eBay 2015 Annual Report Download

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ANNUAL REPORT
2015

Table of contents

  • Page 1
    2015 ANNUAL REPORT

  • Page 2

  • Page 3
    ... change. As we set up the new eBay for success, we also established a best-in-class Board of Directors, adding six new directors - Anthony Bates, Bonnie Hammer, Paul Pressler, Robert Swan, Perry Traquina and Devin Wenig. Collectively, these leaders bring significant management, technology, financial...

  • Page 4

  • Page 5
    ... long-term strategy to reposition our business. We believe the steps we are taking will make eBay more competitive by delivering a differentiated and compelling customer experience. We operate in a dynamic, fast-paced environment that requires companies to innovate and change in order to maintain...

  • Page 6
    ...more successful on our platform and better reward sellers who provide great service to eBay buyers. Financial and Business Highlights In 2015, we executed our plan and delivered on our financial and business commitments, meeting our targets for growth in Gross Merchandise Volume ("GMV"), revenue and...

  • Page 7
    I am passionate about the opportunity ahead of us and eBay's role in shaping the future of commerce. I sincerely thank eBay customers, our employees and our stockholders for your continued support as we embark on our next 20 years. Devin Wenig President and CEO

  • Page 8

  • Page 9
    ...-0430924 (I.R.S. Employer Identification Number) 2065 Hamilton Avenue San Jose, California (Address of principal executive offices) 95125 (Zip Code) Registrant's telephone number, including area code: (408) 376-7400 Securities registered pursuant to Section 12(b) of the Securities Exchange Act of...

  • Page 10

  • Page 11
    ... Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions and Director Independence Principal Accounting Fees and Services Part IV Exhibits and Financial...

  • Page 12

  • Page 13
    ... common stock. Our principal executive offices are located at 2065 Hamilton Avenue, San Jose, California 95125, and our telephone number is (408) 376-7400. Unless otherwise expressly stated or the context otherwise requires, when we refer to "we," "our," "us" or "eBay" in this Annual Report on Form...

  • Page 14
    ... excellent customer service ratings and meet specified criteria for shipping and returns. We believe that sellers who fulfill these standards help promote our goal of maintaining an online marketplace that is safe and hassle-free. eBay Money Back Guarantee covers items purchased on our websites in...

  • Page 15
    ... free shipping during 2015. We have developed a number of features on our Marketplace platforms in the areas of trust and safety (including our Seller Performance Standards, eTRS, eBay Money Back Guarantee, Verified Rights Owner Program and Feedback Forum), customer support and value-added tools...

  • Page 16
    ...." Technology eBay Inc.'s platforms utilize a combination of proprietary technologies and services as well as technologies and services provided by others. We have developed intuitive user interfaces, buyer and seller tools and transaction processing, database and network applications that...

  • Page 17
    ...are infringing their intellectual property rights." Employees As of December 31, 2015, we employed approximately 11,600 people globally. Approximately 6,200 of our employees were located in the U.S. Available Information Our Internet address is www.ebay.com. Our investor relations website is located...

  • Page 18
    regarding our financial performance, including SEC filings, investor events, press and earnings releases, and blogs on our investor relations website. Further corporate governance information, including our governance guidelines for our board of directors, board committee charters and code of ...

  • Page 19
    ... more resources to website, mobile platforms and applications and systems development than we can. Other competitors may offer or continue to offer faster and/or free shipping, delivery on Sunday, same-day delivery, favorable return policies or other transaction-related services which improve the...

  • Page 20
    ...; community cohesion, interaction and size; website, mobile platform and application ease-of-use and accessibility; system reliability and security; reliability of delivery and payment, including customer preference for fast delivery and free shipping and returns; level of service fees; and...

  • Page 21
    ... data, including offering customers the ability to transact business in the local currency and adapting our products and services to local preferences (e.g., payment methods) with which we may have limited or no experience; trade barriers and changes in trade regulations; difficulties in developing...

  • Page 22
    ... and complicated than domestic shipping. Customs and duty procedures and reviews, including duty-free thresholds in various key markets, the interaction of national postal systems, and security related governmental processes at international borders, may increase costs, discourage cross-border...

