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Form 10-Q
|
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[x]
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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eBay Inc.
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(Exact name of registrant as specified in its charter)
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||
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Delaware
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77-0430924
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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|
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2065 Hamilton Avenue
San Jose, California
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95125
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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[x]
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Accelerated filer
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[ ]
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Non-accelerated filer
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[ ]
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(Do not check if a smaller reporting company)
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Smaller reporting company
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[ ]
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Item 1:
|
Financial Statements
|
|
September 30,
2014 |
|
December 31,
2013 |
||||
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(In millions, except par value amounts)
|
||||||
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(Unaudited)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
4,790
|
|
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$
|
4,494
|
|
Short-term investments
|
5,601
|
|
|
4,531
|
|
||
Accounts receivable, net
|
755
|
|
|
899
|
|
||
Loans and interest receivable, net
|
3,162
|
|
|
2,789
|
|
||
Funds receivable and customer accounts
|
9,962
|
|
|
9,260
|
|
||
Other current assets
|
1,384
|
|
|
1,310
|
|
||
Total current assets
|
25,654
|
|
|
23,283
|
|
||
Long-term investments
|
5,875
|
|
|
4,971
|
|
||
Property and equipment, net
|
2,825
|
|
|
2,760
|
|
||
Goodwill
|
9,220
|
|
|
9,267
|
|
||
Intangible assets, net
|
642
|
|
|
941
|
|
||
Other assets
|
260
|
|
|
266
|
|
||
Total assets
|
$
|
44,476
|
|
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$
|
41,488
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
|
||
Short-term debt
|
$
|
250
|
|
|
$
|
6
|
|
Accounts payable
|
339
|
|
|
309
|
|
||
Funds payable and amounts due to customers
|
9,962
|
|
|
9,260
|
|
||
Accrued expenses and other current liabilities
|
5,617
|
|
|
2,799
|
|
||
Deferred revenue
|
185
|
|
|
158
|
|
||
Income taxes payable
|
138
|
|
|
107
|
|
||
Total current liabilities
|
16,491
|
|
|
12,639
|
|
||
Deferred and other tax liabilities, net
|
709
|
|
|
841
|
|
||
Long-term debt
|
7,346
|
|
|
4,117
|
|
||
Other liabilities
|
120
|
|
|
244
|
|
||
Total liabilities
|
24,666
|
|
|
17,841
|
|
||
Commitments and contingencies (Note 8)
|
|
|
|
|
|||
Stockholders' equity:
|
|
|
|
||||
Common stock, $0.001 par value; 3,580 shares authorized; 1,242 and 1,294 shares outstanding
|
2
|
|
|
2
|
|
||
Additional paid-in capital
|
13,580
|
|
|
13,031
|
|
||
Treasury stock at cost, 362 and 296 shares
|
(12,872
|
)
|
|
(9,396
|
)
|
||
Retained earnings
|
17,877
|
|
|
18,854
|
|
||
Accumulated other comprehensive income
|
1,223
|
|
|
1,156
|
|
||
Total stockholders' equity
|
19,810
|
|
|
23,647
|
|
||
Total liabilities and stockholders' equity
|
$
|
44,476
|
|
|
$
|
41,488
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In millions, except per share amounts)
|
||||||||||||||
|
(Unaudited)
|
||||||||||||||
Net revenues
|
$
|
4,353
|
|
|
$
|
3,892
|
|
|
$
|
12,981
|
|
|
$
|
11,517
|
|
Cost of net revenues
|
1,389
|
|
|
1,224
|
|
|
4,132
|
|
|
3,587
|
|
||||
Gross profit
|
2,964
|
|
|
2,668
|
|
|
8,849
|
|
|
7,930
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||
Sales and marketing
|
923
|
|
|
755
|
|
|
2,642
|
|
|
2,223
|
|
||||
Product development
|
511
|
|
|
433
|
|
|
1,491
|
|
|
1,318
|
|
||||
General and administrative
|
442
|
|
|
415
|
|
|
1,368
|
|
|
1,242
|
|
||||
Provision for transaction and loan losses
|
249
|
|
|
185
|
|
|
685
|
|
|
553
|
|
||||
Amortization of acquired intangible assets
|
58
|
|
|
81
|
|
|
210
|
|
|
245
|
|
||||
Total operating expenses
|
2,183
|
|
|
1,869
|
|
|
6,396
|
|
|
5,581
|
|
||||
Income from operations
|
781
|
|
|
799
|
|
|
2,453
|
|
|
2,349
|
|
||||
Interest and other, net
|
20
|
|
|
74
|
|
|
24
|
|
|
89
|
|
||||
Income before income taxes
|
801
|
|
|
873
|
|
|
2,477
|
|
|
2,438
|
|
||||
Provision for income taxes
|
(128
|
)
|
|
(184
|
)
|
|
(3,454
|
)
|
|
(432
|
)
|
||||
Net income (loss)
|
$
|
673
|
|
|
$
|
689
|
|
|
$
|
(977
|
)
|
|
$
|
2,006
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.54
|
|
|
$
|
0.53
|
|
|
$
|
(0.78
|
)
|
|
$
|
1.55
|
|
Diluted
|
$
|
0.54
|
|
|
$
|
0.53
|
|
|
$
|
(0.78
|
)
|
|
$
|
1.53
|
|
Weighted average shares:
|
|
|
|
|
|
|
|
||||||||
Basic
|
1,242
|
|
|
1,295
|
|
|
1,258
|
|
|
1,296
|
|
||||
Diluted
|
1,251
|
|
|
1,310
|
|
|
1,258
|
|
|
1,314
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In millions)
|
||||||||||||||
|
(Unaudited)
|
||||||||||||||
Net income (loss)
|
$
|
673
|
|
|
$
|
689
|
|
|
$
|
(977
|
)
|
|
$
|
2,006
|
|
Other comprehensive income (loss), net of reclassification adjustments:
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation gain (loss)
|
(214
|
)
|
|
353
|
|
|
(123
|
)
|
|
88
|
|
||||
Unrealized gains (losses) on investments, net
|
67
|
|
|
243
|
|
|
(14
|
)
|
|
459
|
|
||||
Tax (expense) benefit on unrealized gains (losses) on investments, net
|
(33
|
)
|
|
(86
|
)
|
|
(1
|
)
|
|
(175
|
)
|
||||
Unrealized gains (losses) on hedging activities, net
|
174
|
|
|
(135
|
)
|
|
211
|
|
|
(24
|
)
|
||||
Tax (expense) benefit on unrealized gains (losses) on hedging activities, net
|
(2
|
)
|
|
4
|
|
|
(6
|
)
|
|
1
|
|
||||
Other comprehensive income (loss), net tax
|
(8
|
)
|
|
379
|
|
|
67
|
|
|
349
|
|
||||
Comprehensive income (loss)
|
$
|
665
|
|
|
$
|
1,068
|
|
|
$
|
(910
|
)
|
|
$
|
2,355
|
|
|
Nine Months Ended September 30,
|
||||||
|
2014
|
|
2013
|
||||
|
(In millions)
|
||||||
|
(Unaudited)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(977
|
)
|
|
$
|
2,006
|
|
Adjustments:
|
|
|
|
||||
Provision for transaction and loan losses
|
685
|
|
|
553
|
|
||
Depreciation and amortization
|
1,120
|
|
|
1,033
|
|
||
Stock-based compensation
|
488
|
|
|
412
|
|
||
Gain on sale of equity investments
|
—
|
|
|
(75
|
)
|
||
Deferred income taxes
|
2,996
|
|
|
258
|
|
||
Changes in assets and liabilities, net of acquisition effects
|
(276
|
)
|
|
(905
|
)
|
||
Net cash provided by operating activities
|
4,036
|
|
|
3,282
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Purchases of property and equipment
|
(902
|
)
|
|
(969
|
)
|
||
Changes in principal loans receivable, net
|
(493
|
)
|
|
(395
|
)
|
||
Purchases of investments
|
(6,879
|
)
|
|
(5,726
|
)
|
||
Maturities and sales of investments
|
4,594
|
|
|
2,710
|
|
||
Acquisitions, net of cash acquired
|
(59
|
)
|
|
(85
|
)
|
||
Repayment of note receivable and sale of related equity investments
|
—
|
|
|
485
|
|
||
Other
|
(6
|
)
|
|
(14
|
)
|
||
Net cash used in investing activities
|
(3,745
|
)
|
|
(3,994
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from issuance of common stock
|
178
|
|
|
301
|
|
||
Repurchases of common stock
|
(3,476
|
)
|
|
(1,088
|
)
|
||
Excess tax benefits from stock-based compensation
|
90
|
|
|
180
|
|
||
Tax withholdings related to net share settlements of restricted stock awards and units
|
(224
|
)
|
|
(247
|
)
|
||
Proceeds from issuance of debt
|
3,482
|
|
|
—
|
|
||
Funds receivable and customer accounts, net
|
(702
|
)
|
|
(979
|
)
|
||
Funds payable and amounts due to customers, net
|
702
|
|
|
979
|
|
||
Other
|
(7
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
43
|
|
|
(854
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(38
|
)
|
|
29
|
|
||
Net increase (decrease) in cash and cash equivalents
|
296
|
|
|
(1,537
|
)
|
||
Cash and cash equivalents at beginning of period
|
4,494
|
|
|
6,817
|
|
||
Cash and cash equivalents at end of period
|
$
|
4,790
|
|
|
$
|
5,280
|
|
Supplemental cash flow disclosures:
|
|
|
|
|
|
||
Cash paid for interest
|
$
|
84
|
|
|
$
|
85
|
|
Cash paid for income taxes
|
$
|
229
|
|
|
$
|
348
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In millions, except per share amounts)
|
||||||||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
673
|
|
|
$
|
689
|
|
|
$
|
(977
|
)
|
|
$
|
2,006
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average shares of common stock - basic
|
1,242
|
|
|
1,295
|
|
|
1,258
|
|
|
1,296
|
|
||||
Dilutive effect of equity incentive awards
|
9
|
|
|
15
|
|
|
—
|
|
|
18
|
|
||||
Weighted average shares of common stock - diluted
|
1,251
|
|
|
1,310
|
|
|
1,258
|
|
|
1,314
|
|
||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.54
|
|
|
$
|
0.53
|
|
|
$
|
(0.78
|
)
|
|
$
|
1.55
|
|
Diluted
|
$
|
0.54
|
|
|
$
|
0.53
|
|
|
$
|
(0.78
|
)
|
|
$
|
1.53
|
|
Common stock equivalents excluded from income per diluted share because their effect would have been anti-dilutive
|
8
|
|
|
2
|
|
|
54
|
|
|
2
|
|
|
December 31,
2013 |
|
Goodwill
Acquired
|
|
Adjustments
|
|
September 30,
2014 |
||||||||
|
(In millions)
|
||||||||||||||
Reportable segments:
(1)
|
|
|
|
|
|
|
|
||||||||
Marketplaces
|
$
|
4,861
|
|
|
$
|
30
|
|
|
$
|
(94
|
)
|
|
$
|
4,797
|
|
Payments
|
3,120
|
|
|
—
|
|
|
17
|
|
|
3,137
|
|
||||
Enterprise
|
1,286
|
|
|
—
|
|
|
—
|
|
|
1,286
|
|
||||
|
$
|
9,267
|
|
|
$
|
30
|
|
|
$
|
(77
|
)
|
|
$
|
9,220
|
|
(1)
|
The above table presents recasted annual segment activity to reflect the move of our Magento platform into our Enterprise segment. Prior to this change, Magento was reported in corporate and other.
