Facebook 2012 Annual Report Download

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Table of contents

  • Page 1

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  • Page 3
    ... acquire new customers and build deeper relationships than ever before. Great brands will be better able to tell their stories and build meaningful connections with consumers. E-commerce services will be able to sell products inline as millions of people discuss them. Developers will have the tools...

  • Page 4

  • Page 5
    ...) Smaller reporting company ' Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ' No È The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant as of June 29, 2012, the last business day...

  • Page 6
    ... and Related Transactions, and Director Independence ...Principal Accounting Fees and Services ...102 102 102 102 102 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ...Selected Financial Data ...Management's Discussion and Analysis of...

  • Page 7
    ... in this Annual Report on Form 10-K other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words "believe," "may...

  • Page 8
    ... discussed in this Annual Report on Form 10-K, as well as ARPU, do not include users of Instagram unless such users would otherwise qualify as MAUs, DAUs, and mobile MAUs, respectively, based on activity that is shared back to Facebook. In addition, our other user engagement metrics, such as friend...

  • Page 9
    ... Likes. In August 2012, we acquired Instagram, a photo-sharing service with over 100 million registered users. In 2012, we released a number of new Facebook apps for iPhone, iPad, and Android devices. These releases were built to improve the speed and quality of our mobile product offerings. In 2012...

  • Page 10
    ... personalized for each user in our products such as News Feed and Timeline. • Express Yourself. We enable people to share and publish their opinions, ideas, photos, and activities to audiences ranging from their closest friends to our one billion users, giving everyone a voice within the Facebook...

  • Page 11
    ... apps and websites. Engagement. We enable Platform developers to create better products that are personalized and social and that offer new ways for our users to engage with friends and share experiences across mobile devices and on the web. Monetization. We provide an online payments infrastructure...

  • Page 12
    ... marketing messages. Social context is information that highlights a friend's connections with a particular brand or business. Engagement. We believe that the shift to a more social web creates new opportunities for businesses to engage with interested customers. Many of our ad products offer new...

  • Page 13
    ... engagement that enables us to show ads; our Platform developers may purchase advertising on Facebook to drive traffic to their apps and websites; Platform developers use our Payment infrastructure to facilitate transactions with users on personal computers; Platform apps share content with Facebook...

  • Page 14
    ... promote trust in our products. For example, when a user posts a status update or uploads a photo to Facebook, our in-line controls allow the user to select his or her audience at the same time that he or she is publishing the post. In addition, we provide other data management tools. "Activity Log...

  • Page 15
    ...and services that are designed to engage users. Companies that offer platforms for game developers to reach broad audiences with free-to-play games including Apple's iOS and Google's Android mobile platforms. Traditional and online businesses that provide media for marketers to reach their audiences...

  • Page 16
    ... impression to selected users based upon the information that users have chosen to share. Our system manages our entire set of ads, the selected audiences, and the marketers' bids to determine which ads to show each person and how to display them for every page on Facebook. We use an advanced click...

  • Page 17
    ...in five regional centers located in Menlo Park, California; Austin, Texas; Dublin, Ireland; Hyderabad, India; and Singapore. We also invest in and rely on self-service tools to provide direct customer support to our users, developers, and marketers. Marketing To date, the Facebook user community has...

  • Page 18
    ...employees. Corporate Information We were incorporated in Delaware in July 2004. We completed our initial public offering in May 2012 and our Class A common stock is listed on The Nasdaq Global Select Market under the symbol "FB." Our principal executive offices are located at 1601 Willow Road, Menlo...

  • Page 19
    ... of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of the websites referred to...

  • Page 20
    ..., the trading price of our Class A common stock could decline, and you could lose part or all of your investment. Risks Related to Our Business and Industry If we fail to retain existing users or add new users, or if our users decrease their level of engagement with Facebook, our revenue, financial...

  • Page 21
    ... adequate customer service to users, developers, or marketers; we, our Platform developers, or other companies in our industry are the subject of adverse media reports or other negative publicity; or our current or future products, such as the Facebook Platform, reduce user activity on Facebook by...

