Zynga 2012 Annual Report Download - page 65

repurchases will be determined based on market conditions, share price and other factors. We believe that our
existing cash, cash equivalents and marketable securities, together with cash generated from operations, will be
sufficient to fund our operations and capital expenditures for at least the next 12 months.
Operating Activities
Operating activities provided $195.8 million of cash during the twelve months ended December 31, 2012, as
our net loss of $209.5 million in the twelve months ended December 31, 2011 is adjusted to exclude non-cash items.
Significant non-cash items included stock-based expense of $282.0 million, depreciation and amortization of $141.5
million and impairment of intangible assets of $95.5 million. Stock-based expense was composed primarily of
employee ZSU and stock option expense and decreased by $318.2 million in the twelve months ended
December 31, 2012 as compared to the same period of the prior year due to expense related to ZSU’s in 2011 as a
result of our 2011 IPO. Depreciation and amortization increased by $46.1 million as compared to the twelve months
ended December 31, 2011 as a result of our continued investment in property and equipment, including the purchase
of our corporate headquarters building, and business acquisitions. Changes in our operating assets and liabilities
used $67.8 million of cash in the twelve months ended December 31, 2012, primarily due to a decrease in deferred
revenue offset by increases in accounts receivable, other assets and other liabilities. Changes in operating assets and
liabilities provided $77.4 million of cash during the twelve months ended December 31, 2011, primarily due to
increases in other liabilities, deferred revenue and accounts payable offset by a decrease in income tax receivable.
Operating activities provided $389.2 million of cash in the year ended December 31, 2011. The cash flow
from operating activities primarily resulted from our net income, adjusted for non-cash items, and changes in our
operating assets and liabilities. We had a net loss in the year ended December 31, 2011 of $404.3 million, which
included non-cash stock-based compensation expense of $600.2 million, composed primarily of expense
associated with ZSUs that vested upon our initial public offering, stock awards issued in connection with
business acquisitions and expense associated with stock warrants and employee stock options. Non-cash
depreciation and amortization expense was $95.4 million during 2011, an increase from prior years due to our
continued investment in property and equipment and business acquisitions. Changes in our operating assets and
liabilities provided $77.4 million of cash during 2011, primarily due to increases in other liabilities, deferred
revenue and accounts payable and a decrease in income tax receivable. The increase in other liabilities was
mainly due to an increase of $44.5 million in customer deposits which includes advance payments from certain
customers and unredeemed game cards. The favorable components of cash provided by operating activities were
partially offset by increases in accounts receivable and other assets. The increases in accounts payable were the
result of increased spending due to the growth of our business. The increase in our deferred revenue and accounts
receivable was primarily due to our bookings growth in 2011, which increased by $316.6 million from 2010.
Additionally, our accounts receivable balance increased as we completed the transition of our primary in-game
payment method to Facebook from other payment processors, who generally remitted payments faster. Our
income tax receivable balance decreased during 2011 as we received federal and state tax refunds. Our other
assets balance increased primarily due to an increase in prepaid expenses, which was driven by the growth of our
business during the year.
Operating activities provided $326.4 million of cash in 2010, primarily from an increase in bookings, which
resulted in an increase in deferred revenue of $241.4 million from 2009 to 2010. Additionally, growth in our
business contributed to increased spending, causing an increase in accounts payable and accrued liabilities of
$102.4 million. We had net income in 2010 of $90.6 million, which included non-cash depreciation and
amortization expense of $39.5 million, driven by investments in capital equipment and business acquisitions we
made during 2010. The favorable components of cash provided by operating activities were partially offset by an
increase in income tax receivable of $25.3 million, an increase in excess tax benefits from stock-based awards of
$39.7 million, due to the realization of tax benefits from stock option activity in 2010; and an increase in
accounts receivable of $69.5 million, primarily due to our bookings growth. Additionally, our rate of collection
on accounts receivable was impacted in the second half of the year, as we began transitioning our primary in-
game payment method to Facebook from other payment processors, who generally remit payments faster.
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