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Foreign Currency
Generally the functional currency of our international subsidiaries is the local currency. We translate the
financial statements of these subsidiaries to U.S. dollars using month-end rates of exchange for assets and
liabilities, and average rates of exchange for revenue, costs, and expenses. Translation gains and losses are
recorded in accumulated other comprehensive income (loss) as a component of stockholders' equity. Net losses
resulting from foreign exchange transactions were $9 million, $29 million and $1 million for the years ended
December 31, 2012, 2011 and 2010, respectively. These losses were recorded as other income (expense), net on
our consolidated statements of income.
Credit Risk and Concentration
Financial instruments owned by the company that are potentially subject to concentrations of credit risk
consist primarily of cash, cash equivalents, restricted cash, marketable securities, accounts receivable, and
derivative instruments. Cash equivalents consist of short-term money market funds and U.S. government and
U.S. government agency securities, which are deposited with reputable financial institutions. Marketable
securities consist of investments in U.S. government and U.S. government agency securities. Our investment
policy limits investment instruments to U.S. government and U.S. government agency securities with the main
objective of preserving capital and maintaining liquidity.
Accounts receivable are typically unsecured and are derived from revenue earned from customers across
different industries and countries. We generated 51%, 56%, and 62% of our revenue for the years ended
December 31, 2012, 2011, and 2010, respectively, from marketers and Platform developers based in the United
States, with the majority of revenue outside of the United States coming from customers located in western
Europe, Canada, Australia, and Brazil.
We perform ongoing credit evaluations of our customers, and generally do not require collateral. We
maintain an allowance for estimated credit losses. During the years ended December 31, 2012, 2011, and 2010,
our bad debt expenses were $9 million, $8 million, and $9 million, respectively. In the event that accounts
receivable collection cycles deteriorate, our operating results and financial position could be adversely affected.
Revenue from one customer, Zynga, represented 12% of total revenue for the year ended December 31,
2011. Revenue from Zynga consisted of payments processing fees related to their sale of virtual goods and from
direct advertising purchased by Zynga. No customer represented 10% or more of total revenue during the years
ended December 31, 2012 and 2010.
Segments
Our chief operating decision-maker is our Chief Executive Officer who reviews financial information
presented on a consolidated basis. There are no segment managers who are held accountable by the chief
operating decision-maker, or anyone else, for operations, operating results, and planning for levels or
components below the consolidated unit level. Accordingly, we have determined that we have a single reporting
segment and operating unit structure.
Recently Issued and Adopted Accounting Pronouncement
Comprehensive Income
In May 2011, the FASB issued guidance that changed the requirement for presenting "Comprehensive
Income" in the consolidated financial statements. The update requires an entity to present the components of
other comprehensive income either in a single continuous statement of comprehensive income or in two separate
but consecutive statements. The update is effective for fiscal years, and interim periods within those years,
beginning after December 15, 2011 and should be applied retrospectively. We adopted this new guidance on
January 1, 2012.
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