  • Page 23
    ...intellectual property rights. Our success will depend on our ability to develop new technologies and adapt to technological changes and evolving industry standards. Our business is subject to extensive government regulation and oversight. We are subject to laws and regulations affecting our domestic...

  • Page 24
    ... us to change our business practices, increase our costs and adversely affect our business. Data collection, privacy and security have become the subject of increasing public concern. If Internet and mobile users were to reduce their use of our websites, mobile platforms, products, and services as...

  • Page 25
    ... increase costs or reduce revenues, such as forcing us to prohibit listings of certain items or restrict certain listing formats in some locations. We could also be subject to fines or other penalties, and any of these outcomes could harm our business. A number of the lawsuits against us relating...

  • Page 26
    ...services, or requiring a change in our business practices in costly ways, or requiring development of non-infringing or otherwise altered products or technologies. Any of these consequences could harm our business. We are subject to regulatory activity and antitrust litigation under competition laws...

  • Page 27
    ... our tickets business. Lawsuits alleging a variety of causes of actions have in the past, and may in the future, be filed against StubHub and eBay by venue owners, competitors, ticket buyers, and unsuccessful ticket buyers. Such lawsuits could result in significant costs and require us to change our...

  • Page 28
    ... to modify our business practices in a manner that increases costs, lowers revenue, makes our websites and mobile platforms less convenient to customers, and requires us to spend substantial resources to take additional protective measures or discontinue certain service offerings in order to combat...

  • Page 29
    ...substantial resources or discontinuing certain service offerings, which could harm our business. Changes to our programs to protect buyers and sellers could increase our costs and loss rate. Our eBay Money Back Guarantee program represents the means by which we compensate users who believe that they...

  • Page 30
    ...to adequately protect or enforce our intellectual property rights, or significant costs incurred in doing so, could materially harm our business. As the number of products in the software industry increases and the functionality of these products further overlap, and as we acquire technology through...

  • Page 31
    ... recommendations to buy, sell or hold any of our debt securities. Actual or anticipated changes or downgrades in our credit ratings, including any announcement that our ratings are under review for a downgrade or have been assigned a negative outlook, would likely increase our borrowing costs, which...

  • Page 32
    ... of electronically supplied services were implemented that require that we pay VAT based on the residence or normal place of business of our customers. These changes may result in our paying a higher rate of VAT on such fees. Additionally, we pay input VAT on applicable taxable purchases within the...

  • Page 33
    ...on our fees and pay taxes on our purchases of goods and services. However, tax authorities may raise questions about our calculation, reporting and collection of taxes and may ask us to remit additional taxes, as well as the proper calculation of such taxes. Should any new taxes become applicable or...

  • Page 34
    ...-financial user data. Upon making this announcement, we required all buyers and sellers on our platform to reset their passwords in order to log into their account. The breach and subsequent password reset have negatively impacted the business. In July 2014, a putative class action lawsuit was filed...

  • Page 35
    ...and costly as we expand the number of markets where we operate. Additionally, our insurance policies carry low coverage limits, which may not be adequate to reimburse us for losses caused by security breaches and we may not be able to fully collect, if at all, under these insurance policies. Systems...

  • Page 36
    ...or additional controls, policies and procedures and subject us to additional exposure; and our dependence on the acquired business' accounting, financial reporting, operating metrics and similar systems, controls and processes and the risk that errors or irregularities in those systems, controls and...

  • Page 37
    ... to work with global carriers to offer our sellers a variety of shipping options and to enhance their shipping experience, postal rate increases may reduce the competitiveness of certain sellers' offerings, and postal service changes could require certain sellers to utilize alternatives which...

  • Page 38
    ... focus and may be more vulnerable to changing market conditions, which could materially and adversely affect our business, financial condition and results of operations. Separating the businesses may also eliminate or reduce synergies or economies of scale that existed prior to the Distribution...

  • Page 39
    ... development offices, fulfillment centers and customer service offices. Our headquarters are located in San Jose, California and occupy approximately 0.5 million square feet. Our owned data centers are primarily located in Utah. As of December 31, 2015, our owned and leased properties provided...

