eBay 2012 Annual Report Download - page 134

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Stock Option Valuation Assumptions
We calculated the fair value of each stock option award on the date of grant using the Black-Scholes option pricing model. The following
weighted average assumptions were used for the years ended December 31, 2012 , 2011 and 2010 :
Our computation of expected volatility is based on a combination of historical and market-based implied volatility from traded options on
our common stock. Our computation of expected life is based on historical experience of similar awards, giving consideration to the contractual
terms of the stock-based awards, vesting schedules and expectations of future employee behavior. The interest rate for periods within the
contractual life of the award is based on the U.S. Treasury yield curve in effect at the time of grant.
Note 17 – Income Taxes
The components of pretax income for the years ended December 31, 2012 , 2011 and 2010 are as follows:
U.S. pre-tax income for the years ended December 31, 2011 and 2010 includes approximately $449 million and $400 million ,
respectively, relating to non-U.S. income recharacterized as U.S. income due to the settlement of multiple uncertain tax positions.
The provision for income taxes is comprised of the following:
F-38
Year Ended December 31,
2012
2011
2010
Risk-free interest rate
0.7
%
1.2
%
1.4
%
Expected life (in years)
4.0
3.8
3.4
Dividend yield —
%
—
%
—
%
Expected volatility
38
%
38
%
37
%
Year Ended December 31,
2012
2011
2010
(In millions)
United States
$
605
$
1,746
$
848
International
2,479
2,164
1,250
$
3,084
$
3,910
$
2,098
Year Ended December 31,
2012
2011
2010
(In millions)
Current:
Federal
$
327
$
518
$
(131
)
State and local
63
24
(13
)
Foreign
120
122
92
$
510
$
664
$
(52
)
Deferred:
Federal
$
34
$
64
$
398
State and local
(24
)
(3
)
8
Foreign
(45
)
(44
)
(57
)
(35
)
17
349
$
475
$
681
$
297