FACEBOOK INC, 10-Q filed on 7/25/2013
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2013
Jul. 23, 2013
Class A Common Stock
Jul. 23, 2013
Class B Common Stock
Document Information
 
 
 
Document Type
10-Q 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Jun. 30, 2013 
 
 
Document Fiscal Year Focus
2013 
 
 
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
 
1,817,515,157 
617,804,812 
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Current assets:
 
 
Cash and cash equivalents
$ 3,001 
$ 2,384 
Marketable securities
7,251 
7,242 
Accounts receivable, net of allowances for doubtful accounts of $26 and $22 as of June 30, 2013 and December 31, 2012, respectively
775 
719 
Income tax refundable
7 
451 
Prepaid expenses and other current assets
387 
471 
Total current assets
11,421 
11,267 
Property and equipment, net
2,577 
2,391 
Goodwill and intangible assets, net
1,631 
1,388 
Other assets
95 
57 
Total assets
15,724 
15,103 
Current liabilities:
 
 
Accounts payable
55 
65 
Platform partners payable
172 
169 
Accrued expenses and other current liabilities
505 
423 
Deferred revenue and deposits
32 
30 
Current portion of capital lease obligations
316 
365 
Total current liabilities
1,080 
1,052 
Capital lease obligations, less current portion
351 
491 
Long-term debt
1,500 
1,500 
Other liabilities
444 
305 
Total liabilities
3,375 
3,348 
Stockholders' equity:
 
 
Common stock, $0.000006 par value; 5,000 million Class A shares authorized, 1,813 million and 1,671 million shares issued and outstanding, including 6 million and 2 million outstanding shares subject to repurchase as of June 30, 2013 and December 31, 2012, respectively; 4,141 million Class B shares authorized, 618 million and 701 million shares issued and outstanding, including 9 million and 11 million outstanding shares subject to repurchase as of June 30, 2013 and December 31, 2012, respectively
0 
0 
Additional paid-in capital
10,167 
10,094 
Accumulated other comprehensive (loss) income
(29)
2 
Retained earnings
2,211 
1,659 
Total stockholders' equity
12,349 
11,755 
Total liabilities and stockholders' equity
$ 15,724 
$ 15,103 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Current assets:
 
 
Accounts receivable, allowances for doubtful accounts
$ 26 
$ 22 
Stockholders' equity:
 
 
Common stock, par value (in dollars per share)
$ 0.000006 
$ 0.000006 
Class A Common Stock
 
 
Stockholders' equity:
 
 
Common stock, shares authorized
5,000,000,000 
5,000,000,000 
Common stock, shares issued
1,813,000,000 
1,671,000,000 
Common stock, shares outstanding
1,813,000,000 
1,671,000,000 
Common stock, outstanding shares subject to repurchase
6,000,000 
2,000,000 
Class B Common Stock
 
 
Stockholders' equity:
 
 
Common stock, shares authorized
4,141,000,000 
4,141,000,000 
Common stock, shares issued
618,000,000 
701,000,000 
Common stock, shares outstanding
618,000,000 
701,000,000 
Common stock, outstanding shares subject to repurchase
9,000,000 
11,000,000 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Revenue
$ 1,813 
$ 1,184 
$ 3,271 
$ 2,242 
Costs and expenses:
 
 
 
 
Cost of revenue
465 
367 
878 
644 
Research and development
344 
705 
637 
858 
Marketing and sales
269 
392 
472 
535 
General and administrative
173 
463 
349 
567 
Total costs and expenses
1,251 
1,927 
2,336 
2,604 
Income (loss) from operations
562 
(743)
935 
(362)
Interest and other (expense) income, net:
 
 
 
 
Interest expense
(14)
(10)
(29)
(24)
Other (expense) income, net
(3)
(12)
(8)
3 
Income (loss) before (provision for) benefit from income taxes
545 
(765)
898 
(383)
(Provision for) benefit from income taxes
(212)
608 
(346)
431 
Net income (loss)
333 
(157)
552 
48 
Less: Net income attributable to participating securities
2 
0 
3 
21 
Net income (loss) attributable to Class A and Class B common stockholders
331 
(157)
549 
27 
Earnings (loss) per share attributable to Class A and Class B common stockholders:
 
 
 
 
Basic (in dollars per share)
$ 0.14 
$ (0.08)
$ 0.23 
$ 0.02 
Diluted (in dollars per share)
$ 0.13 
$ (0.08)
$ 0.22 
$ 0.02 
Weighted average shares used to compute earnings (loss) per share attributable to Class A and Class B common stockholders:
 
 
 
 
Number of shares used for basic EPS computation (in shares)
2,407 
1,879 
2,397 
1,613 
Number of shares used for diluted EPS computation (in shares)
2,502 
1,879 
2,499 
1,792 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
224 
1,106 
394 
1,209 
Cost of revenue
 
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
11 
66 
19 
71 
Research and development
 
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
151 
545 
268 
605 
Marketing and sales
 
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
33 
232 
57 
251 
General and administrative
 
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
$ 29 
$ 263 
$ 50 
$ 282 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Statement of Other Comprehensive Income [Abstract]
 
 
 
 
Net income (loss)
$ 333 
$ (157)
$ 552 
$ 48 
Other comprehensive income (loss):
 
 
 
 
Change in foreign currency translation adjustment
(13)
(21)
(31)
(22)
Unrealized loss on available-for-sale investments, net of tax
(3)
(1)
(3)
(1)
Unrealized gain on derivative, net of tax
2 
0 
3 
0 
Comprehensive income (loss)
$ 319 
$ (179)
$ 521 
$ 25 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Cash flows from operating activities
 
 
Net income (loss)
$ 552 
$ 48 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
463 
249 
Lease abandonment expense
65 
3 
Loss on disposal or write-off of equipment
20 
4 
Share-based compensation
394 
1,209 
Deferred income taxes
19 
(374)
Tax benefit from share-based award activity
148 
381 
Excess tax benefit from share-based award activity
(155)
(381)
Changes in assets and liabilities:
 
 
Accounts receivable
(62)
(40)
Income tax refundable
444 
(567)
Prepaid expenses and other current assets
(16)
(7)
Other assets
(44)
(9)
Accounts payable
2 
(8)
Platform partners payable
3 
(15)
Accrued expenses and other current liabilities
9 
186 
Deferred revenue and deposits
2 
(5)
Other liabilities
197 
7 
Net cash provided by operating activities
2,041 
681 
Cash flows from investing activities
 
 
Purchases of property and equipment
(595)
(866)
Purchases of marketable securities
(3,460)
(6,957)
Sales of marketable securities
1,275 
128 
Maturities of marketable securities
2,174 
1,106 
Investments in non-marketable equity securities
(1)
(3)
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets
(221)
(575)
Change in restricted cash and deposits
4 
(3)
Net cash used in investing activities
(824)
(7,170)
Cash flows from financing activities
 
 
Net proceeds from issuance of common stock
0 
6,761 
Taxes paid related to net share settlement of equity awards
(558)
0 
Proceeds from exercise of stock options
10 
9 
Proceeds from sale and lease-back transactions
0 
82 
Principal payments on capital lease obligations
(200)
(143)
Excess tax benefit from share-based award activity
155 
381 
Net cash (used in) provided by financing activities
(593)
7,090 
Effect of exchange rate changes on cash and cash equivalents
(7)
(15)
Net increase in cash and cash equivalents
617 
586 
Cash and cash equivalents at beginning of period
2,384 
1,512 
Cash and cash equivalents at end of period
3,001 
2,098 
Cash paid during the period for:
 
 
Interest
26 
19 
Income taxes
18 
182 
Cash received during the period for:
 
 
Income taxes
419 
0 
Non-cash investing and financing activities:
 
 
Fair value of shares issued related to acquisitions of businesses and other assets
77 
25 
Net Change in Accounts Payable Accrued Expenses And Other Current Liabilities
 
