Zynga 2012 Annual Report Download - page 89

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Concentration of Credit Risk and Significant Customers
Financial instruments, which potentially expose us to concentrations of credit risk, consist primarily of cash
and cash equivalents, short-term and long-term marketable securities, and accounts receivable. Substantially all
of our cash, cash equivalents, and short-term marketable securities are maintained with three financial institutions
with high credit standings. We perform periodic evaluations of the relative credit standing of these institutions.
Accounts receivable are unsecured and represent amounts due to us based on contractual obligations where
a signed and executed contract or click-through agreement exists. In cases where we are aware of circumstances
that may impair a specific customer’s ability to meet its financial obligations, we record a specific allowance as a
reduction to the accounts receivable balance to reduce it to its net realizable value.
Facebook is a significant distribution, marketing, promotion and payment platform for our social games. A
significant portion of our 2012, 2011 and 2010 revenue was generated from players who accessed our games
through Facebook. As of December 31, 2012 and December 31, 2011, 58% and 71% of our accounts receivable,
respectively, were amounts owed to us by Facebook.
Advertising Expense
Costs for advertising are expensed as incurred. Advertising costs, which are included in sales and marketing
expense, primarily consisting of player acquisition costs, totaled $102.2 million, $102.6 million and
$83.4 million for the years ended December 31, 2012, 2011 and 2010, respectively.
2. Cash and Investments
Cash and investments consist of the following (in thousands):
December 31,
2012
December 31,
2011
Cash and cash equivalents:
Cash .................................. $ 137,104 $ 205,719
Money market funds ..................... 226,993 1,375,918
Corporate debt securities .................. 21,852 706
Total cash and cash equivalents ................. $ 385,949 $1,582,343
Marketable securities:
U.S. government and government agency debt
securities ............................ $ 464,815 $ 267,635
Corporate debt securities .................. 796,316 67,628
Municipal securities ...................... 5,233 —
Total .................................. $1,266,364 $ 335,263
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