|
|
September 30, 2014
|
|
December 31, 2013
|
||||||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted Average Useful Life (Years)
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted Average Useful Life (Years)
|
||||||||||||
|
(In millions, except years)
|
||||||||||||||||||||||||||
Intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer lists and user base
|
$
|
1,655
|
|
|
$
|
(1,339
|
)
|
|
$
|
316
|
|
|
5
|
|
$
|
1,653
|
|
|
$
|
(1,213
|
)
|
|
$
|
440
|
|
|
5
|
Marketing related
|
872
|
|
|
(735
|
)
|
|
137
|
|
|
5
|
|
780
|
|
|
(677
|
)
|
|
103
|
|
|
5
|
||||||
Developed technologies
|
583
|
|
|
(463
|
)
|
|
120
|
|
|
4
|
|
554
|
|
|
(401
|
)
|
|
153
|
|
|
4
|
||||||
Braintree related
(1)
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
155
|
|
|
—
|
|
|
155
|
|
|
—
|
||||||
All other
|
274
|
|
|
(205
|
)
|
|
69
|
|
|
4
|
|
273
|
|
|
(183
|
)
|
|
90
|
|
|
4
|
||||||
|
$
|
3,384
|
|
|
$
|
(2,742
|
)
|
|
$
|
642
|
|
|
|
|
$
|
3,415
|
|
|
$
|
(2,474
|
)
|
|
$
|
941
|
|
|
|
|
(1)
|
During the
nine
months ended
September 30, 2014
, we allocated the Braintree intangible assets between customer lists, marketing related and developed technologies intangible assets.
|
Fiscal years:
|
|
|
||
Remaining 2014
|
|
$
|
80
|
|
2015
|
|
309
|
|
|
2016
|
|
182
|
|
|
2017
|
|
44
|
|
|
2018
|
|
22
|
|
|
Thereafter
|
|
5
|
|
|
|
|
$
|
642
|
|
•
|
results of operations of various initiatives which support all of our reportable segments;
|
•
|
corporate management costs, such as human resources, finance and legal, not allocated to our segments;
|
•
|
amortization of intangible assets;
|
•
|
restructuring charges; and
|
•
|
stock-based compensation expense.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In millions)
|
||||||||||||||
Net Revenue
|
|
|
|
|
|
|
|
||||||||
Marketplaces
|
|
|
|
|
|
|
|
||||||||
Net transaction revenues
|
$
|
1,707
|
|
|
$
|
1,609
|
|
|
$
|
5,156
|
|
|
$
|
4,741
|
|
Marketing services and other revenues
|
449
|
|
|
418
|
|
|
1,329
|
|
|
1,244
|
|
||||
|
2,156
|
|
|
2,027
|
|
|
6,485
|
|
|
5,985
|
|
||||
Payments
|
|
|
|
|
|
|
|
||||||||
Net transaction revenues
|
1,783
|
|
|
1,493
|
|
|
5,224
|
|
|
4,403
|
|
||||
Marketing services and other revenues
|
167
|
|
|
127
|
|
|
517
|
|
|
389
|
|
||||
|
1,950
|
|
|
1,620
|
|
|
5,741
|
|
|
4,792
|
|
||||
Enterprise
|
|
|
|
|
|
|
|
||||||||
Net transaction revenues
|
199
|
|
|
185
|
|
|
614
|
|
|
565
|
|
||||
Marketing services and other revenues
|
60
|
|
|
67
|
|
|
181
|
|
|
195
|
|
||||
|
259
|
|
|
252
|
|
|
795
|
|
|
760
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Elimination of inter-segment net revenue
(1)
|
(12
|
)
|
|
(7
|
)
|
|
(40
|
)
|
|
(20
|
)
|
||||
Total consolidated net revenue
|
$
|
4,353
|
|
|
$
|
3,892
|
|
|
$
|
12,981
|
|
|
$
|
11,517
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
|
|
|
|
|
|
|
||||||||
Marketplaces
|
$
|
775
|
|
|
$
|
789
|
|
|
$
|
2,419
|
|
|
$
|
2,406
|
|
Payments
|
407
|
|
|
368
|
|
|
1,360
|
|
|
1,116
|
|
||||
Enterprise
|
—
|
|
|
8
|
|
|
16
|
|
|
9
|
|
||||
Corporate and other
|
(401
|
)
|
|
(366
|
)
|
|
(1,342
|
)
|
|
(1,182
|
)
|
||||
Total operating income (loss)
|
$
|
781
|
|
|
$
|
799
|
|
|
$
|
2,453
|
|
|
$
|
2,349
|
|
Description
|
|
Balance as of
September 30, 2014
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
||||||
|
|
(In millions)
|
||||||||||
Assets:
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
$
|
4,790
|
|
|
$
|
3,472
|
|
|
$
|
1,318
|
|
Short-term investments:
|
|
|
|
|
|
|
||||||
Restricted cash
|
|
38
|
|
|
38
|
|
|
—
|
|
|||
Corporate debt securities
|
|
4,525
|
|
|
—
|
|
|
4,525
|
|
|||
Government and agency securities
|
|
4
|
|
|
—
|
|
|
4
|
|
|||
Time deposits
|
|
150
|
|
|
—
|
|
|
150
|
|
|||
Equity instruments
|
|
884
|
|
|
884
|
|
|
—
|
|
|||
Total short-term investments
|
|
5,601
|
|
|
922
|
|
|
4,679
|
|
|||
Funds receivable and customer accounts
|
|
3,858
|
|
|
—
|
|
|
3,858
|
|
|||
Derivatives
|
|
169
|
|
|
—
|
|
|
169
|
|
|||
Long-term investments:
|
|
|
|
|
|
|
||||||
Corporate debt securities
|
|
5,394
|
|
|
—
|
|
|
5,394
|
|
|||
Government and agency securities
|
|
238
|
|
|
—
|
|
|
238
|
|
|||
Total long-term investments
|
|
5,632
|
|
|
—
|
|
|
5,632
|
|
|||
Total financial assets
|
|
$
|
20,050
|
|
|
$
|
4,394
|
|
|
$
|
15,656
|
|
|
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
|
||||||
Derivatives
|
|
$
|
73
|
|
|
$
|
—
|
|
|
$
|
73
|
|
Description
|
|
Balance as of
December 31, 2013
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
||||||
|
|
(In millions)
|
||||||||||
Assets:
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
$
|
4,494
|
|
|
$
|
4,159
|
|
|
$
|
335
|
|
Short-term investments:
|
|
|
|
|
|
|
||||||
Restricted cash
|
|
17
|
|
|
17
|
|
|
—
|
|
|||
Corporate debt securities
|
|
3,529
|
|
|
—
|
|
|
3,529
|
|
|||
Government and agency securities
|
|
43
|
|
|
—
|
|
|
43
|
|
|||
Time deposits
|
|
49
|
|
|
—
|
|
|
49
|
|
|||
Equity instruments
|
|
893
|
|
|
893
|
|
|
—
|
|
|||
Total short-term investments
|
|
4,531
|
|
|
910
|
|
|
3,621
|
|
|||
Funds receivable and customer accounts
|
|
3,563
|
|
|
—
|
|
|
3,563
|
|
|||
Derivatives
|
|
44
|
|
|
—
|
|
|
44
|
|
|||
Long-term investments:
|
|
|
|
|
|
|
||||||
Corporate debt securities
|
|
4,445
|
|
|
—
|
|
|
4,445
|
|
|||
Government and agency securities
|
|
251
|
|
|
—
|
|
|
251
|
|
|||
Total long-term investments
|
|
4,696
|
|
|
—
|
|
|
4,696
|
|
|||
Total financial assets
|
|
$
|
17,328
|
|
|
$
|
5,069
|
|
|
$
|
12,259
|
|
|
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
|
||||||
Derivatives
|
|
$
|
151
|
|
|
$
|
—
|
|
|
$
|
151
|
|
|
Balance Sheet Location
|
|
September 30,
2014 |
|
December 31,
2013 |
||||
|
|
|
(In millions)
|
||||||
Derivative Assets:
|
|
|
|
|
|
||||
Foreign exchange contracts designated as cash flow hedges
|
Other Current Assets
|
|
$
|
123
|
|
|
$
|
15
|
|
Foreign exchange contracts not designated as hedging instruments
|
Other Current Assets
|
|
46
|
|
|
29
|
|
||
Total derivative assets
|
|
|
$
|
169
|
|
|
$
|
44
|
|
|
|
|
|
|
|
||||
Derivative Liabilities:
|
|
|
|
|
|
||||
Foreign exchange contracts designated as cash flow hedges
|
Other Current Liabilities
|
|
$
|
18
|
|
|
$
|
121
|
|
Foreign exchange contracts not designated as hedging instruments
|
Other Current Liabilities
|
|
$
|
45
|
|
|
$
|
30
|
|
Interest rate contracts designated as fair value hedges
|
Other Liabilities
|
|
$
|
10
|
|
|
N/A
|
|
|
Total derivative liabilities
|
|
|
$
|
73
|
|
|
$
|
151
|
|
|
|
|
|
|
|
||||
Total fair value of derivative instruments
|
|
|
$
|
96
|
|
|
$
|
(107
|
)
|
|
December 31, 2013
|
|
Amount of gain (loss)
recognized in other
comprehensive income
(effective portion)
|
|
Amount of gain (loss)
reclassified from
accumulated other
comprehensive income
to net revenue and operating expense
(effective portion)
|
|
September 30, 2014
|
||||||||
|
(In millions)
|
||||||||||||||
Foreign exchange contracts designated as cash flow hedges
|
$
|
(106
|
)
|
|
$
|
147
|
|
|
$
|
(64
|
)
|
|
$
|
105
|
|
|
December 31, 2012
|
|
Amount of gain (loss)
recognized in other
comprehensive income
(effective portion)
|
|
Amount of gain (loss)
reclassified from
accumulated other
comprehensive income
to net revenue and operating expense
(effective portion)
|
|
September 30, 2013
|
||||||||
|
(In millions)
|
||||||||||||||
Foreign exchange contracts designated as cash flow hedges
|
$
|
(55
|
)
|
|
$
|
(23
|
)
|
|
$
|
1
|
|
|
$
|
(79
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended
September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In millions)
|
||||||||||||||
Foreign exchange contracts designated as cash flow hedges recognized in net revenues
|
$
|
(16
|
)
|
|
$
|
6
|
|
|
$
|
(56
|
)
|
|
$
|
9
|
|
Foreign exchange contracts designated as cash flow hedges recognized in operating expenses
|
—
|
|
|
(2
|
)
|
|
(8
|
)
|
|
(8
|
)
|
||||
Foreign exchange contracts not designated as hedging instruments recognized in interest and other, net
|
13
|
|
|
(4
|
)
|
|
(9
|
)
|
|
13
|
|
||||
Total gain (loss) recognized from foreign exchange derivative contracts in the condensed consolidated statement of income
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
(73
|
)
|
|
$
|
14
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended
September 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In millions)
|
||||||||||||||
Gain (loss) from interest rate contracts designated as fair value hedges recognized in interest and other, net
|
$
|
(10
|
)
|
|
$
|
—
|
|
|
$
|
(10
|
)
|
|
$
|
—
|
|
Gain (loss) from hedged items attributable to hedged risk recognized in interest and other, net
|
10
|
|
|
—
|
|
|
10
|
|
|
—
|
|
||||
Total gain (loss) recognized from in the condensed consolidated statement of income
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
