EBAY INC: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-K)

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FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including statements that involve expectations,
plans or intentions (such as those relating to future business, future results
of operations or financial condition, including with respect to the ongoing
effects of COVID-19, new or planned features or services, or management
strategies). You can identify these forward-looking statements by words such as
"may," "will," "would," "should," "could," "expect," "anticipate," "believe,"
"estimate," "intend," "plan" and other similar expressions. These
forward-looking statements involve risks and uncertainties that could cause our
actual results to differ materially from those expressed or implied in our
forward-looking statements. Such risks and uncertainties include, among others,
those discussed in "Item 1A: Risk Factors" of this Annual Report on Form 10-K,
as well as in our consolidated financial statements, related notes, and the
other information appearing elsewhere in this report and our other filings with
the Securities and Exchange Commission. We do not intend, and undertake no
obligation, to update any of our forward-looking statements after the date of
this report to reflect actual results or future events or circumstances. Given
these risks and uncertainties, readers are cautioned not to place undue reliance
on such forward-looking statements. You should read the following Management's
Discussion and Analysis of Financial Condition and Results of Operations in
conjunction with the consolidated financial statements and the related notes
included in this report. This section of this Form 10-K generally discusses 2021
and 2020 items and year-to-year comparisons between 2021 and 2020. Discussions
of 2019 items and year-to-year comparisons between 2020 and 2019 are not
included in this Form 10-K, and can be found in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2020.

OVERVIEW

Business

eBay Inc., is a global commerce leader, which includes our Marketplace
platforms. Founded in 1995 in San Jose, California, eBay is one of the world's
largest and most vibrant marketplaces for discovering great value and unique
selection. Collectively, we connect millions of buyers and sellers around the
world, empowering people and creating opportunity. Our technologies and services
are designed to provide buyers choice and a breadth of relevant inventory and to
enable sellers worldwide to organize and offer their inventory for sale,
virtually anytime and anywhere. In 2021, eBay enabled $87 billion of Gross
Merchandise Volume.

In 2020, the World Health Organization declared the outbreak of a coronavirus
("COVID-19") and its variants as a pandemic which continues to be widespread
with uncertainty around its duration. As a result of COVID-19 mobility
restrictions globally, there were changes in consumer behavior that have
resulted in more online shopping beginning in 2020 and extending into 2021. Our
Marketplace platforms experienced improved traffic, acquisition of small
business sellers and buyer acquisition due to the impacts of measures taken
globally to contain the spread of COVID-19. These changes in behavior began to
normalize as mobility trended toward pre-pandemic levels through the remainder
of 2021, and we have experienced lower traffic in most markets which we expect
to continue into 2022. The impacts seen to date continue to create volatility in
our results and a wider range of potential outcomes as consumer behaviors and
mobility restrictions continue to evolve. See "Results of Operations" below for
impacts of COVID-19 on our results for the year ended December 31, 2021 compared
to the year ended December 31, 2020. For additional information, see "-
Liquidity and Capital Resource Requirements" below and "Item 1A: Risk Factors"
under the caption "The global COVID-19 pandemic could harm our business and
results of operations" in Part II of this report.

On November 14, 2021, we completed the previously announced sale of 80.01% of
the outstanding equity interests of eBay Korea LLC, a limited liability company
incorporated under the laws of Korea and a wholly owned subsidiary of eBay KTA
("eBay Korea") to E-mart Inc. and one of its wholly owned subsidiaries
(together, "Emart"), pursuant to the terms and conditions of the securities
purchase agreement, in exchange for approximately $3.0 billion of gross cash
proceeds as of the transaction close date, subject to certain adjustments
specified for indebtedness, cash, working capital, transaction expenses and
certain taxes. The sale resulted in a pre-tax gain of $3.2 billion inclusive of
a $81 million currency translation adjustment and a $44 million gain net of tax
on the net investment hedge settled in the fourth quarter of 2021, and related
income tax expense of $369 million. Upon
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completion of the sale, we retained 19.99% of the outstanding equity interests
of the new entity, Gmarket Global LLC ("Gmarket") formerly known as Apollo
Korea, which is accounted for under the fair value option.

On June 24, 2021, we completed the previously announced transfer of our
Classifieds business to Adevinta ASA ("Adevinta") for $2.5 billion in cash
proceeds, subject to certain adjustments, and approximately 540 million shares
in Adevinta which represent an equity interest of 44%, comprised of
approximately 33% of voting shares and 11% of non-voting shares. Together, the
total consideration received under the definitive agreement was valued at
approximately $13.3 billion, based on the closing trading price of Adevinta's
outstanding shares on the Oslo Stock Exchange on June 24, 2021. The equity
interest received is accounted for under the fair value option. On November 18,
2021, we completed the previously announced sale of approximately 135 million of
our voting shares in Adevinta to Astinlux Finco S.à r.l. ("Permira"), inclusive
of the option exercised by Permira to purchase additional voting shares, for
approximately $2.3 billion in cash proceeds. At the close of the sale inclusive
of the option exercised, our ownership in Adevinta was reduced to 33%.

On February 13, 2020, we closed the previously announced sale of our StubHub
business to an affiliate of viagogo. Beginning in the first quarter of 2020,
StubHub's financial results for periods prior to the sale have been reflected in
our consolidated statement of income as discontinued operations. Additionally,
the related assets and liabilities associated with the discontinued operations
in the prior periods are classified as discontinued operations in our
consolidated balance sheet.

We have classified the related assets and liabilities associated with our eBay
Korea and Classifieds businesses as discontinued operations in our consolidated
balance sheet. The results of our eBay Korea, Classifieds and StubHub businesses
have been presented as discontinued operations in our consolidated statement of
income for all periods presented through the respective transaction close dates
as the transactions represented a strategic shift in our business that had a
major effect on our operations and financial results.

See “Note 3 – Discontinued Operations” in our consolidated financial statements included elsewhere in this report for additional information.

