FACEBOOK INC, 10-Q filed on 7/31/2012
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2012
Jul. 25, 2012
Class A Common Stock
Jul. 25, 2012
Class B Common Stock
Document Information [Line Items]
 
 
 
Document Type
10-Q 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Jun. 30, 2012 
 
 
Document Fiscal Year Focus
2012 
 
 
Document Fiscal Period Focus
Q2 
 
 
Trading Symbol
FB 
 
 
Entity Registrant Name
FACEBOOK INC 
 
 
Entity Central Index Key
0001326801 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Non-accelerated Filer 
 
 
Entity Common Stock, Shares Outstanding
 
674,605,171 
1,467,762,401 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Millions, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Current assets:
 
 
Cash and cash equivalents
$ 2,098 
$ 1,512 
Marketable securities
8,090 
2,396 
Accounts receivable, net of allowances for doubtful accounts of $17 as of June 30, 2012 and December 31, 2011
578 
547 
Income Tax refundable
567 
Prepaid expenses and other current assets
634 
149 
Total current assets
11,967 
4,604 
Property and equipment, net
2,105 
1,475 
Goodwill and intangible assets, net
809 
162 
Other assets
47 
90 
Total assets
14,928 
6,331 
Current liabilities:
 
 
Accounts payable
43 
63 
Platform partners payable
153 
171 
Accrued expenses and other current liabilities
441 
296 
Deferred revenue and deposits
85 
90 
Current portion of capital lease obligations
312 
279 
Total current liabilities
1,034 
899 
Capital lease obligations, less current portion
394 
398 
Other liabilities
191 
135 
Total liabilities
1,619 
1,432 
Stockholders' equity:
 
 
Common stock value
Additional paid-in capital
11,684 
2,684 
Accumulated other comprehensive loss
(29)
(6)
Retained earnings
1,654 
1,606 
Total stockholders' equity
13,309 
4,899 
Total liabilities and stockholders' equity
14,928 
6,331 
Convertible Preferred Stock
 
 
Stockholders' equity:
 
 
Convertible preferred stock, $0.000006 par value, issuable in series; no shares and 569 million shares authorized as of June 30, 2012 and December 31, 2011, respectively, no shares and 543 million shares issued and outstanding as of June 30, 2012 and December 31, 2011, respectively
$ 0 
$ 615 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Millions, except Per Share data, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Accounts receivable, allowances for doubtful accounts
$ 17 
$ 17 
Common stock, par value
$ 0.000006 
$ 0.000006 
Convertible Preferred Stock
 
 
Convertible preferred stock, par value
$ 0.000006 
$ 0.000006 
Convertible preferred stock, shares authorized
   
569 
Convertible preferred stock, shares issued
 
543 
Convertible preferred stock, shares outstanding
 
543 
Common Class A
 
 
Common stock, shares authorized
5,000 
4,141 
Common stock, shares issued
641 
117 
Common stock, shares outstanding
641 
117 
Common stock, outstanding shares subject to repurchase
Common Class B
 
 
Common stock, shares authorized
4,141 
4,141 
Common stock, shares issued
1,501 
1,213 
Common stock, shares outstanding
1,501 
1,213 
Common stock, outstanding shares subject to repurchase
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Revenue
$ 1,184 
$ 895 
$ 2,242 
$ 1,626 
Costs and expenses:
 
 
 
 
Cost of revenue
367 
210 
644 
377 
Marketing and sales
392 
96 
535 
158 
Research and development
705 
99 
858 
156 
General and administrative
463 
83 
567 
140 
Total costs and expenses
1,927 
488 
2,604 
831 
(Loss) income from operations
(743)
407 
(362)
795 
Interest and other income (expense), net:
 
 
 
 
Interest expense
(10)
(9)
(24)
(17)
Other income (expense), net
(12)
19 
(Loss) income before benefit from (provision for) income taxes
(765)
399 
(383)
797 
Benefit from (provision for) income taxes
608 
(159)
431 
(326)
Net (loss) income
(157)
240 
48 
471 
Less: Net income attributable to participating securities
81 
21 
160 
Net (loss) income attributable to Class A and Class B common stockholders
(157)
159 
27 
311 
(Loss) earnings per share attributable to Class A and Class B common stockholders:
 
 
 
 
Basic
$ (0.08)
$ 0.12 
$ 0.02 
$ 0.25 
Diluted
$ (0.08)
$ 0.11 
$ 0.02 
$ 0.22 
Weighted average shares used to compute (loss) earnings per share attributable to Class A and Class B common stockholders:
 
 
 
 
Basic
1,879 
1,292 
1,613 
1,267 
Diluted
1,879 
1,510 
1,792 
1,499 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
1,106 
64 
1,209 
71 
Cost of revenue
 
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
66 
71 
Marketing and sales
 
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
232 
11 
251 
11 
Research and development
 
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
545 
35 
605 
39 
General and administrative
 
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
$ 263 
$ 15 
$ 282 
$ 18 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Net (loss) income
$ (157)
$ 240 
$ 48 
$ 471 
Other comprehensive (loss) income:
 
 
 
 
Foreign currency translation adjustment
(21)
(22)
Change in unrealized gain (loss) on available-for-sale investments, net of tax
(1)
(1)
Comprehensive (loss) income
$ (179)
$ 240 
$ 25 
$ 472 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Cash flows from operating activities
 
 
Net income
$ 48 
$ 471 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
249 
123 
Loss on write-off of equipment
Share-based compensation
1,209 
71 
Deferred income taxes
(374)
(14)
Tax benefit from share-based award activity
381 
355 
Excess tax benefit from share-based award activity
(381)
(355)
Changes in assets and liabilities
 
 
Accounts receivable
(41)
(28)
Income tax refundable
(567)
Prepaid expenses and other current assets
(7)
(226)
Other assets
(43)
(6)
Accounts payable
(8)
Platform partners payable
(15)
38 
Accrued expenses and other current liabilities
226 
(21)
Deferred revenue and deposits
(5)
20 
Other liabilities
33 
Net cash provided by operating activities
683 
474 
Cash flows from investing activities
 
 
Purchases of property and equipment
(866)
(285)
Purchases of marketable securities
(6,957)
(1,892)
Sales of marketable securities
128 
Maturities of marketable securities
1,106 
Investments in non-marketable equity securities
(3)
(1)
Acquisitions of businesses, net of cash acquired, and purchases of intangible and other assets
(575)
(4)
Change in restricted cash and deposits
(3)
(3)
Net cash used in investing activities
(7,170)
(2,185)
Cash flows from financing activities
 
 
Net proceeds from issuance of common stock
6,761 
998 
Proceeds from exercise of stock options
24 
Repayment of long term debt
(250)
Proceeds from sale and lease-back transactions
82 
Principal payments on capital lease obligations
(143)
(82)
Excess tax benefit from share-based award activity
381 
355 
Net cash provided by financing activities
7,090 
1,053 
Effect of exchange rate changes on cash and cash equivalents
(17)
Net increase (decrease) in cash and cash equivalents
586 
(654)
Cash and cash equivalents at beginning of period
1,512 
1,785 
Cash and cash equivalents at end of period
2,098 
1,131 
Cash paid during the period for:
 
 
Interest
19 
13 
Income taxes
182 
176 
Non-cash investing and financing activities:
 
 
Fair value of shares issued related to acquisitions of businesses and other assets
25 
44 
Net change in accounts payable and accrued expenses and other liabilities
 
 
Non-cash investing and financing activities:
 
 
Property and equipment expenditures incurred but not yet paid
(59)
56 
Capital Lease Obligations
 
 
Non-cash investing and financing activities:
 
 
Property and equipment expenditures incurred but not yet paid
$ 90 
$ 291 
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

Note 1.    Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on May 18, 2012 (Prospectus).

