eBay 2013 Annual Report Download - page 111

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In 2013, the FASB issued a new accounting standard that will require the presentation of certain unrecognized tax benefits as reductions to
deferred tax assets rather than as liabilities in the Consolidated Balance Sheets when a net operating loss carryforward, a similar tax loss, or a tax
credit carryforward exists. The new standard requires adoption on a prospective basis in the first quarter of 2015; however, early adoption is
permitted. We do not anticipate that this adoption will have a significant impact on our financial position, results of operations, or cash flows.
Note 2 – Net Income Per Share
Basic net income per share is computed by dividing net income for the period by the weighted average number of common shares
outstanding during the period. Diluted net income per share is computed by dividing net income for the period by the weighted average number
of shares of common stock and potentially dilutive common stock outstanding during the period. The dilutive effect of outstanding options and
equity incentive awards are reflected in diluted net income per share by application of the treasury stock method. The calculation of diluted net
income per share excludes all anti-dilutive shares. The following table sets forth the computation of basic and diluted net income per share for
the periods indicated:
Note 3 – Business Combinations and Divestitures
Our acquisition activity in 2013 , 2012 and 2011 , was as follows:
2013 Acquisition Activity
Braintree
We completed the acquisition of Braintree on December 19, 2013. We acquired Braintree to accelerate PayPal's growth in mobile
payments. We paid total consideration of approximately $713 million
, consisting primarily of cash. The allocation of the purchase consideration
for this acquisition is preliminary and remains subject to adjustment. Based on our preliminary allocation of the purchase consideration we
recorded approximately $155 million of acquired intangible assets, net liabilities of approximately $32 million and goodwill of approximately
$590 million . We expect intangible assets to include customer-related, marketing-related, and technology-based assets, which is consistent with
our similar prior acquisitions. We are still evaluating the fair value and the useful lives over which we expect to amortize these intangible assets
and the period over which we expect to derive economic benefit. Braintree is included in our Payments segment.
We have included the financial results of Braintree in our consolidated financial statements from the date of acquisition. Revenues and
expenses related to Braintree for the period ending December 31, 2013 were not material. Pro forma results of operations have not been
presented because the effect of the acquisition was not material to our financial results.
F-14
Year Ended December 31,
2013
2012
2011
(In millions, except per share amounts)
Numerator:
Net income
$
2,856
$
2,609
$
3,229
Denominator:
Weighted average shares of common stock - basic
1,295
1,292
1,293
Dilutive effect of equity incentive awards
18
21
20
Weighted average shares of common stock - diluted
1,313
1,313
1,313
Net income per share:
Basic
$
2.20
$
2.02
$
2.50
Diluted
$
2.18
$
1.99
$
2.46
Common stock equivalents excluded from income per diluted share because their effect
would have been anti-dilutive
4
4
17