Skype user’s Internet protocol address, online property that generates
advertising, or other service provider, as the case may be, is located. Long-lived assets attributed to the U.S. and
international geographies are based upon the country in which the asset is located or owned.
Note 5 — Investments:
Short and long-term investments, which include marketable equity securities and government and corporate
bonds, are classified as available-for-sale and reported at fair value using the specific identification method.
Unrealized gains and losses are excluded from earnings and reported as a component of other comprehensive
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)