The condensed consolidated balance sheet as of December 31, 2011, included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP.

The condensed consolidated financial statements include the accounts of Facebook, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2012.

We have reclassified certain prior period expense amounts from marketing and sales to general and administrative within our condensed consolidated statements of operations to conform to our current period presentation. These reclassifications did not affect revenue, total costs and expenses, (loss) income from operations, or net (loss) income.

There have been no changes to our significant accounting policies described in the Prospectus that have had a material impact on our condensed consolidated financial statements and related notes.

Initial Public Offering and Share-based Compensation

In May 2012, we completed our initial public offering (IPO) in which we issued and sold 180 million shares of Class A common stock at a public offering price of $38.00 per share. We received net proceeds of $6.8 billion after deducting underwriting discounts and commissions of $75 million and other offering expenses of approximately $6 million. Upon the closing of the IPO, all shares of our then-outstanding convertible preferred stock automatically converted into an aggregate of 545 million shares of Class B common stock and an aggregate of 336 million shares of Class B common stock converted into Class A common stock.

Restricted stock units (RSUs) granted prior to January 1, 2011 (Pre-2011 RSUs) vest upon the satisfaction of both a service condition and a liquidity condition. The service condition for the majority of these awards is satisfied over four years. The liquidity condition is satisfied upon the occurrence of a qualifying event, defined as a change of control transaction or six months following the completion of our IPO, which occurred in May 2012. The vesting condition that will be satisfied six months following our IPO does not affect the expense attribution period for the RSUs for which the service condition has been met as of the date of our IPO. This six-month period is not a substantive service condition and, accordingly, beginning on the effectiveness of our IPO in May 2012, we recognized a cumulative share-based compensation expense for the portion of the RSUs that had met the service condition. In the three and six months ended June 30, 2012, the share-based compensation expense related to our Pre-2011 RSUs recognized was $986 million. As of June 30, 2012, we have approximately $205 million of additional future period share-based compensation expense related to our Pre-2011 RSUs to be recognized over a weighted-average period of approximately two years.

 

RSUs granted on or after January 1, 2011 (Post-2011 RSUs) are not subject to a liquidity condition in order to vest, and compensation expense related to these grants is based on the grant date fair value of the RSUs and is recognized on a straight-line basis over the applicable service period. The majority of Post-2011 RSUs are earned over a service period of four to five years. In the three and six months ended June 30, 2012, we recognized $113 million and $210 million, respectively, and in both the three and six months ended June 30, 2011, we recognized $58 million of share-based compensation expense related to the Post-2011 RSUs. As of June 30, 2012 we anticipate $1,959 million of future period expense related to such RSUs will be recognized over a weighted-average period of approximately two years.

As of June 30, 2012, there was $2,245 million of unrecognized share-based compensation expense, of which $2,164 million relates to RSUs, and $81 million relates to restricted shares and stock options. This unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately two years.

We estimate that an aggregate of approximately 273 million shares underlying Pre-2011 RSUs will vest and settle between October 15, 2012 and November 14, 2012. These shares have not been included in our shares outstanding in our condensed consolidated balance sheet as of June 30, 2012. RSU holders generally will recognize taxable income based upon the value of the shares on the date they are settled and we are required to withhold taxes on such value at applicable minimum statutory rates. We currently expect that the average of these withholding rates will be approximately 45%. We are unable to quantify the obligations as of June 30, 2012 and we will remain unable to quantify this amount until the date of the settlement of the RSUs, as the withholding obligations will be based on the closing price of the shares at the time of settlement.

Use of Estimates

Conformity with GAAP requires the use of estimates and judgments that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. GAAP requires us to make estimates and judgments in several areas, including, but not limited to, those related to revenue recognition, collectability of accounts receivable, contingent liabilities, fair value of share-based awards, fair value of financial instruments, fair value of acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, and income taxes. These estimates are based on management’s knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ materially from those estimates.

(Loss) Earnings per Share
(Loss) Earnings per Share

Note 2.    (Loss) Earnings per Share

We compute (loss) earnings per share (EPS) of Class A and Class B common stock using the two-class method required for participating securities. Prior to the date of the IPO, we considered all series of our convertible preferred stock to be participating securities due to their non-cumulative dividend rights. Immediately after the completion of our IPO in May 2012, all outstanding shares of convertible preferred stock converted to Class B common stock. Additionally, we consider restricted stock awards to be participating securities, because holders of such shares have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares.

 

Undistributed earnings allocated to these participating securities are subtracted from net income in determining net income attributable to common stockholders. Net losses are not allocated to these participating securities. Basic EPS is computed by dividing net (loss) income attributable to common stockholders by the weighted-average number of shares of our Class A and Class B common stock outstanding, adjusted for outstanding shares that are subject to repurchase.

For the calculation of diluted EPS, net income attributable to common stockholders for basic EPS is adjusted by the effect of dilutive securities, including awards under our equity compensation plans. In addition, the computation of the diluted EPS of Class A common stock assumes the conversion from Class B common stock, while the diluted EPS of Class B common stock does not assume the conversion of those shares. Diluted EPS attributable to common stockholders is computed by dividing the resulting net income attributable to common stockholders by the weighted-average number of fully diluted common shares outstanding.

Dilutive securities in our diluted EPS calculation for the three and six months ended June 30, 2011 do not include Pre-2011 RSUs. Vesting of these RSUs is dependent upon the satisfaction of both a service condition and a liquidity condition. The liquidity condition is satisfied upon the occurrence of a qualifying event, defined as a change of control transaction or six months following the completion of our IPO. Our IPO did not occur until May 2012. Therefore, prior to this date the holders of these RSUs had no rights in our undistributed earnings and accordingly, they are excluded from the effect of basic and dilutive securities in the three and six months ended June 30, 2011. However, subsequent to the completion of our IPO in May 2012, these RSUs are included in our basic and diluted EPS calculation for the six months ended June 30, 2012. Post-2011 RSUs are not subject to a liquidity condition in order to vest, and are thus included in the calculation of diluted EPS. We also excluded 0.4 million Post-2011 RSUs for the three months ended June 30, 2011, 8.1 million and 0.7 million Post-2011 RSUs for the six months ended June 30, 2012 and 2011, respectively, because the impact would be antidilutive. No dilutive securities have been included in the diluted EPS calculation for the three months ended June 30, 2012 due to our reporting a net loss for the quarter.

Basic and diluted EPS are the same for each class of common stock because they are entitled to the same liquidation and dividend rights.

The numerators and denominators of the basic and diluted EPS computations for our common stock are calculated as follows (in millions, except per share amounts):

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2012     2011      2012      2011  
     Class A     Class B     Class A      Class B      Class A      Class B      Class A      Class B  

Basic EPS:

                     

Numerator

                     

Net (loss) income

   $ (31 )   $ (126 )   $ 20      $ 220      $ 7      $ 41      $ 39      $ 432  

Less: Net income attributable to participating securities

     0        0        7         74         3         18         13         147   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net (loss) income attributable to common stockholders

   $ (31 )   $ (126 )   $ 13      $ 146      $ 4      $ 23      $ 26      $ 285  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Denominator

                     

Weighted average shares outstanding

     377       1,505       110        1,188        247        1,369         105        1,167  

Less: Shares subject to repurchase

     1        2        1         5         1         2         0         5   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Number of shares used for basic EPS computation

     376       1,503       109        1,183        246        1,367        105        1,162  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Basic EPS

   $ (0.08 )   $ (0.08 )   $ 0.12      $ 0.12      $ 0.02      $ 0.02      $ 0.25      $ 0.25  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Diluted EPS:

                     

Numerator

                     

Net (loss) income attributable to common stockholders

   $ (31 )   $ (126 )   $ 13      $ 146       $ 4      $ 23      $ 26      $ 285  

Reallocation of net income attributable to participating securities

     0        0        8         0         1         0         16         0   

Reallocation of net (loss) income as a result of conversion of Class B to Class A common stock