  • Page 40
    ... lawsuits alleging that we have violated patent, copyright or trademark laws will be filed against us. Intellectual property claims, whether meritorious or not, are time consuming and costly to defend and resolve, could require expensive changes in our methods of doing business or could require...

  • Page 41
    ... business, we have included limited indemnification provisions in certain of our agreements with parties with which we have commercial relations, including our standard marketing, promotions and application-programming-interface license agreements. Under these contracts, we generally indemnify, hold...

  • Page 42
    ... PURCHASES OF EQUITY SECURITIES Price Range of Common Stock Our common stock has been traded on The Nasdaq Global Select Market under the symbol "EBAY" since September 24, 1998. The following table sets forth the high and low closing sale prices per share of our common stock, as actually reported...

  • Page 43
    ... 12/31/15 eBay NASDAQ Composite Index S&P North America Technology Internet Index S&P 500 Index Stock repurchase activity during the three months ended December 31, 2015 was as follows: Total Number of Shares Purchased as Part of Publicly Announced Programs Maximum Dollar Value of Shares that May...

  • Page 44
    ...common stock. However, our stock repurchase programs may be limited or terminated at any time without prior notice. The timing and actual number of shares repurchased will depend on a variety of factors including corporate and regulatory requirements, price and other market conditions and management...

  • Page 45
    ... thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this Annual Report on Form 10-K. The consolidated statement of income data and the consolidated balance sheet data for the years ended, and as of, December 31, 2015, 2014, 2013...

  • Page 46
    ...deferred tax liabilities on $9.0 billion of undistributed foreign earnings of certain of our foreign subsidiaries for 2013 and prior years. (3) The consolidated statement of income data for the year ended December 31, 2011 includes a loss on a divested business of $0.3 billion and a gain on the sale...

  • Page 47
    ... Section 21E of the Securities Exchange Act of 1934, including statements that involve expectations, plans or intentions (such as those relating to future business, future results of operations or financial condition, new or planned features or services, or management strategies). You can identify...

  • Page 48
    ... are classified within cost of net revenues, sales and marketing, product development or general and administrative in our consolidated statement of income as applicable. Impact of Foreign Currency Exchange Rates Our commerce platforms operate globally, resulting in certain revenues that are...

  • Page 49
    ... 31, 2015 December 31, 2014 As Exchange Reported FX-Neutral As Rate As Percent Percent Reported Effect (1) FX-Neutral (2) Reported Change Change (In millions) GMV (3): Marketplace StubHub Total GMV Net transaction revenues: Marketplace StubHub Total net transaction revenues Marketing services and...

  • Page 50
    ... the sale of advertisements, vehicles classifieds listing on Marketplace platforms, revenue sharing arrangements, classifieds fees, marketing service fees and lead referral fees. To drive traffic to our platforms, we provide incentives to our users in the form of coupons and buyer and seller rewards...

  • Page 51
    .... Year Ended December 31, 2015 2014 2013 (In millions, except percentage changes) Net Revenues by Type: Net transaction revenues: Marketplace StubHub Total net transaction revenues Marketing services and other revenues: Marketplace Classifieds Corporate and other Total marketing services and...

  • Page 52
    ... GMV. The total transaction take rate was lower in 2015 compared to 2014 due to decrease in our Marketplace transaction take rate, partially offset by an increase in our StubHub transaction take rate. Marketplace net transaction revenues decreased $248 million, or 4%, while Marketplace GMV decreased...

  • Page 53
    ... dollar. Net transaction revenues earned internationally as a percentage of total net transaction revenue increased in 2014 compared to 2013, primarily due to a greater increase in revenues earned internationally. Marketing Services and Other Revenues Marketing services and other revenues decreased...

  • Page 54
    ...our developed markets of Germany, Canada and the UK. Summary of Cost of Net Revenues The following table summarizes changes in cost of net revenues for the periods presented: Change from 2014 Year Ended December 31, to 2015 2015 2014 2013 in Dollars in % (In millions, except percentages) Change from...