Presentation

In addition to the corresponding measures under generally accepted accounting
principles ("GAAP"), management uses non-GAAP measures in reviewing our
financial results. The foreign exchange neutral ("FX-Neutral"), or constant
currency, net revenue amounts discussed below are non-GAAP financial measures
and are not in accordance with, or an alternative to, measures prepared in
accordance with GAAP. Accordingly, the FX-Neutral information appearing in the
following discussion of our results of operations should be read in conjunction
with the information provided below in "Non-GAAP Measures of Financial
Performance," which includes reconciliations of FX-Neutral financial measures to
the most directly comparable GAAP measures. We calculate the year-over-year
impact of foreign currency movements using prior period foreign currency rates
applied to current year transactional currency amounts.

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Fiscal Year Highlights

During 2021, we completed the migration of eBay's managed payments in all
markets, delivering buyers and sellers a simplified end-to-end payments
experience. Net revenues increased 17% to $10.4 billion in 2021 compared to 2020
primarily due to the migration of managed payments on a global basis and the
associated higher take rate. Transaction take rate was higher in 2021 compared
to 2020 as a result of revenue initiatives such as global payments and Promoted
Listings, which along with final value fees are calculated as a percentage of an
item's sale price and category mix. FX-Neutral net revenue (as defined above)
increased 15% in 2021 compared to 2020. Operating margin decreased to 28.1% in
2021 compared to 29.6% in 2020.

On November 14, 2021, we completed the sale of 80.01% of the outstanding equity
interests of eBay Korea to Emart for approximately $3.0 billion of gross cash
proceeds. We retained 19.99% of the outstanding equity interests of the new
entity, Gmarket, which is accounted for under the fair value option.

On June 24, 2021, the transfer of our Classifieds business was completed for
$13.3 billion of consideration which comprised of $2.5 billion in proceeds and
shares of Adevinta valued at $10.8 billion. On November 18, 2021, we completed
the sale of approximately 135 million of our voting shares in Adevinta to
Permira for approximately $2.3 billion in proceeds. At the close of the sale our
ownership in Adevinta was reduced to 33%.

We generated cash flow from continuing operating activities of $3.1 billion in 2021 compared to $3.0 billion in 2020, ending the year with cash, cash equivalents and non-equity investments from continuing operations of
$7.3 billion.

In May 2021, we issued senior notes of $2.5 billion aggregate principal amount,
which consisted of $750 million of 1.400% fixed rate notes due 2026,
$750 million of 2.600% fixed rate notes due to 2031 and $1.0 billion of 3.650%
fixed rate notes due 2051.

In 2021, we repaid approximately $1.2 billion of debt primarily comprised of
$750 million for the 6.000% senior fixed rate notes due 2056 and $395 million of
the 2.600% senior fixed rate notes due 2022. We also paid $7.1 billion for
repurchases of common stock, of which $2.5 billion related to repurchases of
common stock under an accelerated share repurchase program, and paid $466
million in cash dividends.

In February 2022, we declared a quarterly cash dividend of $0.22 per share of
common stock to be paid on March 18, 2022 to stockholders of record as of March
10, 2022.


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RESULTS OF OPERATIONS

We have one reportable segment to reflect the way management and our chief
operating decision maker ("CODM") review and assess performance of the business.
Our reportable segment is Marketplace, which includes our online marketplace
located at www.ebay.com, its localized counterparts and the eBay suite of mobile
apps. The accounting policies of our segment are the same as those described in
"Note 1 - The Company and Summary of Significant Accounting Policies" in our
consolidated financial statements included elsewhere in this report.

Net income

Seasonality

We expect transaction activity patterns on our platforms to trend with general
consumer buying patterns and expect that these trends will continue. As we
introduce new products and platforms, such as managed payments, we expect net
revenues to fluctuate. In addition, macroeconomic conditions, such as the
ongoing COVID-19 pandemic, may also contribute to fluctuations in revenues and
margins. The following table presents our total net revenues and the sequential
quarterly movements of these net revenues for the periods indicated (in
millions, except percentages):

                                                     Quarter Ended
                               March 31      June 30       September 30      December 31
2019
Net revenues                  $ 1,867       $ 1,859       $     1,799       $     1,904
% change from prior quarter           **          -  %             (3) %              6  %
2020
Net revenues                  $ 1,821       $ 2,337       $     2,258       $     2,478
% change from prior quarter        (4) %         28  %             (3) %             10  %
2021
Net revenues                  $ 2,638       $ 2,668       $     2,501       $     2,613
% change from prior quarter         6  %          1  %             (6) %              4  %

** Growth for the excluded period as 2018 revenue figures have not been restated and provided.

Net Revenues by Geography

Revenues are attributed to U.S. and international geographies primarily based
upon the country in which the seller, platform that displays advertising, other
service provider or customer, as the case may be, is located. The following
table presents net revenues by geography for the periods indicated (in millions,
except percentages):

                                            Year Ended December 31,
                        2021          % Change        2020         % Change        2019
U.S.                 $  5,048             22  %      4,151             26  %    $ 3,303
% of net revenues          48  %                        47  %                        44  %

International           5,372             13  %      4,743             15  %      4,126
% of net revenues          52  %                        53  %                        56  %

Total net revenues   $ 10,420             17  %    $ 8,894             20  %    $ 7,429



Our commerce platforms operate globally, resulting in certain revenues that are
denominated in foreign currencies, primarily the British pound and euro. In
addition, as shown in the table above, we generate approximately half of our net
revenues internationally. Because of these factors, we are subject to the risks
related to doing business in foreign countries as discussed under "Item 1A: Risk
Factors" in Part I of this report.

Net revenues included $65 million of hedging losses during 2021 and $15 million
and $81 million of hedging gains during 2020 and 2019, respectively. The hedging
activity in net revenues specifically relates to hedges of net transaction
revenues. Foreign currency movements relative to the U.S. dollar had a favorable
impact of $188 million
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and $26 million on net revenues in 2021 and 2020, respectively, and an
unfavorable impact of $85 million on net revenues in 2019. The effect of foreign
currency exchange rate movements in 2021 compared to 2020 was primarily
attributable to the weakening of the U.S. dollar against the British pound and
euro.

Net Revenues by Type

We generate two types of net income:

Net transaction revenues primarily include final value fees, feature fees,
including fees to promote listings and listing fees from sellers on our
platforms. Our net transaction revenues also include store subscription and
other fees often from large enterprise sellers. Our net transaction revenues are
reduced by incentives, including discounts, coupons and rewards, provided to our
customers.