     (126     0        146         0         23         0         285         0   

Reallocation of net income to Class B common stock

     0        0        0         9         0         1         0         19   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net (loss) income attributable to common stockholders for diluted EPS

   $ (157 )   $ (126 )   $ 167      $ 155      $ 28      $ 24      $ 327      $ 304  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Denominator

                     

Number of shares used for basic EPS computation

     376       1,503       109        1,183        246        1,367        105        1,162  

Conversion of Class B to Class A common stock

     1,503       0       1,183         0        1,367        0        1,162        0  

Weighted average effect of dilutive securities:

                     

Employee stock options

     0        0       206        206        155        155        223         223   

RSUs

     0       0       6        6         22        22        2         2   

Shares subject to repurchase

     0       0       4         4         2        2        4         4   

Warrants

     0       0       2        2         0        0        3         3   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Number of shares used for diluted EPS computation

     1,879       1,503       1,510        1,401        1,792        1,546         1,499        1,394  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Diluted EPS

   $ (0.08 )   $ (0.08 )   $ 0.11      $ 0.11      $ 0.02      $ 0.02      $ 0.22      $ 0.22  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Property and Equipment
Property and Equipment

Note 3.    Property and Equipment

Property and equipment consist of the following (in millions):

 

     June 30,
2012
    December 31,
2011
 

Network equipment

   $ 1,479      $ 1,016   

Land

     34        34   

Buildings

     449        355   

Leasehold improvements

     142        120   

Computer software, office equipment and other

     88        73   

Construction in progress

     542        327   
  

 

 

   

 

 

 

Total

     2,734        1,925   

Less accumulated depreciation and amortization

     (629     (450
  

 

 

   

 

 

 

Property and equipment, net

   $ 2,105      $ 1,475   
  

 

 

   

 

 

 

Construction in progress includes costs primarily related to the construction of data centers and equipment located in our new data centers in Oregon, North Carolina and Sweden.

Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets

Note 4.    Goodwill and Other Intangible Assets

Goodwill and other intangible assets consist of the following (in millions):

 

     June 30,
2012
    December 31,
2011
 

Acquired patents

   $ 684      $ 51   

Acquired non-compete agreements

     21        18   

Acquired technology and other

     49        43   

Accumulated amortization

     (45     (32
  

 

 

   

 

 

 

Net acquired intangible assets

     709        80   

Goodwill

     100        82   
  

 

 

   

 

 

 

Goodwill and other intangible assets

   $ 809      $ 162   
  

 

 

   

 

 

 

Acquired patents have estimated useful lives ranging from three to 18 years at acquisition. The average term of acquired non-compete agreements is generally two years. Acquired technology and other have estimated useful lives of two to ten years. Amortization expense of intangible assets for the three and six months ended June 30, 2012 was $8 million and $13 million, respectively, and for the three and six months ended June 30, 2011 was $5 million and $10 million, respectively.

During the six months ended June 30, 2012, we completed business acquisitions for total consideration of $24 million. These acquisitions were not material to our condensed consolidated financial statements individually or in the aggregate.

The following table presents the aggregated estimated fair value of the assets acquired for acquisition completed during the six months ended June 30, 2012 (in millions):

 

Goodwill

   $             18   

Acquired technology and other

     6  

Acquired non-compete agreements

     3  

Deferred tax liabilities

     (3
  

 

 

 

Total

   $ 24  
  

 

 

 

 

Pro forma results of operations related to our acquisitions during the six months ended June 30, 2012 have not been presented because they are not material to our condensed consolidated statements of operations, either individually or in the aggregate. For acquisitions completed during the six months ended June 30, 2012, acquired technology has a weighted-average useful life of three years and the term of the non-compete agreements is two years.

During the six months ended June 30, 2012, we acquired $633 million of patents and other intellectual property rights. We completed the largest of these acquisitions in June 2012 under an agreement with Microsoft Corporation pursuant to which we were assigned Microsoft’s rights to acquire approximately 615 U.S. patents and patent applications and their foreign counterparts, consisting of approximately 170 foreign patents and patent applications, that were subject to an agreement between AOL Inc. and Microsoft entered into on April 5, 2012. We paid $550 million in cash in exchange for these patents and patent applications. As part of this transaction, we established a deferred tax liability of $49 million to reflect the difference between the future tax basis and book basis in the acquired patents and patent applications, which also increased the capitalized patent cost by this amount. As part of this transaction, we obtained a license to the other AOL patents and patent applications being purchased by Microsoft and granted Microsoft a license to the AOL patents and patent applications that we acquired. The acquisitions of these patents, patent applications and other intellectual property rights were accounted for as asset acquisitions. Patents acquired during the six months ended June 30, 2012 have estimated useful lives ranging from three to 17 years at acquisition.

Estimated amortization expense for the unamortized acquired intangible assets for the next five years and thereafter is as follows (in millions):

 

The remainder of 2012

   $ 53   

2013

     95   

2014

     89   

2015

     84   

2016

     75   

2017

     66   

Thereafter

     247   
  

 

 

 
   $ 709   
  

 

 

 
Fair Value Measurements
Fair Value Measurements

Note 5.    Fair Value Measurements

Assets measured at fair value on a recurring basis are summarized below (in millions):

 

            Fair Value Measurement at
Reporting Date Using
 

Description

   June 30, 2012      Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 

Cash equivalents:

           

Money market funds

   $ 944       $ 944       $             0       $             0   

U.S. government securities

     517         517         0         0   

U.S. government agency securities

     69         69         0         0   

Marketable securities:

           

U.S. government securities

     5,557         5,557         0         0   

U.S. government agency securities

     2,533         2,533         0         0   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cash equivalents and marketable securities

   $ 9,620       $ 9,620       $ 0       $ 0   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

            Fair Value Measurement at
Reporting Date Using
 

Description

   December 31,
2011
     Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 

Cash equivalents:

           

Money market funds

   $ 892       $ 892       $             0       $             0   

U.S. government securities

     60         60         0         0   

U.S. government agency securities

     50         50         0         0   

Marketable securities:

           

U.S. government securities

     1,415         1,415         0         0   

U.S. government agency securities

     981         981         0         0   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cash equivalents and marketable securities

   $ 3,398       $ 3,398       $ 0       $ 0   
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross unrealized gains or losses for cash equivalents and marketable securities as of June 30, 2012 and December 31, 2011 were not material.

The following table classifies our marketable securities by contractual maturities as of June 30, 2012 (in millions):

 

     Fair Value  

Due in one year

   $ 5,369   

Due in one to two years

     2,721   
  

 

 

 
   $ 8,090   
  

 

 

 
Commitments and Contingencies
Commitments and Contingencies

Note 6.    Commitments and Contingencies

Leases

We have entered into various capital lease arrangements to obtain property and equipment for our operations. Additionally, on occasion we have purchased property and equipment for which we have subsequently obtained capital financing under sale-leaseback transactions. These agreements are typically for three years except for building leases which are for 15 years, with interest rates ranging from 1% to 13%. The leases are secured by the underlying leased buildings and equipment. We have also entered into various non-cancelable operating lease agreements for certain of our offices, equipment, land and data centers with original lease periods expiring between 2012 and 2027. We are committed to pay a portion of the related actual operating expenses under certain of these lease agreements. Certain of these arrangements have free rent periods and/or escalating rent payment provisions, and we recognize rent expense under such arrangements on a straight-line basis.

Operating lease expense totaled $50 million and $101 million for the three and six months ended June 30, 2012, and $61 million and $119 million for the three and six months ended June 30, 2011.

