Discontinued Operations

12 Months Ended

Dec. 31, 2017

Discontinued Operations and Disposal Groups [Abstract]

On June 26, 2015, our Board approved the separation of PayPal through the Distribution. To consummate the Distribution, our Board declared a pro rata dividend of PayPal Holdings, Inc. common stock to eBay’s stockholders of record as of the close of business on July 8, 2015 (the “Record Date”). Each eBay stockholder received one (1) share of PayPal Holdings, Inc. common stock for every share of eBay common stock held at the close of business on the Record Date. The Distribution occurred on July 17, 2015. Immediately following the Distribution, PayPal became an independent, publicly traded company listed on The NASDAQ Stock Market under the ticker “PYPL.” eBay continues to trade on The NASDAQ Stock Market under the ticker “EBAY.” We classified the financial results of PayPal as discontinued operations in our consolidated statement of income. Additionally, the related assets and liabilities associated with the discontinued operations were classified as discontinued operations in our consolidated balance sheet. In connection with the Distribution, we reviewed our capital allocation strategy to ensure that each of PayPal and eBay would be well capitalized at Distribution. As part of this strategy, we contributed approximately $3.8 billion of cash to PayPal in 2015.

In 2015, our Board approved a plan to sell Enterprise. Based on the expected sales proceeds, we recorded a goodwill impairment of $786 million in 2015. On July 16, 2015, we signed a definitive agreement to sell Enterprise for $925 million and on November 2, 2015, the sale closed. We recorded a loss of $35 million upon closing included within income (loss) from discontinued operations, net of income taxes. We classified the results of Enterprise as discontinued operations in our consolidated statement of income. Additionally, the related assets and liabilities were classified as discontinued operations in our consolidated balance sheet.

The financial results of PayPal and Enterprise are presented as income (loss) from discontinued operations, net of income taxes in our consolidated statement of income. The following table presents financial results of PayPal and Enterprise (in millions):



	Year Ended December 31,
	2017			2016			2015 ⁽¹⁾
PayPal income (loss) from discontinued operations, net of income taxes	$	(4	)	$	(10	)	$	516
Enterprise loss from discontinued operations, net of income taxes	—			(9		)	(738		)
Income (loss) from discontinued operations, net of income taxes	$	(4	)	$	(19	)	$	(222	)


(1)	Includes PayPal financial results from January 1, 2015 to July 17, 2015 and Enterprise financial results from January 1, 2015 to November 2, 2015.

The following table presents cash flows of PayPal and Enterprise (in millions):



	Year Ended December 31,
	2017		2016			2015 ⁽¹⁾
PayPal net cash provided by (used in) discontinued operating activities	$	—	$	(1	)	$	1,252
Enterprise net cash provided by (used in) discontinued operating activities	—		—			(96		)
Net cash provided by discontinued operating activities	$	—	$	(1	)	$	1,156

PayPal net cash used in discontinued investing activities	$	—	$	—		$	(3,725	)
Enterprise net cash provided by (used in) discontinued investing activities	—		—			787
Net cash used in discontinued investing activities	$	—	$	—		$	(2,938	)

PayPal net cash provided by (used in) discontinued financing activities ⁽²⁾	$	—	$	—		$	(1,594	)
Enterprise net cash used in discontinued financing activities	—		—			—
Net cash provided by (used in) discontinued financing activities	$	—	$	—		$	(1,594	)


(1)	Includes PayPal financial results from January 1, 2015 to July 17, 2015 and Enterprise financial results from January 1, 2015 to November 2, 2015.


(2)	Includes $1.6 billion of PayPal cash and cash equivalents as of July 17, 2015.

PayPal

The following table presents financial results of PayPal (in millions):



	Year Ended December 31,
	2017			2016			2015 ⁽¹⁾
Net revenues	$	—		$	—		$	4,793
Cost of net revenues	—			—			1,918
Gross profit	—			—			2,875
Operating expenses:
Sales and marketing	—			—			534
Product development	—			—			527
General and administrative	—			23			741
Provision for transaction and loan losses	—			—			418
Amortization of acquired intangible assets	—			—			30
Total operating expenses	—			23			2,250
Income (loss) from operations of discontinued operations	—			(23		)	625
Interest and other, net	—			—			1
Income (loss) from discontinued operations before income taxes	—			(23		)	626
Income tax benefit (provision)	(4		)	13			(110		)
Income (loss) from discontinued operations, net of income taxes	$	(4	)	$	(10	)	$	516


(1)	Includes PayPal financial results from January 1, 2015 to July 17, 2015.

Enterprise

The following table presents financial results of Enterprise (in millions):



	Year Ended December 31,
	2017		2016			2015 ⁽¹⁾
Net revenues	$	—	$	—		$	904
Cost of net revenues	—		—			654
Gross profit	—		—			250
Operating expenses:
Sales and marketing	—		—			95
Product development	—		—			91
General and administrative	—		8			118
Provision for transaction losses	—		—			12
Amortization of acquired intangible assets	—		—			70
Goodwill impairment	—		—			786
Total operating expenses	—		8			1,172
Loss from operations of discontinued operations	—		(8		)	(922		)
Interest and other, net	—		—			1
Pretax loss on disposal of the discontinued operation	—		—			(35		)
Loss from discontinued operations before income taxes	—		(8		)	(956		)
Income tax benefit (provision)	—		(1		)	218
Loss from discontinued operations, net of income taxes	$	—	$	(9	)	$	(738	)

(1)

Includes Enterprise financial results from January 1, 2015 to November 2, 2015.