On November 19, 2009, eBay sold all the capital shares of Skype to Springboard Group. eBay received cash proceeds of approximately $1.9 billion, a subordinated note issued by a subsidiary of the Buyer in the principal amount of $125.0 million and an equity stake of approximately 30 percent in the outstanding capital stock of the Buyer (valued at $620.0 million). The sale resulted in the removal of all Skype- related assets and liabilities, which offset the proceeds noted above, resulting in a net gain of $1.4 billion recorded in interest and other income. In conjunction with the sale of Skype, eBay reached a legal settlement of a lawsuit between Skype, Joltid, and entities controlled by Joltid’s founders, resulting in a $343.2 million charge to general and administrative expense. In addition, eBay recorded a charge for impairment of goodwill for $1.39 billion from the Skype acquisition.

Required:
Examine eBay’s income statement from 2007 to 2009. Reconstruct eBay’s income statement excluding the effects of Skype. Use the following categories in your analysis: Net revenue, Total operating expenses, Operating income, Interest and other income, and Income before taxes.

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Net revenues Cost of net revenues. Gross profit Operating expenses: Sales and marketing.. Product development. General and administrative Provision for transaction and loan losses ........ Amortization of acquired intangible assets Restructuring ........... Impairment of goodwill Total operating expenses Income from operations... Interest and other income, net eBay Inc. Consolidated Statement of Income Income before income taxes Provision for income taxes Net income ..... Year Ended December 31, 2007 2008 2009 (In thousands, except per-share amounts) $7.672.329 $8,541,261 $8,727,362 1,762,972 2,228,069 2,479,762 5,909,357 6,313,192 6,247,600 1,882,810 1,881,551 619,727 725,600 904,681 998,871 293,917 347,453 204,104 234,916 49,119 1,390,938 5,296,177 4,237,510 613,180 2,075,682 137,671 107,882 1,885,677 803,070 1,418,389 382,825 262,686 38,187 4,790,834 1,456,766 1,422,385 750,851 2,183,564 2,879,151 (402,600) (404,090) (490,054) $ 348,251 $1,779,474 $2,389,097