September 30,
|
||||||
|
2014
|
|
2013
|
||||
|
(In millions)
|
||||||
Foreign exchange contracts designated as cash flow hedges
|
$
|
2,560
|
|
|
$
|
2,901
|
|
Foreign exchange contracts not designated as hedging instruments
|
2,895
|
|
|
3,380
|
|
||
Interest rate contracts designated as fair value hedges
|
$
|
2,400
|
|
|
N/A
|
|
|
Total
|
$
|
7,855
|
|
|
$
|
6,281
|
|
|
|
Coupon
|
|
Carrying Value as of
|
|
Effective
|
|
Carrying Value as of
|
|
Effective
|
|||||||
|
|
Rate
|
|
September 30, 2014
|
|
Interest Rate
|
|
December 31, 2013
|
|
Interest Rate
|
|||||||
|
|
(In millions, except percentages)
|
|||||||||||||||
Long-Term Debt
|
|
|
|
|
|
|
|
|
|
|
|||||||
Floating Rate Notes:
|
|
|
|
|
|
|
|
|
|
|
|||||||
Senior notes due 2017
|
|
LIBOR plus 0.20%
|
|
|
$
|
450
|
|
|
0.560
|
%
|
|
—
|
|
|
—
|
%
|
|
Senior notes due 2019
|
|
LIBOR plus 0.48%
|
|
|
$
|
400
|
|
|
0.812
|
%
|
|
—
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Fixed Rate Notes:
|
|
|
|
|
|
|
|
|
|
|
|||||||
Senior notes due 2015
|
|
0.700
|
%
|
|
$
|
—
|
|
|
|
|
$
|
250
|
|
|
0.82
|
%
|
|
Senior notes due 2015
|
|
1.625
|
%
|
|
$
|
600
|
|
|
1.805
|
%
|
|
$
|
599
|
|
|
1.805
|
%
|
Senior notes due 2017
|
|
1.350
|
%
|
|
1,000
|
|
|
1.456
|
%
|
|
1,000
|
|
|
1.456
|
%
|
||
Senior notes due 2019
|
|
2.200
|
%
|
|
1,148
|
|
|
2.346
|
%
|
|
—
|
|
|
—
|
%
|
||
Senior notes due 2020
|
|
3.250
|
%
|
|
498
|
|
|
3.389
|
%
|
|
498
|
|
|
3.389
|
%
|
||
Senior notes due 2021
|
|
2.875
|
%
|
|
748
|
|
|
2.993
|
%
|
|
—
|
|
|
—
|
%
|
||
Senior notes due 2022
|
|
2.600
|
%
|
|
999
|
|
|
2.678
|
%
|
|
999
|
|
|
2.678
|
%
|
||
Senior notes due 2024
|
|
3.450
|
%
|
|
749
|
|
|
3.531
|
%
|
|
—
|
|
|
—
|
%
|
||
Senior notes due 2042
|
|
4.000
|
%
|
|
743
|
|
|
4.114
|
%
|
|
743
|
|
|
4.114
|
%
|
||
Total senior notes
|
|
|
|
7,335
|
|
|
|
|
4,089
|
|
|
|
|||||
Hedge accounting fair value adjustments
|
|
|
|
(10
|
)
|
|
|
|
N/A
|
|
|
|
|||||
Other indebtedness
|
|
|
|
21
|
|
|
|
|
28
|
|
|
|
|||||
Total long-term debt
|
|
|
|
$
|
7,346
|
|
|
|
|
$
|
4,117
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||||||
Short-Term Debt
|
|
|
|
|
|
|
|
|
|
|
|||||||
Senior notes due 2015
|
|
0.700
|
%
|
|
250
|
|
|
0.820
|
%
|
|
—
|
|
|
|
|
||
Other indebtedness
|
|
|
|
—
|
|
|
|
|
6
|
|
|
|
|||||
Total short-term debt
|
|
|
|
250
|
|
|
|
|
6
|
|
|
|
|||||
Total Debt
|
|
|
|
$
|
7,596
|
|
|
|
|
$
|
4,123
|
|
|
|
|
Shares Repurchased
|
|
Average Price per Share
|
|
Value of Shares Repurchased
|
|
Remaining Amount Authorized
|
|||||||
|
(In millions, except per share amounts)
|
|||||||||||||
Balance as of January 1, 2014
|
25
|
|
|
$
|
54.30
|
|
|
$
|
1,360
|
|
|
$
|
640
|
|
Authorization of additional plan in January 2014
|
|
|
|
|
|
|
5,000
|
|
||||||
Repurchase of shares of common stock
|
66
|
|
|
52.89
|
|
|
3,475
|
|
|
(3,475
|
)
|
|||
Balance as of September 30, 2014
|
91
|
|
|
$
|
53.28
|
|
|
$
|
4,835
|
|
|
$
|
2,165
|
|
|
Options
|
|
|
(In millions)
|
|
Outstanding as of January 1, 2014
|
14
|
|
Granted and assumed
|
2
|
|
Exercised
|
(4
|
)
|
Forfeited/expired/canceled
|
(1
|
)
|
Outstanding as of September 30, 2014
|
11
|
|
|
Units
|
|
|
(In millions)
|
|
Outstanding as of January 1, 2014
|
34
|
|
Awarded and assumed
|
17
|
|
Vested
|
(12
|
)
|
Forfeited
|
(4
|
)
|
Outstanding as of September 30, 2014
|
35
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In millions)
|
||||||||||||||
Cost of net revenues
|
$
|
19
|
|
|
$
|
9
|
|
|
$
|
56
|
|
|
$
|
45
|
|
Sales and marketing
|
46
|
|
|
38
|
|
|
133
|
|
|
112
|
|
||||
Product development
|
57
|
|
|
42
|
|
|
167
|
|
|
120
|
|
||||
General and administrative
|
51
|
|
|
51
|
|
|
132
|
|
|
135
|
|
||||
Total stock-based compensation expense
|
$
|
173
|
|
|
$
|
140
|
|
|
$
|
488
|
|
|
$
|
412
|
|
Capitalized in product development
|
$
|
5
|
|
|
$
|
4
|
|
|
$
|
13
|
|
|
$
|
11
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Risk-free interest rate
|
1.27
|
%
|
|
0.77
|
%
|
|
1.19
|
%
|
|
0.62
|
%
|
Expected life (in years)
|
3.9
|
|
|
3.9
|
|
|
4.1
|
|
|
4.1
|
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Expected volatility
|
27
|
%
|
|
32
|
%
|
|
29
|
%
|
|
34
|
%
|
|
(In millions)
|
||
Gross amounts of unrecognized tax benefits as of January 1, 2014
|
$
|
334
|
|
Increases related to prior period tax positions
|
21
|
|
|
Decreases related to prior period tax positions
|
(9
|
)
|
|
Increases related to current period tax positions
|
41
|
|
|
Settlements
|
(10
|
)
|
|
Gross amounts of unrecognized tax benefits as of September 30, 2014
|
$
|
377
|
|
|
Nine Months Ended September 30,
|
||||||
|
2014
|
|
2013
|
||||
|
(In millions)
|
||||||
Balance as of January 1
|
$
|
146
|
|
|
$
|
101
|
|
Charge-offs
|
(210
|
)
|
|
(161
|
)
|
||
Recoveries
|
20
|
|
|
9
|
|
||
Provision
|
222
|
|
|
181
|
|
||
Balance as of September 30
|
$
|
178
|
|
|
$
|
130
|
|
|
Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Unrealized
Gains on
Investments
|
|
Foreign
Currency
Translation
|
|
Estimated tax (expense) benefit
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Beginning balance
|
$
|
(69
|
)
|
|
$
|
840
|
|
|
$
|
748
|
|
|
$
|
(288
|
)
|
|
$
|
1,231
|
|
Other comprehensive income before reclassifications
|
158
|
|
|
88
|
|
|
(214
|
)
|
|
(35
|
)
|
|
(3
|
)
|
|||||
Amount of gain (loss) reclassified from accumulated other comprehensive income
|
(16
|
)
|
|
21
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||
Net current period other comprehensive income
|
174
|
|
|
67
|
|
|
(214
|
)
|
|
(35
|
)
|
|
(8
|
)
|
|||||
Ending balance
|
$
|
105
|
|
|
$
|
907
|
|
|
$
|
534
|
|
|
$
|
(323
|
)
|
|
$
|
1,223
|
|
|
Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Unrealized
Gains on
Investments
|
|
Foreign
Currency
Translation
|
|
Estimated tax (expense) benefit
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Beginning balance
|
$
|
(106
|
)
|
|
$
|
921
|
|
|
$
|
657
|
|
|
$
|
(316
|
)
|
|
$
|
1,156
|
|
Other comprehensive income before reclassifications
|
147
|
|
|
21
|
|
|
(123
|
)
|
|
(7
|
)
|
|
38
|
|
|||||
Amount of gain (loss) reclassified from accumulated other comprehensive income
|
(64
|
)
|
|
35
|
|
|
—
|
|
|
—
|
|
|
(29
|
)
|
|||||
Net current period other comprehensive income
|
211
|
|
|
(14
|
)
|
|
(123
|
)
|
|
(7
|
)
|
|
67
|
|
|||||
Ending balance
|
$
|
105
|
|
|
$
|
907
|
|
|
$
|
534
|
|
|
$
|
(323
|
)
|
|
$
|
1,223
|
|
|
Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Unrealized
Gains on
Investments
|
|
Foreign
Currency
Translation
|
|
Estimated tax (expense) benefit
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Beginning balance
|
$
|
56
|
|
|
$
|
903
|
|
|
$
|
184
|
|
|
$
|
(317
|
)
|
|
$
|
826
|
|
Other comprehensive income before reclassifications
|
(131
|
)
|
|
243
|
|
|
353
|
|
|
(82
|
)
|
|
383
|
|
|||||
Amount of gain (loss) reclassified from accumulated other comprehensive income
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||
Net current period other comprehensive income
|
(135
|
)
|
|
243
|
|
|
353
|
|
|
(82
|
)
|
|
379
|
|
|||||
Ending balance
|
$
|
(79
|
)
|
|
$
|
1,146
|
|
|
$
|
537
|
|
|
$
|
(399
|
)
|
|
$
|
1,205
|
|
|
Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Unrealized
Gains on
Investments
|
|
Foreign
Currency
Translation
|
|
Estimated tax (expense) benefit
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Beginning balance
|
$
|
(55
|
)
|
|
$
|
687
|
|
|
$
|
449
|
|
|
$
|
(225
|
)
|
|
$
|
856
|
|
Other comprehensive income before reclassifications
|
(23
|
)
|
|
463
|
|
|
88
|
|
|
(174
|
)
|
|
354
|
|
|||||
Amount of gain (loss) reclassified from accumulated other comprehensive income
|
1
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||
Net current period other comprehensive income
|
(24
|
)
|
|
459
|
|
|
88
|
|
|
(174
|
)
|
|
349
|
|
|||||
Ending balance
|
$
|
(79
|
)
|
|
$
|
1,146
|
|
|
$
|
537
|
|
|
$
|
(399
|
)
|
|
$
|
1,205
|
|
Details about Accumulated Other Comprehensive
Income Components
|
|
Amount of Gain (Loss)
Reclassified from
Accumulated Other
Comprehensive
Income
|
|
Affected Line Item in the Statement of Income
|
||||||
|
|
Three Months Ended
September 30, 2014 |
|
Three Months Ended
September 30, 2013 |
|
|
||||
|
|
(In millions)
|
|
|
||||||
Gains (losses) on cash flow hedges - foreign exchange contracts
|
|
$
|
(16
|
)
|
|
$
|
6
|
|
|
Net Revenues
|
|
|
—
|
|
|
(1
|
)
|
|
Cost of net revenues
|
||
|
|
—
|
|
|
—
|
|
|
Sales and marketing
|
||
|
|
—
|
|
|
(1
|
)
|
|
Product development
|
||
|
|
—
|
|
|
—
|
|
|
General and administrative
|
||
|
|
(16
|
)
|
|
4
|
|
|
Total, before income taxes
|
||
|
|
—
|
|
|
—
|
|
|
Provision for income taxes
|
||
|
|
(16
|
)
|
|
4
|
|
|
Total, net of income taxes
|
||
|
|
|
|
|
|
|
||||
Unrealized gains on investments
|
|
21
|
|
|
—
|
|
|
Interest and other, net