Marketing and other services (“MS&O”) revenue consists primarily of revenue from the sale of revenue sharing arrangements and advertisements.

The following table presents net revenues by nature for the periods indicated (in millions, except percentages):

                                                            Year Ended December 31,
                                           2021        % Change       2020        % Change       2019
Net transaction revenues                $  9,772           19  %    $ 8,243           25  %    $ 6,581

Marketing services and other revenues        648            -  %        651          (23) %        848

Total net revenues                      $ 10,420           17  %    $ 8,894           20  %    $ 7,429



Net Transaction Revenues

Key Operating Metrics

Gross merchandise volume (“GMV”) and acceptance rate are important factors that we believe affect our net transaction revenue.

GMV consists of the total value of all paid transactions between users on our
platforms during the applicable period inclusive of shipping fees and taxes.
Despite GMV's divergence from revenue, we still believe that GMV provides a
useful measure of the overall volume of paid transactions that flow through our
platforms in a given period.

Take rate is defined as net transaction revenues divided by GMV and represents
net transaction revenue as a percentage of overall volume on our platforms. We
believe that take rate provides a useful measure of our ability to monetize
volume through marketplace services on our platforms in a given period. We use
take rate to identify key revenue drivers on our marketplace.

Net Transaction Revenues

                                 Year Ended December 31,                               % Change                                Year Ended December 31,                               % Change
                               2021                    2020              As Reported               FX-Neutral                2020                    2019              As Reported               FX-Neutral
Net transaction revenues
(1)                       $     9,772               $  8,243                       19  %                    17  %       $     8,243               $  6,581                       25  %                    26  %

Supplemental data:
GMV (2)                   $    87,365               $ 87,608                        -  %                    (3) %       $    87,608               $ 72,134                       21  %                    21  %
Take rate                       11.19   %               9.41  %                  1.78  %                                       9.41   %               9.12  %                  0.29  %


(1)Marketplace net transaction revenues were net of $65 million, $15 million and
$81 million hedging activity during the years ended December 31, 2021, 2020 and
2019 respectively.
(2)GMV has been retrospectively recast to reflect the new definition of GMV
announced in December 2021.
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During 2021, we completed the migration of eBay's managed payments in all
markets, delivering buyers and sellers a simplified end-to-end payments
experience. Net transaction revenues increased $1.5 billion in 2021 compared to
2020 primarily due to the migration of managed payments on a global basis and
the associated higher take rate as well as the growth of Promoted Listings. GMV
was relatively flat in 2021 compared to 2020 due to improved traffic and buyer
acquisition during the first quarter of 2021 offset by a decline in traffic
experienced for the remainder of 2021. Traffic has fluctuated throughout 2021
and 2020 in response to the pervasive macroeconomic impacts of COVID-19,
including mobility restrictions which influence consumer engagement in online
shopping. GMV in both 2021 and 2020 was elevated compared to 2019 as improved
business dynamics influenced growth across all major product categories. While
GMV growth rates were relatively flat across many categories in 2021 compared to
2020, market trends influenced stronger contributions from the collectibles
category in 2021 compared to 2020, particularly in the U.S.

Transaction take rate was higher in 2021 compared to 2020 as a result of revenue
initiatives such as global payments which resulted in the majority of global
on-platform volume processed through managed payments and Promoted Listings,
which along with final value fees are calculated as a percentage of an item's
sale price and category mix.

The increase in net transaction revenues in 2021 compared to 2020 was due to
take rate considerations discussed above, despite relatively flat GMV. We expect
that the divergence between net transaction revenues and GMV to continue into
2022. Despite GMV's divergence from net transaction revenues, we still believe
the metric provides a useful measure of overall volume of paid transactions that
flow through the platform in a given period.

Marketing services and other income

The following table shows MS&O’s revenues for the periods indicated (in millions, except percentages):

                        Year Ended December 31,                            % Change                           Year Ended December 31,                            % Change
                          2021              2020             As Reported              FX-Neutral                2020              2019             As Reported              FX-Neutral

MS&O revenues        $      648           $  651                        -  %                   (2) %       $      651           $  848                      (23) %                  (23) %
% of net revenues             6   %            7  %                                                                 7   %           11  %



MS&O revenues were relatively flat in 2021 compared to 2020 primarily due to a
decrease in advertising revenues offset by an increase in revenues from revenue
sharing arrangements for shipping agreements.

Net revenue cost

Cost of net revenues represents costs associated with customer support, site
operations and payment processing. Significant components of these costs
primarily consist of employee compensation including stock-based compensation,
contractor costs, facilities costs, depreciation of equipment and amortization
expense, bank transaction fees, credit card interchange and assessment fees,
authentication costs and digital services tax. The following table presents cost
of net revenues for the periods indicated (in millions, except percentages):

                                                      Year Ended December 31,
                                   2021        % Change         2020        % Change         2019
         Cost of net revenues   $ 2,650            47  %     $ 1,797            13  %     $ 1,585
         % of net revenues           25  %                        20  %                        21  %



Cost of net revenues, net of immaterial hedging activities, was unfavorably
impacted by $30 million attributable to foreign currency movements relative to
the U.S. dollar in 2021 compared to 2020. The increase in cost of net revenues
in 2021 compared to 2020 was primarily due to an increase in payment processing
costs as we transitioned customers to our payments platform throughout 2021 and
an unfavorable impact from foreign currency movements relative to the U.S.
dollar.
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Operating Expenses

The following table presents the operating expenses for the periods indicated (in millions, except percentages):

                                                                                Year Ended December 31,
                                                  2021              % Change              2020              % Change              2019
Sales and marketing                            $ 2,170                      4  %       $ 2,091                     12  %       $ 1,866
% of net revenues                                   21  %                                   24  %                                   25  %
Product development                              1,325                     29  %         1,028                     11  %           930
% of net revenues                                   13  %                                   12  %                                   13  %
General and administrative                         921                     (6) %           985                      -  %           988
% of net revenues                                    9  %                                   11  %                                   13  %
Provision for transaction losses                   422                     28  %           330                     26  %           262
% of net revenues                                    4  %                                    4  %                                    4  %
Amortization of acquired intangible assets           9                    (67) %            27                     (6) %            28
Total operating expenses                       $ 4,847                      9  %       $ 4,461                     10  %       $ 4,074


Movements of foreign currencies against we dollar had an unfavorable impact of $80 million operating expenses in 2021 compared to 2020. There was no hedging activity in operating expenses.