 

Other Agreements

In April 2012, we entered into an agreement to acquire Instagram, Inc., which has built a mobile phone-based photo-sharing service, for 22,999,412 shares of our common stock and $300 million in cash. The value of the equity component of the final purchase price will be determined for accounting purposes based on the fair value of our common stock on the closing date. Following the closing of this acquisition, we plan to maintain Instagram’s products as independent mobile applications to enhance our photos product offerings and to enable users to increase their levels of mobile engagement and photo sharing. This acquisition is subject to customary closing conditions, including the expiration or early termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (HSR), and is expected to close in 2012. We have agreed to pay Instagram a $200 million termination fee if governmental authorities permanently enjoin or otherwise prevent the completion of the merger or if either party terminates the agreement after December 10, 2012.

Contingencies

Legal Matters

On March 12, 2012, Yahoo filed a lawsuit against us in the U.S. District Court for the Northern District of California, claiming that we infringe ten of Yahoo’s patents that Yahoo claimed relate to “advertising,” “social networking,” “privacy,” “customization,” and “messaging,” and on April 27, 2012 Yahoo added two patents to the lawsuit that Yahoo claims relate to “advertising.” Yahoo sought unspecified damages, a damage multiplier for alleged willful infringement, and an injunction. On April 3, 2012, we filed our answer with respect to this complaint and asserted counterclaims that Yahoo’s products infringe ten of our patents. On July 6, 2012, the parties entered into a settlement agreement resolving all claims made in the litigation. On July 9, 2012, the parties filed a stipulated dismissal of the litigation with the U.S. District Court for the Northern District of California and this litigation was dismissed on July 10, 2012. We have no payment obligations under this settlement agreement.

Beginning on May 22, 2012, multiple putative class actions, derivative actions, and individual actions were filed in state and federal courts in the United States and in other jurisdictions against us, our directors, and/or certain of our officers alleging violation of securities laws or breach of fiduciary duties in connection with our IPO and seeking unspecified damages. We believe these lawsuits are without merit, and we are vigorously defending these lawsuits. In addition, following our IPO, the events surrounding our IPO became the subject of government inquiries, and we have received requests for information in connection with certain of those inquiries.

We are also party to various legal proceedings and claims which arise in the ordinary course of business.

In the opinion of management, there was not at least a reasonable possibility we may have incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies relating to the matters set forth above. However, the outcome of litigation is inherently uncertain. Therefore, although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against us in the same reporting period for amounts in excess of management’s expectations, our condensed consolidated financial statements of a particular reporting period could be materially adversely affected.

Credit Facility

In February 2012, we entered into an agreement for an unsecured five-year revolving credit facility that allows us to borrow up to $5,000 million for general corporate purposes, with interest payable on the borrowed amounts set at LIBOR plus 1.0%. Under the terms of the agreement, we are obligated to pay a commitment fee of 0.10% per annum on the daily undrawn balance.

Concurrent with our entering into the revolving credit facility, we also entered into a bridge credit facility agreement that allows us to borrow up to $3,000 million to fund tax withholding and remittance obligations related to the settlement of RSUs in connection with our IPO, with interest payable on the borrowed amounts set at LIBOR plus 1.0% and an additional 0.25% payable on drawn balances outstanding from and after the 180th day of borrowing. Any amounts outstanding under this facility will be due one year after the date we draw on the facility but no later than June 30, 2014. During the term of this bridge facility, the lenders’ commitments are subject to reduction and amounts borrowed thereunder are subject to repayment in the event we raise capital through certain asset sales, debt issuances, or equity issuances. Under the terms of the agreement, we are obligated to pay a commitment fee of 0.10% per annum on the daily undrawn balance from and after the 90th day following the date we entered into the bridge facility.

 

No amounts were drawn down under these credit and bridge credit facility agreements as of June 30, 2012.

Stockholders' Equity
Stockholders' Equity

Note 7.     Stockholders’ Equity

Share-based Compensation Plans

We maintain three share-based employee compensation plans: the 2012 Equity Incentive Plan, the 2005 Stock Plan and the 2005 Officers’ Stock Plan (Stock Plans). In January 2012, our board of directors approved our 2012 Equity Incentive Plan (2012 Plan), and in April 2012 our stockholders adopted the 2012 Plan, effective on May 17, 2012, which serves as the successor to our 2005 Stock Plan and provides for the issuance of incentive and nonstatutory stock options, restricted stock awards, stock appreciation rights, restricted stock units, performance shares and stock bonuses to qualified employees, directors and consultants. No new awards will be issued under the 2005 Stock Plan as of the effective date of the 2012 Plan. Outstanding awards under the 2005 Stock Plan continue to be subject to the terms and conditions of the 2005 Stock Plan. Shares available for grant under the 2005 Stock Plan, which were reserved but not issued or subject to outstanding awards under the 2005 Stock Plan as of the effective date, were added to the reserves of the 2012 Plan.

We have initially reserved 25,000,000 shares of our Class A common stock for issuance under our 2012 Plan. The number of shares reserved for issuance under our 2012 Plan will increase automatically on the first day of January of each of 2013 through 2022. The maximum term for stock options granted under the 2012 Plan may not exceed ten years from the date of grant. Our 2012 Plan will terminate ten years from the date our board of directors approved the plan, unless it is terminated earlier by our board of directors.

The 2005 Officers’ Stock Plan provides for up to 120,000,000 shares of incentive and nonstatutory stock options to certain of our employees or officers. The 2005 Officers’ Stock Plan will terminate ten years after its adoption unless terminated earlier by our compensation committee. Stock options become vested and exercisable at such times and under such conditions as determined by our compensation committee on the date of grant. In November 2005, we issued a nonstatutory stock option to our CEO to purchase 120,000,000 shares of our Class B common stock under the 2005 Officers’ Stock Plan. As of June 30, 2012, the option had been partially exercised in respect of 60,000,000 shares with the remainder remaining outstanding and fully vested, and no options were available for future issuance under the 2005 Officers’ Stock Plan.

The following table summarizes the stock option and RSU award activity under the Stock Plans during the six months ended June 30, 2012:

 

           Shares Subject to Options Outstanding      Outstanding RSUs  
     Shares
Available
for Grant
    Number of
Shares
    Weighted
Average
Exercise
Price
     Weighted-
Average
Remaining
Contractual
Term
     Aggregate
Intrinsic
Value(1)
     Outstanding
RSUs
    Weighted
Average
Grant
Date Fair
Value
 
     (in thousands)     (in thousands)            (in years)      (in millions)      (in thousands)        

Balance as of December 31, 2011

     52,318        258,539      $ 0.47         4.38       $ 7,360         378,772      $ 6.83   

RSUs granted

     (28,603     0                 28,603        36.04   

Stock options exercised

     0        (84,078     0.11               0     

Stock options forfeited/cancelled

     584        (584     0.62               0     

RSUs forfeited and cancelled

     4,385        0                 (4,385     14.86   

2012 Equity Incentive Plan shares authorized

     25,000                  
  

 

 

   

 

 

            

 

 

   

Balance as of June 30, 2012

     53,684        173,877      $ 0.65         4.08       $ 5,294         402,990      $ 8.81   
  

 

 

   

 

 

            

 

 

   

 

(1)

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the assessed fair value of our common stock as of December 31, 2011 and the closing market price of our common stock as of June 30, 2012.

Income Taxes
Income Taxes

Note 8.     Income Taxes

Our tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter we update our estimate of the annual effective tax rate, and if our estimated annual tax rate changes, we make a cumulative adjustment in that quarter. Our quarterly tax provision, and our quarterly estimate of our annual effective tax rate, are subject to significant volatility due to several factors, including our ability to accurately predict our pre-tax income and loss in multiple jurisdictions, including the portions of our share-based compensation that will not generate tax benefits, and the effects of acquisitions and the integration of those acquisitions. In addition, our effective tax rate can be more or less volatile based on the amount of pre-tax income. For example, the impact of non-deductible share based compensation expenses on our effective tax rate is significantly greater when our pre-tax income is lower.