|
||
|
|
21
|
|
|
—
|
|
|
Total, before income taxes
|
||
|
|
—
|
|
|
—
|
|
|
Provision for income taxes
|
||
|
|
21
|
|
|
—
|
|
|
Total, net of income taxes
|
||
|
|
|
|
|
|
|
||||
Total reclassifications for the period
|
|
$
|
5
|
|
|
$
|
4
|
|
|
Total, net of income taxes
|
Details about Accumulated Other Comprehensive
Income Components
|
|
Amount of Gain (Loss)
Reclassified from
Accumulated Other
Comprehensive
Income
|
|
Affected Line Item in the Statement of Income
|
||||||
|
|
Nine Months Ended
September 30, 2014 |
|
Nine Months Ended
September 30, 2013 |
|
|
||||
|
|
(In millions)
|
|
|
||||||
Gains (losses) on cash flow hedges - foreign exchange contracts
|
|
$
|
(56
|
)
|
|
$
|
9
|
|
|
Net Revenues
|
|
|
(2
|
)
|
|
(2
|
)
|
|
Cost of net revenues
|
||
|
|
—
|
|
|
(1
|
)
|
|
Sales and marketing
|
||
|
|
(4
|
)
|
|
(4
|
)
|
|
Product development
|
||
|
|
(2
|
)
|
|
(1
|
)
|
|
General and administrative
|
||
|
|
(64
|
)
|
|
1
|
|
|
Total, before income taxes
|
||
|
|
—
|
|
|
—
|
|
|
Provision for income taxes
|
||
|
|
(64
|
)
|
|
1
|
|
|
Total, net of income taxes
|
||
|
|
|
|
|
|
|
||||
Unrealized gains on investments
|
|
35
|
|
|
4
|
|
|
Interest and other, net
|
||
|
|
35
|
|
|
4
|
|
|
Total, before income taxes
|
||
|
|
—
|
|
|
—
|
|
|
Provision for income taxes
|
||
|
|
35
|
|
|
4
|
|
|
Total, net of income taxes
|
||
|
|
|
|
|
|
|
||||
Total reclassifications for the period
|
|
$
|
(29
|
)
|
|
$
|
5
|
|
|
Total, net of income taxes
|
Item 2:
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In millions)
|
||||||||||||||
Net Revenues by Type:
|
|
|
|
|
|
|
|
||||||||
Net transaction revenues
|
|
|
|
|
|
|
|
||||||||
Marketplaces
|
$
|
1,707
|
|
|
$
|
1,609
|
|
|
$
|
5,156
|
|
|
$
|
4,741
|
|
Payments
|
1,783
|
|
|
1,493
|
|
|
5,224
|
|
|
4,403
|
|
||||
Enterprise
|
199
|
|
|
185
|
|
|
614
|
|
|
565
|
|
||||
Total net transaction revenues
|
3,689
|
|
|
3,287
|
|
|
10,994
|
|
|
9,709
|
|
||||
Marketing services and other revenues
|
|
|
|
|
|
|
|
||||||||
Marketplaces
|
449
|
|
|
418
|
|
|
1,329
|
|
|
1,244
|
|
||||
Payments
|
167
|
|
|
127
|
|
|
517
|
|
|
389
|
|
||||
Enterprise
|
60
|
|
|
67
|
|
|
181
|
|
|
195
|
|
||||
Total marketing services and other revenues
|
676
|
|
|
612
|
|
|
2,027
|
|
|
1,828
|
|
||||
Elimination of inter-segment net revenue
(2)
|
(12
|
)
|
|
(7
|
)
|
|
(40
|
)
|
|
(20
|
)
|
||||
Total net revenues
|
$
|
4,353
|
|
|
$
|
3,892
|
|
|
$
|
12,981
|
|
|
$
|
11,517
|
|
Net Revenues by Geography:
|
|
|
|
|
|
|
|
||||||||
U.S.
|
$
|
2,050
|
|
|
$
|
1,873
|
|
|
$
|
6,095
|
|
|
$
|
5,532
|
|
International
|
2,303
|
|
|
2,019
|
|
|
6,886
|
|
|
5,985
|
|
||||
Total net revenues
|
$
|
4,353
|
|
|
$
|
3,892
|
|
|
$
|
12,981
|
|
|
$
|
11,517
|
|
|
(1)
|
During the first quarter of 2014, we changed our reportable segments based upon changes in our organizational structure which reflect the integration of our Magento platform into our Enterprise segment. Prior to this change, Magento was reported in corporate and other. Also during the first quarter of 2014, we revised our internal management reporting of certain Marketplaces transactions to align more closely with our related operating metrics. Related to this change, we reclassified our Marketplaces vehicles and real estate revenues from net transaction revenues to marketing services and other revenues. Prior period amounts have been revised to conform to the current period segment reporting structure.
|
(2)
|
Represents net revenue generated between our reportable segments.
|
|
Three Months Ended September 30,
|
|
Percent
|
|
Nine Months Ended September 30,
|
|
Percent
|
||||||||||||||
|
2014
|
|
2013
|
|
Change
|
|
2014
|
|
2013
|
|
Change
|
||||||||||
|
(In millions, except percentage changes)
|
||||||||||||||||||||
Supplemental Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketplaces Segment:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
GMV
(2)
|
$
|
20,075
|
|
|
$
|
18,345
|
|
|
9
|
%
|
|
$
|
61,105
|
|
|
$
|
54,928
|
|
|
11
|
%
|
Payments Segment:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Merchant Services Net TPV
(3)
|
$
|
42,235
|
|
|
$
|
30,725
|
|
|
37
|
%
|
|
$
|
119,768
|
|
|
$
|
88,619
|
|
|
35
|
%
|
On eBay Net TPV
(4)
|
$
|
14,341
|
|
|
$
|
13,112
|
|
|
9
|
%
|
|
$
|
43,860
|
|
|
$
|
39,071
|
|
|
12
|
%
|
Net TPV
(5)
|
$
|
56,576
|
|
|
$
|
43,837
|
|
|
29
|
%
|
|
$
|
163,628
|
|
|
$
|
127,690
|
|
|
28
|
%
|
Enterprise Segment:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross Merchandise Sales
(6)
|
$
|
900
|
|
|
$
|
787
|
|
|
14
|
%
|
|
$
|
2,776
|
|
|
$
|
2,409
|
|
|
15
|
%
|
|
(1)
|
eBay's classifieds websites, brands4friends and Shopping.com are not included in these metrics.
|
(2)
|
Total value of all successfully closed transactions between users on Marketplaces platforms during the period regardless of whether the buyer and seller actually consummated the transaction; excludes vehicles and real estate gross merchandise volume.
|
(3)
|
Total dollar volume of payments, net of payment reversals, successfully completed through our payments networks, including PayPal Credit, Venmo and payments processed though Braintree's full stack payments platform during the period; excludes PayPal's and Braintree's payment gateway businesses and payments for transactions on our Marketplaces platforms.
|
(4)
|
Total dollar volume of payments, net of payment reversals, successfully completed through our payments networks, including PayPal Credit, during the period for transactions on our Marketplaces platforms.
|
(5)
|
Total dollar volume of payments, net of payment reversals, successfully completed through our payments networks, including PayPal Credit, Venmo and payments processed through Braintree’s full stack payments platform during the period; excludes payments sent or received through PayPal's and Braintree’s payment gateway businesses.
|
(6)
|
Represents the retail value of all sales transactions, inclusive of freight charges and net of allowance for returns and discounts, which flow through our Enterprise commerce technologies, whether we record the full amount of such transaction as a product sale or a percentage of such transaction as a service fee; excludes volume transacted through the Magento platform.
|
|
Three Months Ended
|
||||||||||||||
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
|
(In millions, except percentage changes)
|
||||||||||||||
2012
|
|
|
|
|
|
|
|
||||||||
Net revenues
|
$
|
3,277
|
|
|
$
|
3,398
|
|
|
$
|
3,404
|
|
|
$
|
3,992
|
|
Percent change from prior quarter
|
(3
|
)%
|
|
4
|
%
|
|
0
|
%
|
|
17
|
%
|
||||
2013
|
|
|
|
|
|
|
|
||||||||
Net revenues
|
$
|
3,748
|
|
|
$
|
3,877
|
|
|
$
|
3,892
|
|
|
$
|
4,530
|
|
Percent change from prior quarter
|
(6
|
)%
|
|
3
|
%
|
|
0
|
%
|
|
16
|
%
|
||||
2014
|
|
|
|
|
|
|
|
||||||||
Net revenues
|
$
|
4,262
|
|
|
$
|
4,366
|
|
|
4,353
|
|
|
—
|
|
||
Percent change from prior quarter
|
(6
|
)%
|
|
2
|
%
|
|
0
|
%
|
|
—
|
%
|
|
Three Months Ended
September 30,
|
|
Change from
2013 to 2014 |
|
Nine Months Ended
September 30,
|
|
Change from
2013 to 2014 |
||||||||||||||||||||||
|
2014
|
|
2013
|
|
in Dollars
|
|
in %
|
|
2014
|
|
2013
|
|
in Dollars
|
|
in %
|
||||||||||||||
|
(In millions, except percentages)
|
||||||||||||||||||||||||||||
Cost of net revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Marketplaces
|
$
|
421
|
|
|
$
|
378
|
|
|
$
|
43
|
|
|
11
|
%
|
|
$
|
1,246
|
|
|
$
|
1,101
|
|
|
$
|
145
|
|
|
13
|
%
|
As a percentage of total Marketplaces net revenues
|
19.5
|
%
|
|
18.6
|
%
|
|
|
|
|
|
19.2
|
%
|
|
18.4
|
%
|
|
|
|
|
||||||||||
Payments
|
765
|
|
|
665
|
|
|
100
|
|
|
15
|
%
|
|
2,271
|
|
|
1,928
|
|
|
343
|
|
|
18
|
%
|
||||||
As a percentage of total Payments net revenues
|
39.2
|
%
|
|
41.0
|
%
|
|
|
|
|
|
|
39.6
|
%
|
|
40.2
|
%
|
|
|
|
|
|||||||||
Enterprise
|
203
|
|
|
178
|
|
|
25
|
|
|
14
|
%
|
|
612
|
|
|
557
|
|
|
55
|
|
|
10
|
%
|
||||||
As a percentage of total Enterprise net revenues
|
78.4
|
%
|
|
70.6
|
%
|
|
|
|
|
|
77.0
|
%
|
|
73.3
|
%
|
|
|
|
|
||||||||||
Corporate and other
|
—
|
|
|
3
|
|
|
(3
|
)
|
|
(100
|
)%
|
|
3
|
|
|
1
|
|
|
2
|
|
|
200
|
%
|
||||||
Total cost of net revenues
|
$
|
1,389
|
|
|
$
|
1,224
|
|
|
$
|
165
|
|
|
13
|
%
|
|
$
|
4,132
|
|
|
$
|
3,587
|
|
|
$
|
545
|
|
|
15
|
%
|
As a percentage of net revenues
|
31.9
|
%
|
|
31.4
|
%
|
|
|
|
|
|
|
|
31.8
|
%
|
|
31.1
|
%
|
|
|
|
|
|
(1)
|
During the first quarter of 2014, we changed our reportable segments based upon changes in our organizational structure which reflect the integration of our Magento platform into our Enterprise segment. Prior to this change, Magento was reported in corporate and other. Prior period amounts have been revised to conform to the current period segment reporting structure.