  • Page 55
    ... taxes for the periods presented: Change from Change from Year Ended December 31, 2014 to 2015 2013 to 2014 2015 2014 2013 in Dollars in % in Dollars in % (In millions, except percentage changes) Sales and marketing Product development General and administrative Provision for transaction losses...

  • Page 56
    ...and mobile. Product development expenses as a net percentage of revenues were 11% in both 2014 and 2013. General and Administrative General and administrative expenses consist primarily of employee compensation, contractor costs, facilities costs, depreciation of equipment, employer payroll taxes on...

  • Page 57
    ... financial statements included in this report. Amortization of acquired intangible assets decreased by $34 million, or 45%, in 2015 compared to 2014. The decrease was due to certain intangible assets becoming fully amortized during the year. Amortization of acquired intangible assets decreased...

  • Page 58
    larger stock-based compensation expense recorded in the U.S. for U.S. based employees, overhead related to our corporate operations which are primarily U.S. based and higher average margins earned by non-U.S. businesses. Our provision for income taxes differs from the provision computed by applying ...

  • Page 59
    ... these non-GAAP measures provide useful information to both management and investors by excluding the foreign currency exchange rate impact that may not be indicative of our core operating results and business outlook. In addition, because we have historically reported certain non-GAAP results to...

  • Page 60
    ... in depreciation and amortization, $298 million in stock-based compensation expense and $236 million in provision for transaction and loan losses and a decrease of $109 million in changes in assets and liabilities. Cash paid for income taxes in 2015, 2014 and 2013 was $256 million, $343 million...

  • Page 61
    ... debt securities, as well as common stock, preferred stock, warrants, depositary shares representing fractional interest in shares of preferred stock, purchase contracts and units from time to time in one or more offerings. Each issuance under the shelf registration statement will require the filing...

  • Page 62
    ...things and subject to exceptions, limit our ability to incur, assume or guarantee debt secured by liens on specified assets or enter into sale and lease-back transactions with respect to specified properties, and also includes customary events of default. Commercial Paper In connection with entering...

  • Page 63
    ... covenants require us to meet a quarterly financial test with respect to a minimum consolidated interest coverage ratio and a maximum consolidated leverage ratio. We were in compliance with all covenants in our outstanding debt instruments for the period ended December 31, 2015. Credit Ratings Our...

  • Page 64
    ... equipment, software applications, engineering development services, construction contracts) and other goods and services entered into in the ordinary course of business. • • As we are unable to reasonably predict the timing of settlement of liabilities related to unrecognized tax benefits...

  • Page 65
    ... business, we have included limited indemnification provisions in certain of our agreements with parties with which we have commercial relations, including our standard marketing, promotions and application-programming-interface license agreements. Under these contracts, we generally indemnify, hold...

  • Page 66
    ... of critical accounting policies, judgments and estimates should be read in conjunction with our consolidated financial statements and related notes and other disclosures included in this report. Revenue Recognition We may enter into certain revenue transactions, primarily related to certain...

  • Page 67
    ... fair value measurement for all share-based payment awards made to our employees and directors, including employee stock options, employee stock purchases and restricted stock awards, over the service period for awards expected to vest. Stock-based compensation expense recognized for 2015, 2014 and...

  • Page 68
    ... volatility, risk-free interest rate and dividend yield. As a result, future stock-based compensation expense may differ from our historical amounts. The weighted-average grantdate fair value of stock options granted during 2015, 2014 and 2013 was $6.84, $13.59 and $15.39 per share, respectively...

  • Page 69
    ... 50 basis point deviation from our provision for transaction losses as a percentage of net revenues would have resulted in an increase or decrease in operating income of approximately $43 million in 2015, resulting in an approximate $0.02 change in diluted earnings per share. Legal Contingencies...

  • Page 70
    ... market value due to changes in interest rates. As of December 31, 2015, the balance of our government bond and corporate debt security portfolio was $6.6 billion, which represented approximately 69% of our total cash and investment portfolio. A 100 basis point increase or decrease in interest rates...

  • Page 71
    ... impact our financial results. We transact business in various foreign currencies and have significant international revenues as well as costs. In addition, we charge our international subsidiaries for their use of intellectual property and technology and for certain corporate services we provide...