 
Non-cash investing and financing activities:
 
 
Property and equipment expenditures incurred but not yet paid
(5)
(59)
Capital Lease Obligations
 
 
Non-cash investing and financing activities:
 
 
Property and equipment expenditures incurred but not yet paid
$ 11 
$ 90 
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
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 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 Annual Report on Form 10-K for the fiscal year ended December 31, 2012.
The condensed consolidated balance sheet as of December 31, 2012 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 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, 2013.
There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012 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 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.
Reclassifications
We have reclassified certain prior period amounts within our condensed consolidated statements of cash flows to conform to our current year presentation.
Recently Issued and Adopted Accounting Pronouncement 

Comprehensive Income

In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU 2013-02) which is effective prospectively for public companies for reporting periods beginning after December 15, 2012. This new accounting standard improves the reporting of reclassifications out of accumulated other comprehensive income (AOCI) by requiring an entity to report the effect of significant reclassifications out of AOCI on the respective line items in net income if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income. For other amounts that are not required under GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. We adopted this new guidance on January 1, 2013 and the adoption did not have a material effect on our condensed consolidated financial statements.
Acquisitions
Acquisitions
Acquisitions
In the six months ended June 30, 2013, we completed several business acquisitions for total consideration of $246 million, consisting of approximately $170 million in cash and 3 million vested shares of our Class A common stock which are not conditioned upon continuous employment. In addition, we issued 6 million shares of Class A common stock in connection with such acquisitions, which are conditioned upon continuous employment. These shares have been excluded from purchase consideration and will be recognized over the required service period as share-based compensation expense.
These acquisitions were not material to our condensed consolidated financial statements, either individually or in the aggregate. Pro forma results of operations related to our acquisitions during the six months ended June 30, 2013 have not been presented because they are not material to our condensed consolidated statements of operations, either individually or in the aggregate.
The following table summarizes the allocation of estimated fair values of the net assets acquired during the six months ended June 30, 2013, including related useful lives, where applicable:
 
in millions
 
Useful lives (in years)
Amortizable intangible assets:
 
 
 
Acquired technology
$
54

 
3 - 7
Tradename and other
26

 
2 - 10
Deferred tax liabilities
(9
)
 
 
Net assets acquired
$
71

 
 
Goodwill
175

 
 
Total fair value consideration
$
246

 
 

Goodwill generated from all business acquisitions completed during the six months ended June 30, 2013 is primarily attributable to expected synergies from future growth and potential monetization opportunities and $66 million of this goodwill is deductible for tax purposes.
In the six months ended June 30, 2013, we also acquired $57 million of patents and other intangible assets. Patents acquired during 2013 have estimated useful lives ranging from seven to 15 years from the dates of acquisition.
Earnings (Loss) per Share
Earnings (Loss) per Share
Earnings (Loss) per Share
We compute earnings (loss) 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 our initial public offering (IPO) in May 2012, 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, 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 income (loss) 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 (loss) 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 (loss) attributable to common stockholders by the weighted-average number of fully diluted common shares outstanding.

Restricted stock units (RSUs) granted prior to January 1, 2011 vest upon the satisfaction of both a service condition and a liquidity condition. The liquidity condition was 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, subsequent to the completion of our IPO in May 2012, these RSUs were included in our basic and diluted EPS calculation. RSUs granted on or after January 1, 2011 (Post-2011 RSUs) are not subject to a liquidity condition in order to vest and are thus included in the calculation of diluted EPS for the three and six months ended June 30, 2013 and 2012.
We have excluded 50 million and 23 million Post-2011 RSUs from the EPS calculation for the three and six months ended June 30, 2013, respectively, and 8 million Post-2011 RSUs for the six months ended June 30, 2012 because the impact would be anti-dilutive. No dilutive securities have been included in the diluted EPS calculation for the three months ended June 30, 2012 due to our reporting of 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 were calculated as follows (in millions, except per share amounts): 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2013
 
2012
 
2013
 
2012
 
Class A
 
Class B
 
Class A
 
Class B
 
Class A
 
Class B
 
Class A
 
Class B
Basic EPS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$
245

 
$
88

 
$
(31
)
 
$
(126
)
 
$
400

 
$
152

 
$
7

 
$
41

Less: Net income attributable to participating securities
2

 
—

 
—

 
—

 
2

 
1

 
3

 
18

Net income (loss) attributable to common stockholders
$
243

 
$
88

 
$
(31
)
 
$
(126
)
 
$
398

 
$
151

 
$
4

 
$
23

Denominator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
1,779

 
644

 
377

 
1,505

 
1,744

 
668

 
247

 
1,369

Less: Shares subject to repurchase
7

 
9

 
1

 
2

 
5

 
10

 
1

 
2

Number of shares used for basic EPS computation
1,772

 
635

 
376

 
1,503

 
1,739

 
658

 
246

 
1,367

Basic EPS
$
0.14

 
$
0.14

 
$
(0.08
)
 
$
(0.08
)
 
$
0.23

 
$
0.23

 
$
0.02

 
$
0.02

Diluted EPS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to common stockholders
$
243

 
$
88

 
$
(31
)
 
$
(126
)
 
$
398

 
$
151

 
$
4

 
$
23

Reallocation of net income attributable to participating securities
2

 
—

 
—

 
—

 
3

 
—

 
1

 
—

Reallocation of net income (loss) as a result of conversion of Class B to Class A common stock
88

 
—

 
(126
)
 
—

 
151

 
—

 
23

 
—

Reallocation of net income to Class B common stock
—

 
10

 
—

 
—

 
—

 
17

 
—

 
1

Net income (loss) attributable to common stockholders for diluted EPS
$
333

 
$
98

 
$
(157
)
 
$
(126
)
 
$
552

 
$
168

 
$
28

 
$
24

Denominator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares used for basic EPS computation
1,772

 
635

 
376

 
1,503

 
1,739

 
658

 
246

 
1,367

Conversion of Class B to Class A common stock
635

 
—

 
1,503

 
—

 
658

 
—

 
1,367

 
—

Weighted average effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee stock options
73

 
73

 
—

 
—

 
75

 
75

 
155

 
155

RSUs
19

 
19

 
—

 
—

 
22

 
22

 
22

 
22

Shares subject to repurchase
3

 
3

 
—

 
—

 
5

 
5

 
2

 
2

Number of shares used for diluted EPS computation
2,502

 
730

 
1,879

 
1,503

 
2,499

 
760

 
1,792

 
1,546

Diluted EPS
$
0.13

 
$
0.13

 
$
(0.08
)
 
$
(0.08
)
 
$
0.22

 
$
0.22

 
$
0.02

 
$
0.02

Cash and Cash Equivalents, and Marketable Securities
Cash and Cash Equivalents, and Marketable Securities
Cash, Cash Equivalents and Marketable Securities
The following table sets forth the cash, cash equivalents and marketable securities for the periods presented (in millions):
 
June 30, 2013
 
December 31, 2012
Cash and cash equivalents:
 
 
 
Cash
$
1,020

 
$
1,513

Cash equivalents:

 

Money market funds
1,981

 
871

Total cash and cash equivalents
3,001

 
2,384

Marketable securities:
 
 
 
U.S. government securities
4,801

 
5,165

U.S. government agency securities
2,450

 
2,077

Total marketable securities
7,251

 
7,242

Total cash, cash equivalents and marketable securities
$
10,252

 
$
9,626


The gross unrealized gains or losses on our marketable securities as of June 30, 2013 and December 31, 2012 were not significant. In addition, there were no securities in a continuous loss position for 12 months or longer as of June 30, 2013 and December 31, 2012.
The following table classifies our marketable securities by contractual maturities (in millions):  
 
June 30, 2013
Due in one year
$
3,244

Due in one to two years
4,007

Total
$
7,251

Fair Value Measurements
Fair Value Measurements
Fair Value Measurements
Assets and liabilities measured at fair value on a recurring basis are summarized below (in millions): 
 