  • Page 22
    ... sharing of information, companies that enable marketers to display personalized advertising and companies that provide development platforms for applications developers. We compete with companies that offer full-featured products that replicate the range of communications and related capabilities...

  • Page 23
    ... to successfully monetize mobile usage; the frequency, size, and relative prominence of the ads displayed by us or our competitors; customer service and support efforts; marketing and selling efforts; our ability to establish and maintain developers' interest in building on the Facebook Platform...

  • Page 24
    ...by apps on Facebook, direct advertising on Facebook purchased by Platform developers to drive traffic to their apps and websites, and fees from our Platform developers' use of our Payments infrastructure to sell virtual and digital goods to users accessing Facebook via personal computers. Apps built...

  • Page 25
    ...little or no prior development or operating experience. If new or enhanced products fail to engage users, developers, or marketers, we may fail to attract or retain users or to generate sufficient revenue, operating margin, or other value to justify our investments, and our business may be adversely...

  • Page 26
    ...through personal computers, and our ability to monetize through our mobile products; our ability to maintain or increase Payments and other fees revenue; the diversification and growth of revenue sources beyond advertising and Payments; the development and introduction of new products or services by...

  • Page 27
    ...user growth and revenue growth rates will decline over time as the size of our active user base increases and as we achieve higher market penetration rates. As our growth rates decline, investors' perceptions of our business may be adversely affected and the trading price of our Class A common stock...

  • Page 28
    ... to our business, including user privacy, rights of publicity, data protection, content, intellectual property, distribution, electronic contracts and other communications, competition, protection of minors, consumer protection, taxation, securities law compliance, and online payment services. The...

  • Page 29
    ...and we include open source software in our products. For example, we have contributed certain specifications and designs related to our data center equipment to the Open Compute Project Foundation, a non-profit entity that shares and develops such information with the technology community, under the...

  • Page 30
    ...harm the trading price of our Class A common stock. In addition, Mr. Zuckerberg has the ability to control the management and major strategic investments of our company as a result of his position as our CEO and his ability to control the election or replacement of our directors. In the event of his...

  • Page 31
    ... after we have started to fully utilize the underlying equipment, that could further degrade the user experience or increase our costs. Our software is highly technical, and if it contains undetected errors, our business could be adversely affected. Our products incorporate software that is highly...

  • Page 32
    ... metrics may harm our reputation and negatively affect our business. The numbers of our MAUs, DAUs, and mobile MAUs and average revenue per user (ARPU) are calculated using internal company data based on the activity of user accounts. While these numbers are based on what we believe to be reasonable...

  • Page 33
    ..., and financial resources, including managing multiple relations with users, marketers, Platform developers, and other third parties. In the event of continued growth of our operations or in the number of our third-party relationships, our information technology systems or our internal controls and...

  • Page 34
    ... to deal with bad transactions or customer disputes; potential fraudulent or otherwise illegal activity by users, developers, employees, or third parties; restrictions on the investment of consumer funds used to transact Payments; and additional disclosure and reporting requirements. We plan to...

  • Page 35
    data centers in more than 20 different countries. We may enter new international markets where we have limited or no experience in marketing, selling, and deploying our products. For example, we continue to evaluate entering China. However, this market has substantial legal and regulatory ...

  • Page 36
    ...to raise additional tax proceeds from companies such as Facebook. Due to the large and expanding scale of our international business activities, any changes in the taxation of such activities may increase our worldwide effective tax rate and harm our financial position and results of operations. 32

  • Page 37
    ... changes in the size of our user base, the level of user engagement or the effectiveness of our ad products; changes in operating performance and stock market valuations of technology companies in our industry, including our Platform developers and competitors; price and volume fluctuations...

  • Page 38
    ... independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the trading price of our Class A common stock could be...