|
|
Three Months Ended
September 30,
|
|
Change from
2013 to 2014 |
|
Nine Months Ended
September 30,
|
|
Change from
2013 to 2014 |
||||||||||||||||||||||
|
2014
|
|
2013
|
|
in Dollars
|
|
in %
|
|
2014
|
|
2013
|
|
in Dollars
|
|
in %
|
||||||||||||||
|
(In millions, except percentage changes)
|
||||||||||||||||||||||||||||
Sales and marketing
|
$
|
923
|
|
|
$
|
755
|
|
|
$
|
168
|
|
|
22
|
%
|
|
$
|
2,642
|
|
|
$
|
2,223
|
|
|
$
|
419
|
|
|
19
|
%
|
Product development
|
511
|
|
|
433
|
|
|
78
|
|
|
18
|
%
|
|
1,491
|
|
|
1,318
|
|
|
173
|
|
|
13
|
%
|
||||||
General and administrative
|
442
|
|
|
415
|
|
|
27
|
|
|
7
|
%
|
|
1,368
|
|
|
1,242
|
|
|
126
|
|
|
10
|
%
|
||||||
Provision for transaction and loan losses
|
249
|
|
|
185
|
|
|
64
|
|
|
35
|
%
|
|
685
|
|
|
553
|
|
|
132
|
|
|
24
|
%
|
||||||
Amortization of acquired intangible assets
|
58
|
|
|
81
|
|
|
(23
|
)
|
|
(28
|
)%
|
|
210
|
|
|
245
|
|
|
(35
|
)
|
|
(14
|
)%
|
||||||
Interest and other, net
|
20
|
|
|
74
|
|
|
(54
|
)
|
|
(73
|
)%
|
|
24
|
|
|
89
|
|
|
(65
|
)
|
|
(73
|
)%
|
||||||
Provision for income taxes
|
(128
|
)
|
|
(184
|
)
|
|
56
|
|
|
(30
|
)%
|
|
(3,454
|
)
|
|
(432
|
)
|
|
(3,022
|
)
|
|
700
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Sales and marketing
|
21
|
%
|
|
19
|
%
|
|
20
|
%
|
|
19
|
%
|
Product development
|
12
|
%
|
|
11
|
%
|
|
11
|
%
|
|
11
|
%
|
General and administrative
|
10
|
%
|
|
11
|
%
|
|
11
|
%
|
|
11
|
%
|
Provision for transaction and loan losses
|
6
|
%
|
|
5
|
%
|
|
5
|
%
|
|
5
|
%
|
Amortization of acquired intangible assets
|
1
|
%
|
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
Interest and other, net
|
—
|
%
|
|
2
|
%
|
|
—
|
%
|
|
1
|
%
|
Provision for income taxes
|
3
|
%
|
|
5
|
%
|
|
27
|
%
|
|
4
|
%
|
|
Nine Months Ended September 30,
|
||||||
|
2014
|
|
2013
|
||||
|
(In millions)
|
||||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
4,036
|
|
|
$
|
3,282
|
|
Investing activities
|
(3,745
|
)
|
|
(3,994
|
)
|
||
Financing activities
|
43
|
|
|
(854
|
)
|
||
Effect of exchange rates on cash and cash equivalents
|
(38
|
)
|
|
29
|
|
||
Net increase/(decrease) in cash and cash equivalents
|
$
|
296
|
|
|
$
|
(1,537
|
)
|
Item 3:
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4:
|
Controls and Procedures
|
Item 1:
|
Legal Proceedings
|
Item 1A:
|
Risk Factors
|
•
|
our ability to manage the rapid shift from ecommerce and online payments to mobile and multi-channel commerce and payments;
|
•
|
our ability to improve the quality of the user experience on our websites and through mobile devices (including our customer support in the event of a problem) to keep pace with the improved quality of the user experience generally offered by competitive platforms;
|
•
|
our ability to upgrade and develop our systems (including the “replatforming” of our base PayPal technology), infrastructure and customer service capabilities to accommodate growth and to improve the functionality and reliability of our websites, mobile platforms and services at a reasonable cost while maintaining 24/7 operations;
|
•
|
our ability to respond effectively to increased competitive pressure in our ecommerce and Payments businesses globally, including from competitors such as Alibaba Group Holding Ltd., which has a very strong regional presence and may look to use that presence to expand;
|
•
|
the planned separation of eBay and PayPal into separate independent companies, which we expect will involve significant costs and expenses and require significant time and attention from our senior management and key employees, which could distract them from operating our business, disrupt operations and result in the loss of business opportunities;
|
•
|
the effectiveness of our efforts to increase the rate of growth in our StubHub business, which was slower than projected in the first half of 2014;
|
•
|
the primary and secondary effects of previously announced and possible future changes to our pricing, products and policies, including, among other changes, restrictions or holds on payments made to certain sellers or in connection with certain transactions; updates to our seller performance standards; changes to our fee structure; changes to the checkout process; new functionality for sellers to specify shipping, payment and return policies (collectively referred to as “business policies”), (sellers began to be opted into some of these business policies in August 2013 and all of them will become mandatory in 2015); automatic enrollment of new sellers in an automated eBay returns process, and other products and features through which we are increasingly intermediating more aspects of transactions between buyers and sellers using our platforms;
|
•
|
our ability to retain an active user base, attract new users, especially in countries where market penetration of our services is high or if the growth of online and mobile commerce slows, and encourage existing users to list items for sale and purchase items through our websites and mobile platforms, or use our payment services, especially in the face of improving competitor platforms;
|
•
|
consumer confidence in the safety and security of transactions using our websites and technology (including through mobile devices) and customer concerns arising from the actual or perceived use of personally identifiable information and the effect on such confidence of any changes in our practices and policies or of any events such as the recent data security incident that led us to require eBay Marketplaces customers to reset their passwords or data security breaches at other companies that may impact general consumer confidence in online transactions;
|
•
|
decreased usage of eBay Marketplaces by customers who were required to reset their passwords (including customers who fail to remember their new password or are only occasional users);
|
•
|
our ability to address a slower rate of growth in the Marketplaces segment;
|
•
|
the actions of our competitors, including the introduction of new stores, channels, websites, mobile platforms, applications, services, products and functionality, or changes to the provision or prices of products and services important to our success, including interchange, Internet search and mobile operating systems;
|
•
|
our ability to effectively manage the costs of and administer our user protection programs;
|
•
|
the impact on PayPal or PayPal Credit (formerly Bill Me Later) of new regulations enacted pursuant to laws regulating financial institutions, including the Dodd-Frank Wall Street Reform and Consumer Protection Act in the U.S., or the Dodd-Frank Act, and the impact of other new laws that may be enacted regulating financial institutions;
|
•
|
our ability to comply with existing and new laws and regulations as we expand the range and geographical scope of our products and services and as we grow larger, including those laws and regulations discussed below under the captions “There are many risks associated with our international operations,” “We are subject to general litigation and regulatory disputes,” “Our Payments business is subject to a number of laws and regulations, including those governing banking, cross-border and domestic money transmission, foreign exchange and payment services, that vary in the markets where we operate,” “Our Payments business is subject to anti-money laundering and counter-terrorist financing laws or regulations,” and “Our Payments business is subject to consumer protection laws and regulations”;
|
•
|
new laws or regulations (such as those that may stem from the proposed Anti-Counterfeiting Trade Agreement (ACTA) and Trans-Pacific Partnership Agreement (TPP), the European Consumer Rights Directive and the proposed revisions to the European Data Protection Directive) and interpretations of existing laws or regulations that impose liability on us for the actions of our users or otherwise harm our business models, especially as we become more actively involved in various aspects of transactions on our platforms;
|
•
|
regulatory and legal actions imposing obligations on our businesses or our users;
|
•
|
our ability to manage the costs of compliance with existing and new laws and regulations that affect our businesses;
|
•
|
new laws or regulations (in particular, financial or privacy laws or regulations) enacted in jurisdictions in which we do business that require data (including customer information, transaction data or other information) to be stored locally on servers in that jurisdiction and/or prohibit such data from being transmitted outside of that jurisdiction, which could increase our operational costs or capital expenditures and potentially impact the performance and availability of our services and/or our ability to use or process customer data;
|
•
|
the volume, velocity, size, timing, monetization and completion rates of transactions using our websites or technology;
|
•
|
our ability to reduce the loss of active buyers and sellers and increase activity of the users of our Marketplaces business, especially with respect to our top buyers and sellers, and increase activity of PayPal account holders, particularly in our merchant services business;
|
•
|
our ability to develop product enhancements, programs and features on different platforms and mobile devices at a reasonable cost and in a timely manner, including our initiatives to make several PayPal solutions available at the retail point of sale;
|
•
|
changes to our use of advertising on our websites and mobile platforms;
|
•
|
the costs and results of litigation or regulatory actions that involve us;
|
•
|
technical difficulties or service interruptions involving our websites;
|
•
|
disruptions to services provided to us or our users by third parties;
|
•
|
our ability to manage the transaction loss rate in our Marketplaces, Payments and Enterprise businesses;
|
•
|
our ability to manage funding costs, credit risk and interest-rate risk associated with our PayPal Credit business and our other credit products;
|
•
|
our ability to manage service operations (or effectively partner with a third party for such service operations) for credit portfolios, including at the time we acquire the co-randed retail credit card portfolio currently being jointly offered by PayPal and Synchrony Financial (formerly, GE Capital Retail Bank);
|
•
|
our ability to successfully and cost-effectively integrate and manage businesses that we acquire;
|
•
|
the amount and timing of operating costs and capital expenditures relating to the maintenance and expansion of our businesses, operations and infrastructure;
|
•
|
our ability to comply with the requirements of entities whose services are required for our operations, such as payment card networks and banks;
|
•
|
the cost and availability of traditional and online advertising, and the success of our brand building and marketing campaigns;
|
•
|
business disruptions, costs and future events related to shareholder activism;
|
•
|
our ability to attract new personnel in a timely and effective manner and to retain key employees;
|
•
|
the continued healthy operation of our technology suppliers and other commercial counterparties;
|
•
|
continued consumer acceptance of the Internet and of mobile devices as a medium for commerce and payments in the face of increasing publicity about data privacy issues, including data breaches, fraud, spoofing, phishing, viruses, spyware, malware and other dangers; and
|
•
|
macroeconomic and geopolitical events affecting commerce generally.
|
•
|
our products and services continue to expand in scope and complexity (e.g., our mobile, local, social and data initiatives);
|
•
|
we continue to expand into new businesses, including through acquisitions; and
|
•
|
the universe of patent owners who may claim that we, companies that we have acquired, or our customers (including PayPal merchants and Enterprise clients) infringe their patents and the aggregate number of patents controlled by such patent owners correspondingly increases.
|
•
|
In Turkey, local prosecutors and courts are investigating our liability for allegedly illegal actions by users of our Turkish Marketplaces business (GittiGidiyor). In accordance with local law and custom, they are considering indicting, and have in some cases already indicted, one or more members of the board of directors of our local Turkish subsidiary. We intend to defend vigorously against any such actions.
|
•
|
In August 2012, we were informed that U.S. listings of footwear with religious imagery were visible on our local Indian site and we immediately removed these listings. In September 2012, a criminal case was registered against us in India in regard to these listings, and we are challenging the prosecution of this case.
|
•
|
The German Federal Supreme Court has ruled that we may have a duty to take reasonable measures to prevent prohibited DVDs from being sold on our site to minors and that competitors may be able to enforce this duty.