  • Page 72
    ...internal control over financial reporting as of December 31, 2015 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in Item 15(a) of this Annual Report on Form 10-K. ITEM 9B: OTHER INFORMATION Not applicable. 60

  • Page 73
    ... on our website at https://investors.ebayinc.com/corporate-governance.cfm. We will post any amendments to or waivers from the Code of Ethics for Senior Financial Officers at that location. We have also adopted Governance Guidelines for the Board of Directors and a written committee charter for each...

  • Page 74
    ... AND FINANCIAL STATEMENT SCHEDULE (a) The following documents are filed as part of this report: 1. Consolidated Financial Statements: Page Number Report of Independent Registered Public Accounting Firm Consolidated Balance Sheet Consolidated Statement of Income Consolidated Statement of Other...

  • Page 75
    ... 31, 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in...

  • Page 76
    ... 31, 2015 2014 (In millions, except par value amounts) ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net Other current assets Current assets of discontinued operations Total current assets Long-term investments Property and equipment, net Goodwill...

  • Page 77
    ... STATEMENT OF INCOME Year Ended December 31, 2015 2014 2013 (In millions, except per share amounts) Net revenues Cost of net revenues Gross profit Operating expenses: Sales and marketing Product development General and administrative Provision for transaction losses Amortization of acquired...

  • Page 78
    eBay Inc. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year Ended December 31, 2015 2014 2013 (In millions) Net income Other comprehensive income (loss), net of reclassification adjustments: Foreign currency translation gain (loss) Unrealized gains (losses) on investments, net Tax benefit (...

  • Page 79
    ... year Common stock and stock-based awards issued and assumed Tax withholdings related to net share settlements of restricted stock awards and units Stock-based compensation Stock-based awards tax impact Balance, end of year Treasury stock at cost: Balance, beginning of year Common stock repurchased...

  • Page 80
    ... OF CASH FLOWS Year Ended December 31, 2015 2014 2013 (In millions) Cash flows from operating activities: Net income (Income) loss from discontinued operations, net of income taxes Adjustments: Provision for transaction losses Depreciation and amortization Stock-based compensation Gain on sale of...

  • Page 81
    ... financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to provisions for transaction losses, legal contingencies, income taxes, revenue recognition, stock-based compensation...

  • Page 82
    ... are generally based on pricing strategies, market factors and strategic objectives. Revenues related to revenue sharing arrangements are recognized based on revenue reports received from our partners, provided that collectability is reasonably assured. Revenues related to fees for listing items...

  • Page 83
    ...Direct costs incurred to develop software for internal use and platform development costs are capitalized and amortized over an estimated useful life of one to five years. During the years ended December 31, 2015 and 2014, we capitalized costs, primarily related to labor and stock-based compensation...

  • Page 84
    ... of related estimated tax provisions or benefits. Long-term investments may include marketable government bonds and corporate debt securities, time deposits, certificates of deposit and cost and equity method investments. Debt securities are classified as available-for-sale and are reported at fair...

  • Page 85
    ..., we determined that no further adjustment to the carrying value of goodwill for any reporting units was required. Intangible assets consist of purchased customer lists and user base, marketing related, developed technologies and other intangible assets, including patents and contractual agreements...

  • Page 86
    ... the third quarter of 2015 related to the financial statement presentation of assets held for sale and discontinued operations and required additional disclosures as presented in "Note 4 - Discontinued Operations." In 2014, the FASB issued new accounting guidance related to revenue recognition. This...

  • Page 87
    ... of December 31, 2015. See "Note 17 - Income Taxes" for additional information. In 2016, the FASB issued new guidance related accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition...

  • Page 88
    ... by application of the treasury stock method. The calculation of diluted net income (loss) per share excludes all anti-dilutive common shares. The following table sets forth the computation of basic and diluted net income (loss) per share for the periods indicated: Year Ended December 31, 2015 2014...

  • Page 89
    ...PayPal Holdings, Inc. common stock for every share of eBay common stock held at the close of business on the Record Date. The Distribution occurred on July 17, 2015. Immediately following the Distribution, PayPal became an independent, publicly traded company and is listed on The NASDAQ Stock Market...

