eBay 2012 Annual Report Download - page 70

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General and Administrative
General and administrative expenses consist primarily of employee compensation, contractor costs, facilities costs, depreciation of
equipment, employer payroll taxes on employee stock-based compensation, legal expenses, restructuring, insurance premiums and professional
fees. Our legal expenses, including those related to various ongoing legal proceedings, may fluctuate substantially from period to period.
General and administrative expenses increased $203 million , or 15% , in 2012 compared to 2011 . The increase was due primarily to
higher employee-related costs (including consultant costs, facility costs and equipment-related costs), the impact from acquisitions, primarily
GSI, restructuring costs and the increase in professional service fees. General and administrative expenses as a percentage of net revenues were
11% and 12% in 2012 and 2011, respectively.
General and administrative expenses increased $263 million, or 24%, in 2011 compared to 2010. The increase was due primarily to higher
employee-related costs (including consultant costs, facility costs and equipment-related costs) and the impact from acquisitions. The increase in
2011 was also due in part to an increase in professional service fees, including those relating to acquisitions, and was partially offset by a
decrease in restructuring costs. General and administrative expenses as a percentage of net revenues were 12% in both 2011 and 2010.
Provision for Transaction and Loan Losses
Provision for transaction and loan losses consists primarily of transaction loss expense associated with our customer protection programs,
fraud, chargebacks and merchant credit losses; bad debt expense associated with our accounts receivable balances; and loan reserves associated
with our loan receivables balances. We expect our provision for transaction and loan loss expense to fluctuate depending on many factors,
including macroeconomic conditions, our customer protection programs and the impact of regulatory changes.
Provision for transaction and loan losses increased by $63 million , or 12% , in 2012 compared to 2011 . This increase was due primarily
to higher transaction volume and growth in our Bill Me Later portfolio of receivables from consumer loans. The increase was partially offset by
a reduction in our Marketplaces consumer protection program expense as a result of certain loss prevention programs and lower Marketplaces
bad debt expense. Provision for transaction and loan loss expense as a percentage of net revenues was 4% in both 2012 and 2011.
Provision for transaction and loan losses increased by $125 million, or 32%, in 2011 compared to 2010. This increase was due primarily to
higher transaction volume and higher transaction loss rates, partially offset by improvements in loan loss and bad debt rates. Transaction loss
rates increased due primarily to strategic risk management decisions designed to improve the user experience and drive growth as well as the
expansion of our protection programs. Our loan loss and bad debt rates declined due to continued improvements in charge-off rates. Provision
for transaction and loan loss expense as a percentage of net revenues was 4% in both 2011 and 2010.
Amortization of Acquired Intangible Assets
From time to time we have purchased, and we expect to continue to purchase, assets and businesses. These purchase transactions generally
result in the creation of acquired intangible assets with finite lives and lead to a corresponding increase in our amortization expense in periods
subsequent to acquisition. We amortize intangible assets over the period of estimated benefit, using the straight-
line method and estimated useful
lives ranging from one to eight years. Amortization of acquired intangible assets is also impacted by our sales of assets and businesses and
timing of acquired intangible assets becoming fully amortized. See “Note 4 - Goodwill and Intangible Assets” to the consolidated financial
statements included in this report.
Amortization of acquired intangible assets increased by $68 million , or 25% , in 2012 compared to 2011 . The increase in amortization of
acquired intangible assets was due to the impact of acquisitions, primarily GSI.
Amortization of acquired intangible assets increased by $77 million, or 41%, in 2011 compared to 2010. The increase in amortization of
acquired intangible assets was due to the thirteen acquisitions we completed in 2011, with the acquisition of GSI having the most significant
impact of approximately $61 million.
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