Our effective tax rate has exceeded the U.S. statutory rate primarily because of losses arising outside the United States in jurisdictions where we do not receive a tax benefit and the impact of non-deductible share-based compensation. These losses were primarily due to the initial start-up costs incurred by our foreign subsidiaries to operate in certain foreign markets, including the costs incurred by those subsidiaries to license, develop, and use our intellectual property. Our effective tax rate in the future will depend on the portion of our profits earned within and outside the United States, which will also be affected by our methodologies for valuing our intellectual property and intercompany transactions.

Our effective tax rate in the three and six months ended June 30, 2012 exceeded our effective tax rate in 2011 because the amount of losses arising outside the United States in jurisdictions where we do not receive a tax benefit and the amount of non-deductible share-based compensation are proportionately larger relative to pre-tax income in 2012 than in 2011. Our effective tax rate in 2012 was also higher due to the expiration of the federal tax credit for research and development activities.

Our income tax refundable was $567 million as of June 30, 2012, which is an increase of $567 million from December 31, 2011. This balance reflects the expected refund of estimated income tax payments made in 2012 and the expected refund from income tax loss carrybacks to 2010 and 2011. Our net deferred tax assets were $396 million as of June 30, 2012, which is an increase of $336 million from December 31, 2011. This increase is primarily due to the recognition of tax benefits related to share-based compensation.

We are subject to taxation in the United States and various other state and foreign jurisdictions. The material jurisdictions in which we are subject to potential examination include the United States and Ireland. We are under examination by the Internal Revenue Service (IRS) for our 2008 and 2009 tax years. We believe that adequate amounts have been reserved for any adjustments that may ultimately result from these examinations and we do not anticipate a significant impact to our gross unrecognized tax benefits within the next 12 months related to these years. Our 2010 and 2011 tax years remain subject to examination by the IRS and all tax years starting in 2008 remain subject to examination in Ireland. We remain subject to possible examinations or are undergoing audits in various other jurisdictions that are not material to our financial statements.

 

Although the timing of the resolution, settlement, and closure of any audits is highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits could significantly change in the next 12 months. However, given the number of years remaining that are subject to examination, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits.

Geographical Information
Geographical Information

Note 9.     Geographical Information

Revenue by geography is based on the billing address of the advertiser or Platform developer. The following tables set forth revenue and long-lived assets by geographic area (in millions):

 

     Three Months Ended
June 30,
     Six Months Ended
June 30,
 
     2012      2011      2012      2011  

Revenue:

           

United States

   $ 588       $ 515       $ 1,124       $ 942   

Rest of the world (1)

     596         380         1,118         684   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   $ 1,184       $ 895       $ 2,242       $ 1,626   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

No individual country exceeded 10% of our total revenue for any period presented

 

                                                                         
     June 30, 2012      December 31, 2011  

Long-lived assets:

     

United States

   $ 1,978       $ 1,444   

Rest of the world(1)

     127         31   
  

 

 

    

 

 

 

Total long-lived assets

   $ 2,105       $ 1,475   
  

 

 

    

 

 

 

 

(1)

No individual country exceeded 10% of our total long-lived assets for any period presented

Summary of Significant Accounting Policies (Policies)

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on May 18, 2012 (Prospectus).

The condensed consolidated balance sheet as of December 31, 2011, included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP.

The condensed consolidated financial statements include the accounts of Facebook, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2012.

We have reclassified certain prior period expense amounts from marketing and sales to general and administrative within our condensed consolidated statements of operations to conform to our current period presentation. These reclassifications did not affect revenue, total costs and expenses, (loss) income from operations, or net (loss) income.

There have been no changes to our significant accounting policies described in the Prospectus that have had a material impact on our condensed consolidated financial statements and related notes.

Use of Estimates

Conformity with GAAP requires the use of estimates and judgments that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. GAAP requires us to make estimates and judgments in several areas, including, but not limited to, those related to revenue recognition, collectability of accounts receivable, contingent liabilities, fair value of share-based awards, fair value of financial instruments, fair value of acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, and income taxes. These estimates are based on management’s knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ materially from those estimates.

(Loss) Earnings per Share (Tables)
Numerators and Denominators of Basic and Diluted EPS Computations for Common Stock

The numerators and denominators of the basic and diluted EPS computations for our common stock are calculated as follows (in millions, except per share amounts):

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2012     2011      2012      2011  
     Class A     Class B     Class A      Class B      Class A      Class B      Class A      Class B  

Basic EPS:

                     

Numerator

                     

Net (loss) income

   $ (31 )   $ (126 )   $ 20      $ 220      $ 7      $ 41      $ 39      $ 432  

Less: Net income attributable to participating securities

     0        0        7         74         3         18         13         147   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net (loss) income attributable to common stockholders

   $ (31 )   $ (126 )   $ 13      $ 146      $ 4      $ 23      $ 26      $ 285  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Denominator

                     

Weighted average shares outstanding

     377       1,505       110        1,188        247        1,369         105        1,167  

Less: Shares subject to repurchase

     1        2        1         5         1         2         0         5   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Number of shares used for basic EPS computation

     376       1,503       109        1,183        246        1,367        105        1,162  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Basic EPS

   $ (0.08 )   $ (0.08 )   $ 0.12      $ 0.12      $ 0.02      $ 0.02      $ 0.25      $ 0.25  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Diluted EPS:

                     

Numerator

                     

Net (loss) income attributable to common stockholders

   $ (31 )   $ (126 )   $ 13      $ 146       $ 4      $ 23      $ 26      $ 285  

Reallocation of net income attributable to participating securities

     0        0        8         0         1         0         16         0   

Reallocation of net (loss) income as a result of conversion of Class B to Class A common stock

     (126     0        146         0         23         0         285         0   

Reallocation of net income to Class B common stock

     0        0        0         9         0         1         0         19   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net (loss) income attributable to common stockholders for diluted EPS

   $ (157 )   $ (126 )   $ 167      $ 155      $ 28      $ 24      $ 327      $ 304  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Denominator

                     

Number of shares used for basic EPS computation

     376       1,503       109        1,183        246        1,367        105        1,162  

Conversion of Class B to Class A common stock

     1,503       0       1,183         0        1,367        0        1,162        0  

Weighted average effect of dilutive securities:

                     

Employee stock options

     0        0       206        206        155        155        223         223   

RSUs

     0       0       6        6         22        22        2         2   

Shares subject to repurchase

     0       0       4         4         2        2        4         4   

Warrants

     0       0       2        2         0        0        3         3   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Number of shares used for diluted EPS computation

     1,879       1,503       1,510        1,401        1,792        1,546         1,499        1,394  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Diluted EPS

   $ (0.08 )   $ (0.08 )   $ 0.11      $ 0.11      $ 0.02      $ 0.02      $ 0.22      $ 0.22  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Property and Equipment (Tables)
Property and equipment

Property and equipment consist of the following (in millions):

 

     June 30,
2012
    December 31,
2011
 

Network equipment

   $ 1,479      $ 1,016   

Land

     34        34   

Buildings

     449        355   

Leasehold improvements

     142        120   

Computer software, office equipment and other

     88        73   

Construction in progress

     542        327   
  

 

 

   

 

 

 

Total

     2,734        1,925   

Less accumulated depreciation and amortization

     (629     (450
  

 

 

   

 

 

 

Property and equipment, net

   $ 2,105      $ 1,475   
  

 

 

   

 

 

 
Goodwill and Other Intangible Assets (Tables)

Goodwill and other intangible assets consist of the following (in millions):

 

     June 30,
2012
    December 31,
2011
 

Acquired patents

   $ 684      $ 51   

Acquired non-compete agreements

     21        18   

Acquired technology and other

     49        43   

Accumulated amortization

     (45     (32
  

 

