eBay 2009 Annual Report Download - page 68

several platform development initiatives to enhance the user experience and expand our existing product
offerings primarily across our Marketplaces and Payments segments. Product development expenses as a
percentage of net revenues increased slightly from 2007 as we added capacity at a faster rate than we generated
revenue.
General and Administrative
2007 2008 2009
(In thousands, except percentages)
General and administrative .................... $904,681 $998,871 $1,418,389
As a percentage of net revenues ................ 11.8% 11.7% 16.3%
General and administrative expenses consist primarily of employee compensation, contractor costs, facilities
costs, depreciation of equipment, employer payroll taxes on employee stock-based compensation, legal
settlement costs, insurance and professional fees.
General and administrative expenses increased $419.5 million, or 42%, in 2009 compared to 2008. The
increase during 2009 was due primarily to a charge of $343.2 million, related to the settlement of a lawsuit
between Skype, Joltid and entities controlled by Joltid’s founders and $30.2 million related to costs associated
with our acquisition and divestiture activities primarily related to the sale of Skype (sold November 2009) and
the acquisition of Gmarket (acquired June 2009). General and administrative expenses also increased by $58.0
million due to the inclusion of costs attributable to Gmarket, Bill Me Later (acquired November 2008) and Den
Blå Avis and BilBasen (acquired October 2008). The increases were partially offset by lower contractor costs and
a reduction in certain international indirect taxes of $22.0 million. General and administrative expenses as a
percentage of net revenue in 2009 increased due to the settlement charge noted above and the unfavorable impact
of foreign currency exchange rates against the U.S. dollar. General and administrative costs are more weighted
toward U.S. dollar costs.
General and administrative expenses increased $94.2 million, or 10%, in 2008 compared to 2007. The
increase was due primarily to an increase in professional services costs, employee-related costs and facilities
costs. Professional services costs increased $54.5 million due primarily to costs incurred in connection with
various ongoing legal proceedings, which can fluctuate substantially from period to period. Employee-related
and facilities costs increased by approximately $40.2 million due to a net increase in headcount. General and
administrative expenses as a percentage of net revenue decreased slightly from 2007 due to our continued
leverage of our existing infrastructure.
Provision for Transaction and Loan Losses
2007 2008 2009
(In thousands, except percentages)
Provision for transaction and loan losses ........... $293,917 $347,453 $382,825
As a percentage of net revenues .................. 3.8% 4.1% 4.4%
Provision for transaction and loan losses primarily consists of bad debt expense associated with our
accounts receivable balance, loan reserves associated with our principal loan receivable balance and PayPal
transaction loss expense, as well our losses resulting from our customer protection programs.
Provision for transaction and loan losses increased by $35.4 million, or 10%, in 2009 compared to 2008.
The increase was due primarily to the addition of the provision for loan losses associated with our Bill Me Later
business (acquired November 2008) and the expansion of eBay’s Buyer Protection programs, partially offset by
decreases in bad debt expense as well as improvements to PayPal’s fraud and credit loss rates. We continue to
expect our provision for transaction and loan loss expense to fluctuate depending on many factors, including
macroeconomic conditions, our customer protection programs and historical experience.
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