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S-1/A 1 d287954ds1a.htm AMENDMENT NO. 4 TO REGISTRATION STATEMENT ON FORM S-1

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As filed with the Securities and Exchange Commission on April 23, 2012Registration No. 333-179287

UNITED STATES

SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

Amendment No. 4 to

Form S-1

REGISTRATION STATEMENTUnder

The Securities Act of 1933

Facebook, Inc.(Exact name of Registrant as specified in its charter)

Delaware 7370 20-1665019

(State or other jurisdiction ofincorporation or organization)

(Primary Standard IndustrialClassification Code Number)

(IRS EmployerIdentification No.)

Facebook, Inc.

1601 Willow RoadMenlo Park, California 94025

(650) 308-7300(Address, including zip code, and telephone number, including area code, of Registrants principal executive offices)

David A. EbersmanChief Financial Officer

Facebook, Inc.1601 Willow Road

Menlo Park, California 94025(650) 308-7300

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Please send copies of all communi cations t o:

Gordon K. Davidson, Esq.

Jeffrey R. Vetter, Esq.James D. Evans, Esq.Fenwick & West LLP801 California Street

Mountain View, California 94041(650) 988-8500

Theodore W. Ullyot, Esq.

David W. Kling, Esq.Michael L. Johnson, Esq.

Facebook, Inc.1601 Willow Road

Menlo Park, California 94025(650) 308-7300

William H. Hinman, Jr., Esq.

Daniel N. Webb, Esq.Simpson Thacher & Bartlett LLP

2550 Hanover StreetPalo Alto, California 94304

(650) 251-5000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

Ifany of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box:

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registrationstatement for the same offering.

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for thesame offering.

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for thesame offering.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reportingcompany in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer Accelerated filer

Non-accelerated filerx (Do not check ifa smaller reporting company) Smaller reporting company

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that thisRegistration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and ExchangeCommission, acting pursuant to said Section 8(a), may determine.

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We are also currently parties to multiple other lawsuits related to our products, including patent infringement lawsuits brought by both other companies and non-practicing

entities as well as class action lawsuits brought by users and advertisers, 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 from the ordinary course of our business. Although the results of these other lawsuits, claims, government investigations,

and proceedings in which we are involved cannot be predicted with certainty, we do not believe that the final outcome of these other matters will have a material adverse effect on our

business, financial condition, or results of operations.

Regardless of the final outcome, defending lawsuits, claims, government investigations, and proceedings in which we are involved is costly and can impose a significant

burden on management and employees, we may receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no as surances that favorable final

outcomes will be obtained.

Culture and Employees

Our employees and our culture are critical to our success. We value our hacker culture, which we define as a work environment that rewards creative problem solving and

rapid decision making. We try to move fast in developing new products and then continually iterate and optimize to further improve our products. We seek employees who are

motivated by the ability to have a direct impact on how hundreds of millions of people around the world connect, discover, and express themselves.

We encourage our employees to think boldly. We also have posted the phrase this journey is 1% finished across many of our office walls, to remind employees that we

believe that we have only begun fulfilling our mission to make the world more open and connected.

We have grown rapidly, but at a rate that we believe will allow us to preserve a culture of collaboration, excellence, and moving fast. We had 1,218 full-time employees, 2,127

full-time employees, 3,200 full-time employees, and 3,539 full-time employees at the end of 2009, 2010, 2011, and the first quarter of 2012, respectively.

Facilities

As of March 31, 2012, we leased office facilities around the world totaling approximately 2.2 million s quare feet, including one million square feet for our corporate headquartersin Menlo Park, California. We have data centers in the United States, including data center facilities that we own in North Carolina and Oregon and leased data center facilities in

California and Virginia. We believe that our facilities are adequate for our current needs.

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FACEBOOK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of March 31, 2012 and for the three months ended March 31, 2011 and 2012 is unaudited)

from foreign exchange transactions were $16 million and $10 million, respectively, for the three months ended March 31, 2011 and 2012. These gains and losses were recorded as other

income (expense), net .

Property and Equipment

Property and equipment, which includes amounts recorded under capital leases, are stated at cost. Depreciation is computed using the straight-line method over the estimateduseful lives of the assets or the remaining lease term, in the case of a capital lease, whichever is shorter.

The estimated useful lives of property and equipment are described below:

Property and Equipment Useful Life

Network equipment Three to four yearsComputer software, office equipment and other Two to five years

Buildings 15 to 20 years

Leased equipment and leasehold improvements Lesser of estimated useful life or remaining lease term

Land and assets held within construction in progress are not depreciated. Construction in progress is related to the construction or development of property and equipment

that have not yet been placed in service for their intended use.

The cost of maintenance and repairs is expensed as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization

are removed from their respective accounts, and any gain or loss on such sale or disposal is reflected in income from operations.

Long-Lived Assets, Including Goodwill and Other Acquired Intangible Assets

We evaluate the recoverability of property and equipment and amortizable intangible assets for possible impairment whenever events or circumstances indicate that the

carrying amount of such assets may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows

the assets are expected to generate. If such review indicates that the carrying amount of property and equipment and intangible assets is not recoverable, the carrying amount of such

assets is reduced to fair value. In addition, we test goodwill for impairment at least annually or more frequently if events or changes in circumstances indicate that this asset may be

impaired. These tests are based on our single operating segment and reporting unit structure. No indications of impairment of goodwill were noted during the years presented.

Acquired amortizable intangible assets, which are included in goodwill and intangible assets, net, are amortized on a straight-line basis over the estimated useful lives of the

assets. The estimated remaining useful lives for intangible assets range from less than one year to 16 years.