 

   

 

 

 

Net acquired intangible assets

     709        80   

Goodwill

     100        82   
  

 

 

   

 

 

 

Goodwill and other intangible assets

   $ 809      $ 162   
  

 

 

   

 

 

 

The following table presents the aggregated estimated fair value of the assets acquired for acquisition completed during the six months ended June 30, 2012 (in millions):

 

Goodwill

   $             18   

Acquired technology and other

     6  

Acquired non-compete agreements

     3  

Deferred tax liabilities

     (3
  

 

 

 

Total

   $ 24  
  

 

 

 

Estimated amortization expense for the unamortized acquired intangible assets for the next five years and thereafter is as follows (in millions):

 

The remainder of 2012

   $ 53   

2013

     95   

2014

     89   

2015

     84   

2016

     75   

2017

     66   

Thereafter

     247   
  

 

 

 
   $ 709   
  

 

 

 
Fair Value Measurements (Tables)

Assets measured at fair value on a recurring basis are summarized below (in millions):

 

            Fair Value Measurement at
Reporting Date Using
 

Description

   June 30, 2012      Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 

Cash equivalents:

           

Money market funds

   $ 944       $ 944       $             0       $             0   

U.S. government securities

     517         517         0         0   

U.S. government agency securities

     69         69         0         0   

Marketable securities:

           

U.S. government securities

     5,557         5,557         0         0   

U.S. government agency securities

     2,533         2,533         0         0   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cash equivalents and marketable securities

   $ 9,620       $ 9,620       $ 0       $ 0   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

            Fair Value Measurement at
Reporting Date Using
 

Description

   December 31,
2011
     Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 

Cash equivalents:

           

Money market funds

   $ 892       $ 892       $             0       $             0   

U.S. government securities

     60         60         0         0   

U.S. government agency securities

     50         50         0         0   

Marketable securities:

           

U.S. government securities

     1,415         1,415         0         0   

U.S. government agency securities

     981         981         0         0   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cash equivalents and marketable securities

   $ 3,398       $ 3,398       $ 0       $ 0   
  

 

 

    

 

 

    

 

 

    

 

 

 

The following table classifies our marketable securities by contractual maturities as of June 30, 2012 (in millions):

 

     Fair Value  

Due in one year

   $ 5,369   

Due in one to two years

     2,721   
  

 

 

 
   $ 8,090   
  

 

 

 
Stockholders' Equity (Tables)
Stock Option and RSU Award Activity under Stock Plans

The following table summarizes the stock option and RSU award activity under the Stock Plans during the six months ended June 30, 2012:

 

           Shares Subject to Options Outstanding      Outstanding RSUs  
     Shares
Available
for Grant
    Number of
Shares
    Weighted
Average
Exercise
Price
     Weighted-
Average
Remaining
Contractual
Term
     Aggregate
Intrinsic
Value(1)
     Outstanding
RSUs
    Weighted
Average
Grant
Date Fair
Value
 
     (in thousands)     (in thousands)            (in years)      (in millions)      (in thousands)        

Balance as of December 31, 2011

     52,318        258,539      $ 0.47         4.38       $ 7,360         378,772      $ 6.83   

RSUs granted

     (28,603     0                 28,603        36.04   

Stock options exercised

     0        (84,078     0.11               0     

Stock options forfeited/cancelled

     584        (584     0.62               0     

RSUs forfeited and cancelled

     4,385        0                 (4,385     14.86   

2012 Equity Incentive Plan shares authorized

     25,000                  
  

 

 

   

 

 

            

 

 

   

Balance as of June 30, 2012

     53,684        173,877      $ 0.65         4.08       $ 5,294         402,990      $ 8.81   
  

 

 

   

 

 

            

 

 

   

 

(1)

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the assessed fair value of our common stock as of December 31, 2011 and the closing market price of our common stock as of June 30, 2012.

Geographical Information (Tables)

The following tables set forth revenue and long-lived assets by geographic area (in millions):

 

     Three Months Ended
June 30,
     Six Months Ended
June 30,
 
     2012      2011      2012      2011  

Revenue:

           

United States

   $ 588       $ 515       $ 1,124       $ 942   

Rest of the world (1)

     596         380         1,118         684   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   $ 1,184       $ 895       $ 2,242       $ 1,626   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

No individual country exceeded 10% of our total revenue for any period presented

                                                                         
     June 30, 2012      December 31, 2011  

Long-lived assets:

     

United States

   $ 1,978       $ 1,444   

Rest of the world(1)

     127         31   
  

 

 

    

 

 

 

Total long-lived assets

   $ 2,105       $ 1,475   
  

 

 

    

 

 

 

 

(1)

No individual country exceeded 10% of our total long-lived assets for any period presented

Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
Share data in Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Pre Twenty Eleven Restricted Stock Units
Jun. 30, 2012
Pre Twenty Eleven Restricted Stock Units
Minimum
Jun. 30, 2012
Pre Twenty Eleven Restricted Stock Units
Maximum
Jun. 30, 2012
Post-2011 RSUs
Jun. 30, 2011
Post-2011 RSUs
Jun. 30, 2012
Post-2011 RSUs
Jun. 30, 2011
Post-2011 RSUs
Jun. 30, 2012
Post-2011 RSUs
Minimum
Jun. 30, 2012
Post-2011 RSUs
Maximum
Jun. 30, 2012
Restricted Stock Units (RSUs)
Jun. 30, 2012
Restricted shares and stock options
Jun. 30, 2012
Common Class A
Dec. 31, 2011
Common Class A
Jun. 30, 2012
IPO
Common Class A
May 17, 2012
IPO
Common Class A
Jun. 30, 2012
IPO
Convertible Preferred Stock Converted into Class B Common Stock
Jun. 30, 2012
IPO
Class B Common Stock Converted into Class A Common Stock
Summary Of Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares issued, initial public offering
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
641 
117 
 
180 
 
 
Initial public offering, price per share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 38.00 
 
 
Proceeds from initial public offering, net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 6,800,000,000 
 
 
 
Underwriting discounts and commissions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
75,000,000 
 
 
 
Other offering expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6,000,000 
 
 
 
Conversion of stock into common stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
545 
336 
Future period share-based compensation expense
2,245,000,000 
 
2,245,000,000 
 
205,000,000 
 
 
1,959,000,000 
 
1,959,000,000 
 
 
 
2,164,000,000 
81,000,000 
 
 
 
 
 
 
Weighted-average period over which share-based compensation expense will be recognized
 
 
2 years 
 
2 years 
 
 
 
 
2 years 
 
 
 
 
 
 
 
 
 
 
 
Share based compensation expense
$ 1,106,000,000 
$ 64,000,000 
$ 1,209,000,000 
$ 71,000,000 
$ 986,000,000 
 
 
$ 113,000,000 
$ 58,000,000 
$ 210,000,000 
$ 58,000,000 
 
 
 
 
 
 
 
 
 
 
Restricted stock units, service period
 
 
 
 
 
 
 
 
 
 
 
4 years 
5 years 
 
 
 
 
 
 
 
 
Share based compensation, number of shares vested
 
 
 
 
273 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share based compensation, vesting period
 
 
 
 
 
Oct. 15, 2012 
Nov. 14, 2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Withholding tax rate
 
 
 
 
45.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) Earnings per Share - Additional Information (Detail) (Post-2011 RSUs)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Post-2011 RSUs
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Shares excluded from calculation diluted EPS
0.4 
8.1 
0.7 
Numerators and Denominators of Basic and Diluted EPS Computations for Common Stock (Detail) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Numerator
 
 
 
 
Net (loss) income
$ (157)
$ 240 
$ 48 
$ 471 
Less: Net income attributable to participating securities
81 
21 
160 
Net (loss) income attributable to common stockholders
(157)
159 
27 
311 
Denominator
 