  • Page 90
    ... are presented as income (loss) from discontinued operations, net of income taxes in our consolidated statement of income. The following table presents financial results of PayPal and Enterprise: Year Ended December 31, 2015 (1) 2014 2013 PayPal income from discontinued operations, net of income...

  • Page 91
    ..., net of income taxes on our consolidated statement of income. The following table presents financial results of PayPal: Year Ended December 31, 2015 (1) 2014 2013 Net revenues Cost of net revenues Gross profit Operating expenses: Sales and marketing Product development General and administrative...

  • Page 92
    ..., net Loans and interest receivable, net Funds receivable and customer accounts Other current assets Current assets classified as discontinued operations Long-term investments Property and equipment, net Goodwill Intangible assets, net Other assets Long-term assets classified as discontinued...

  • Page 93
    ...net of income taxes on our consolidated statement of income. The following table presents financial results of Enterprise: Year Ended December 31, 2015 (1) 2014 2013 Net revenues Cost of net revenues Gross profit Operating expenses: Sales and marketing Product development General and administrative...

  • Page 94
    ... Assets Goodwill The following table presents goodwill balances and adjustments to those balances for the years ended December 31, 2015 and 2014: December 31, 2013 Goodwill Acquired Adjustments December 31, 2014 (In millions) Goodwill Acquired Adjustments December 31, 2015 $ 29 1 146 77 253...

  • Page 95
    ...Life Carrying Accumulated Carrying Useful Life Amount Amortization Amount (Years) Amount Amortization Amount (Years) (In millions, except years) December 31, 2015 Intangible assets: Customer lists and user base Marketing related Developed technologies All other $ 419 594 238 157 $1,408 $ (399) (570...

  • Page 96
    ... FINANCIAL STATEMENTS - (Continued) The following table sets forth the breakdown of net revenues by type: Year Ended December 31, 2015 2014 2013 (In millions) Net Revenues by Type: Net transaction revenues: Marketplace StubHub Total net transaction revenues Marketing services and other revenues...

  • Page 97
    ...classified as available for sale, are as follows: Gross Amortized Cost December 31, 2015 Gross Gross Unrealized Unrealized Gains Losses (In millions) Estimated Fair Value Short-term investments: Restricted cash Corporate debt securities Government and agency securities Equity instruments Long-term...

  • Page 98
    ... to changes in market interest rates and bond yields. As interest rates increase, those securities purchased at a lower yield show a mark-to-market unrealized loss. The unrealized losses are due primarily to changes in credit spreads and interest rates. We regularly review investment securities for...

  • Page 99
    ... FINANCIAL STATEMENTS - (Continued) Note 8 - Fair Value Measurement of Assets and Liabilities The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2015 and 2014: Quoted Prices in Active Markets for Identical Assets (Level...

  • Page 100
    ... are valued using pricing models that take into account the contract terms as well as multiple inputs where applicable, such as equity prices, interest rate yield curves, option volatility and currency rates. We did not have any transfers of financial instruments between valuation levels during 2015...

  • Page 101
    ... primarily related to forecasted revenues, expenses, assets and liabilities denominated in foreign currencies. The objective of the foreign exchange contracts is to better ensure that ultimately the U.S. dollar-equivalent cash flows are not adversely affected by changes in the applicable U.S. dollar...

  • Page 102
    ... rate movements. Changes in the fair values of these interest rate swap agreements are recognized in other assets or other liabilities with a corresponding increase or decrease in long-term debt. Each quarter we pay interest based on LIBOR plus a spread to the counterparty and on a semi-annual...

  • Page 103
    ... table provides the location in our financial statements of the recognized gains or losses related to our foreign exchange derivative instruments: Year Ended December 31, 2015 2014 2013 (In millions) Foreign exchange contracts designated as cash flow hedges recognized in cost of net revenues...

  • Page 104
    ... CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The following table provides the location in our financial statements of the recognized gains or losses related to our interest rate derivative instruments: Year Ended December 31, 2015 2014 2013 (In millions) Gain (loss) from interest rate contracts...