 
 
Fair Value Measurement at
Reporting Date Using
Description
June 30, 2013
 
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
$
1,981

 
$
1,981

 
$
—

 
$
—

Marketable securities:
 
 
 
 
 
 
 
U.S. government securities
4,801

 
4,801

 
—

 
—

U.S. government agency securities
2,450

 
2,450

 
—

 
—

Total cash equivalents and marketable securities
$
9,232

 
$
9,232

 
$
—

 
$
—

 
 
 
 
 
 
 
 
Other assets:
 
 
 
 
 
 
 
Derivative financial instrument
$
1

 
$
—

 
$
1

 
$
—

 
 
 
 
 
 
 
 
Other current liabilities:
 
 
 
 
 
 
 
Contingent consideration liability
$
4

 
$
—

 
$
—

 
$
4

 
 
 
Fair Value Measurement at
Reporting Date Using
Description
December 31, 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
$
871

 
$
871

 
$
—

 
$
—

Marketable securities:
 
 
 
 
 
 
 
U.S. government securities
5,165

 
5,165

 
—

 
—

U.S. government agency securities
2,077

 
2,077

 
—

 
—

Total cash equivalents and marketable securities
$
8,113

 
$
8,113

 
$
—

 
$
—

 
 
 
 
 
 
 
 
Other current liabilities:
 
 
 
 
 
 
 
Contingent consideration liability
$
4

 
$
—

 
$
—

 
$
4

 
 
 
 
 
 
 
 
Other liabilities:
 
 
 
 
 
 
 
Derivative financial instrument
$
4

 
$
—

 
$
4

 
$
—


Our Level 2 derivative financial instrument represents our interest rate swap agreement which is valued based on a valuation model using significant inputs derived from or corroborated by observable market data.
We estimate the fair value of our Level 3 contingent consideration liability based on the probability assessment of an earn-out criteria. In developing these estimates, we consider factors not observed in the market and thus this represents a Level 3 measurement. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect our own assumptions in measuring fair value. Our fair value estimate of this liability was $6 million at the date of acquisition. Changes in the fair value of the contingent consideration liability subsequent to the acquisition date, such as changes in the probability assessment and our stock prices, are recognized in earnings in the period when the change in the estimated fair value occurs.
Property and Equipment
Property and Equipment
Property and Equipment
Property and equipment consisted of the following (in millions): 
 
June 30, 2013
 
December 31, 2012
Network equipment
$
2,117

 
$
1,912

Land
41

 
36

Buildings
966

 
594

Leasehold improvements
194

 
194

Computer software, office equipment and other
98

 
93

Construction in progress
175

 
444

Total
3,591

 
3,273

Less: Accumulated depreciation
(1,014
)
 
(882
)
Property and equipment, net
$
2,577

 
$
2,391


Construction in progress includes costs primarily related to the construction of data centers and equipment located in our data centers in Oregon, North Carolina and Sweden. Interest capitalized during the periods presented was not material.
Goodwill and Intangible Assets
Goodwill and Intangible Assets
Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for the six months ended June 30, 2013 are as follows (in millions): 
Balance as of December 31, 2012
$
587

Goodwill acquired
175

Balance as of June 30, 2013
$
762

Intangible assets consisted of the following (in millions):
 
 
 
June 30, 2013
 
December 31, 2012
 
Useful lives from date of acquisitions (in years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Amortizable intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquired patents
3 - 18
 
$
738

 
$
(97
)
 
$
641

 
$
684

 
$
(53
)
 
$
631

Acquired technology
2 - 10
 
187

 
(46
)
 
141

 
133

 
(32
)
 
101

Tradename and other
2 - 10
 
123

 
(36
)
 
87

 
94

 
(25
)
 
69

Total
 
 
$
1,048

 
$
(179
)
 
$
869

 
$
911

 
$
(110
)
 
$
801


Amortization expense of intangible assets was $36 million and $69 million for the three and six months ended June 30, 2013, respectively, and $8 million and $13 million for the three and six months ended June 30, 2012, respectively.
As of June 30, 2013, estimated amortization expense for the unamortized acquired intangible assets for the next five years and thereafter is as follows (in millions):
The remainder of 2013
$
75

2014
141

2015
131

2016
118

2017
102

2018
70

Thereafter
232

 
$
869

Long-term Debt
Long-term Debt
Long-term Debt
We have an unsecured five-year revolving credit facility that allows us to borrow up to $5 billion at London Interbank Offered Rate (LIBOR) plus 1.0%, as well as an annual commitment fee of 0.10% on the daily undrawn balance. As of June 30, 2013, no amounts were drawn down and we were in compliance with the covenants under this credit facility.
We also have a three-year unsecured term loan facility (Amended and Restated Term Loan) expiring in October 2015 that allows us to borrow up to $1.5 billion with interest payable on the borrowed amounts set at LIBOR plus 1.0%, as well as an annual commitment fee of 0.10% on the daily undrawn balance of the facility. We fully drew down the $1.5 billion which will become due and payable in full on October 25, 2015. We have the option to repay this facility at any time prior to such date. As of June 30, 2013, we were in compliance with the covenants in the Amended and Restated Term Loan.
In connection with the draw down of the Amended and Restated Term Loan, we entered into a $1.5 billion interest rate swap agreement that converts the one-month LIBOR rate on the corresponding notional amount of debt to a fixed interest rate of 1.46% to hedge our exposure to interest rate fluctuation. This interest rate swap has a maturity date of October 25, 2015. We have designated the interest rate swap agreement as a qualifying hedging instrument and accounted for it as a cash flow hedge. We periodically assess the effectiveness of our hedged transaction. The interest rate swap agreement is currently our only derivative instrument and is not used for trading purposes.
For the six months ended June 30, 2013, the change in fair value of this interest rate swap agreement, net of tax was $3 million and is recognized in other comprehensive income. As of June 30, 2013, the fair value of $1 million was included in other assets on our condensed consolidated balance sheet. For the three and six months ended June 30, 2013, the amount in AOCI reclassified to interest expense was not significant. There were no realized gains or losses on this derivative other than those related to the periodic settlement of a portion of the interest rate swap.

We do not expect the amount of gains and losses in AOCI that will be reclassified to earnings during the next 12 months to be material.
Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
Leases
We entered into various capital lease arrangements to obtain property and equipment for our operations. Additionally, on occasion we purchased property and equipment for which we subsequently obtained capital financing under sale-leaseback transactions. These agreements are typically for three years, except for a building lease which is for 15 years, with interest rates ranging from 1% to 13%. The leases are secured by the underlying leased buildings and equipment. We 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 2013 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.
During the three and six months ended June 30, 2013, we recognized lease abandonment expense of $57 million and $65 million, respectively, primarily due to exiting certain leased data centers resulting from the migration of operations to our own data centers. Lease abandonment expense for the same periods in 2012 was not material.
Operating lease expense was $32 million and $73 million for the three and six months ended June 30, 2013, respectively, and $50 million and $101 million for the three and six months ended June 30, 2012, respectively.
Contingencies
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 intend to continue to vigorously defend them. On October 4, 2012, on our motion, the vast majority of the cases in the United States, along with multiple cases filed against The NASDAQ OMX Group, Inc. and The Nasdaq Stock Market LLC (collectively referred to herein as NASDAQ) alleging technical and other trading-related errors by NASDAQ in connection with our IPO, were ordered centralized for coordinated or consolidated pre-trial proceedings in the United States District Court for the Southern District of New York. On February 13, 2013, the court granted our motion to dismiss four derivative actions against our directors and certain of our officers with leave to amend. In September 2013, the court is scheduled to hear argument on our motion to dismiss the consolidated securities class action, as well as our motion to dismiss, and the plaintiffs' motion to remand to state court, certain other derivative actions. In addition, the events surrounding our IPO have become the subject of various government inquiries, and we are cooperating with those inquiries.
We are also currently parties to multiple other lawsuits related to our products, including patent infringement lawsuits as well as class action lawsuits brought by users and marketers, and we may in the future be subject to additional lawsuits and disputes. We are also involved in other claims, government investigations, and proceedings arising in the ordinary course of our 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.
Stockholders' Equity
Stockholders' Equity
Stockholders' Equity
Share-based Compensation Plans
We maintain three share-based employee compensation plans: the 2012 Equity Incentive Plan (2012 Plan), the 2005 Stock Plan and the 2005 Officers' Stock Plan (collectively, Stock Plans). Our 2012 Plan 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, RSUs, performance shares and stock bonuses to qualified employees, directors and consultants. 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 of approval unless it is terminated earlier by our compensation committee. We have initially reserved 25,000,000 shares of our Class A common stock for issuance under our 2012 Plan, which amount increases on the first day of January of each of 2013 through 2022 based on a formula or as determined by the board of directors. Our board of directors elected not to increase the number of shares reserved for issuance in 2013. In addition, 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 of our IPO, were added to the reserves of the 2012 Plan and shares that are withheld in connection with the net settlement of RSUs are also added to the reserves of the 2012 Plan.
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, 2013, the option had been partially exercised and the remaining option to purchase 60,000,000 shares is outstanding and fully vested. No options were available for future issuance under the 2005 Officers' Stock Plan.
The following table summarizes the stock option activity under the Stock Plans during the six months ended June 30, 2013: 
 