  • Page 39
    ...could make our Class A common stock less attractive to some investors or otherwise harm our stock price. Because we qualify as a "controlled company" under the corporate governance rules for NASDAQ-listed companies, we are not required to have a majority of our board of directors be independent, nor...

  • Page 40
    ... voting power of our common stock, our board of directors will be classified into three classes of directors with staggered three-year terms and directors will only be able to be removed from office for cause; when the outstanding shares of our Class B common stock represent less than a majority of...

  • Page 41
    ...Staff Comments None. Item 2. Properties As of December 31, 2012, we leased office and data center facilities around the world totaling approximately 2.2 million square feet, including one million square feet for our corporate headquarters in Menlo Park, California. We have data centers in the United...

  • Page 42
    ... such outcome becomes probable and estimable. In addition, we are also currently parties to multiple other lawsuits related to our products, including other patent infringement lawsuits as well as class action lawsuits brought by users and marketers, and we may in the future be subject to additional...

  • Page 43
    ... sets forth for the indicated periods the high and low intra-day sales prices per share for our Class A common stock on the NASDAQ Global Select Market. High Low Second Quarter 2012 (from May 18, 2012) ...Third Quarter 2012 ...Fourth Quarter 2012 ...Our Class B common stock is not listed nor traded...

  • Page 44
    ... Facebook, Inc. under the Securities Act of 1933, as amended, or the Exchange Act. The following graph shows a comparison from May 18, 2012 (the date our Class A common stock commenced trading on the NASDAQ Global Select Market) through December 31, 2012 of the cumulative total return for our Class...

  • Page 45
    ... Annual Report on Form 10-K. Our historical results are not necessarily indicative of our results in any future period. 2012 Year Ended December 31, 2011 2010 2009 2008 (in millions, except per share data) Consolidated Statements of Operations Data: Revenue ...Total costs and expenses(1) ...Income...

  • Page 46
    ... believe that this methodology can provide useful supplemental information to help investors better understand underlying trends in our business. We use FCF in discussions with our senior management and board of directors. FCF has limitations as an analytical tool, and you should not consider it in...

  • Page 47
    ... (apps) and websites that integrate with Facebook to reach our global network of users and to build products that are more personalized and social. Marketers. We enable marketers to engage with more than one billion monthly active users (MAUs) on Facebook or subsets of our users based on information...

  • Page 48
    ... Facebook friends or connections via a third-party website that is integrated with Facebook, in the last 30 days as of the date of measurement. MAUs are a measure of the size of our global active user community, which has grown substantially in the past several years. Monthly Active Users Worldwide...

  • Page 49
    ... Facebook friends or connections via a third-party website that is integrated with Facebook, on a given day. We view DAUs, and DAUs as a percentage of MAUs, as measures of user engagement. 700 600 500 400 300 200 100 0 Daily Active User Worldwide (in millions) (daily average over the month ended...

  • Page 50
    ... MAU as a user who accessed Facebook via a mobile app or via mobile-optimized versions of our website such as m.facebook.com, whether on a mobile phone or tablet such as the iPad, during the period of measurement. Worldwide mobile MAUs increased 57% to 680 million as of December 31, 2012 from 432...

  • Page 51
    ... our users when they perform a revenue-generating activity. This allocation differs from our revenue by geography disclosure in our consolidated financial statements where revenue is geographically apportioned based on the location of the advertiser or developer. In June 2012, we discovered an error...

  • Page 52
    .... Our product development investments are focused on increasing user engagement over time. Facebook Usage on Mobile Devices. Increasing Facebook use on mobile devices may affect our revenue and financial results as we currently show fewer ads on average to mobile users compared to users on personal...

  • Page 53
    ...engagement. For example, in 2012, we launched new versions of our iPhone app that are faster and more reliable than the prior versions of our app. The new versions of the apps significantly increased News Feed loads and user feedback shared. Our new products often also increase costs if they require...

  • Page 54
    ... Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K. Revenue Recognition for Payments and Other Fees We enable Payments from our users to our Platform developers. Our users can make payments on the Facebook Platform by using credit cards or other payment methods...

