Zynga 2015 Annual Report Download - page 74

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Table of Contents
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
InterestRateFluctuationRisk
Our cash and cash equivalents and marketable securities consist of cash, money market funds, U.S. government debt securities and corporate debt securities.
The primary objective of our investment activities is to preserve principal, ensure liquidity and maximize income without significantly increasing risk. Our
available-for-sale investments consist of U.S. government and corporate debt securities which may be subject to market risk due to changes in prevailing interest
rates that may cause the fair values of our investments to fluctuate. Based on a sensitivity analysis, we have determined that a hypothetical 100 basis points increase
in interest rates would have resulted in a decrease in the fair values of our investments of approximately $1.0 million as of December 31, 2015. Such losses would
only be realized if we sold the investments prior to maturity.
ForeignCurrencyExchangeRisk
We have foreign currency risks related to our revenue and operating expenses incurred outside the United States and denominated in currencies other than
the functional currency of the entities in which they are recorded. Accordingly, we are subject to fluctuations due to changes in foreign currency exchange rates,
particularly changes in the Euro, Chinese Yuan, Japanese Yen, British Pound, Canadian Dollar, Australian Dollar and Indian Rupee. The volatility of exchange
rates depends on many factors that we cannot forecast with reliable accuracy. Although we have experienced and will continue to experience fluctuations in our net
income (loss) as a result of transaction gains (losses) related to revaluing certain cash balances, trade accounts receivable, trade accounts payable, current liabilities
and intercompany balances that are denominated in currencies other than the U.S. dollar, we believe such a change would not have a material impact on our results
of operations.
InflationRisk
We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to
significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our
business, financial condition and results of operations.
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