Shares Subject to Options Outstanding
 
Number of
Shares
 
Weighted
Average
Exercise
Price
 
Weighted-
Average
Remaining
Contractual
Term
 
Aggregate
Intrinsic
Value(1)
 
(in thousands)
 
 
 
(in years)
 
(in millions)
Balance as of December 31, 2012
122,821

 
$
0.85

 
3.79
 
$
3,166

Stock options exercised
(21,419
)
 
0.52

 
 
 
 
Balance as of June 30, 2013
101,402

 
$
0.92

 
3.25
 
$
2,427

Stock options vested and expected to vest as of June 30, 2013
101,374

 
$
0.92

 
3.25
 
$
2,427

Stock options exercisable as of June 30, 2013
94,613

 
$
0.36

 
3.00
 
$
2,318

(1)
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the closing price of our Class A common stock of $24.88 on June 30, 2013.
The aggregate intrinsic value of the options exercised was $269 million and $580 million for the three and six months ended June 30, 2013, respectively, and $2.35 billion and $2.98 billion for the three and six months ended June 30, 2012, respectively.
The following table summarizes the activities for our unvested RSUs for the six months ended June 30, 2013:
 
Unvested RSUs
 
Number of Shares
 
Weighted Average Grant Date Fair Value
 
(in thousands)
 
 
Unvested at December 31, 2012
113,044

 
$
21.38

Granted
45,127

 
27.47

Vested
(29,650
)
 
16.05

Forfeited
(6,389
)
 
24.23

Unvested at June 30, 2013
122,132

 
$
24.78


As of June 30, 2013, there was $3.06 billion of unrecognized share-based compensation expense, of which $2.71 billion is related to RSUs and $347 million is related to restricted shares and stock options. This unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately three years.
Income Taxes
Income Taxes
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 income (loss) before provision for income taxes 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 income before provision for income taxes. For example, the effect of non-deductible share based compensation expense on our effective tax rate is significantly greater when our income before provision for income taxes is lower.
Our effective tax rate has exceeded the U.S. statutory rate primarily because of the effect of non-deductible share-based compensation and losses arising outside the United States in jurisdictions where we do not receive a tax benefit. 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.
For the six months ended June 30, 2013, the effect of the non-deductible share-based compensation expense and losses arising outside the United States in jurisdictions where we do not receive a tax benefit was largely offset by the recognition of a non-recurring tax benefit that we recorded in the first quarter of 2013 related to the reinstatement of the federal tax credit for research and development activities applicable to the year ended December 31, 2012.
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, 2009 and 2010 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 2011 and subsequent 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.
Our balances of gross unrecognized tax benefits were $382 million and $164 million as of June 30, 2013 and December 31, 2012, respectively. If the remaining balance of gross unrecognized tax benefits as of June 30, 2013 is realized in a future period, this would result in a tax benefit of $287 million within our provision of income taxes at such time. Our existing tax positions will continue to generate an increase in liabilities in future periods for unrecognized tax benefits. 
Although the timing of the resolution, settlement, and closure of any audit 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
Geographical Information
Revenue by geography is based on the billing address of the marketer 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,
 
2013
 
2012
 
2013
 
2012
Revenue:
 
 
 
 
 
 
 
United States
$
818

 
$
588

 
$
1,498

 
$
1,124

Rest of the world (1)
995

 
596

 
1,773

 
1,118

Total revenue
$
1,813

 
$
1,184

 
$
3,271

 
$
2,242

 
(1)
No individual country, other than disclosed above, exceeded 10% of our total revenue for any period presented
 
June 30,
2013
 
December 31,
2012
Long-lived assets:
 
 
 
United States
$
2,182

 
$
2,110

Sweden
328

 
220

Rest of the world (1)
67

 
61

Total long-lived assets
$
2,577

 
$
2,391

 
(1)
No individual country, other than disclosed above, exceeded 10% of our total long-lived assets for any period presented
Summary of Significant Accounting Policies (Policies)
Basis of Presentation 
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 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 Annual Report on Form 10-K for the fiscal year ended December 31, 2012.
The condensed consolidated balance sheet as of December 31, 2012 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 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, 2013.
There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012 that have had a material impact on our condensed consolidated financial statements and related notes.
Use of Estimates 
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 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.
Reclassification 
Reclassifications
We have reclassified certain prior period amounts within our condensed consolidated statements of cash flows to conform to our current year presentation.
Recently Issued and Adopted Accounting Pronouncement 
Recently Issued and Adopted Accounting Pronouncement 

Comprehensive Income

In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU 2013-02) which is effective prospectively for public companies for reporting periods beginning after December 15, 2012. This new accounting standard improves the reporting of reclassifications out of accumulated other comprehensive income (AOCI) by requiring an entity to report the effect of significant reclassifications out of AOCI on the respective line items in net income if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income. For other amounts that are not required under GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. We adopted this new guidance on January 1, 2013 and the adoption did not have a material effect on our condensed consolidated financial statements.
Acquisitions (Tables)
Allocation of Estimated Fair Value of Assets Acquired and Liabilities Assumed
The following table summarizes the allocation of estimated fair values of the net assets acquired during the six months ended June 30, 2013, including related useful lives, where applicable:
 
in millions
 
Useful lives (in years)
Amortizable intangible assets:
 
 
 
Acquired technology
$
54

 
3 - 7
Tradename and other
26

 
2 - 10
Deferred tax liabilities
(9
)
 
 
Net assets acquired
$
71

 
 
Goodwill
175

 
 
Total fair value consideration
$
246

 
 
Earnings (Loss) 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 were calculated as follows (in millions, except per share amounts): 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2013
 
2012
 
2013
 
2012
 
Class A
 
Class B
 
Class A
 
Class B
 
Class A
 
Class B
 
Class A
 
Class B
Basic EPS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$
245

 
$
88

 
$
(31
)
 
$
(126
)
 
$
400

 
$
152

 
$
7

 
$
41

Less: Net income attributable to participating securities
2

 
—

 
—

 
—

 
2

 
1

 
3

 
18

Net income (loss) attributable to common stockholders
$
243

 
$
88

 
$
(31
)
 
$
(126
)
 