|
•
|
as an entity licensed and subject to regulation as a bank in Luxembourg, PayPal (Europe) S.à r.l et Cie, SCA is subject to banking secrecy laws;
|
•
|
the EU has proposed a General Data Protection Regulation that would supersede the European Data Protection Directive. Changes could increase penalties and fines for failing to comply with the new regulation and it is unclear how consistently the new regulation may be enforced. There is significant international pressure against the U.S. and the National Security Agency (NSA) regarding the collection of data by the NSA from U.S. companies. Further restrictions or regulation in the EU could result as a reaction to these events;
|
•
|
new laws or regulations, in particular, financial or privacy laws or regulations, enacted in jurisdictions in which we do business that require data (including customer information, transaction data or other information) to be stored locally on servers in that jurisdiction and/or prohibit such data from being transmitted outside of that jurisdiction, which could increase our operational costs or capital expenditures and potentially impact the performance or availability of our services and/or our ability to use or process customer data;
|
•
|
the recent ECJ decision in Google v. AEPD, in which the ECJ found that there is a “right to be forgotten” under the EU Data Protection Directive (i.e. the right to request that personal data be deleted). In deciding this case, the ECJ purported to extend jurisdictional reach over foreign Internet activities. As a result of this decision, significant new restraints may be imposed on the use of personal data throughout the EU, which could impact the growth of Internet businesses in Europe;
|
•
|
the EU has also proposed new data laws that give customers additional rights and provide additional restrictions and harsher penalties on companies for illegal collection and misuse of personal information, including restrictions on the use of Internet tracking tools called “cookies.” While the EU directive on cookies has taken effect, the manner in which member states adopt implementing legislation, and whether the EU deems that legislation sufficient, continues to evolve. To the extent implementing legislation by member states is more restrictive, it could negatively impact the manner in which we use cookies for many of our services, ranging from advertising to anti-fraud, and require us to incur additional costs or change our business practices;
|
•
|
California and other states continue to pass privacy regulations which may be subsequently copied and passed in other states. For example, effective January 1, 2014, operators of a commercial Internet website that collects personally identifiable information about consumers residing in California must disclose how the website responds to “do not track” signals or other mechanisms that provide consumers the ability to exercise choice about the collection of such information and about a consumer’s online activity over time and across third party services. As many of these laws have yet to be implemented, it is unclear how these laws may impact consumer perception of privacy or how they may impact our businesses;
|
•
|
in the U.S., the Federal Trade Commission, or FTC, and the White House have both proposed U.S. privacy frameworks. In 2012, legislation was introduced in the U.S. Senate which would have required organizations that suffer a breach of security related to personal information to notify owners of the breached information and, in some instances, notify the Federal Bureau of Investigation or U.S. Secret Service; similar legislation may be introduced and enacted in the future;
|
•
|
other countries in which we operate have recently adopted and implemented privacy and data protection laws and regulations for the first time, or are in the process of doing so. Our current data protection policies and practices may not be consistent with new laws and regulations or evolving interpretations and applications. It is unclear how the application of existing privacy laws and regulations will impact mobile services and technologies, which are evolving rapidly. Complying with these varying national requirements could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business;
|
•
|
the legislative and regulatory environment around mobile data collection continues to evolve. Legislators and regulators in various jurisdictions are increasingly focusing on the capture and use of location-based information relating to users of mobile devices. Any legislation or regulations restricting or limiting the collection or use of mobile data (including the type of information that may be collected from mobile devices and/or how such information may be collected and used) could, if enacted, prohibit the use of certain technologies, including those that track individuals’ activities on the Internet or geolocation via mobile devices, and/or restrict or limit our ability to collect and use page viewing data and personal information, which may reduce demand for our services or require
|
•
|
increased expectations from offline retailers regarding the reliability and availability of its systems and services and correspondingly lower amounts of downtime, which PayPal may not be able to meet;
|
•
|
increased targeting by fraudsters, and given that our fraud models are less developed in this area, we may experience increases in fraud and associated transaction losses as we adjust to fraudulent activity at the point of sale:
|
•
|
exposure to product liability claims, resulting from hardware products (e.g., our PayPal Here and Beacon devices) produced for use at the retail point of sale, which could result in substantial liability and require product recalls or other actions;
|
•
|
exposure to new or additional laws and regulations (e.g., export control regulations related to the shipment of the PayPal Here and Beacon devices across national borders);
|
•
|
increased reliance on third parties involved with processing in-store payments, including independent software providers, electronic point of sale providers, hardware providers, such as cash register and pin-pad providers, payment processors and banks that enable in store transactions;
|
•
|
significant competition at the retail point of sale; and
|
•
|
lower profit margins than PayPal’s other payment solutions.
|
•
|
strong local competitors;
|
•
|
legal and regulatory requirements, including regulation of Internet and mobile services, auctioneering, professional selling, distance selling, privacy and data protection, banking and money transmitting and foreign corrupt practices and anti-bribery, that may limit or prevent the offering of our services in some jurisdictions, prevent enforceable agreements between sellers and buyers, prohibit the listing of certain categories of goods, require product or service changes, require special licensure, subject us to criminal sanctions and/or various taxes, penalties or audits or limit the transfer of information between us and our affiliates;
|
•
|
customs and duties, including the possibility of cumbersome shipping and delivery logistics, significant delays at the border due to customs inspections, maximum limits on the number of cross-border imports by consumers, and the possibility that our services may be viewed as facilitating customs fraud by governmental authorities;
|
•
|
greater liability or legal uncertainty regarding our liability for the listings and other content provided by our users, including uncertainty as a result of unique local laws, conflicting court decisions and lack of clear precedent or applicable law;
|
•
|
risks associated with cross-border transactions, including those described under the caption “Any factors that reduce cross-border trade could harm our business,” above;
|
•
|
potentially higher incidence of fraud and corruption and higher credit and transaction loss risks;
|
•
|
cultural ambivalence towards, or non-acceptance of, trading or payments over the Internet or through mobile devices;
|
•
|
laws and business practices that favor local competitors or prohibit or limit foreign ownership of certain businesses;
|
•
|
difficulties in integrating with local payment providers, including banks, credit and debit card networks and electronic fund transfer systems;
|
•
|
differing levels of retail distribution, shipping and Internet and mobile infrastructures;
|
•
|
different employee/employer relationships and labor laws, and the existence of workers’ councils and labor unions;
|
•
|
difficulties in staffing and managing foreign operations;
|
•
|
challenges associated with joint venture relationships and minority investments, including dependence on joint venture partners, controlling shareholders or management who may have business interests, strategies or goals that are inconsistent with ours;
|
•
|
difficulties in implementing and maintaining adequate internal controls;
|
•
|
longer payment cycles, different accounting practices and greater problems in collecting accounts receivable;
|
•
|
potentially adverse tax consequences, including local taxation of our fees or of transactions on our websites;
|
•
|
higher Internet service provider or mobile network operator costs;
|
•
|
differing intellectual property laws;
|
•
|
seasonal reductions in business activity;
|
•
|
expenses associated with localizing our products and services, 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;
|
•
|
foreign exchange rate fluctuations;
|
•
|
our ability to repatriate funds from abroad without adverse tax consequences;
|
•
|
the possibility that foreign governments may impose currency controls or other restrictions on the repatriation of funds;
|
•
|
changes in the business practices of the card networks or participating banks (e.g., dynamic currency conversion);
|
•
|
disturbances in a specific country’s or region’s political, economic or military conditions, including potential sanctions (e.g., recent significant civil, political and economic disturbances in Russia, Ukraine and the Crimean peninsula); and
|
•
|
challenges associated with maintaining relationships with local law enforcement and related agencies.
|
•
|
the need to integrate the operations, systems (including accounting, management, information, human resource and other administrative systems), technologies, products and personnel of each acquired company, which is an inherently risky and potentially lengthy and costly process;
|
•
|
the inefficiencies and lack of control that may result if such integration is delayed or not implemented, and unforeseen difficulties and expenditures that may arise as a result;
|
•
|
the potential loss of key customers, merchants, vendors and other key business partners (e.g., payment processors) of the companies we acquire following and continuing after announcement of our acquisition plans;
|
•
|
diversion of management time, as well as a shift of focus from operating the businesses to issues related to integration and administration, particularly given the number, size and varying scope of our recent acquisitions;
|
•
|
declining employee morale and retention issues resulting from changes in, or acceleration of, compensation, or changes in management, reporting relationships, future prospects or the direction of the acquired business;
|
•
|
the need to implement controls, procedures and policies appropriate for a larger public company at companies that prior to acquisition may have lacked such controls, procedures and policies;
|
•
|
risks associated with our expansion into new international markets and doing business internationally, including those described above under the caption “There are many risks associated with our international operations”;
|
•
|
difficulties in entering new markets where we have no or limited direct prior experience or where competitors may have stronger market positions;
|
•
|
in the case of acquisitions involving foreign companies or operations, the need to integrate operations across different cultures and languages and to address the particular regulatory, economic, currency and political risks associated with specific countries or regions;
|
•
|
in some cases, the need to build or enhance compliance programs and/or systems to comply with likely greater regulatory scrutiny;
|
•
|
derivative lawsuits resulting from the acquisition;
|
•
|
in some cases, the need to transition operations, users and customers of our existing businesses or the acquired business, as the case may be, onto different platforms;
|
•
|
liability for activities of the acquired company before the acquisition, including intellectual property and other litigation claims or disputes, violations of laws, rules and regulations, commercial disputes, tax liabilities and other known and unknown liabilities;
|
•
|
the potential loss of key employees following the acquisition;
|
•
|
the acquisition of new customer and employee personal information, which in and of itself may require regulatory approval and or additional controls, policies and procedures and subject us to additional exposure; and
|
•
|
for investments in which an investee’s results of operations and financial condition are incorporated into our financial statements and operating metrics, either in full or in part, the dependence on the investee’s accounting, financial reporting, operating metrics and similar systems, controls and processes.
|
•
|
ability to attract, retain and engage buyers and sellers;
|
•
|
volume of transactions and price and selection of goods;
|
•
|
trust in the seller and the transaction;
|
•
|
customer service; and
|
•
|
brand recognition.
|
•
|
community cohesion, interaction and size;
|
•
|
website or mobile platform and application ease-of-use and accessibility;
|
•
|
user engagement;
|
•
|
system reliability;
|
•
|
reliability of delivery and payment, including customer preference for fast delivery and free shipping and returns;
|
•
|
level of service fees; and
|
•
|
quality of search tools.
|
•
|
providers of traditional payment methods, particularly credit and debit cards, checks, money orders and Automated Clearing House transactions (these providers are primarily well-established banks);
|
•
|
providers of “digital wallets” which offer customers the ability to pay online and/or on mobile devices, including with mobile applications, through a variety of payment methods, including Visa’s V.me, MasterCard’s MasterPass, American Express’s Serve, Google Wallet and the Merchant Customer Exchange (MCX) initiative supported by Walmart, Target and other major U.S. retailers;
|
•
|
providers of mobile payments solutions that use Visa, American Express and Mastercard's tokenized card data approaches and Near Fields Communication (NFC) functionality, such as Apple's mobile Apple Pay, and Google's Android solution, that uses Host Based Card Emulation (HCE) functionality to eliminate the need for a physical NFC card in the device;
|
•
|
payment-card processors that offer their services to merchants, including Chase Paymentech, First Data, Bank of America Merchant Services, Elavon, Vantiv, WorldPay, Barclays Merchant Services, Global Payments, Inc., Stripe and Balanced, and payment gateways, including CyberSource and Authorize.net (both owned by Visa), SimplifyCommerce by MasterCard and First Data;
|
•
|
Amazon Payments, which offers merchants the ability to accept payment card- and bank-funded payments from Amazon’s base of online and mobile customers on the merchant’s own website. Amazon has recently launched a new payment service for online merchants under the name Log in and Pay with Amazon;
|
•
|
providers of "person-to-person" payments, that facilitate individuals sending money with an email address, such as Facebook messaging payments;
|
•
|
providers of mobile payments, including Softcard in the U.S., Buyster in France, Mpass in Germany, Paym in the U.K., Boku and Crandy, many of which are owned by or supported by major mobile carriers; and
|
•
|
providers of card readers for mobile devices and of other new point of sale and multi-channel technologies, including Square (which has also begun to offer a marketplace service to sellers), Chase Paymentech, Bank of America, AT&T (in association with Vantiv), Capital One, Shopify, iZettle, WorldPay, Payleven, Groupon, SumUp and others.
