Zynga 2012 Annual Report Download - page 99

Concurrent with the execution of the loan agreement, to eliminate variability in interest payments, we
entered into an interest rate swap agreement, such that the interest rate is fixed at two percent. We have
designated the interest rate swap as a qualifying hedging instrument and accounted for it as a cash flow hedge in
accordance with ASC 815, Derivatives and Hedging. If the hedged transactions become probable of not
occurring, the corresponding amounts in accumulated other comprehensive income would be reclassified to other
income (expense), net in our consolidated statements of operations. The fair value of the interest rate swap was
$2.4 million as of December 31, 2012 and was recorded in the consolidated balance sheets in other current and
non-current liabilities. We initially record the gain or loss on the effective portion of the hedge as a component of
accumulated other comprehensive income (loss) and subsequently reclassify it to interest expense in other
income (expense), net when the hedged transaction occurs which is once per quarter commensurate with the date
of our interest payment. As of December 31, 2012, we expect to reclassify approximately $0.9 million net from
accumulated other comprehensive income (loss) into other income (expense), net in the next 12 months, along
with the earnings impact of the related forecasted hedged transactions.
Credit Facility
In July 2011, we executed a revolving credit agreement with certain lenders to borrow up to $1.0 billion in
revolving loans. Per the terms of the credit agreement, we paid upfront fees of $2.5 million, which were
capitalized and are to be amortized over the term of the credit agreement, and we are required to pay ongoing
commitment fees of up to $0.6 million each quarter based on the portion of the credit facility that is not drawn
down. The interest rate for the credit facility is determined based on a formula using certain market rates, as
described in the credit agreement. As of December 31, 2012, we have not drawn down any funds under the terms
of the credit agreement.
9. Other Current Liabilities
Other current liabilities consist of the following (in thousands):
December 31, December 31,
2012 2011
Customer deposits ........................... $ 25,671 $ 50,140
Accrued escrow for acquisitions ................ 32,568 7,242
Other ..................................... 88,644 109,889
Total other current liabilities ................... $146,883 $167,271
Customer deposits represent amounts received for unredeemed game cards as well as advanced payments
from various customers. Accrued escrow from acquisitions mainly relates to amounts held in escrow under the
terms of certain of our acquisition agreements. Other liabilities include various expenses that we accrue for
transaction taxes, compensation liabilities, restructuring charges and accrued accounts payable.
10. Restructuring
During the fourth quarter of 2012, we implemented certain cost reduction initiatives, including a workforce
reduction of 155 employees and the consolidation of certain real estate facilities which resulted in our exit from
certain facilities for which we had non-cancellable operating leases.
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