Sales and Marketing

Sales and marketing expenses primarily consist of advertising and marketing
program costs (both online and offline), employee compensation including
stock-based compensation, certain user coupons and rewards, contractor costs,
facilities costs and depreciation on equipment. Online marketing expenses
represent traffic acquisition costs in various channels such as paid search,
affiliates marketing and display advertising. Offline advertising primarily
includes brand campaigns and buyer/seller communications.

The increase in sales and marketing expenses in 2021 compared to 2020 is mainly due to increases in $84 million online ad spend,
$37 million in employee compensation and $25 million in executive severance pay. These increases were offset by a decrease in $78 million in certain coupons and rewards.

Product development

Product development expenses primarily consist of employee compensation
including stock-based compensation, contractor costs, facilities costs and
depreciation on equipment. Product development expenses are net of required
capitalization of major platform and other product development efforts,
including the development and maintenance of our technology platform. Our top
technology priorities include payment intermediation capabilities, products to
grow the seller tools ecosystem and product experiences that delight our
customers and enhance the buying experience for our enthusiasts.

The increase in product development expenses in 2021 compared to 2020 was
primarily due to increases of $227 million in employee related costs.
Capitalized internal use and platform development costs were $127 million and
$129 million in 2021 and 2020, respectively, and are primarily reflected as a
cost of net revenues when amortized in future periods.

General and administrative

General and administrative expenses primarily consist of employee compensation
including stock-based compensation, contractor costs, facilities costs,
depreciation of equipment, employer payroll taxes on 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.

The decrease in general and administrative expenses in 2021 compared to 2020 was
primarily due to the absence of costs related to our CEO transition in 2020 of
$33 million and a decrease in charitable contributions of approximately
$36 million.

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Provision for Transaction Losses

Provision for transaction losses primarily consists of transaction loss expense
associated with our buyer protection programs, losses from our managed payments
services, fraud and bad debt expense associated with our accounts receivable
balance. We expect our provision for transaction losses to fluctuate depending
on many factors, including changes to our protection programs and the impact of
regulatory changes.

The increase in provision for transaction losses in 2021 compared to the same
period in 2020 was primarily due to higher chargeback losses of $81 million
incurred for managed payments as we scaled the platform and higher customer
protection program costs of $63 million. These increases were partially offset
by a decrease in bad debt expense of $52 million as a result of fees collected
through the managed payments platform.

Gain (loss) on equity investments and warrants, net

Gain (loss) on equity investments and warrant, net primarily consists of gains
and losses related to our various types of equity investments, including our
equity investments in Adevinta, KakaoBank and Adyen, and gains and losses due to
changes in fair value of the warrant received from Adyen. The following table
presents gain (loss) on equity investments and warrant, net for the periods
indicated (in millions, except percentages):

                                                                            

Year ended the 31st of December,

                                                2021               % Change              2020              % Change              2019
Change in fair value of equity investment
in Adevinta                                 $  (3,070)                       **       $     -                      -  %       $     -
Gain (loss) on sale of shares in Adevinta
(1)                                                 9                        **             -                      -  %             -

Change in fair value of warrant                   354                    (54) %           770                        **           133
Change in fair value of equity investment
in Adyen                                          (10)                       **             -                      -  %             -
Change in fair value of equity investment
in KakaoBank                                      403                     69  %           239                        **             -
Gain (loss) on sale of shares in KakaoBank         83                        **             -                      -  %             -
Impairment of equity investment in Paytm
Mall                                             (160)                       **             -                      -  %             -
Gain (loss) on other investments (2)               26                        **            (2)                       **             -
Total gain (loss) on equity investments and
warrant, net                                $  (2,365)                       **       $ 1,007                        **       $   133


(1) The gain (loss) on the sale of Adevinta shares includes a $88 million capital gain recognized on the sale of securities offset by a $79 million loss resulting from the change in the fair value of the shares sold up to the date of sale.

(2)Gain (loss) on other investments primarily included: (i) in 2021, primarily a
$41 million upward adjustment and a $10 million impairment recorded on equity
investments without readily determinable fair values; (ii) in 2020, primarily a
$40 million impairment recorded on an investment and a $37 million gain for the
receipt of proceeds that were held in escrow related to a long-term investment
that was sold in 2018.
**  Not meaningful

The decrease in gain (loss) on equity method investments and warrant, net in
2021 compared to 2020 was primarily driven by a $3.1 billion loss from the
change in fair value of our equity investment in Adevinta, a $160 million
impairment recorded on our equity investment in Paytm Mall and a $416 million
change in the gain related to the Adyen warrant. These decreases were partially
offset by a $164 million change in unrealized gain related to our equity
investment in KakaoBank and a $83 million gain on sale of a portion of our
shares in KakaoBank.


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Interest and Other, Net

Interest and other, net primarily consists of interest earned on cash, cash
equivalents and available-for-sale investments, as well as foreign exchange
transaction gains and losses and interest expense, consisting of interest
charges on any amounts borrowed and commitment fees on unborrowed amounts under
our credit agreement and interest expense on our outstanding debt securities and
commercial paper, if any. The following table presents interest and other, net
for the periods indicated (in millions, except percentages):

                                                      Year Ended December 31,
                                    2021          % Change        2020       % Change        2019
Interest income                 $     19             (50) %     $   38          (66) %     $  112
Interest expense                    (269)            (12) %       (304)          (2) %       (311)
Foreign exchange and other            90                 **        (32)         (38) %        (52)
Total interest and other, net   $   (160)            (46) %     $ (298)          19  %     $ (251)


** Not meaningful

Net interest and other expenses decreased in 2021 compared to 2020, mainly due to foreign exchange gains and lower interest expenses.

Provision for income tax

The following table presents the provision for income taxes for the periods indicated (in millions, except percentages):

                                          Year Ended December 31,
                                     2021               2020         2019

Income tax provision (benefit)   $    146             $ 858        $ 219
Effective tax rate                   36.6   %          25.6  %      13.2  %



The increase in our effective tax rate in 2021 compared to 2020 was primarily
due to non-deductible losses on investments, partially offset by a benefit from
the release of a valuation allowance. The effective tax rate in 2020 included
the effects of a retroactive California law change including incremental taxes
on the gain on the sale of StubHub, partially offset by an increased tax benefit
from stock-based compensation.