|
•
|
money remitters such as MoneyGram, Western Union, Global Payments, Inc., Xoom and Euronet;
|
•
|
bill payment services, including CheckFree, a subsidiary of Fiserv;
|
•
|
services that provide online merchants the ability to offer their customers the option of paying for purchases from their bank account or paying on credit, including Western Union’s WU Pay, Dwolla, Acculynk, TeleCheck (a subsidiary of First Data), iDEAL in the Netherlands, Klarna in several European countries with announced plans to enter the U.S. market, Sofortueberweisung (which recently merged with Klarna) in Germany, PayLib in France and the MyBank pan-European initiative;
|
•
|
issuers of stored value targeted at online payments, including NetSpend, Green Dot, PayNearMe, UKash and Qiwi in Russia;
|
•
|
other international online payment-services providers such as AliPay, the PayU group of companies (owned by Naspers), PagSeguro and Bcash (owned by Naspers);
|
•
|
other providers of online account-based payments, such as Skrill, ClickandBuy (owned by Deutsche Telekom), Barclays Pingit in the U.K., Kwixo in France and Paymate and Visa PayClick in Australia;
|
•
|
payment services targeting users of social networks and online gaming, often through billing to the consumer’s mobile phone account, including PlaySpan (owned by Visa), Boku, Bango and Payfone;
|
•
|
payment services enabling banks to offer their online banking customers the ability to send and receive payments through their bank account, including PopMoney from Fiserv, which has a collaboration agreement with Visa, and ClearXchange (a joint venture among Wells Fargo, Bank of America and JP Morgan Chase);
|
•
|
services such as Coinbase and Bitpay that help merchants accept and manage virtual currencies such as Bitcoin; and
|
•
|
cash.
|
•
|
ability to attract, retain and engage both buyers and sellers with relatively low marketing expense;
|
•
|
ability to show that sellers will achieve incremental sales by offering PayPal;
|
•
|
security of transactions and the ability for buyers to use PayPal without sharing their financial information with the seller;
|
•
|
low fees and simplicity of fee structure;
|
•
|
ability to develop services across multiple commerce channels, including mobile payments and payments at the retail point of sale;
|
•
|
trust in PayPal’s dispute resolution and buyer and seller protection programs;
|
•
|
customer service; and
|
•
|
brand recognition.
|
•
|
website and mobile platform and application onboarding, ease-of-use and accessibility;
|
•
|
system reliability;
|
•
|
data security;
|
•
|
ease and quality of integration into third-party mobile applications; and
|
•
|
quality of developer tools such as our application programming interfaces and software development kits.
|
•
|
offering the choice of a complete integrated solution or a component-based e-commerce solution;
|
•
|
promoting the client’s brand and business, rather than our own;
|
•
|
providing scale and operating leverage with an enterprise focus;
|
•
|
establishing a commitment to invest in and enhance our platform;
|
•
|
aligning our financial interests with those of our clients;
|
•
|
offering a suite of individual digital marketing solutions that are integrated with our marketing solutions platform, which we believe provides a more strategic, cohesive and optimized approach to demand generation; and
|
•
|
providing services that utilize proprietary technology to promote stronger customer engagement designed to increase clients’ return on investment.
|
•
|
geopolitical events, such as war, the threat of war or terrorist activity;
|
•
|
natural disasters, such as hurricanes or earthquakes;
|
•
|
increased use of social networking or other entertainment websites or mobile platforms and applications, which may decrease the amount of time users spend on our websites or mobile platforms and applications;
|
•
|
significant local, national or global events capturing the attention of a large part of the population; and
|
•
|
seasonal fluctuations due to a variety of factors, such as decreased activity on our websites caused by the onset of good weather during the summer months and national holidays or increased activity during the holiday season.
|
•
|
Technology Platforms
. We continue to focus on upgrading and developing our systems and infrastructure to accommodate the growth of our businesses and to improve the functionality and reliability of our websites and services at a reasonable cost while maintaining uninterrupted 24/7 operations. Risks associated with our failure to do so are described under the captions “If we are unable to cost-effectively upgrade and expand our websites, services and platforms, our business would suffer” and “Systems failures and resulting interruptions in the availability of our websites, applications, products or services could harm our business.”
|
•
|
Customer Account Billing
. Our revenues depend on prompt and accurate billing processes. Our failure to grow our transaction-processing capabilities to accommodate the increasing number of transactions that must be billed on our and our subsidiaries’ websites would harm our business and our ability to collect revenue.
|
•
|
Customer Service
. We continue to focus on providing better and more efficient customer support to our users. We intend to provide an increased level of support (including an increasing amount of telephone support and supporting an increasing number of languages) in a cost-effective manner. If we are unable to provide customer support in a cost-effective manner, users of our products and services may have negative experiences, current and future revenues could suffer, our costs may increase and our operating margins may decrease.
|
•
|
Internal Infrastructure
. Our current and planned personnel, systems, procedures and controls may not be adequate to support our future operations. To effectively manage the expected growth of our operations and personnel, we will need to continue to improve our operational and financial systems, procedures and controls. This is a special challenge as we acquire new operations with different and incompatible systems. Any capital investments that we may make will increase our cost base, which will make it more difficult for us to offset any future revenue shortfalls by expense reductions in the short term. Failure to implement these improvements could limit our ability to manage our growth and adversely affect our operating results. Also, we must continue to effectively hire, train and manage new employees. If our new hires perform poorly, if we are unsuccessful in hiring, training, managing and integrating new employees or if we are unsuccessful in retaining our existing employees, our business may be harmed.
|
•
|
we will be required to use cash to pay the principal of and interest on our indebtedness;
|
•
|
our indebtedness and leverage may increase our vulnerability to adverse changes in general economic and industry conditions, as well as to competitive pressure;
|
•
|
adverse changes in the ratings assigned to our debt securities by credit rating agencies will likely increase our borrowing costs;
|
•
|
our ability to obtain additional financing for working capital, capital expenditures, acquisitions, share repurchases or other general corporate and other purposes may be limited; and
|
•
|
our flexibility in planning for, or reacting to, changes in our business and our industry may be limited.
|
•
|
repatriate funds to the U.S. at substantial tax cost;
|
•
|
seek additional financing in the debt or equity markets;
|
•
|
refinance or restructure all or a portion of our indebtedness;
|
•
|
sell selected assets; or
|
•
|
reduce or delay planned capital or operating expenditures.
|
•
|
the possibility of environmental contamination and the costs associated with fixing any environmental problems;
|
•
|
disruptions to our operations resulting from possible natural disasters, interruptions in utilities and similar events;
|
•
|
adverse changes in the value of these properties due to interest rate changes, changes in the commercial property markets or other factors;
|
•
|
the possible need for structural improvements in order to comply with zoning, seismic, disability law or other requirements; and
|
•
|
the possibility of disputes with tenants, neighboring owners or others.
|
Item 2:
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period Ended
|
|
Total Number of
Shares Purchased |
|
Average Price Paid
per Share |
|
Total Number of
Shares Purchased as Part of Publicly Announced Programs |
|
Maximum Dollar
Value that May Yet be Purchased Under the Programs (1) |
||||||
July 31, 2014
|
|
160,308
|
|
|
$
|
49.89
|
|
|
160,308
|
|
|
$
|
2,165,494,609
|
|
August 31, 2014
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
2,165,494,609
|
|
September 30, 2014
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
2,165,494,609
|
|
|
|
160,308
|
|
|
|
|
160,308
|
|
|
|
|
(1)
|
In June 2012, our Board of Directors authorized a stock repurchase program that provided for the repurchase of up to
$2 billion
of our common stock, with no expiration from the date of authorization. In January 2014, our Board of Directors authorized an additional stock repurchase program that provides for the repurchase of up to an additional
$5 billion
of our common stock, with no expiration from the date of authorization. The stock repurchase programs are intended to offset the impact of dilution from our equity compensation programs and, subject to market conditions and other factors, are also used to make opportunistic repurchases of our common stock to reduce outstanding share count. Any share repurchases under our stock repurchase programs may be made through open market transactions, 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.
|
Item 3:
|
Defaults Upon Senior Securities
|
Item 4:
|
Mine Safety Disclosures
|
Item 5:
|
Other Information
|
Item 6:
|
Exhibits
|
Exhibit 10.01+
|
|
Letter Agreement dated September 15, 2014 between Mark Carges and Registrant.
|
Exhibit 10.02+
|
|
Letter Agreement dated September 29, 2014 between Daniel Schulman and Registrant.
|
Exhibit 10.03+
|
|
Letter Agreement dated September 29, 2014 between Devin Wenig and Registrant.
|
Exhibit 12.01
|
|
Statement regarding computation of ratio of earnings to fixed charges.
|
Exhibit 31.01
|
|
Certification of Registrant's Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002.
|
Exhibit 31.02
|
|
Certification of Registrant's Chief Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002.
|
Exhibit 32.01
|
|
Certification of Registrant's Chief Executive Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002.
|
Exhibit 32.02
|
|
Certification of Registrant's Chief Financial Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
+
|
Indicates a management contract or compensatory plan or arrangement
|
|
|
eBay Inc.
|
|
|
|
Principal Executive Officer:
|
|
|
|
|
|
|
|
By:
|
/s/ John J. Donahoe
|
|
|
|
John J. Donahoe
|
|
|
|
President and Chief Executive Officer
|
Date:
|
October 16, 2014
|
|
|
|
|
Principal Financial Officer:
|
|
|
|
|
|
|
|
By:
|
/s/ Robert H. Swan
|
|
|
|
Robert H. Swan
|
|
|
|
Senior Vice President, Finance and Chief Financial Officer
|
Date:
|
October 16, 2014
|
|
|
|
|
Principal Accounting Officer:
|
|
|
|
|
|
|
|
By:
|
/s/ Brian J. Doerger
|
|
|
|
Brian J. Doerger
|
|
|
|
Vice President, Chief Accounting Officer
|
Date:
|
October 16, 2014
|
|
|
Exhibit 10.01+
|
|
Letter Agreement dated September 15, 2014 between Mark Carges and Registrant.
|
Exhibit 10.02+
|
|
Letter Agreement dated September 29, 2014 between Daniel Schulman and Registrant.
|
Exhibit 10.03+
|
|
Letter Agreement dated September 29, 2014 between Devin Wenig and Registrant.
|
Exhibit 12.01
|
|
Statement regarding computation of ratio of earnings to fixed charges.
|
Exhibit 31.01
|
|
Certification of Registrant's Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002.
|
Exhibit 31.02
|
|
Certification of Registrant's Chief Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002.
|
Exhibit 32.01
|
|
Certification of Registrant's Chief Executive Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002.
|
Exhibit 32.02
|
|
Certification of Registrant's Chief Financial Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
+
|
Indicates a management contract or compensatory plan or arrangement
|
1.
|
SEPARATION
. On your Separation Date, the Company will pay you all accrued salary, subject to standard payroll deductions and withholdings, earned through the Separation Date. You will also be paid all accrued and unused vacation time earned through the Separation Date, subject to standard payroll deductions and withholdings, and any ESPP contributions withheld thus far for the current purchase period (if applicable). You are entitled to these payments regardless of whether you sign this Agreement.
|
2.
|
SEPARATION PAY
. Although the Company is not required to provide separation pay, the Company will make a separation payment to you in the form of a lump sum payment in the amount of $468,750, which is equivalent to nine (9) months base salary, subject to standard deductions and withholdings and less any sums owing to the Company. You will receive this payment within 30 days of the latter of the Separation Date or the Effective Date (see item 17).
|
3.
|
BONUS.