  • Page 55
    ...requisite service period for the entire award. We account for share-based employee compensation plans under the fair value recognition and measurement provisions in accordance with applicable accounting standards, which require all share-based payments to employees, including grants of stock options...

  • Page 56
    ...to the grant date fair value of the common stock on a straight-line basis over the employee's required service period. We capitalize share-based employee compensation expense when appropriate. We did not capitalize any share-based compensation expense in the three years ended December 31, 2012. Loss...

  • Page 57
    ... Payments infrastructure that enables users to purchase virtual and digital goods from our Platform developers. Advertising. Our advertising revenue is generated by displaying ad products on the Facebook website or mobile app and third-party affiliated websites or mobile apps. Marketers pay for ad...

  • Page 58
    ... The following table set forth our consolidated statements of income data: Year Ended December 31, 2012 2011 2010 (in millions) Consolidated Statements of Income Data: Revenue ...Costs and expenses: Cost of revenue ...Research and development ...Marketing and sales ...General and administrative...

  • Page 59
    ... and development ...Marketing and sales ...General and administrative ...Total share-based compensation expense ... 2% 17 6 7 31% - 3 1 2 6% - - - - 1% Revenue Year Ended December 31, 2012 2011 2010 (in millions) 2011 to 2012 % Change 2010 to 2011 % Change Advertising ...Payments and other fees...

  • Page 60
    ... lower priced markets, which has the effect of decreasing the overall average price per ad. For the fourth quarter of 2012, we estimate that mobile advertising revenue as a percentage of advertising revenue was approximately 23%. Payments and other fees revenue in 2012 increased $253 million, or...

  • Page 61
    ... of international sales offices and payment methods. The majority of our revenue outside of the United States came from customers located in western Europe, Canada, and Australia. Cost of revenue Year Ended December 31, 2012 2011 2010 (dollars in millions) 2011 to 2012 % Change 2010 to 2011 % Change...

  • Page 62
    ...our IPO in May 2012 and, to a lesser extent, Post-2011 RSUs. Payroll and benefits expenses also increased due to a 19% increase in employee headcount to support global sales, business development and customer service. An increase in our user-, developer-, and advertiser-facing marketing expense also...

  • Page 63
    ... our user-, developer-, and advertiser-facing marketing. Additionally, share-based compensation expense increased from $2 million in 2010 to $37 million in 2011 due to recognition of expense related to Post-2011 RSUs. In 2013, we plan to add sales, business development and customer service employees...

  • Page 64
    ...net in 2011 increased $37 million, or 154%, compared to 2010. Interest expense increased by $20 million, driven by an increase in fees related to our credit facility as described in "-Liquidity and Capital Resources," and the payments related to an increased volume of property and equipment financed...

  • Page 65
    ...31, Sep 30, 2012 2011 2011 (in millions) Jun 30, 2011 Mar 31, 2011 Consolidated Statements of Operations Data: Revenue: Advertising revenue ...Payments and other fees revenue(1) ...Total revenue ...Costs and expenses: Cost of revenue ...Research and development ...Marketing and sales ...General and...

  • Page 66
    ...of total revenue) Dec 31, 2012 Sep 30, 2012 Jun 30, 2011 Mar 31, 2011 Consolidated Statements of Operations Data: Revenue: Advertising revenue ...Payments and other fees revenue ...Total revenue ...Costs and expenses: Cost of revenue ...Research and development ...Marketing and sales ...General...

  • Page 67
    ...tax benefit from share-based award activity, offset by $2.86 billion of taxes paid related to the net share settlement of RSUs when the Pre-2011 RSUs vested and settled in the fourth quarter of 2012, $1.24 billion used for capital expenditures and $911 million used for acquisitions of businesses and...

  • Page 68
    ... of marketable securities. Our cash used in investing activities in 2011 also consisted of capital expenditures of $606 million related to the purchase of servers, networking equipment, storage infrastructure, and the construction of data centers. Cash used in investing activities during 2010...

