Zynga 2012 Annual Report Download - page 98

Net operating loss and tax credit carryforwards as of December 31, 2012 are as follows (in thousands):
Amount
Expiration
years
Net operating losses, federal ................. $167,406 2028 - 2032
Net operating losses, state ................... $ 97,462 2021 - 2032
Tax credit, federal ......................... $ 33,966 2020 - 2022
Tax credits, state .......................... $ 33,546 2017 - indefinite
Net operating losses, foreign ................. $ 2,456 2017 - 2019
Tax credits, foreign ........................ $ 46 2017 - 2018
Pursuant to authoritative guidance, the benefit of stock options will only be recorded to stockholders’ equity
when cash taxes payable are reduced. As of December 31, 2012, the portion of net operating loss carryforwards
related to stock options is approximately $178.1 million, the benefit of which will be credited to additional paid-
in capital when realized. The federal and state net operating loss carryforwards are subject to various annual
limitations under Section 382 of the Internal Revenue Code.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
December 31, 2009 ......................................................... $ 1,528
Additions based on tax positions related to 2010 ............................... 13,782
Reductions for tax positions of prior years ................................... (127)
December 31, 2010 ......................................................... 15,183
Additions based on tax positions related to 2011 ............................... 30,841
Additions for tax positions of prior years .................................... 2,318
Reductions for tax positions of prior years ................................... (9)
December 31, 2011 ......................................................... 48,334
Additions based on tax positions related to 2012 ............................... 51,222
Reductions for tax positions of prior years ................................... (835)
December 31, 2012 ......................................................... $98,721
As of December 31, 2012, approximately $66.8 million represents the amount of unrecognized tax benefits
that would, if recognized, impact our effective income tax rate.
We classify uncertain tax positions as non-current income tax liabilities unless expected to be paid within
one year or otherwise directly related to an existing deferred tax asset, in which case the uncertain tax position is
recorded net of the asset on the balance sheet. These non-current income tax liabilities are classified in other non-
current liabilities on the consolidated balance sheets. We do not anticipate a significant impact to our gross
unrecognized tax benefits within the next 12 months. We recognize interest and penalties in income tax expense.
As of December 31, 2012 and 2011, the total balance of accrued interest and penalties related to uncertain tax
positions was $0.2 million and zero, respectively. We file income tax returns in the United States, including
various state and local jurisdictions. Our subsidiaries file tax returns in various foreign jurisdictions, including
Canada, China, Germany, India, Ireland, Japan, Luxembourg, and UK. We are subject to examination by U.S.
federal, state or foreign tax authorities for all years since 2008.
8. Long-term Debt and Derivative Financial Instruments
In June, 2012, we entered into an agreement for a term loan of $100 million due June 30, 2017, at a variable
interest rate of three month LIBOR plus 0.75 percent. Interest payments are made quarterly and the three month
LIBOR will reset once per quarter. The amounts borrowed are collateralized by our corporate headquarters
building and the loan will be used for general corporate purposes and we may prepay the term loan in full or in
part at any time.
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