 
 
 
Number of shares used for basic EPS computation
1,879 
1,292 
1,613 
1,267 
Basic EPS
$ (0.08)
$ 0.12 
$ 0.02 
$ 0.25 
Numerator
 
 
 
 
Net (loss) income attributable to common stockholders
(157)
159 
27 
311 
Denominator
 
 
 
 
Number of shares used for basic EPS computation
1,879 
1,292 
1,613 
1,267 
Number of shares used for diluted EPS computation
1,879 
1,510 
1,792 
1,499 
Diluted EPS
$ (0.08)
$ 0.11 
$ 0.02 
$ 0.22 
Common Class A
 
 
 
 
Numerator
 
 
 
 
Net (loss) income
(31)
20 
39 
Less: Net income attributable to participating securities
13 
Net (loss) income attributable to common stockholders
(31)
13 
26 
Denominator
 
 
 
 
Weighted average shares outstanding
377 
110 
247 
105 
Less: Shares subject to repurchase
Number of shares used for basic EPS computation
376 
109 
246 
105 
Basic EPS
$ (0.08)
$ 0.12 
$ 0.02 
$ 0.25 
Numerator
 
 
 
 
Net (loss) income attributable to common stockholders
(31)
13 
26 
Reallocation of net income attributable to participating securities
16 
Reallocation of net (loss) income as a result of conversion of Class B to Class A common stock
(126)
146 
23 
285 
Reallocation of net income to Class B common stock
Net (loss) income attributable to common stockholders for diluted EPS
(157)
167 
28 
327 
Denominator
 
 
 
 
Number of shares used for basic EPS computation
376 
109 
246 
105 
Conversion of Class B to Class A common stock
1,503 
1,183 
1,367 
1,162 
Shares subject to repurchase
Warrants
Number of shares used for diluted EPS computation
1,879 
1,510 
1,792 
1,499 
Diluted EPS
$ (0.08)
$ 0.11 
$ 0.02 
$ 0.22 
Common Class A |
Employee Stock Option
 
 
 
 
Denominator
 
 
 
 
Share based payment arrangements
206 
155 
223 
Common Class A |
Restricted Stock
 
 
 
 
Denominator
 
 
 
 
Share based payment arrangements
22 
Common Class B
 
 
 
 
Numerator
 
 
 
 
Net (loss) income
(126)
220 
41 
432 
Less: Net income attributable to participating securities
74 
18 
147 
Net (loss) income attributable to common stockholders
(126)
146 
23 
285 
Denominator
 
 
 
 
Weighted average shares outstanding
1,505 
1,188 
1,369 
1,167 
Less: Shares subject to repurchase
Number of shares used for basic EPS computation
1,503 
1,183 
1,367 
1,162 
Basic EPS
$ (0.08)
$ 0.12 
$ 0.02 
$ 0.25 
Numerator
 
 
 
 
Net (loss) income attributable to common stockholders
(126)
146 
23 
285 
Reallocation of net income attributable to participating securities
Reallocation of net (loss) income as a result of conversion of Class B to Class A common stock
Reallocation of net income to Class B common stock
19 
Net (loss) income attributable to common stockholders for diluted EPS
$ (126)
$ 155 
$ 24 
$ 304 
Denominator
 
 
 
 
Number of shares used for basic EPS computation
1,503 
1,183 
1,367 
1,162 
Conversion of Class B to Class A common stock
Shares subject to repurchase
Warrants
Number of shares used for diluted EPS computation
1,503 
1,401 
1,546 
1,394 
Diluted EPS
$ (0.08)
$ 0.11 
$ 0.02 
$ 0.22 
Common Class B |
Employee Stock Option
 
 
 
 
Denominator
 
 
 
 
Share based payment arrangements
206 
155 
223 
Common Class B |
Restricted Stock
 
 
 
 
Denominator
 
 
 
 
Share based payment arrangements
22 
Property and Equipment (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
$ 2,734 
$ 1,925 
Less accumulated depreciation and amortization
(629)
(450)
Property and equipment, net
2,105 
1,475 
Network Equipment
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
1,479 
1,016 
Land
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
34 
34 
Buildings
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
449 
355 
Leasehold Improvements
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
142 
120 
Computer software, office equipment and other
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
88 
73 
Construction in Progress
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
$ 542 
$ 327 
Goodwill and Other Intangible Assets (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
Acquired patents
$ 684 
$ 51 
Acquired non-compete agreements
21 
18 
Acquired technology and other
49 
43 
Accumulated amortization
(45)
(32)
Net acquired intangible assets
709 
80 
Goodwill
100 
82 
Goodwill and other intangible assets
$ 809 
$ 162 
Goodwill and Other Intangible Assets - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
 
 
Amortization expense
$ 8 
$ 5 
$ 13 
$ 10 
Business acquisitions total consideration
24 
 
24 
 
Patents
 
 
 
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
 
 
Purchased patents for cash
633 
 
633 
 
Patents |
Minimum
 
 
 
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
 
 
Estimated remaining useful lives of intangible assets acquired
 
 
3 years 
 
Patents |
Maximum
 
 
 
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
 
 
Estimated remaining useful lives of intangible assets acquired
 
 
18 years 
 
Patents |
Microsoft Corporation
 
 
 
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
 
 
Cash payment for patents acquired
 
 
550 
 
Deferred tax liability
$ 49 
 
$ 49 
 
Patents |
Microsoft Corporation |
U S
 
 
 
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
 
 
Number of patents acquired
 
 
615 
 
Patents |
Microsoft Corporation |
Foreign Tax Authority
 
 
 
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
 
 
Number of patents acquired
 
 
170 
 
Patents |
Current Period Acquisition |
Minimum
 
 
 
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
 
 
Estimated remaining useful lives of intangible assets acquired
 
 
3 years 
 
Patents |
Current Period Acquisition |
Maximum
 
 
 
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
 
 
Estimated remaining useful lives of intangible assets acquired
 
 
17 years 
 
Non-compete agreements
 
 
 
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
 
 
Estimated remaining useful lives of intangible assets acquired
 
 
2 years 
 
Average useful lives of intangible assets acquired
 
 
2 years 
 
Acquired Technology and Other
 
 
 
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
 
 
Average useful lives of intangible assets acquired
 
 
3 years 
 
Acquired Technology and Other |
Minimum
 
 
 
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
 
 
Estimated remaining useful lives of intangible assets acquired
 
 
2 years 
 
Acquired Technology and Other |
Maximum
 
 
 
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
 
 
 
Estimated remaining useful lives of intangible assets acquired
 
 
10 years 
 
Aggregated Estimated Fair Value of Assets Acquired (Detail) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2012
Goodwill and Intangible Assets Disclosure [Line Items]
 
Goodwill
$ 18 
Deferred tax liabilities
(3)
Total
24 
Acquired Technology
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
Intangible assets acquired
Non-compete agreements
 
Goodwill and Intangible Assets Disclosure [Line Items]
 
Intangible assets acquired
$ 3 
Estimated Amortization Expense for Unamortized Acquired Intangible Assets (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Expected Amortization Expense [Line Items]
 