  • Page 105
    ... FINANCIAL STATEMENTS - (Continued) Total depreciation expense on our property and equipment in the years ended December 31, 2015, 2014 and 2013 totaled $614 million, $559 million and $495 million, respectively. Accrued Expenses and Other Current Liabilities Total compensation and related benefits...

  • Page 106
    ...things and subject to exceptions, limit our ability to incur, assume or guarantee debt secured by liens on specified assets or enter into sale and lease-back transactions with respect to specified properties, and also includes customary events of default. Commercial Paper In connection with entering...

  • Page 107
    ...in millions): Fiscal Years: 2016 2017 2018 2019 2020 Thereafter $ - 1,450 - 1,550 500 3,250 $6,750 Note 12 - Related Party Transactions We have entered into indemnification agreements with each of our directors, executive officers and certain other officers. These agreements require us to indemnify...

  • Page 108
    ... under our non-cancelable operating leases at December 31, 2015 are as follows: Leases (In millions) 2016 2017 2018 2019 2020 Thereafter Total minimum lease payments $ 55 52 35 30 25 25 $222 Rent expense in the years ended December 31, 2015, 2014 and 2013 totaled $79 million, $85 million and $74...

  • Page 109
    ... Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Litigation eBay Inc., eBay Domestic Holdings, Inc., Pierre Omidyar and Joshua Silverman have been sued by craigslist, Inc. in California Superior Court in San Francisco (Case No.: CGC - 08 - 475276). craigslist filed suit on May 13, 2008...

  • Page 110
    ... lawsuits alleging that we have violated patent, copyright or trademark laws will be filed against us. Intellectual property claims, whether meritorious or not, are time consuming and costly to defend and resolve, could require expensive changes in our methods of doing business or could require...

  • Page 111
    ... block trades, privately negotiated transactions (including accelerated share repurchase transactions) or other means at times and in such amounts as management deems appropriate and will be funded from our working capital or other financing alternatives. Our stock repurchase programs may be limited...

  • Page 112
    ... vest in equal annual installments over a period of three to five years, are subject to the employees' continuing service to us and do not have an expiration date. The cost of restricted stock units is determined using the fair value of our common stock on the date of grant. In 2015, 2014 and 2013...

  • Page 113
    ... lower of the fair market value on the first day of the applicable offering period or on the last day of the sixmonth purchase period. Employees may purchase shares having a value not exceeding 10% of their eligible compensation during an offering period. During the years ended 2015, 2014, and 2013...

  • Page 114
    ... between the exercise price of the underlying awards and the quoted price of our common stock. At December 31, 2015, options to purchase 7 million shares of our common stock were in-the-money. The weighted average grant-date fair value of options granted during the years 2015, 2014 and 2013 was...

  • Page 115
    ... of recording stock-based compensation expense for years ended December 31, 2015, 2014 and 2013 was as follows: Year Ended December 31, 2015 2014 2013 (In millions) Cost of net revenues Sales and marketing Product development General and administrative Total stock-based compensation expense...

  • Page 116
    ... 31, 2015 2014 2013 Risk-free interest rate Expected life (in years) Dividend yield Expected volatility 1.4% 4.1 - % 27% 1.2% 4.1 - % 29% 0.6% 4.1 - % 34% Our computation of expected volatility is based on a combination of historical and market-based implied volatility from traded options on...

  • Page 117
    ... Permanent differences: Prior year foreign earnings no longer considered indefinitely reinvested Foreign income taxed at different rates Change in valuation allowance Stock-based compensation State taxes, net of federal benefit Research and other tax credits Divested business Other $ 843 - (399...

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    ... net operating loss carryforwards are subject to various limitations under Section 382 of the Internal Revenue Code and applicable state tax laws. If not utilized, the federal and state net operating loss carryforwards will both begin to expire in 2018. The carryforward periods on our foreign net...

  • Page 119
    ... annually. The following table reflects changes in unrecognized tax benefits for the years ended December, 31 2015, 2014 and 2013: 2015 2014 2013 (In millions) Gross amounts of unrecognized tax benefits as of the beginning of the period Increases related to prior period tax positions Decreases...