$
398

 
$
151

 
$
4

 
$
23

Denominator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
1,779

 
644

 
377

 
1,505

 
1,744

 
668

 
247

 
1,369

Less: Shares subject to repurchase
7

 
9

 
1

 
2

 
5

 
10

 
1

 
2

Number of shares used for basic EPS computation
1,772

 
635

 
376

 
1,503

 
1,739

 
658

 
246

 
1,367

Basic EPS
$
0.14

 
$
0.14

 
$
(0.08
)
 
$
(0.08
)
 
$
0.23

 
$
0.23

 
$
0.02

 
$
0.02

Diluted EPS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to common stockholders
$
243

 
$
88

 
$
(31
)
 
$
(126
)
 
$
398

 
$
151

 
$
4

 
$
23

Reallocation of net income attributable to participating securities
2

 
—

 
—

 
—

 
3

 
—

 
1

 
—

Reallocation of net income (loss) as a result of conversion of Class B to Class A common stock
88

 
—

 
(126
)
 
—

 
151

 
—

 
23

 
—

Reallocation of net income to Class B common stock
—

 
10

 
—

 
—

 
—

 
17

 
—

 
1

Net income (loss) attributable to common stockholders for diluted EPS
$
333

 
$
98

 
$
(157
)
 
$
(126
)
 
$
552

 
$
168

 
$
28

 
$
24

Denominator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares used for basic EPS computation
1,772

 
635

 
376

 
1,503

 
1,739

 
658

 
246

 
1,367

Conversion of Class B to Class A common stock
635

 
—

 
1,503

 
—

 
658

 
—

 
1,367

 
—

Weighted average effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee stock options
73

 
73

 
—

 
—

 
75

 
75

 
155

 
155

RSUs
19

 
19

 
—

 
—

 
22

 
22

 
22

 
22

Shares subject to repurchase
3

 
3

 
—

 
—

 
5

 
5

 
2

 
2

Number of shares used for diluted EPS computation
2,502

 
730

 
1,879

 
1,503

 
2,499

 
760

 
1,792

 
1,546

Diluted EPS
$
0.13

 
$
0.13

 
$
(0.08
)
 
$
(0.08
)
 
$
0.22

 
$
0.22

 
$
0.02

 
$
0.02

Cash and Cash Equivalents, and Marketable Securities (Tables)
Cash, Cash Equivalents and Marketable Securities 
The following table sets forth the cash, cash equivalents and marketable securities for the periods presented (in millions):
 
June 30, 2013
 
December 31, 2012
Cash and cash equivalents:
 
 
 
Cash
$
1,020

 
$
1,513

Cash equivalents:

 

Money market funds
1,981

 
871

Total cash and cash equivalents
3,001

 
2,384

Marketable securities:
 
 
 
U.S. government securities
4,801

 
5,165

U.S. government agency securities
2,450

 
2,077

Total marketable securities
7,251

 
7,242

Total cash, cash equivalents and marketable securities
$
10,252

 
$
9,626

Marketable Securities by Contractual Maturities 
The following table classifies our marketable securities by contractual maturities (in millions):  
 
June 30, 2013
Due in one year
$
3,244

Due in one to two years
4,007

Total
$
7,251

Fair Value Measurements (Tables)
Assets Measured at Fair Value on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis are summarized below (in millions): 
 
 
 
Fair Value Measurement at
Reporting Date Using
Description
June 30, 2013
 
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
$
1,981

 
$
1,981

 
$
—

 
$
—

Marketable securities:
 
 
 
 
 
 
 
U.S. government securities
4,801

 
4,801

 
—

 
—

U.S. government agency securities
2,450

 
2,450

 
—

 
—

Total cash equivalents and marketable securities
$
9,232

 
$
9,232

 
$
—

 
$
—

 
 
 
 
 
 
 
 
Other assets:
 
 
 
 
 
 
 
Derivative financial instrument
$
1

 
$
—

 
$
1

 
$
—

 
 
 
 
 
 
 
 
Other current liabilities:
 
 
 
 
 
 
 
Contingent consideration liability
$
4

 
$
—

 
$
—

 
$
4

 
 
 
Fair Value Measurement at
Reporting Date Using
Description
December 31, 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
$
871

 
$
871

 
$
—

 
$
—

Marketable securities:
 
 
 
 
 
 
 
U.S. government securities
5,165

 
5,165

 
—

 
—

U.S. government agency securities
2,077

 
2,077

 
—

 
—

Total cash equivalents and marketable securities
$
8,113

 
$
8,113

 
$
—

 
$
—

 
 
 
 
 
 
 
 
Other current liabilities:
 
 
 
 
 
 
 
Contingent consideration liability
$
4

 
$
—

 
$
—

 
$
4

 
 
 
 
 
 
 
 
Other liabilities:
 
 
 
 
 
 
 
Derivative financial instrument
$
4

 
$
—

 
$
4

 
$
—

Property and Equipment (Tables)
Property and equipment
Property and equipment consisted of the following (in millions): 
 
June 30, 2013
 
December 31, 2012
Network equipment
$
2,117

 
$
1,912

Land
41

 
36

Buildings
966

 
594

Leasehold improvements
194

 
194

Computer software, office equipment and other
98

 
93

Construction in progress
175

 
444

Total
3,591

 
3,273

Less: Accumulated depreciation
(1,014
)
 
(882
)
Property and equipment, net
$
2,577

 
$
2,391

Goodwill and Intangible Assets (Tables)
Changes in Carrying Amount of Goodwill 
The changes in the carrying amount of goodwill for the six months ended June 30, 2013 are as follows (in millions): 
Balance as of December 31, 2012
$
587

Goodwill acquired
175

Balance as of June 30, 2013
$
762

Intangible Assets 
Intangible assets consisted of the following (in millions):
 
 
 
June 30, 2013
 
December 31, 2012
 
Useful lives from date of acquisitions (in years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Amortizable intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquired patents
3 - 18
 
$
738

 
$
(97
)
 
$
641

 
$
684

 
$
(53
)
 
$
631

Acquired technology
2 - 10
 
187

 
(46
)
 
141

 
133

 
(32
)
 
101

Tradename and other
2 - 10
 
123

 
(36
)
 
87

 
94

 
(25
)
 
69

Total
 
 
$
1,048

 
$
(179
)
 
$
869

 
$
911

 
$
(110
)
 
$
801

Estimated Amortization Expense for Unamortized Acquired Intangible Assets 
As of June 30, 2013, estimated amortization expense for the unamortized acquired intangible assets for the next five years and thereafter is as follows (in millions):
The remainder of 2013
$
75

2014
141

2015
131

2016
118

2017
102

2018
70

Thereafter
232

 
$
869

Stockholders' Equity (Tables)
Stock Option Activity under Stock Plans 
The following table summarizes the stock option activity under the Stock Plans during the six months ended June 30, 2013: 
 
Shares Subject to Options Outstanding
 
Number of
Shares
 
Weighted
Average
Exercise
Price
 
Weighted-
Average
Remaining
Contractual
Term
 
Aggregate
Intrinsic
Value(1)
 
(in thousands)
 
 
 
(in years)
 
(in millions)
Balance as of December 31, 2012
122,821

 
$
0.85

 
3.79
 
$
3,166

Stock options exercised
(21,419
)
 
0.52

 
 
 
 
Balance as of June 30, 2013
101,402

 
$
0.92

 
3.25
 
$
2,427

Stock options vested and expected to vest as of June 30, 2013
101,374

 
$
0.92

 
3.25
 
$
2,427

Stock options exercisable as of June 30, 2013
94,613

 
$
0.36

 
3.00
 
$
2,318

(1)
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the closing price of our Class A common stock of $24.88 on June 30, 2013.
Restricted Stock Units Award Activity 
The following table summarizes the activities for our unvested RSUs for the six months ended June 30, 2013:
 
Unvested RSUs
 
Number of Shares
 
Weighted Average Grant Date Fair Value
 
(in thousands)
 
 
Unvested at December 31, 2012
113,044

 
$
21.38

Granted
45,127

 
27.47

Vested
(29,650
)
 