We are regularly under examination by tax authorities both domestically and
internationally. We believe that adequate amounts have been reserved for any
adjustments that may ultimately result from these examinations, although we
cannot assure you that this will be the case given the inherent uncertainties in
these examinations. Due to the ongoing tax examinations, it is generally
impractical to determine the amount and timing of these adjustments. However, we
expect several tax examinations to close within the next twelve months. See
"Note 15 - Income Taxes" to the consolidated financial statements included in
this report for more information on estimated settlements within the next twelve
months.

Discontinued Operations

On November 14, 2021, we completed the previously announced sale of 80.01% of
the outstanding equity interests of eBay Korea to Emart. We have classified the
results of our eBay Korea business as discontinued operations in our
consolidated statement of income for the periods presented through November 14,
2021. Additionally, the related assets and liabilities associated with the
discontinued operations are classified as discontinued operations in our
consolidated balance sheet.

On June 24, 2021, we completed the previously announced transfer of our
Classifieds business to Adevinta. We have classified the results of our
Classifieds business as discontinued operations in our consolidated statement of
income for the periods presented through June 24, 2021. Additionally, the
related assets and liabilities associated with the discontinued operations are
classified as discontinued operations in our consolidated balance sheet.

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On February 13, 2020, we completed the previously announced sale of our StubHub
business to an affiliate of viagogo. Beginning in the first quarter of 2020,
StubHub's financial results for periods prior to the sale have been reflected in
our consolidated statement of income as discontinued operations. Additionally,
the related assets and liabilities associated with the discontinued operations
in the prior periods are classified as discontinued operations in our
consolidated balance sheet.

See “Note 3 – Discontinued Operations” in our consolidated financial statements included elsewhere in this report for additional information.

Non-GAAP Measures of Financial Performance

To supplement our consolidated financial statements presented in accordance with
generally accepted accounting principles, we use FX-Neutral net revenues, which
are non-GAAP financial measures. Management uses the foregoing non-GAAP measures
in reviewing our financial results. We define FX-Neutral net revenues as net
revenues minus the exchange rate effect. We define exchange rate effect as the
year-over-year impact of foreign currency movements using prior period foreign
currency rates applied to current year transactional currency amounts, excluding
hedging activity.

These non-GAAP measures are not in accordance with, or an alternative to,
measures prepared in accordance with GAAP and may be different from non-GAAP
measures used by other companies. In addition, these non-GAAP measures are not
based on any comprehensive set of accounting rules or principles. Non-GAAP
measures have limitations in that they do not reflect all of the amounts
associated with our results of operations as determined in accordance with GAAP.
These measures should only be used to evaluate our results of operations in
conjunction with the corresponding GAAP measures.

These non-GAAP measures are provided to enhance investors' overall understanding
of our current financial performance and its prospects for the future.
Specifically, we believe these non-GAAP measures provide useful information to
both management and investors by excluding the foreign currency exchange rate
impact that may not be indicative of our core operating results and business
outlook. In addition, because we have historically reported certain non-GAAP
results to investors, we believe that the inclusion of these non-GAAP measures
provide consistency in our financial reporting.

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The following tables present a reconciliation of FX-Neutral GMV and FX-Neutral
net revenues (each as defined below) to our reported GMV and net revenues for
the periods indicated (in millions, except percentages):

                                                       Year Ended Year Ended December 31,
                                                           2021                                         2020
                                                     Exchange Rate                                                         As Reported %
                                 As Reported           Effect (1)           FX-Neutral (2)           As Reported              Change             FX-Neutral % Change
GMV                            $   87,365            $     2,362          $        85,003          $     87,608                       -  %                     (3) %

Net Revenues:
Net transaction revenues (3)   $    9,772            $       180          $         9,592          $      8,243                      19  %              

17%

Marketing services and other
revenues                              648                      8                      640                   651                       -  %                     (2) %

Total net revenues             $   10,420            $       188          $        10,232          $      8,894                      17  %                     15  %


                                                          Year Ended Year Ended December 31,
                                                              2020                                            2019
                                                          Exchange Rate                                                          As Reported %
                                   As Reported              Effect (1)            FX-Neutral (2)           As Reported              Change             FX-Neutral % Change
GMV                            $    87,608               $          46          $        87,562          $     72,134                      21  %                     21  %

Net Revenues:
Net transaction revenues (3)   $     8,243               $          25          $         8,218          $      6,581                      25  %                     26  %

Marketing services and other
revenues                               651                           1                      650                   848                     (23) %                    (23) %

Total net revenues             $     8,894               $          26          $         8,868          $      7,429                      20  %                     21  %

(1) We define the exchange rate effect as the year-over-year impact of foreign currency fluctuations using the prior period’s exchange rates applied to the year’s currency transaction amounts outstanding, excluding hedging activities.

(2)We define FX-Neutral GMV as GMV minus the exchange rate effect. We define the
non-GAAP financial measures of FX-Neutral net revenues as net revenues minus the
exchange rate effect.

(3) Net trading income is net of $65 million, $15 million and $81 million
hedging activity in 2021, 2020 and 2019, respectively.

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Liquidity and Capital Resources

Cash Flows
                                                                         Year Ended December 31,
                                                               2021                2020               2019
                                                                              (In millions)
Net cash provided by (used in):
Continuing operating activities                            $    3,093          $   3,004          $   2,416
Continuing investing activities                                (1,417)              (179)             2,900
Continuing financing activities                                (6,557)            (5,680)            (7,087)

Effect of exchange rates on cash, cash equivalents and restricted cash

                                                    24                 77                (33)

Net increase in cash, cash equivalents and restricted cash – discontinued operations

                                       4,669              3,376                581
Net increase (decrease) in cash, cash equivalents and
restricted cash                                            $     (188)         $     598          $  (1,223)


Ongoing operational activities

Our operating cash flow comes primarily from cash received from our customers on our platforms offset by cash payments for sales and marketing, employee compensation, and payment processing expenses.