  • Page 120
    ... as of December 31, 2015 related to this matter. We will continue to monitor ongoing developments and potential impacts to our consolidated financial statements. Note 18 - Interest and Other, Net The components of interest and other, net for the years ended December 31, 2015, 2014 and 2013 are as...

  • Page 121
    ... Income 2015 2014 (In millions) Details about Accumulated Other Comprehensive Income Components Affected Line Item in the Statement of Income Gains (losses) on cash flow hedges - foreign exchange contracts Cost of net revenues Sales and marketing Product development General and administrative...

  • Page 122
    ... Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Note 20 - Restructuring In January 2015, at a regular meeting of our Board, our Board approved a plan to implement a strategic reduction of our existing global workforce. As a result, we reduced our workforce globally. The reduction was...

  • Page 123
    ... the Consolidated Financial Statements and includes all adjustments necessary to state fairly the information for the periods presented. Quarterly Financial Data (Unaudited, in millions, except per share amounts) March 31 Quarter Ended June 30 September 30 December 31 2015 Net revenues Gross profit...

  • Page 124
    ... TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) March 31 Quarter Ended June 30 September 30 December 31 2014 Net revenues Gross profit Income (loss) from continuing operations Income from discontinued operations, net of income taxes Net income (loss) Income (loss) per share - basic: Continuing...

  • Page 125
    eBay Inc. FINANCIAL STATEMENT SCHEDULE The Financial Statement Schedule II - VALUATION AND QUALIFYING ACCOUNTS is filed as part of this Annual Report on Form 10-K. Balance at Beginning of Period Charged/Credited to Net Income Charged to Charges Utilized/ Other Account Write-offs (In millions) ...

  • Page 126
    ...to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Jose, State of California, on the 1st day of February, 2016. eBay Inc...

  • Page 127
    ... J. TIERNEY Thomas J. Tierney Chairman of the Board and Director EDWARD W. BARNHOLT Edward W. Barnholt Director BONNIE S. HAMMER Bonnie S. Hammer Director PAUL S. PRESSLER Paul S. Pressler Director PERRY M. TRAQUINA Perry M. Traquina Director By: /s/ By: /s/ By: /s/ By: /s/ By: /s/ By...

  • Page 128
    ... 10-K Incorporated by Reference Form File No. Date Filed No. Exhibit Description 2.01*++ Share Purchase Agreement, dated as of September 1, 2009, as amended on September 14, 2009, by and among Registrant, eBay International AG, Sonorit Holding, A.S. and Springboard Group S.Ã .r.l. (formerly SLP...

  • Page 129
    ... of Indemnity Agreement entered into by Registrant with each of its directors and executive officers. Registrant's Amended and Restated 1998 Employee Stock Purchase Plan. Registrant's 1998 Directors Stock Option Plan, as amended. Registrant's 1999 Global Equity Incentive Plan, as amended. Form of...

  • Page 130
    ...Agreement (and Performance-Based Restricted Stock Unit Agreement) under Registrant's 2008 Equity Incentive Award Plan. Amended and Restated eBay Incentive Plan. Amendment to eBay Incentive Plan, effective April 2, 2012. eBay Inc. Deferred Compensation Plan. Employment Letter Agreement dated March 31...

  • Page 131
    ... effective April 2, 2012. Form of Restricted Stock Unit Award Agreement under GSI Commerce, Inc. 2012 Equity Incentive Plan. GSI Commerce, Inc. Leadership Team Incentive Plan (Filed as Appendix B to GSI Commerce, Inc.'s Definitive Proxy Statement on Schedule 14A filed with the Commission on April 25...

  • Page 132
    ... Transaction Success and Retention Program. Amendment dated December 31, 2014 to Offer Letter between Registrant and Daniel Schulman. Nomination and Standstill Agreement, dated as of January 21, 2015, by and among the persons and entities listed on Schedule A thereto and Registrant. eBay Inc. Change...

  • Page 133
    ... + Indicates a management contract or compensatory plan or arrangement ++ Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. * The annexes and schedules to the Share Purchase Agreement...

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    On February 22, 2016, we filed a Form 10-K/A amending Exhibit 12.01 as filed with our Form 10-K on February 1, 2016.

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