16.05

Forfeited
(6,389
)
 
24.23

Unvested at June 30, 2013
122,132

 
$
24.78

Geographical Information (Tables)
Revenue by Geographic Area 
Revenue by geography is based on the billing address of the marketer 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,
 
2013
 
2012
 
2013
 
2012
Revenue:
 
 
 
 
 
 
 
United States
$
818

 
$
588

 
$
1,498

 
$
1,124

Rest of the world (1)
995

 
596

 
1,773

 
1,118

Total revenue
$
1,813

 
$
1,184

 
$
3,271

 
$
2,242

 
(1)
No individual country, other than disclosed above, exceeded 10% of our total revenue for any period presented
Property and Equipment, Net by Geographic Area 
 
June 30,
2013
 
December 31,
2012
Long-lived assets:
 
 
 
United States
$
2,182

 
$
2,110

Sweden
328

 
220

Rest of the world (1)
67

 
61

Total long-lived assets
$
2,577

 
$
2,391

 
(1)
No individual country, other than disclosed above, exceeded 10% of our total long-lived assets for any period presented
Acquisitions (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2013
Business Acquisition
 
Purchase price of acquisition
$ 246 
Cash paid for business acquisition
170 
Number of shares issued
3 
Number of shares issued, conditioned upon continuous employment
6 
Allocation of estimated fair value of assets acquired and liabilities assumed
 
Deferred tax liabilities
(9)
Net assets acquired
71 
Goodwill
175 
Total fair value considerations
246 
Goodwill tax deductible amount
66 
Acquired technology
 
Allocation of estimated fair value of assets acquired and liabilities assumed
 
Amortizable intangible assets
54 
Acquired technology |
Minimum
 
Allocation of estimated fair value of assets acquired and liabilities assumed
 
Useful lives from date of acquisitions
2 years 
Acquired technology |
Maximum
 
Allocation of estimated fair value of assets acquired and liabilities assumed
 
Useful lives from date of acquisitions
10 years 
Acquired technology |
Current period acquisition |
Minimum
 
Allocation of estimated fair value of assets acquired and liabilities assumed
 
Useful lives from date of acquisitions
3 years 
Acquired technology |
Current period acquisition |
Maximum
 
Allocation of estimated fair value of assets acquired and liabilities assumed
 
Useful lives from date of acquisitions
7 years 
Tradename and other
 
Allocation of estimated fair value of assets acquired and liabilities assumed
 
Amortizable intangible assets
26 
Tradename and other |
Minimum
 
Allocation of estimated fair value of assets acquired and liabilities assumed
 
Useful lives from date of acquisitions
2 years 
Tradename and other |
Maximum
 
Allocation of estimated fair value of assets acquired and liabilities assumed
 
Useful lives from date of acquisitions
10 years 
Tradename and other |
Current period acquisition |
Minimum
 
Allocation of estimated fair value of assets acquired and liabilities assumed
 
Useful lives from date of acquisitions
2 years 
Tradename and other |
Current period acquisition |
Maximum
 
Allocation of estimated fair value of assets acquired and liabilities assumed
 
Useful lives from date of acquisitions
10 years 
Patents |
Minimum
 
Allocation of estimated fair value of assets acquired and liabilities assumed
 
Useful lives from date of acquisitions
3 years 
Patents |
Maximum
 
Allocation of estimated fair value of assets acquired and liabilities assumed
 
Useful lives from date of acquisitions
18 years 
Patents |
Current period acquisition |
Minimum
 
Allocation of estimated fair value of assets acquired and liabilities assumed
 
Useful lives from date of acquisitions
7 years 
Patents |
Current period acquisition |
Maximum
 
Allocation of estimated fair value of assets acquired and liabilities assumed
 
Useful lives from date of acquisitions
15 years 
Patents and Other Intangible Assets
 
Allocation of estimated fair value of assets acquired and liabilities assumed
 
Amount of acquired patents and other intangible assets
$ 57 
Earnings (Loss) per Share (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Numerator
 
 
 
 
Net income (loss)
$ 333 
$ (157)
$ 552 
$ 48 
Less: Net income attributable to participating securities
2 
0 
3 
21 
Net income (loss) attributable to common stockholders
331 
(157)
549 
27 
Denominator
 
 
 
 
Number of shares used for basic EPS computation (in shares)
2,407 
1,879 
2,397 
1,613 
Basic EPS (in dollars per share)
$ 0.14 
$ (0.08)
$ 0.23 
$ 0.02 
Numerator
 
 
 
 
Net income (loss) attributable to common stockholders
331 
(157)
549 
27 
Denominator
 
 
 
 
Number of shares used for basic EPS computation (in shares)
2,407 
1,879 
2,397 
1,613 
Number of shares used for diluted EPS computation (in shares)
2,502 
1,879 
2,499 
1,792 
Diluted EPS (in dollars per share)
$ 0.13 
$ (0.08)
$ 0.22 
$ 0.02 
Class A Common Stock
 
 
 
 
Numerator
 
 
 
 
Net income (loss)
245 
(31)
400 
7 
Less: Net income attributable to participating securities
2 
0 
2 
3 
Net income (loss) attributable to common stockholders
243 
(31)
398 
4 
Denominator
 
 
 
 
Weighted average shares outstanding (in shares)
1,779 
377 
1,744 
247 
Less: Shares subject to repurchase (in shares)
7 
1 
5 
1 
Number of shares used for basic EPS computation (in shares)
1,772 
376 
1,739 
246 
Basic EPS (in dollars per share)
$ 0.14 
$ (0.08)
$ 0.23 
$ 0.02 
Numerator
 
 
 
 
Net income (loss) attributable to common stockholders
243 
(31)
398 
4 
Reallocation of net income attributable to participating securities
2 
0 
3 
1 
Reallocation of net income (loss) as a result of conversion of Class B to Class A common stock
88 
(126)
151 
23 
Reallocation of net income to Class B common stock
0 
0 
0 
0 
Net income (loss) attributable to common stockholders for diluted EPS
333 
(157)
552 
28 
Denominator
 
 
 
 
Number of shares used for basic EPS computation (in shares)
1,772 
376 
1,739 
246 
Conversion of Class B to Class A common stock (in shares)
635 
1,503 
658 
1,367 
Shares subject to repurchase (in shares)
3 
0 
5 
2 
Number of shares used for diluted EPS computation (in shares)
2,502 
1,879 
2,499 
1,792 
Diluted EPS (in dollars per share)
$ 0.13 
$ (0.08)
$ 0.22 
$ 0.02 
Class A Common Stock |
Restricted Stock Units (RSUs)
 
 
 
 
Denominator
 
 
 
 
Share based payment arrangements (in shares)
19 
0 
22 
22 
Class A Common Stock |
Employee Stock Option
 
 
 
 
Denominator
 
 
 
 
Share based payment arrangements (in shares)
73 
0 
75 
155 
Class B Common Stock
 
 
 
 
Numerator
 
 
 
 
Net income (loss)
88 
(126)
152 
41 
Less: Net income attributable to participating securities
0 
0 
1 
18 
Net income (loss) attributable to common stockholders
88 
(126)
151 
23 
Denominator
 
 
 
 
Weighted average shares outstanding (in shares)
644 
1,505 
668 
1,369 
Less: Shares subject to repurchase (in shares)
9 
2 
10 
2 
Number of shares used for basic EPS computation (in shares)
635 
1,503 
658 
1,367 
Basic EPS (in dollars per share)
$ 0.14 
$ (0.08)
$ 0.23 
$ 0.02 
Numerator
 
 
 
 
Net income (loss) attributable to common stockholders
88 
(126)
151 
23 
Reallocation of net income attributable to participating securities
0 
0 
0 
0 
Reallocation of net income (loss) as a result of conversion of Class B to Class A common stock
0 
0 
0 
0 
Reallocation of net income to Class B common stock
10 
0 
17 
1 
Net income (loss) attributable to common stockholders for diluted EPS
$ 98 
$ (126)
$ 168 
$ 24 
Denominator
 