Cash provided by continuing operating activities of $3.1 billion in 2021
compared to $3.0 billion in 2020 was primarily attributable to an increase in
operating income from continuing operations of $287 million. The increase in
operating income from continuing operations was primarily due to an increase in
revenues, primarily as a result of the migration of managed payments on a global
basis and the associated higher take rate as noted in our comments in "Net
Transaction Revenues." The remaining changes in continuing operating cash flows
were attributable to changes in non-cash items and favorable working capital
movements due to lower accounts receivable from the migration to managed
payments and lower accrued liabilities.

Ongoing investing activities

Cash used in investing activities of $1.4 billion in 2021 was primarily
attributable to purchases of investments of $22.2 billion and property and
equipment of $444 million. These purchases were partially offset by proceeds of
$18.9 billion from the maturities and sales of investments and $2.3 billion from
the sale of approximately 135 million of our voting shares in Adevinta.

Cash used in investing activities of $0.2 billion in 2020 was mainly attributable to cash paid for the purchase of investments of $32.9 billion and the goods and equipment of $463 millionoffset by the proceeds of $33.1 billion maturities and sales of investments.

The largely offset effects of investment purchases and maturities and investment sales result from the management of our investments. As our immediate cash needs change, buying and selling activity fluctuates.

Ongoing fundraising activities

Cash used in financing activities of $6.6 billion in 2021 was primarily driven
by common stock repurchases of $7.1 billion, of which $2.5 billion related to
repurchases under an accelerated share repurchase program. Cash used in
financing activities also included debt repayments of $1.2 billion, which was
comprised of $750 million related to our 6.000% senior fixed rate notes due 2056
that were redeemed and $405 million related to our 2.600% senior fixed rate
notes due 2022 that were repurchased pursuant to a tender offer, and $466
million of cash dividends paid, partially offset by proceeds from debt issuances
of $2.5 billion.

Cash used in financing activities of $5.7 billion in 2020 was primarily used to
repurchase $5.1 billion of common stock, repay outstanding debt of $1.8 billion
and pay $447 million of cash dividends, partially offset by proceeds from debt
issuances of $1.8 billion.

The positive effect of exchange rate fluctuations on cash, cash equivalents and restricted cash is explained by the weakening of the we dollar against other currencies, mainly the euro, in 2021 and 2020.

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Liquidity and capital resources requirements

As of December 31, 2021 and December 31, 2020, we had assets classified as cash
and cash equivalents, as well as short-term and long-term non-equity investments
from continuing operations, in an aggregate amount of $7.3 billion and $3.8
billion, respectively. We believe that our cash, cash equivalents and short-term
and long-term investments, together with cash expected to be generated from
operations, borrowings available under our credit agreement and commercial paper
program, and our access to capital markets, will be sufficient to satisfy our
material cash requirements over the next 12 months and for the foreseeable
future.

However, COVID-19 and related measures to contain its impact have caused
material disruptions in both national and global financial markets and
economies. The future impact of COVID-19 and these containment measures cannot
be predicted with certainty and may increase our borrowing costs and other costs
of capital and otherwise adversely affect our business, results of operations,
financial condition and liquidity, and we cannot assure that we will have access
to external financing at times and on terms we consider acceptable, or at all,
or that we will not experience other liquidity issues going forward.

Senior Notes

As of December 31, 2021, we had floating- and fixed-rate senior notes
outstanding with varying maturities for an aggregate principal amount of $9.1
billion, with $1.4 billion payable within 12 months. Future interest payments
associated with the senior notes total $2.5 billion, with $0.2 billion payable
within 12 months. The net proceeds from the issuances of these senior notes are
used for general corporate purposes, including, among other things, capital
expenditures, share repurchases, repayment of indebtedness and possible
acquisitions.

In February 2022, we redeemed the $750 million aggregate principal amount of the
3.800% senior notes due March 2022. Total cash consideration paid was
$750 million as the redemption price was equal to 100% of the principal amount.
In addition, we paid accrued and unpaid interest on the principal amount.

Commercial paper

We have a commercial paper program pursuant to which we may issue commercial
paper notes in an aggregate principal amount at maturity of up to $1.5 billion
outstanding at any time with maturities of up to 397 days from the date of
issue. As of December 31, 2021, there were no commercial paper notes
outstanding.

credit agreement

In March 2020, we entered into a credit agreement that provides for an unsecured
$2 billion five-year credit facility. We may also, subject to the agreement of
the applicable lenders, increase commitments under the revolving credit facility
by up to $1 billion. Funds borrowed under the credit agreement may be used for
working capital, capital expenditures, acquisitions and other general corporate
purposes. As of December 31, 2021, no borrowings were outstanding under our $2
billion credit agreement.

Credit Ratings

As of December 31, 2021, we were rated investment grade by Standard and Poor's
Financial Services, LLC (long-term rated BBB+, short-term rated A-2, with a
stable outlook) and Moody's Investor Service (long-term rated Baa1, short-term
rated P-2, with a stable outlook). We disclose these ratings to enhance the
understanding of our sources of liquidity and the effects of our ratings on our
costs of funds. Our borrowing costs depend, in part, on our credit ratings and
any actions taken by these credit rating agencies to lower our credit ratings
will likely increase our borrowing costs.

We were in compliance with all financial covenants of our outstanding debt instruments for the period ended December 31, 2021. For further details regarding our debt, please refer to “Note 10 – Debt” to the consolidated financial statements included in this report.

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Leases

We have operating leases for office space, data centers, as well as other
corporate assets that we utilize under lease arrangements. As of December 31,
2021, we had fixed lease payment obligations of $366 million, with $156 million
payable within 12 months. For additional details related to our leases, please
see "Note 11 - Leases" to the consolidated financial statements included in this
report.

Purchase Obligations

Purchase obligation amounts include minimum purchase commitments for
advertising, capital expenditures (computer equipment, software applications,
engineering development services, construction contracts) and other goods and
services entered into in the ordinary course of business. As of December 31,
2021, we had purchase obligations of $151 million, with $125 million payable
within 12 months.