In addition to the recoverability assessment, we routinely review the remaining estimated useful lives of property and equipment and amortizable intangible assets. If wereduce the estimated useful life assumption for any asset, the remaining unamortized balance would be amortized or depreciated over the revised estimated useful life.

Lease Obligations

We lease office space, data centers, and equipment under non-cancelable capital and operating leases with various expiration dates through 2027. Certain of the operating

lease agreements contain rent holidays, rent escalation provisions, and purchase options. Rent holidays and rent escalation provisions are considered in determining the straight-line

rent expense to be recorded over the lease term. The lease term begins on the date of

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FACEBOOK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of March 31, 2012 and for the three months ended March 31, 2011 and 2012 is unaudited)

Year EndedDecember 31, 2011

Three Months EndedMarch 31, 2012

Class A Class B Class A Class B

Denominator:

Number of shares used for pro forma basic EPS computation 110 1,920 117 2,009

Conversion of Class B to Class A common s tock

1,920 2,009 Weighted average effect of dilutive securities:

Employee stock options 204 204 169 169

RSUs 93 93 64 64

Shares s ubject to repurchase 3 3 2 2Warrants 2 2

Number of shares used for pro forma diluted EPS computation 2,332 2,222 2,361 2,244

Pro forma diluted EPS $ 0.43 $ 0.43 $ 0.09 $ 0.09

Note 3. Property and Equipment

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

December 31, March 31,2012 2010 2011

(unaudited)

Network equipment $ 478 $1,016 $ 1,382

Land 29 34 34Buildings 355 373

Leasehold improvements 58 120 148Computer software, office equipment and other 61 73 76

Construction in progress 194 327 379

Total 820 1,925 2,392

Less accumulated depreciation and amortization (246) (450) (537)

Property and equipment, net $ 574 $1,475 $ 1,855

Property and equipment at December 31, 2010 and 2011 and March 31, 2012 includes $298 million, $881 million, and $979 million, respectively, acquired under capital lease

agreements. Accumulated amortization under capital leases totaled $85 million, $210 million, and $280 million at December 31, 2010 and 2011, and March 31, 2012, respectively.

Amortization of assets under capital leases is included in depreciation and amortization expense.

Construction in progress includes costs primarily related to the construction and network equipment of data centers in Oregon and North Carolina in the United States and inSweden, and our new corporate headquarters in Menlo Park, California. Interest capitalized during the years presented was not material.

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FACEBOOK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of March 31, 2012 and for the three months ended March 31, 2011 and 2012 is unaudited)

Fair Value Measurement atReporting Date Using

Description December 31,

2010

QuotedPrices in

Active

MarketsforIdentical

Assets(Level 1)

SignificantOtherObservable

Inputs(Level 2)

SignificantUnobservable

Inputs(Level 3)

Cash equivalents:

Money market funds $ 1,450 $ 1,450 $ $

Total cash equivalents $ 1,450 $ 1,450 $ $

Gross unrealized gains or losses for cash equivalent and marketable securities as of December 31, 2010 and 2011 and March 31, 2012 were not material.

The following table class ifies our marketable securities by contractual maturities as of December 31, 2011 and March 31, 2012 (in millions):

December 31,2011

March 31,2012

(unaudited)

Due in one year $ 1,964 $ 1,818

Due in one to five years 432 810

Total $ 2,396 $ 2,628

Note 7. Commitments and Contingencies

Leases

We 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 2% to 13%. The leases are secured by the underlying leased buildings, leasehold improvements, 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 or escalatingrent payment provisions, and we recognize rent expense under such arrangements on a straight-line basis.

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FACEBOOK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of March 31, 2012 and for the three months ended March 31, 2011 and 2012 is unaudited)

The following is a s chedule, by years, of the future minimum lease payments required under non-cancelable capital and operating leases as of December 31, 2011 (in millions):

CapitalLeases

OperatingLeases

2012 $ 322 $ 180

2013

228 1302014 109 113

2015 17 102

2016 11 95

Thereafter 130 325

Total minimum lease payments 817 $ 945

Less amount representing interest and taxes (140)

Less current portion of the present value of minimum lease payments (279)

Capital lease obligations, net of current portion $ 398

Operating lease expense totaled $69 million, $178 million, and $219 million for the years ended December 31, 2009, 2010, and 2011, respectively. We also have $500 million of

non-cancelable contractual commitments as of December 31, 2011, primarily related to equipment and supplies for our data center operations, and to a lesser extent, construction of

our data center s ites. The majority of these commitments are due in 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 certain patents that Yahoo claims

relate to advertising, s ocial networking, privacy, cus tomization, and messaging. Yahoo is seeking unspecified damages, a damage multiplier for alleged willful infringement,

and an injunction. We intend to vigorously defend this lawsuit, and on April 3, 2012, we filed our answer with respect to this complaint and asserted counterclaims that Yahoosproducts infringe ten of our patents. This litigation is still in its early s tages and the final outcome, including our liability, if any, with respect to Yahoos claims, is uncertain. At

present, we are unable to estimate a reasonably poss ible range of loss, if any, that may result from this matter. If an unfavorable outcome were to occur in this litigation, the impact

could be material to our business, financial condition, or results of operations.

We are also party to various legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, as of December 31, 2011 and

March 31, 2012, there was not at least a reasonable possibility that we had incurred a material loss, or a material loss in excess of a recorded accrual, with respect to such losscontingencies.

Indemnifications

In the normal course of business, to facilitate transactions of services and products, we have agreed to indemnify certain parties with respect to certain matters. We have

agreed to hold certain parties harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made by third

parties. In addition, we have also agreed to indemnify certain investors with respect to

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