 
 
 
Number of shares used for basic EPS computation (in shares)
635 
1,503 
658 
1,367 
Conversion of Class B to Class A common stock (in shares)
0 
0 
0 
0 
Shares subject to repurchase (in shares)
3 
0 
5 
2 
Number of shares used for diluted EPS computation (in shares)
730 
1,503 
760 
1,546 
Diluted EPS (in dollars per share)
$ 0.13 
$ (0.08)
$ 0.22 
$ 0.02 
Class B Common Stock |
Restricted Stock Units (RSUs)
 
 
 
 
Denominator
 
 
 
 
Share based payment arrangements (in shares)
19 
0 
22 
22 
Class B Common Stock |
Employee Stock Option
 
 
 
 
Denominator
 
 
 
 
Share based payment arrangements (in shares)
73 
0 
75 
155 
Restricted Stock Units (RSUs)
 
 
 
 
Earnings Per Share, Basic, by Common Class, Including Two Class Method
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount
50 
0 
23 
8 
Cash and Cash Equivalents, and Marketable Securities (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Jun. 30, 2012
Dec. 31, 2011
Cash, Cash Equivalents, and Marketable Securities
 
 
 
 
Cash
$ 1,020 
$ 1,513 
 
 
Cash equivalents:
 
 
 
 
Total cash and cash equivalents
3,001 
2,384 
2,098 
1,512 
Marketable securities:
 
 
 
 
Total marketable securities
7,251 
7,242 
 
 
Total cash, cash equivalents and marketable securities
10,252 
9,626 
 
 
Cash Equivalents
 
 
 
 
Cash equivalents:
 
 
 
 
Money market funds
1,981 
871 
 
 
Marketable Securities
 
 
 
 
Marketable securities:
 
 
 
 
U.S. government securities
4,801 
5,165 
 
 
U.S. government agency securities
$ 2,450 
$ 2,077 
 
 
Cash, Cash Equivalents, and Marketable Securities - Contractual Maturities of Debt Securities (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Cash and Cash Equivalents, and Marketable Securities [Abstract]
 
 
Due in one year
$ 3,244 
 
Due in one to two years
4,007 
 
Marketable securities
$ 7,251 
$ 7,242 
Fair Value Measurements (Details) (Fair Value, Measurements, Recurring, USD $)
In Millions, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
May 31, 2012
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Total cash equivalents and marketable securities
$ 9,232 
$ 8,113 
 
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Money Market Funds
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
1,981 
871 
 
Quoted Prices in Active Markets for Identical Assets (Level 1) |
US Government Securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
4,801 
5,165 
 
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
 
 
 
Marketable securities
2,450 
2,077 
 
Significant Other Observable Inputs (Level 2)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Total cash equivalents and marketable securities
0 
0 
 
Derivative asset
1 
 
 
Derivative liability
 
4 
 
Significant Other Observable Inputs (Level 2) |
Money Market Funds
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
0 
0 
 
Significant Other Observable Inputs (Level 2) |
US Government Securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
0 
0 
 
Significant Other Observable Inputs (Level 2) |
US Government Agency Securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
0 
0 
 
Significant Unobservable Inputs (Level 3)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Total cash equivalents and marketable securities
0 
0 
 
Contingent consideration liability
4 
4 
6 
Significant Unobservable Inputs (Level 3) |
Money Market Funds
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
0 
0 
 
Significant Unobservable Inputs (Level 3) |
US Government Securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
0 
0 
 
Significant Unobservable Inputs (Level 3) |
US Government Agency Securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
0 
0 
 
Estimate of Fair Value, Fair Value Disclosure
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Total cash equivalents and marketable securities
9,232 
8,113 
 
Contingent consideration liability
4 
4 
 
Derivative asset
1 
 
 
Derivative liability
 
4 
 
Estimate of Fair Value, Fair Value Disclosure |
Money Market Funds
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
1,981 
871 
 
Estimate of Fair Value, Fair Value Disclosure |
US Government Securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
4,801 
5,165 
 
Estimate of Fair Value, Fair Value Disclosure |
US Government Agency Securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
$ 2,450 
$ 2,077 
 
Property and Equipment (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Property, Plant and Equipment
 
 
Property and equipment, gross
$ 3,591 
$ 3,273 
Less: accumulated depreciation
(1,014)
(882)
Property and equipment, net
2,577 
2,391 
Network equipment
 
 
Property, Plant and Equipment
 
 
Property and equipment, gross
2,117 
1,912 
Land
 
 
Property, Plant and Equipment
 
 
Property and equipment, gross
41 
36 
Buildings
 
 
Property, Plant and Equipment
 
 
Property and equipment, gross
966 
594 
Leasehold improvements
 
 
Property, Plant and Equipment
 
 
Property and equipment, gross
194 
194 
Computer software, office equipment and other
 
 
Property, Plant and Equipment
 
 
Property and equipment, gross
98 
93 
Construction in progress
 
 
Property, Plant and Equipment
 
 
Property and equipment, gross
$ 175 
$ 444 
Goodwill and Intangible Assets (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Dec. 31, 2012
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Gross Carrying Amount
$ 1,048 
 
$ 1,048 
 
$ 911 
Accumulated Amortization
(179)
 
(179)
 
(110)
Net Carrying Amount
869 
 
869 
 
801 
Amortization expense
36 
8 
69 
13 
 
Goodwill
 
 
 
 
 
Goodwill beginning
 
 
587 
 
 
Goodwill acquired
 
 
175 
 
 
Goodwill ending
762 
 
762 
 
 
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
 
 
 
 
 
The remainder of 2013
75 
 
75 
 
 
2014
141 
 
141 
 
 
2015
131 
 
131 
 
 
2016
118 
 
118 
 
 
2017
102 
 
102 
 
 
2018
70 
 
70 
 
 
Thereafter
232 
 
232 
 
 
Net Carrying Amount
869 
 
869 
 
801 
Acquired patents
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Gross Carrying Amount
738 
 
738 
 
684 
Accumulated Amortization
(97)
 
(97)
 
(53)
Net Carrying Amount
641 
 
641 
 
631 
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
 
 
 
 
 
Net Carrying Amount
641 
 
641 
 
631 
Acquired technology
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Gross Carrying Amount
187 
 
187 
 
133 
Accumulated Amortization
(46)
 
(46)
 
(32)
Net Carrying Amount
141 
 
141 
 
101 
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
 
 
 
 
 
Net Carrying Amount
141 
 
141 
 
101 
Tradename and other
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Gross Carrying Amount
123 
 
123 
 
94 
Accumulated Amortization
(36)
 
(36)
 
(25)
Net Carrying Amount
87 
 
87 
 
69 
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
 
 
 
 
 
Net Carrying Amount
$ 87 
 
$ 87 
 
$ 69 
Minimum |
Acquired patents
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Useful lives from date of acquisitions
 
 
3 years 
 
 
Minimum |
Acquired technology
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Useful lives from date of acquisitions
 
 
2 years 
 
 
Minimum |
Tradename and other
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Useful lives from date of acquisitions
 
 
2 years 
 
 
Maximum |
Acquired patents
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Useful lives from date of acquisitions
 
 
18 years 
 
 
Maximum |
Acquired technology
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Useful lives from date of acquisitions
 
 
10 years 
 
 
Maximum |
Tradename and other
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Useful lives from date of acquisitions
 
 
10 years 
 
 
Long-term Debt - Borrowings (Details) (USD $)
6 Months Ended 1 Months Ended
Jun. 30, 2013
Dec. 31, 2012
Jun. 30, 2013
Revolving Credit Facility
Unsecured Five Year Revolving Credit Facility 2012
Oct. 25, 2012
Unsecured debt
Amended and Restated Term Loan
Debt Instrument
 
