eBay 2001 Annual Report Download - page 31

General and Administrative
Percent Percent
1999 Change 2000 Change 2001
(in thousands, except percent changes)
General and administrativeÏÏÏÏÏÏÏÏÏÏÏ $43,919 66% $73,027 45% $105,784
As a percentage of net revenue ÏÏÏÏÏÏÏ 20% 17% 14%
General and administrative expenses consist primarily of employee compensation, provisions for
doubtful accounts, insurance, fees for external professional advisors and corporate overhead allocations.
Our general and administrative expenses increased in absolute dollars as a result of growth in
employee compensation, provisions for doubtful accounts, fees for professional services and facilities costs
to meet the demands of our expanding business, including operations in new countries and the integration
of new businesses. We increased the size of our general and administrative staÅ from 240 in 1999, to
302 in 2000 and to 415 in 2001. This headcount increase helped us strengthen the existing teams in
corporate Ñnance, mergers and acquisitions, legal and accounting departments as well as in our growing
international operations. We expect that general and administrative expenses will increase in absolute
dollars in 2002, as we continue to invest in the infrastructure that is necessary to support our business.
However, we expect 2002 general and administrative expense to decrease as a percentage of net revenues.
Payroll Expense on Employee Stock Options
Percent Percent
1999 Change 2000 Change 2001
(in thousands, except percent changes)
Payroll tax on employee stock options $ 0 100% $ 2,337 4% $ 2,442
As a percentage of net revenues ÏÏÏÏÏÏ 0% 1% 0%
We are subject to employer payroll taxes on employee exercises of non-qualiÑed stock options. These
employer payroll taxes are recorded as a charge to operations in the period in which such options are
exercised and sold based on actual gains realized by employees. Our quarterly results of operations and
cash Öows could vary signiÑcantly depending on the actual period that stock options are exercised by
employees and, consequently, the amount of employer payroll taxes assessed.
Amortization of Acquired Intangible Assets
Percent Percent
1999 Change 2000 Change 2001
(in thousands, except percent changes)
Amortization of acquired intangible
assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1,145 25% $ 1,433 2,453% $ 36,591
As a percentage of net revenues ÏÏÏÏÏÏ 1% 0% 5%
From time to time we have purchased, and we expect to continue purchasing assets or businesses to
accelerate geographic expansion, increase the features and functions available to our users and maintain
our leading role in online trading. These purchase transactions may result in the creation of intangible
assets and lead to a corresponding increase in the amortization expense in future periods.
Amortization of acquired intangible assets increased during 2001, primarily from the acquisitions of
iBazar and a majority interest in Internet Auction, which were accounted for as purchase business
combinations. See ""Note 3 Ì Acquisitions to the Consolidated Financial Statements.''
Intangible assets are comprised of purchased customer lists, developed technology, trademarks, other
intangible assets and goodwill. Goodwill is the excess of acquisition cost over the fair value of net tangible
and identiÑable intangible assets of businesses acquired. Intangible assets are being amortized using the
straight-line method over estimated useful lives ranging from three to Ñfteen years.
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