  • Page 69
    ... down in 2011. In the fourth quarter of 2012, we paid $2.86 billion of taxes related to the net settlement of RSUs when the Pre-2011 RSUs were vested and settled. In January 2011, we completed an offering of our Class A common stock to certain non-U.S. investors that generated $998 million in net...

  • Page 70
    ... Annual Report on Form 10-K for additional information regarding contingencies. Recently Issued and Adopted Accounting Pronouncement Comprehensive Income In May 2011, the FASB issued guidance that changed the requirement for presenting "Comprehensive Income" in the consolidated financial statements...

  • Page 71
    ... 100 basis point increase in interest rates would result in a decrease of approximately $55 million and $15 million in the market value of our available-for-sale debt securities as of December 31, 2012 and December 31, 2011, respectively. Any realized gains or losses resulting from such interest...

  • Page 72
    ... Statements and Supplementary Data FACEBOOK, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Ernst & Young LLP, Independent Registered Public Accounting Firm ...Consolidated Financial Statements: Consolidated Balance Sheets ...Consolidated Statements of Income ...Consolidated Statements...

  • Page 73
    ... and 2011, and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2012. These financial statements are the responsibility of the Company's management. Our responsibility is to express...

  • Page 74
    FACEBOOK, INC. CONSOLIDATED BALANCE SHEETS (In millions, except for number of shares and par value) December 31, 2012 2011 Assets Current assets: Cash and cash equivalents ...Marketable securities ...Accounts receivable, net of allowances for doubtful accounts of $22 and $17 as of December 31, 2012...

  • Page 75
    FACEBOOK, INC. CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts) Year Ended December 31, 2012 2011 2010 Revenue ...Costs and expenses: Cost of revenue ...Research and development ...Marketing and sales ...General and administrative ...Total costs and expenses ...Income from ...

  • Page 76
    FACEBOOK, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Year Ended December 31, 2012 2011 2010 Net income ...Other comprehensive income (loss): Foreign currency translation adjustment ...Unrealized gain on available-for-sale investments, net of tax ...Unrealized loss on ...

  • Page 77
    ...& E preferred stock to common stock ...Share-based compensation, related to employee share-based awards ...Excess tax benefit from share-based award activity ...Other comprehensive income ...Net income ... Balances at December 31, 2012 ... See Accompanying Notes to Consolidated Financial Statements.

  • Page 78
    ... flows from investing activities Purchases of property and equipment ...Purchases of marketable securities ...Sales of marketable securities ...Maturities of marketable securities ...Investments in non-marketable equity securities ...Acquisitions of businesses, net of cash acquired, and purchases...

  • Page 79
    ... expenses and other current liabilities related to property and equipment additions ...Property and equipment acquired under capital leases ...Fair value of shares issued related to acquisitions of businesses and other assets ...See Accompanying Notes to Consolidated Financial Statements. $ 38 $ 53...

  • Page 80
    ... in July 2004. Our mission is to make the world more open and connected. We build products that support our mission by providing utility to Facebook users, Platform developers, and marketers. We generate substantially all of our revenue from advertising and from fees associated with our Payments...

  • Page 81
    ...following (in millions): Year Ended December 31, 2012 2011 2010 Advertising ...Payments and other fees ...Total revenue ...Advertising $4,279 810 $5,089 $3,154 557 $3,711 $1,868 106 $1,974 Advertising revenue is generated by displaying ad products on the Facebook website or mobile app and third...

  • Page 82
    ... the grant date fair value of the common stock on a straight-line basis over the employee's required service period. During the years ended December 31, 2012, 2011, and 2010, we realized tax benefits from share-based award activity of $1.03 billion, $433 million and $115 million, respectively. These...

  • Page 83
    ...income. The tax benefits realized from share-based award activity of $1.03 billion relate to both the reduction of current year income tax liabilities and the expected refund of $451 million from income tax loss carrybacks to 2010 and 2011. In addition, we reported excess tax benefits that decreased...