 
 
 
Line of credit maturity period
 
 
5 years 
 
Line of credit facility, maximum borrowing capacity
 
 
$ 5,000,000,000 
 
Debt instrument, interest rate during period
 
 
London Interbank Offered Rate (LIBOR) 
LIBOR 
Basis spread on variable rate
 
 
1.00% 
1.00% 
Line of credit facility, unused capacity, commitment fee percentage
 
 
0.10% 
 
Line of credit facility, amount outstanding
 
 
0 
 
Term loan facility, term period
 
 
 
3 years 
Debt instrument, face amount
 
 
 
1,500,000,000 
Debt instrument, unused capacity, commitment fee percentage
 
 
 
0.10% 
Long-term debt
$ 1,500,000,000 
$ 1,500,000,000 
 
$ 1,500,000,000 
Long-term Debt - Derivative (Details) (USD $)
3 Months Ended 6 Months Ended 1 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Oct. 25, 2012
Interest Rate Swap
Oct. 25, 2012
Amended and Restated Term Loan
Interest Rate Swap
Cash Flow Hedging
Jun. 30, 2013
Significant Other Observable Inputs (Level 2)
Fair Value, Measurements, Recurring
Derivative
 
 
 
 
 
 
 
Notional amount of interest rate derivatives
 
 
 
 
 
$ 1,500,000,000 
 
Derivative, description of variable rate basis
 
 
 
 
one-month LIBOR 
 
 
Derivative, fixed interest rate
 
 
 
 
 
1.46% 
 
Unrealized gain on derivative, net of tax
2,000,000 
0 
3,000,000 
0 
 
 
 
Derivative asset
 
 
 
 
 
 
$ 1,000,000 
Commitments and Contingencies (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Leases [Abstract]
 
 
 
 
Capital lease agreement period
 
 
3 years 
 
Lease abandonment expense
$ 57 
 
$ 65 
$ 3 
Operating lease expense
$ 32 
$ 50 
$ 73 
$ 101 
Minimum
 
 
 
 
Leases [Abstract]
 
 
 
 
Interest rate
1.00% 
 
1.00% 
 
Expiration date of lease
 
 
2013 
 
Maximum
 
 
 
 
Leases [Abstract]
 
 
 
 
Interest rate
13.00% 
 
13.00% 
 
Expiration date of lease
 
 
2027 
 
Buildings
 
 
 
 
Leases [Abstract]
 
 
 
 
Capital lease agreement period
 
 
15 years 
 
Stockholders' Equity - Share-based Compensation Plans (Detail)
6 Months Ended 6 Months Ended 1 Months Ended
Jun. 30, 2013
plans
Jun. 30, 2013
2012 Plan
May 31, 2012
2012 Plan
Jun. 30, 2013
2012 Plan
Minimum
Jun. 30, 2013
2012 Plan
Maximum
Nov. 30, 2005
2005 Officer's Stock Plan
Jun. 30, 2013
2005 Officer's Stock Plan
Share-based Compensation Arrangement by Share-based Payment Award
 
 
 
 
 
 
 
Share-based employee compensation plans, number
3 
 
 
 
 
 
 
Share-based compensation arrangement by share-based payment award, expiration period
 
10 years 
 
 
 
 
 
Share-based compensation arrangement by share-based payment award, expiration period for plan
 
10 years 
 
 
 
 
 
2012 equity incentive plan shares authorized
 
 
25,000,000 
 
 
 
 
Shares reserved for issuance increase date range
 
 
 
Jan. 01, 2013 
Jan. 01, 2022 
 
 
Non statutory stock option issued to CEO to purchase shares of Class B common stock
 
 
 
 
 
120,000,000 
 
Options exercisable and fully vested
 
 
 
 
 
 
60,000,000 
Stockholders' Equity - Stock Option Activity (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
6 Months Ended 12 Months Ended
Jun. 30, 2013
Dec. 31, 2012
Aggregate Intrinsic Value
 
 
Common stock, closing share price
$ 24.88 
 
Stock Option
 
 
Number of Shares
 
 
Beginning balance
122,821 
 
Stock options exercised
(21,419)
 
Ending balance
101,402 
122,821 
Stock options vested and expected to vest as of period end
101,374 
 
Stock options exercisable as of period end
94,613 
 
Weighted Average Exercise Price
 
 
Beginning Balance (in dollars per share)
$ 0.85 
 
Stock options exercised (in dollars per share)
$ 0.52 
 
Ending Balance (in dollars per share
$ 0.92 
$ 0.85 
Stock options vested and expected to vest as of period end (in dollars per share)
$ 0.92 
 
Stock options exercisable as of period end (in dollars per share)
$ 0.36 
 
Weighted- Average Remaining Contractual Term
 
 
Weighted- Average Remaining Contractual Term
3 years 3 months 1 day 
3 years 9 months 15 days 
Stock options vested and expected to vest as of period end
3 years 3 months 1 day 
 
Stock options exercisable as of period end
3 years 
 
Aggregate Intrinsic Value
 
 
Aggregate Intrinsic Value
$ 2,427 1
$ 3,166 1
Stock options vested and expected to vest as of period end
2,427 1
 
Stock options exercisable as of period end
$ 2,318 1
 
Stockholders' Equity - Stock Options Additional Disclosures (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Equity [Abstract]
 
 
 
 
Aggregate intrinsic value of the options exercised
$ 269 
$ 2,350 
$ 580 
$ 2,980 
Stockholders' Equity - Restricted Stock Units (Details) (Restricted Stock Units (RSUs), USD $)
In Thousands, except Per Share data, unless otherwise specified
6 Months Ended
Jun. 30, 2013
Restricted Stock Units (RSUs)
 
Outstanding RSUs
 
Non-vested at beginning of period (in shares)
113,044 
Granted (in shares)
45,127 
Vested (in shares)
(29,650)
Forfeited (in shares)
(6,389)
Non-vested at end of period (in shares)
122,132 
Weighted Average Grant Date Fair Value
 
Non-vested at beginning of period
$ 21.38 
Granted
$ 27.47 
Vested
$ 16.05 
Forfeited
$ 24.23 
Non-vested at end of period
$ 24.78 
Stockholders' Equity - Additional Award Disclosures (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award
 
Future period share-based compensation expense
$ 3,060 
Future period share-based compensation expense period of recognition
3 years 
Restricted shares and stock options
 
Share-based Compensation Arrangement by Share-based Payment Award
 
Future period share-based compensation expense
347 
Restricted Stock Units (RSUs)
 
Share-based Compensation Arrangement by Share-based Payment Award
 
Future period share-based compensation expense
$ 2,710 
Income Taxes (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Income Tax Disclosure [Abstract]
 
 
Unrecognized tax benefits
$ 382 
$ 164 
Unrecognized tax benefits that would impact effective tax rate
$ 287 
 
Geographical Information - Revenue (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Revenue by Geographical Area
 
 
 
 
Revenue
$ 1,813 
$ 1,184 
$ 3,271 
$ 2,242 
United States
 
 
 
 
Revenue by Geographical Area
 
 
 
 
Revenue
818 
588 
1,498 
1,124 
Rest of World
 
 
 
 
Revenue by Geographical Area
 
 
 
 
Revenue
$ 995 1
$ 596 1
$ 1,773 1
$ 1,118 1
Geographical Information - Long-Lived Assets (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Long-Lived Assets by Geographical Area
 
 
Property and equipment, net
$ 2,577 
$ 2,391 
United States
 
 
Long-Lived Assets by Geographical Area
 
 
Property and equipment, net
2,182 
2,110 
Sweden
 
 
Long-Lived Assets by Geographical Area
 
 
Property and equipment, net
328 
220 
Rest of the World
 
 
Long-Lived Assets by Geographical Area
 
 
Property and equipment, net
$ 67 1
$ 61 1