 
The remainder of 2012
$ 53 
 
2013
95 
 
2014
89 
 
2015
84 
 
2016
75 
 
2017
66 
 
Thereafter
247 
 
Net acquired intangible assets
$ 709 
$ 80 
Assets Measured at Fair Value on Recurring Basis (Detail) (Fair Value, Measurements, Recurring, USD $)
In Millions, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Total cash equivalents and marketable securities
$ 9,620 
$ 3,398 
Money Market Funds
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
944 
892 
US Government Securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
517 
60 
Marketable Securities
5,557 
1,415 
US Government Agency Securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
69 
50 
Marketable Securities
2,533 
981 
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Total cash equivalents and marketable securities
9,620 
3,398 
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Money Market Funds
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
944 
892 
Quoted Prices in Active Markets for Identical Assets (Level 1) |
US Government Securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
517 
60 
Marketable Securities
5,557 
1,415 
Quoted Prices in Active Markets for Identical Assets (Level 1) |
US Government Agency Securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
69 
50 
Marketable Securities
2,533 
981 
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Total cash equivalents and marketable securities
Significant Other Observable Inputs (Level 2) |
Money Market Funds
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
Significant Other Observable Inputs (Level 2) |
US Government Securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
Marketable Securities
Significant Other Observable Inputs (Level 2) |
US Government Agency Securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
Marketable Securities
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Total cash equivalents and marketable securities
Significant Unobservable Inputs (Level 3) |
Money Market Funds
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
Significant Unobservable Inputs (Level 3) |
US Government Securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
Marketable Securities
Significant Unobservable Inputs (Level 3) |
US Government Agency Securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
Marketable Securities
$ 0 
$ 0 
Marketable Securities by Contractual Maturities (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2012
Schedule Of Marketable Securities [Line Items]
 
Marketable securities
$ 8,090 
Due in one year
 
Schedule Of Marketable Securities [Line Items]
 
Marketable securities
5,369 
Due in one to two years
 
Schedule Of Marketable Securities [Line Items]
 
Marketable securities
$ 2,721 
Commitments and Contingencies - Additional Information (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
1 Months Ended 3 Months Ended 6 Months Ended
Feb. 29, 2012
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Commitments and Contingencies Disclosure [Line Items]
 
 
 
 
 
Capital lease agreement period
 
 
 
3 years 
 
Operating lease expense
 
$ 50 
$ 61 
$ 101 
$ 119 
Expiration Date
2014-06-30 
 
 
 
 
Minimum number of days after borrowing to pay additional interest on drawn balances outstanding
180 days 
 
 
 
 
Minimum number of days after entering bridge facility to pay commitment fee on daily undrawn balance
90 days 
 
 
 
 
Bridge Loan
 
 
 
 
 
Commitments and Contingencies Disclosure [Line Items]
 
 
 
 
 
Credit facility, maximum borrowing capacity
3,000 
 
 
 
 
Interest payable on borrowed amounts
1.00% 
 
 
 
 
Commitment fee payable per annum on daily undrawn balance
0.10% 
 
 
 
 
Interest payable on undrawn outstanding balances
0.25% 
 
 
 
 
Revolving Credit Facility
 
 
 
 
 
Commitments and Contingencies Disclosure [Line Items]
 
 
 
 
 
Credit facility, maturity period
5 years 
 
 
 
 
Credit facility, maximum borrowing capacity
5,000 
 
 
 
 
Interest payable on borrowed amounts
1.00% 
 
 
 
 
Commitment fee payable per annum on daily undrawn balance
0.10% 
 
 
 
 
Minimum
 
 
 
 
 
Commitments and Contingencies Disclosure [Line Items]
 
 
 
 
 
Interest Rate
 
1.00% 
 
1.00% 
 
Expiration date of lease
 
 
 
2012 
 
Maximum
 
 
 
 
 
Commitments and Contingencies Disclosure [Line Items]
 
 
 
 
 
Interest Rate
 
13.00% 
 
13.00% 
 
Expiration date of lease
 
 
 
2027 
 
Instagram, Inc.
 
 
 
 
 
Commitments and Contingencies Disclosure [Line Items]
 
 
 
 
 
Shares of our common stock to acquire Instagram, Inc.
 
22,999,412 
 
22,999,412 
 
Cash to be paid to acquire Instagram, Inc.
 
300 
 
300 
 
Contingent termination fee
 
$ 200 
 
$ 200 
 
Buildings
 
 
 
 
 
Commitments and Contingencies Disclosure [Line Items]
 
 
 
 
 
Capital lease agreement period
 
 
 
15 years 
 
Stockholders' Equity - Additional Information (Detail)
6 Months Ended 6 Months Ended 1 Months Ended
Jun. 30, 2012
2012 Plan
Jun. 30, 2012
2012 Plan
Minimum
Jun. 30, 2012
2012 Plan
Maximum
Jun. 30, 2012
Common Class A
2012 Plan
Jun. 30, 2012
2005 Officer's Stock Plan
Nov. 30, 2005
2005 Officer's Stock Plan
Common Class B
Stockholders Equity Note [Line Items]
 
 
 
 
 
 
Shares reserved for issuance under 2012 plan
 
 
 
25,000,000 
 
 
Shares reserved for issuance increase date
 
Jan. 01, 2013 
Jan. 01, 2022 
 
 
 
Maximum term for stock options granted
10 years 
 
 
 
10 years 
 
Shares of incentive and nonstatutory stock options provided for issuance
 
 
 
 
120,000,000 
 
Non statutory stock option issued to CEO to purchase shares of Class B common stock
 
 
 
 
 
120,000,000 
Options partially exercised and fully vested
 
 
 
 
60,000,000 
 
Stock Option and RSU Award Activity under Stock Plans (Detail) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
6 Months Ended 12 Months Ended
Jun. 30, 2012
Dec. 31, 2011
Shares Available for Grant
 
 
Beginning Balance
52,318 
 
RSUs granted
(28,603)
 
Stock options exercised
 
Stock options forfeited/cancelled
584 
 
RSUs forfeited and cancelled
4,385 
 
2012 Equity Incentive Plan shares authorized
25,000 
 
Ending Balance
53,684 
52,318 
Number of Shares
 
 
Beginning Balance
258,539 
 
Stock options exercised
(84,078)
 
Stock options forfeited/cancelled
(584)
 
Ending Balance
173,877 
258,539 
Weighted Average Exercise Price
 
 
Beginning Balance
$ 0.47 
 
Stock options exercised
$ 0.11 
 
Stock options forfeited/cancelled
$ 0.62 
 
Ending Balance
$ 0.65 
$ 0.47 
Weighted-Average Remaining Contractual Term
 
 
Beginning Balance
4 years 29 days 
4 years 4 months 17 days 
Aggregate Intrinsic Value
 
 
Beginning Balance
$ 7,360 1
 
Ending Balance
$ 5,294 1
$ 7,360 1
Outstanding RSUs
 
 
Beginning Balance
378,772 
 
RSUs granted
28,603 
 
RSUs forfeited and cancelled
(4,385)
 
Ending Balance
402,990 
378,772 
Weighted Average Grant Date Fair Value
 
 
Beginning Balance
$ 6.83 
 
RSUs granted
$ 36.04 
 
RSUs forfeited and cancelled
$ 14.86 
 
Ending Balance
$ 8.81 
$ 6.83 
Income Taxes - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Dec. 31, 2011
Income Taxes [Line Items]
 
 
 
Income Tax refundable
$ 567 
 
$ 0 
Increase in income tax refundable
567 
 
Net deferred tax assets
396 
 
 
Increase in net deferred tax assets
$ 336 
 
 
Revenue by Geographic Area (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Revenue
$ 1,184 
$ 895 
$ 2,242 
$ 1,626 
UNITED STATES
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Revenue
588 
515 
1,124 
942 
Rest of World
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Revenue
$ 596 1
$ 380 1
$ 1,118 1
$ 684 1
Long-Lived Assets by Geographic Area (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Long-Lived Assets by Geographical Areas [Line Items]
 
 
Property and equipment
$ 2,105 
$ 1,475 
UNITED STATES
 
 
Long-Lived Assets by Geographical Areas [Line Items]
 
 
Property and equipment
1,978 
1,444 
Rest of World
 
 
Long-Lived Assets by Geographical Areas [Line Items]
 
 
Property and equipment
$ 127 1
$ 31 1