  • Page 84
    ...-Marketable Securities We invest in certain investment funds that are not publicly traded. We carry these investments at cost because we do not have significant influence over the underlying investee. We assess for any other-thantemporary impairment at least on an annual basis. No impairment charge...

  • Page 85
    ... term, in the case of a capital lease, whichever is shorter. The estimated useful lives of property and equipment are described below: Property and Equipment Useful Life Network equipment ...Buildings ...Computer software, office equipment and other ...Leased equipment and leasehold improvements...

  • Page 86
    ... amount of property and equipment and intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value. We have not recorded any such impairment charge during the years presented. We review goodwill for impairment at least annually or more frequently if events or...

  • Page 87
    ... for the year ended December 31, 2011. Revenue from Zynga consisted of payments processing fees related to their sale of virtual goods and from direct advertising purchased by Zynga. No customer represented 10% or more of total revenue during the years ended December 31, 2012 and 2010. Segments Our...

  • Page 88
    ... on our financial statements. Note 2. Acquisitions In August 2012, we completed our acquisition of Instagram, Inc. (Instagram), a privately-held company which has built a mobile phone-based photo-sharing service that is expected to enhance our photos product offerings and to enable users to increase...

  • Page 89
    ... million Post-2011 RSUs for the years ended December 31, 2012 and December 31, 2011, respectively, and two million shares issuable upon exercise of employee stock options for the year ended December 31, 2010 because the impact would be anti-dilutive. Basic and diluted EPS are the same for each class...

  • Page 90
    ...for our common stock are calculated as follows (in millions, except per share amounts): Year Ended December 31, 2012 2011 2010 Class A Class B Class A Class B Class A Class B Basic EPS: Numerator Net income ...$ Less: Net income attributable to participating securities ...Net income attributable to...

  • Page 91
    ... significant. In addition, there were no securities in a continuous loss position for 12 months or longer as of December 31, 2012 and 2011. The following table classifies our marketable securities by contractual maturities: (in millions): December 31, 2012 2011 Due in one year ...Due in one to two...

  • Page 92
    ...): Fair Value Measurement at Reporting Date Using Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Description December 31, 2012 Cash equivalents: Money market funds ...Marketable securities...

  • Page 93
    ... software, office equipment, and other. Accumulated depreciation of property and equipment acquired under these capital leases was $437 million and $210 million at December 31, 2012 and 2011, respectively. Construction in progress includes costs primarily related to the construction of data centers...

  • Page 94
    ... in February 2012. In February 2012, we entered into a new agreement for an unsecured five-year revolving credit facility that allows us to borrow up to $5 billion for general corporate purposes, with interest payable on the borrowed amounts set at LIBOR plus 1.0%. Origination fees are amortized...

  • Page 95
    ... have purchased property and equipment for which we have subsequently obtained capital financing under sale-leaseback transactions. These agreements are typically for three years except for building leases which are for 15 years, with interest rates ranging from 1% to 13%. The leases are secured by...

  • Page 96
    ... lease payments ...Capital lease obligations, net of current portion ... $ 398 278 125 20 15 143 $ 979 (123) (365) $ 491 $ 142 128 117 110 102 252 $ 851 Operating lease expenses totaled $196 million, $219 million, and $178 million for the years ended December 31, 2012, 2011 and 2010, respectively...

  • Page 97
    ... Initial Public Offering In May 2012, we completed our IPO in which we issued and sold 180,000,000 shares of Class A common stock at a public offering price of $38.00 per share and the selling stockholders sold 241,233,615 shares of Class A common stock. We did not receive any proceeds from the sale...

  • Page 98
    ...Class B common stock, respectively, issued and outstanding. Share-based Compensation Plans We maintain three share-based employee compensation plans: the 2012 Plan, the 2005 Stock Plan and the 2005 Officers' Stock Plan (collectively, Stock Plans). Our 2012 Plan was approved by our board of directors...