Income Taxes

We are unable to reasonably predict the timing of settlement of liabilities
related to unrecognized tax benefits of $318 million included in other
liabilities on our consolidated balance sheet as of December 31, 2021. The
timing of the resolution and/or closure of audits is highly uncertain, and it is
reasonably possible that the balance of gross unrecognized tax benefits could
significantly change in the next 12 months. However, given the number of years
remaining subject to examination and the number of matters being examined, we
are unable to estimate the full range of possible adjustments to the balance of
gross unrecognized tax benefits.

As of December 31, 2021, our assets classified as cash and cash equivalents, and
short-term and long-term non-equity investments from continuing operations
included assets held in certain of our foreign operations totaling approximately
$5.0 billion. As we repatriate these funds to the U.S., we will be required to
pay income taxes in certain U.S. states and applicable foreign withholding taxes
on those amounts during the period when such repatriation occurs. We have
accrued deferred taxes for the tax effect of repatriating the funds to the U.S.

See "Note 15 - Income Taxes" to the consolidated financial statements included
in this report for more information on unrecognized tax benefits and deferred
taxes.

Stock Repurchases

Our stock repurchase programs are intended to programmatically offset the impact
of dilution from our equity compensation programs and, subject to market
conditions and other factors, to make opportunistic and programmatic repurchases
of our common stock to reduce our outstanding share count. Any share repurchases
under our stock repurchase programs will be funded from our working capital or
other financing alternatives.

We expect, subject to market conditions and other uncertainties, to continue
making opportunistic and programmatic repurchases of our common stock. However,
our stock repurchase programs may be limited or terminated at any time without
prior notice. The timing and actual number of shares repurchased will depend on
a variety of factors, including corporate and regulatory requirements, the
impacts of the COVID-19 pandemic, price and other market conditions and
management's determination as to the appropriate use of our cash.

During 2021, we repurchased approximately $7.0 billion of our common stock under
our stock repurchase programs, including the accelerated repurchase agreement we
entered into during the fourth quarter of 2021. As of December 31, 2021, a total
of approximately $2.0 billion remained available for future repurchases of our
common stock under our stock repurchase programs. In February 2022 our Board
authorized an additional $4.0 billion stock repurchase program, with no
expiration from the date of authorization. See "Note 13 - Stockholders' Equity"
to the consolidated financial statements included in this report for more
information about our stock repurchase programs.

Dividends

The company paid a total of $466 million and $447 million in cash dividends in
2021 and 2020, respectively. In February 2022, we declared a cash dividend of
$0.22 per share of common stock to be paid on March 18, 2022 to stockholders of
record as of March 10, 2022.

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Other Capital Resource Requirements

We actively monitor all counterparties that hold our cash and cash equivalents
and non-equity investments, focusing primarily on the safety of principal and
secondarily on improving yield on these assets. We diversify our cash and cash
equivalents and investments among various counterparties in order to reduce our
exposure should any one of these counterparties fail or encounter difficulties.
To date, we have not experienced any material loss or lack of access to our
invested cash, cash equivalents or short-term investments; however, we can
provide no assurances that access to our invested cash, cash equivalents or
short-term investments will not be impacted by adverse conditions in the
financial markets, including, without limitation, as a result of the impact of
the COVID-19 pandemic. At any point in time we have funds in our operating
accounts and customer accounts that are deposited and invested with third party
financial institutions.


We have a cash pooling arrangement with a financial institution for cash
management purposes. As of December 31, 2021, we had a total of $3.7 billion in
aggregate cash deposits, partially offset by $3.5 billion in cash withdrawals,
held within the financial institution under the cash pooling arrangement. See
"Note 12 - Commitments and Contingencies" to the consolidated financial
statements included in this report for more information about our cash pooling
arrangement.

We have entered into various indemnification agreements and, in the ordinary
course of business, we have included limited indemnification provisions in
certain of our agreements with parties with which we have commercial relations.
It is not possible to determine the maximum potential loss under these various
indemnification provisions due to our limited history of prior indemnification
claims and the unique facts and circumstances involved in each particular
provision. To date, losses recorded in our consolidated statement of income in
connection with our indemnification provisions have not been significant, either
individually or collectively. See "Note 12 - Commitments and Contingencies" to
the consolidated financial statements included in this report for more
information about our indemnification provisions.
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Critical Accounting Policies, Judgments and Estimates

General

The preparation of our consolidated financial statements and related notes
requires us to make judgments, estimates and assumptions that affect the
reported amounts of assets, liabilities, revenue and expenses, and related
disclosure of contingent assets and liabilities. We have based our estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Our senior management has discussed the
development, selection and disclosure of these estimates with the Audit
Committee of our Board of Directors. Actual results may differ from these
estimates under different assumptions or conditions.

An accounting policy is considered to be critical if it requires an accounting
estimate to be made based on assumptions about matters that are highly uncertain
at the time the estimate is made, and if different estimates that reasonably
could have been used, or changes in the accounting estimates that are reasonably
likely to occur periodically, could materially impact the consolidated financial
statements. We believe the following critical accounting policies reflect the
more significant estimates and assumptions used in the preparation of our
consolidated financial statements. The following descriptions of critical
accounting policies, judgments and estimates should be read in conjunction with
our consolidated financial statements and related notes and other disclosures
included in this report.

Revenue Recognition

We may enter into certain revenue contracts that include promises to transfer
multiple goods or services including discounts on future services. We also may
enter into arrangements to purchase services from certain customers. As a
result, significant interpretation and judgment is sometimes required to
determine the appropriate accounting for these transactions including: (1)
whether services are considered distinct performance obligations that should be
accounted for separately or combined; (2) developing an estimate of the
stand-alone selling price of each distinct performance obligation; (3) whether
revenue should be reported gross (as eBay is acting as a principal), or net (as
eBay is acting as an agent); (4) evaluating whether a promotion or incentive is
a payment to a customer; and (5) whether the arrangement would be characterized
as revenue or reimbursement of costs incurred. Changes in judgments with respect
to these assumptions and estimates could impact the timing or amount of revenue
recognition.