You will be eligible to receive a prorated annual bonus through November 3, 2014, paid out at target for the individual component and based on actual Company performance should the Company meet the threshold to pay out a bonus. This will be paid out in accordance with the plan with an anticipated pay out in March of 2015 (and not later than March 15, 2015).
|
4.
|
EQUITY
. Pursuant to the terms of your equity grant(s), vesting of your eBay stock options and restricted stock units (“RSUs”) will cease on the Separation Date. You are allowed to exercise your vested stock options only during the time period set forth in the award agreement(s). As part of this Agreement, the Company will accelerate 21,831 RSUs that were earned in connection with the 2012-2013 Performance-Based Restricted Stock Unit Cycle and were scheduled to vest on March 1, 2015. These RSUs will vest on your Separation Date and will be settled and distributed to you shortly thereafter.
|
5.
|
HEALTH COVERAGE
. As provided by the federal COBRA law and by the Company's current group health plan, you will be eligible to continue your health coverage following the Separation Date. You are entitled to COBRA coverage whether or not you sign this Separation Agreement. Your current health coverage is paid through midnight on the last day of the calendar month in which you terminate. You will be provided with a separate notice of your COBRA rights. If you sign this Separation Agreement, the Company will enroll you and pay your COBRA premiums for four (4) calendar months, on the same terms and conditions as before your separation, beginning the first day of the month after your Separation Date. The Company's obligation to make these payments will stop immediately if you become eligible for other health coverage at the expense of another employer. You agree to immediately provide the Company written notice of the availability of health coverage within that time period. Although you are entitled to COBRA coverage whether or not you sign this Separation Agreement, if you want the Company to pay your COBRA premium(s) for the above-referenced time period, you must sign this Separation Agreement. If you do not sign this Separation Agreement, our COBRA administrator will mail a COBRA enrollment packet to your home within 30 days of your last day of employment. You will have 60 days from date of notification to elect COBRA coverage. You must send in your enrollment forms to our COBRA administrator to activate coverage. Should you timely elect COBRA, the effective date of your continued coverage will be retroactive to the date your current coverage otherwise would have ceased.
|
6.
|
SUPPLEMENTAL PAYMENT FOR COBRA.
If you sign this Separation Agreement, the Company will also make a supplemental payment to you in the form of a lump sum payment in the amount of $24,000, subject to standard deductions and withholdings, which is intended to help you cover the costs of your COBRA premiums for approximately 14 calendar months after the Company has stopped paying your COBRA premiums as described in paragraph 5 above. You will receive this payment within 30 days of the latter of the Separation Date or the Effective Date (see item 17).
|
7.
|
AT-WILL EMPLOYMENT.
Your employment remains at-will and nothing contained in this Separation Agreement is intended to create or imply any contrary policy. Either you or the Company may terminate your employment at any time, with or without cause or notice. If, however, the Company terminates your employment before the Separation Date for reasons other than cause, you will remain eligible for separation pay, any applicable bonus (if you are otherwise eligible under the program), equity acceleration, and payment of your COBRA premiums in accordance with Section 5 (unless you are or become eligible for other health coverage at the expense of another employer). If you are terminated for cause, you will receive only your unpaid wages through termination, any accrued and unused vacation, and any ESPP contributions withheld thus far for the current purchase period (if applicable), subject to standard payroll deductions and withholdings. In the event of early termination (by either you or the Company for any reason), any stock options and RSUs will cease vesting as of the earlier date of separation.
|
8.
|
OTHER COMPENSATION OR BENEFITS
. You acknowledge that, except as expressly provided in this Agreement, you will not receive nor are you entitled to receive any additional compensation, severance or benefits after the Separation Date. You recognize and agree that your employment relationship with the Company is permanently and irrevocably severed and the Company has no obligation, contractual or otherwise, to hire, re-hire or re-employ you in the future.
|
9.
|
EXPENSE REIMBURSEMENTS
. Within ten (10) days of the Separation Date, you will submit your final documented expense reimbursement statement reflecting any and all authorized business expenses you incurred through the Separation Date for which you seek reimbursement. The Company will reimburse you for such expenses pursuant to its regular business practice.
|
10.
|
RETURN OF COMPANY PROPERTY
. By the Separation Date, you will return to the Company all Company documents (and all copies thereof) and other Company property and materials in your possession, or your control, including, but not limited to, Company files, laptop, Blackberry or iPhone, notes, memoranda, correspondence, lists, drawings, records, plans and forecasts, financial information, personnel information, customer and customer prospect information, sales and marketing information, product development and pricing information, specifications, computer-recorded information, tangible property, credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential material of the Company (and all reproductions thereof).
|
11.
|
PROPRIETARY INFORMATION OBLIGATIONS
. You acknowledge your continuing obligations under your Employee Proprietary Information and Inventions Agreement which include but are not limited to the obligation to refrain from any unauthorized use or disclosure of any confidential or proprietary information of the Company as well as the obligation to not solicit (directly or indirectly) eBay Inc. employees for a period of one year (12 months). Failure to comply with this provision shall be a material breach of this Agreement. A copy of your Employee Proprietary Information and Inventions Agreement is available upon request.
|
12.
|
NONDISPARAGEMENT
. You agree not to disparage the Company, or the Company’s officers, directors, employees, shareholders and agents, affiliates and subsidiaries in any manner likely to be harmful to them or their business, business reputation or personal reputation; provided that you will respond accurately and fully to any question, inquiry or request for information when required by legal process. Failure to comply with this provision shall be a material breach of this Agreement.
|
13.
|
SECTION 409A.
This Agreement is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and shall be interpreted and construed consistently with such intent. The payments to you pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the maximum extent possible, under either the separation pay exemption pursuant to Treasury regulation §1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4). In the event the terms of this Agreement would subject you to taxes or penalties under Section 409A of the Code (“409A Penalties”), you and the Company shall cooperate diligently to amend the terms of this Agreement to avoid such 409A Penalties, to the extent possible; provided that in no event shall the Company be responsible for any 409A Penalties that arise in connection with any amounts payable under this Agreement. To the extent any amounts under this Agreement are payable by reference to your “termination of employment,” such term shall be deemed to refer to your “separation from service,” within the meaning of Section 409A of the Code. Any reimbursement or advancement payable to you pursuant to this Agreement or otherwise shall be conditioned on your submission of all expense reports reasonably required by the Company under any applicable expense reimbursement policy, and shall be paid to you
|
14.
|
RELEASE OF CLAIMS
. In consideration for the payments and other promises and undertakings contained in this Agreement to which you would not otherwise be entitled, and except as otherwise set forth in this Agreement, you release, acquit and forever discharge the Company, its parents and subsidiaries, and its and their respective officers, directors, agents, servants, employees, attorneys, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, charges, causes of action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, which you assert or could assert against the Company at common law or under any statute, rule, regulation, order or law, whether federal, state or local, on any ground whatsoever, known and unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or in any way related to agreements, events, acts or conduct at any time prior to and including the date you sign this Agreement, including but not limited to: all such claims and demands directly or indirectly arising out of or in any way connected with your employment with the Company or the termination of that employment; claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation or other time off pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation; any and all causes of action, including but not limited to actions for breach of contract, express or implied, breach of the covenant of good faith and fair dealing, express or implied, wrongful termination in violation of public policy, all other claims for wrongful termination and constructive discharge, and all other tort claims, including, but not limited to, intentional or negligent infliction of emotional distress, invasion of privacy, negligence, negligent investigation, negligent hiring, supervision or retention, assault and battery, false imprisonment, defamation, intentional or negligent misrepresentation, fraud, and any and all claims arising under any federal, state or local law or statute, including, but not limited to, the California Fair Employment and Housing Act; Business and Professions Code 17200; Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Fair Labor Standards Act; the Employee Retirement and Income Security Act; the Americans with Disabilities Act, 42 U.S.C. § 1981; the Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the Family and Medical Leave Act; the California Family Rights Act; the California Labor Code; the California Civil Code; the California Constitution; and any and all other laws and regulations relating to employment termination, employment discrimination, harassment or retaliation, claims for wages, hours, benefits, compensation, and any and all claims for attorneys’ fees and costs, inasmuch as is permissible by law and by the respective governmental enforcement agencies for the above-listed laws.
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15.
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RELEASE OF UNKNOWN CLAIMS
. You acknowledge that you have read and understand Section 1542 of the California Civil Code, which reads as follows:
“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”
You hereby knowingly, intentionally, and expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to your release of any unknown or unsuspected claims you may have against the Company.
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16.
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MISCELLANEOUS
. This Agreement, including all exhibits, constitutes the complete, final and exclusive embodiment of the entire agreement between you and the Company with regard to this subject matter. It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations, prior agreements and communications, whether oral or written, as to the specific subjects of this letter by and between you and the Company. This Agreement may not be modified or amended except in writing signed by both you and a duly authorized officer of the Company. This Agreement will bind the heirs, personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and the Company,
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17.
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I ACKNOWLEDGE THAT I HAVE BEEN ADVISED BY THIS WRITING, AS REQUIRED BY THE AGE DISCRIMINATION IN EMPLOYMENT ACT (ADEA) AND THE OLDER WORKERS’ BENEFIT PROTECTION ACT (“OWBPA”), THAT: (a) MY WAIVER AND RELEASE DO NOT APPLY TO ANY RIGHTS OR CLAIMS THAT MAY ARISE AFTER THE EXECUTION DATE OF THIS AGREEMENT; (b) I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS AGREEMENT; (c) I HAVE TWENTY-ONE (21) DAYS TO CONSIDER THIS AGREEMENT (ALTHOUGH I MAY CHOOSE TO VOLUNTARILY EXECUTE THIS AGREEMENT EARLIER); (d) I HAVE SEVEN (7) DAYS FOLLOWING THE EXECUTION OF THIS AGREEMENT BY THE PARTIES TO REVOKE THE AGREEMENT; AND (e) THIS AGREEMENT WILL NOT BE EFFECTIVE UNTIL THE DATE UPON WHICH THE REVOCATION PERIOD HAS EXPIRED, WHICH WILL BE THE EIGHTH DAY AFTER THIS AGREEMENT IS EXECUTED BY ME, PROVIDED THAT THE COMPANY HAS ALSO EXECUTED THIS AGREEMENT BY THAT DATE (“EFFECTIVE DATE”).
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/s/ John Donahoe
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John Donahoe
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President and Chief Executive Officer
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eBay Inc.
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ACCEPTED:
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/s/ Daniel Schulman
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Daniel Schulman
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September 29, 2014
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/s/ John Donahoe
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John Donahoe
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President and Chief Executive Officer
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eBay Inc.
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ACCEPTED:
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/s/ Devin Wenig
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Devin Wenig
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September 29, 2014
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Nine Months Ended September 30,
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||||||
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2014
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2013
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||||
Income Before Income Taxes, Noncontrolling Interest and Income/Loss of Equity Method Investees
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$
|
2,500
|
|
|
$
|
2,449
|
|
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Add: Fixed Charges
(1)
|
128
|
|
|
122
|
|
|
||
Earnings
(2)
|
$
|
2,628
|
|
|
$
|
2,571
|
|
|
Fixed Charges
(1)
|
$
|
128
|
|
|
$
|
122
|
|
|
Ratio of Earnings to Fixed Charges
|
20.5
|
|
x
|
21.1
|
|
x
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(1)
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Fixed Charges consist of interest expense and our estimate of an appropriate portion of rentals representative of the interest factor. The estimate of interest within rental expense is estimated to be one-third of rental expense.
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(2)
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Earnings consist of income before income taxes, noncontrolling interest and equity in income or losses of equity method investees plus Fixed Charges.
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/s/
John J. Donahoe
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|
John J. Donahoe
|
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President and Chief Executive Officer
|
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(Principal Executive Officer)
|
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/s/
Robert H. Swan
|
|
Robert H. Swan
|
|
Senior Vice President, Finance and Chief Financial Officer
|
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(Principal Financial Officer)
|
|
/s/
John J. Donahoe
|
|
John J. Donahoe
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
/s/
Robert H. Swan
|
|
Robert H. Swan
|
|
Senior Vice President, Finance and Chief Financial Officer
|
|
(Principal Financial Officer)
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