  • Page 99
    ... as the difference between the exercise price of the underlying stock option awards and the assessed fair value of our common stock as of December 31, 2011 and the closing market price of our common stock as of December 31, 2012. (3) During the year ended December 31, 2012 69,196 thousand RSUs were...

  • Page 100
    ...% 0.46 - The weighted-average fair value of employee options granted during the year ended December 31, 2010 was $5.26 per share. There were no options granted for the years ended December 31, 2012 and 2011. The following table summarizes additional information regarding outstanding and exercisable...

  • Page 101
    ... grant date fair value of stock options vested during the years ended December 31, 2012, 2011, and 2010 was $5 million, $6 million and $16 million, respectively. As of December 31, 2012, there was $2.21 billion of unrecognized share-based compensation expense, of which $1.96 billion is related to...

  • Page 102
    ...The income tax benefits resulting from stock awards that were credited to stockholders' equity were $1.03 billion, $433 million and $107 million for the years ended December 31, 2012, 2011, and 2010. Our deferred tax assets (liabilities) are as follows (in millions): December 31, 2012 2011 Deferred...

  • Page 103
    .... Note 14. Geographical Information Revenue by geography is based on the billing address of the advertiser or Platform developer. The following table sets forth revenue and property and equipment, net by geographic area (in millions): Year Ended December 31, 2012 2011 2010 Revenue: United States...

  • Page 104
    December 31, 2012 2011 Property and equipment, net: United States ...Rest of the world(1) ...Total property and equipment, net ...(1) No individual country exceeded 10% of our total property and equipment, net for any period presented. $2,110 281 $2,391 $1,444 31 $1,475 100

  • Page 105
    ...specified in the rules and forms of the Securities and Exchange Commission (SEC), and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Changes in Internal Control There were no...

  • Page 106
    ... the Securities and Exchange Commission (SEC) within 120 days of the fiscal year ended December 31, 2012. Our board of directors has adopted a Code of Business Conduct and Ethics applicable to all officers, directors and employees, which is available on our website (investor.fb.com) under "Corporate...

  • Page 107
    ...this Form 10-K: 1. Consolidated Financial Statements: Page No. Report of Ernst & Young LLP, Independent Registered Public Accounting Firm ...Consolidated Balance Sheets ...Consolidated Statements of Income ...Consolidated Statements of Comprehensive Income ...Consolidated Statements of Stockholders...

  • Page 108
    ... of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Menlo Park, State of California, on this first day of February 2013. FACEBOOK, INC. Date: February 1, 2013...

  • Page 109
    Signature Title Date /S/ MARK ZUCKERBERG Mark Zuckerberg Chairman and Chief Executive Officer (Principal Executive Officer) Chief Financial Officer (Principal Financial Officer) Chief Accounting Officer (Principal Accounting Officer) Director February 1, 2013 /S/ DAVID A. EBERSMAN David A. ...

  • Page 110
    ...Stock Certificate Form of Class B Common Stock Certificate Sixth Amended and Restated Investors' Rights Agreement, dated December 27, 2010, by and among Registrant and certain security holders of Registrant. Amendment No. 1 to Sixth Amended and Restated Investors' Rights Agreement, dated May 1, 2012...

  • Page 111
    ... Ullyot. Lease, dated February 7, 2011, between Registrant and Wilson Menlo Park Campus, LLC. Conversion Agreement, dated February 19, 2010, between Registrant, Digital Sky Technologies Limited, and DST Global Limited. Amendment No. 1 to Conversion Agreement, dated April 30, 2012, between Registrant...

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    ... A. Ebersman, Chief Financial Officer, pursuant to Rule ...management contract or compensatory plan. Portions of exhibit have been granted confidential treatment by the SEC. This certification is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended (Exchange...

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    ... Thiel President of Thiel Capital and Partner of Founders Fund stockholDer information investor relations Facebook, Inc. 1601 Willow Road Menlo Park, California 94025 [email protected] investor relations Website http://investor.fb.com Facebook's Class A common stock trades on NASDAQ under the ticker...

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