Income Taxes

Our annual tax rate is based on our income, statutory tax rates and tax planning
opportunities available to us in the various jurisdictions in which we operate.
Tax laws are complex and subject to different interpretations by the taxpayer
and respective government taxing authorities. Significant judgment is required
in determining our tax expense and in evaluating our tax positions, including
evaluating uncertainties and the complexity of taxes on foreign earnings. We
review our tax positions quarterly and adjust the balances as new information
becomes available. Tax positions are evaluated for potential reserves for
uncertainty based on the estimated probability of sustaining the position under
examination. Our income tax rate is affected by the tax rates that apply to our
foreign earnings including U.S. minimum taxes on foreign earnings. The deferred
tax benefit derived from the amortization of our intellectual property is based
on the fair value, which has been agreed with foreign tax authorities. The
deferred tax benefit may from time to time change based on changes in tax rates.
Management has no specific plans to indefinitely reinvest the undistributed
earnings of our foreign subsidiaries at the balance sheet date.

Deferred tax assets represent amounts available to reduce income taxes payable
on taxable income in future years. Such assets arise because of temporary
differences between the financial reporting and tax bases of assets and
liabilities, as well as from net operating loss and tax credit carryforwards. We
evaluate the recoverability of these future tax deductions and credits by
assessing the adequacy of future expected taxable income from all sources,
including reversal of taxable temporary differences, forecasted operating
earnings and available tax planning strategies. These sources of income rely
heavily on estimates that are based on a number of factors, including our
historical experience and short-range and long-range business forecasts. As of
December 31, 2021, we had a valuation allowance on certain net operating loss
and tax credit carryforwards based on our assessment that it is more likely than
not that the deferred tax asset will not be realized.

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We recognize and measure uncertain tax positions in accordance with generally
accepted accounting principles in the U.S., or GAAP, pursuant to which we only
recognize the tax benefit from an uncertain tax position if it is more likely
than not that the tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The tax benefits
recognized in the financial statements from such positions are then measured
based on the largest benefit that has a greater than 50 percent likelihood of
being realized upon ultimate settlement. We report a liability for unrecognized
tax benefits resulting from uncertain tax positions taken or expected to be
taken in a tax return. GAAP further requires that a change in judgment related
to the expected ultimate resolution of uncertain tax positions be recognized in
earnings in the quarter in which such change occurs. We recognize interest and
penalties, if any, related to unrecognized tax benefits in income tax expense.

We file annual income tax returns in multiple taxing jurisdictions around the
world. A number of years may elapse before an uncertain tax position is audited
by the relevant tax authorities and finally resolved. While it is often
difficult to predict the final outcome or the timing of resolution of any
particular uncertain tax position, we believe that our reserves for income taxes
reflect the most likely outcome. We adjust these reserves, as well as the
related interest, where appropriate in light of changing facts and
circumstances. Settlement of any particular position could require the use of
cash.

The following table shows our effective tax rates for the periods indicated (in millions, except percentages):

                                          Year Ended December 31,
                                     2021               2020         2019
Income tax provision (benefit)   $    146             $ 858        $ 219
Effective tax rate                   36.6   %          25.6  %      13.2  %



Our future effective tax rates could be adversely affected by earnings being
lower than anticipated in countries where we have lower statutory rates and
higher than anticipated in countries where we have higher statutory rates, by
changes in the valuation of our deferred tax assets or liabilities, or by
changes or interpretations in tax laws, regulations or accounting principles. In
addition, we are subject to the continuous examination of our income tax returns
by the Internal Revenue Service, as well as various state and foreign tax
authorities. We regularly assess the likelihood of adverse outcomes resulting
from these examinations to determine the adequacy of our provision for income
taxes.

Based on our results for the year ended December 31, 2021, a one-percentage
point change in our provision for income taxes as a percentage of income before
taxes would have resulted in an increase or decrease in the provision of
approximately $4 million, resulting in an approximate $0.01 change in diluted
earnings per share.

Goodwill

The purchase price of an acquired company is allocated between intangible assets
and the net tangible assets of the acquired business with the residual of the
purchase price recorded as goodwill.

As of December 31, 2021, our goodwill totaled $4.2 billion. We assess the
impairment of goodwill of our reporting unit annually, or more often if events
or changes in circumstances indicate that the carrying value may not be
recoverable. Goodwill is tested for impairment at the reporting unit level by
first performing a qualitative assessment to determine whether it is more likely
than not that the fair value of the reporting unit is less than its carrying
value. If the reporting unit does not pass the qualitative assessment, then the
reporting unit's carrying value is compared to its fair value. The fair values
of the reporting units are estimated using market and discounted cash flow
approaches. Goodwill is considered impaired if the carrying value of the
reporting unit exceeds its fair value. The discounted cash flow approach uses
expected future operating results. The market approach uses comparable company
information to determine revenue and earnings multiples to value our reporting
unit. Failure to achieve these expected results or market multiples may cause a
future impairment of goodwill at the reporting unit. We conducted our annual
impairment test of goodwill as of August 31, 2021 and 2020. As of December 31,
2021, we determined that no impairment of the carrying value of goodwill was
required. See "Note 4 - Goodwill and Intangible Assets" to the consolidated
financial statements included in this report.

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Legal Contingencies

In connection with certain pending litigation and other claims, we have
estimated the range of probable loss, net of expected recoveries, and provided
for such losses through charges to our consolidated statement of income. These
estimates have been based on our assessment of the facts and circumstances at
each balance sheet date and are subject to change based upon new information and
future events.

From time to time, we are involved in disputes and regulatory inquiries that
arise in the ordinary course of business. We are currently involved in legal
proceedings, some of which are discussed in "Item 1A: Risk Factors," "Item 3:
Legal Proceedings" and "Note 12 - Commitments and Contingencies" to the
consolidated financial statements included in this report. We believe that we
have meritorious defenses to the claims against us, and we intend to defend
ourselves vigorously. However, even if successful, our defense against certain
actions will be costly and could require significant amounts of management's
time and result in the diversion of significant operational resources. If the
plaintiffs were to prevail on certain claims, we might be forced to pay
significant damages and licensing fees, modify our business practices or even be
prohibited from conducting a significant part of our business. Any such results
could materially harm our business and could result in a material adverse impact
on the financial position, results of operations or cash flows.

Recent accounting pronouncements

See "Note 1 - The Company and Summary of Significant Accounting Policies" to the
consolidated financial statements included in this report, regarding the impact
of certain recent accounting pronouncements on our consolidated financial
statements.

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