GOOGLE INC. - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - October 17, 2013

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Exhibit 99.2
Google Inc.
CONSOLIDATED BALANCE SHEETS
(In millions, except share and par value amounts which are reflected in thousands,
and par value per share amounts)
 

As of
December 31,
2012
 
As of
September 30,
2013


 
(unaudited)
Assets

 

Current assets:

 

Cash and cash equivalents
$
14,778

 
$
15,242

Marketable securities
33,310

 
41,281

Total cash, cash equivalents, and marketable securities (including securities loaned of $3,160 and $5,103)
48,088

 
56,523

Accounts receivable, net of allowance of $581 and $486
7,885

 
7,921

Inventories
505

 
235

Receivable under reverse repurchase agreements
700

 
100

Deferred income taxes, net
1,144

 
1,154

Income taxes receivable, net
0

 
571

Prepaid revenue share, expenses and other assets
2,132

 
2,354

Total current assets
60,454

 
68,858

Prepaid revenue share, expenses and other assets, non-current
2,011

 
1,784

Non-marketable equity investments
1,469

 
1,843

Property and equipment, net
11,854

 
14,867

Intangible assets, net
7,473

 
6,290

Goodwill
10,537

 
11,426

Total assets
$
93,798

 
$
105,068

Liabilities and Stockholders’ Equity

 

Current liabilities:

 

Accounts payable
$
2,012

 
$
2,124

Short-term debt
2,549

 
3,009

Accrued compensation and benefits
2,239

 
1,999

Accrued expenses and other current liabilities
3,258

 
3,071

Accrued revenue share
1,471

 
1,472

Securities lending payable
1,673

 
1,893

Deferred revenue
895

 
907

Income taxes payable, net
240

 
0

Total current liabilities
14,337

 
14,475

Long-term debt
2,988

 
2,238

Deferred revenue, non-current
100

 
125

Income taxes payable, non-current
2,046

 
2,434

Deferred income taxes, net, non-current
1,872

 
2,097

Other long-term liabilities
740

 
710

Stockholders’ equity:

 

Convertible preferred stock, $0.001 par value per share, 100,000 shares authorized; no shares issued and outstanding
0

 
0

Class A and Class B common stock and additional paid-in capital, $0.001 par value per share: 12,000,000 shares authorized (Class A 9,000,000, Class B 3,000,000); 329,979 (Class A 267,448, Class B 62,531) and par value of $330 (Class A $267, Class B $63) and 334,157 (Class A 276,681, Class B 57,476) and par value of $334 (Class A $277, Class B $57) shares issued and outstanding
22,835

 
25,004





Class C capital stock, $0.001 par value per share: 3,000,000 shares authorized; no shares issued and outstanding
0

 
0

Accumulated other comprehensive income
538

 
99

Retained earnings
48,342

 
57,886

Total stockholders’ equity
71,715

 
82,989

Total liabilities and stockholders’ equity
$
93,798

 
$
105,068




    





Google Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except share amounts which are reflected in thousands and per share amounts)
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2012
 
2013
 
2012
 
2013
 
(unaudited)
Revenues:

 

 

 

Google (advertising and other)
$
11,526

 
$
13,754

 
$
33,135

 
$
39,812

Motorola Mobile (hardware and other)
1,778

 
1,139

 
2,621

 
3,155

Total revenues
13,304

 
14,893

 
35,756

 
42,967

Costs and expenses:

 

 

 

Cost of revenues - Google (advertising and other) (1)
4,440

 
5,409

 
12,213

 
15,740

Cost of revenues - Motorola Mobile (hardware and other) (1)
1,515

 
1,004

 
2,208

 
2,680

Research and development (1)
1,879

 
2,017

 
4,858

 
5,841

Sales and marketing (1)
1,710

 
1,806

 
4,392

 
5,127

General and administrative (1)
1,020

 
1,213

 
2,719

 
3,535

Total costs and expenses
10,564

 
11,449

 
26,390

 
32,923

Income from operations
2,740

 
3,444

 
9,366

 
10,044

Interest and other income, net
65

 
24

 
474

 
405

Income from continuing operations before income taxes
2,805

 
3,468

 
9,840

 
10,449

Provision for income taxes
647

 
513

 
1,959

 
1,616

Net income from continuing operations
2,158

 
2,955

 
7,881

 
8,833

Net income (loss) from discontinued operations
18

 
15

 
(30
)
 
711

Net income
$
2,176

 
$
2,970

 
$
7,851

 
$
9,544

Net income (loss) per share - basic:

 

 

 

Continuing operations
$
6.59

 
$
8.86

 
$
24.14

 
$
26.59

Discontinued operations
0.05

 
0.04

 
(0.09
)
 
2.14

Net income (loss) per share - basic
$
6.64

 
$
8.90

 
$
24.05

 
$
28.73

Net income (loss) per share - diluted:

 

 

 

Continuing operations
$
6.48

 
$
8.71

 
$
23.78

 
$
26.13

Discontinued operations
0.05

 
0.04

 
(0.09
)
 
2.10

Net income (loss) per share - diluted
$
6.53

 
$
8.75

 
$
23.69

 
$
28.23



 

 

 

Shares used in per share calculation - basic
327,785

 
333,616

 
326,452

 
332,183

Shares used in per share calculation - diluted
333,314

 
339,235

 
331,414

 
338,078



 

 

 

(1) Includes stock-based compensation expense as follows:

 

 

 

Cost of revenues - Google (advertising and other)
$
103

 
$
133

 
$
259

 
$
342

Cost of revenues - Motorola Mobile (hardware and other)
6

 
4

 
10

 
14

Research and development
373

 
453

 
961

 
1,235

Sales and marketing
152

 
160

 
367

 
419

General and administrative
116

 
136

 
344

 
356


$
750

 
$
886

 
$
1,941

 
$
2,366






Google Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)

Three Months Ended
 
Nine Months Ended

September 30,
 
September 30,

2012
 
2013
 
2012
 
2013

(unaudited)
Operating activities
 
 
 
 
 
 
 
Net income
$
2,176

 
$
2,970

 
$
7,851

 
$
9,544

Adjustments:

 

 

 

Depreciation and amortization of property and equipment
507

 
693

 
1,358

 
2,024

Amortization of intangible and other assets
321

 
281

 
651

 
879

Stock-based compensation expense
762

 
886

 
1,976

 
2,441

Excess tax benefits from stock-based award activities
(58
)
 
(104
)
 
(113
)
 
(302
)
Deferred income taxes
(168
)
 
(140
)
 
23

 
125

Gain on divestiture of businesses
0

 
(15
)
 
(188
)
 
(705
)
Other
32

 
98

 
(24
)
 
44

Changes in assets and liabilities, net of effects of acquisitions:

 

 

 

Accounts receivable
(307
)
 
(516
)
 
(228
)
 
(454
)
Income taxes, net
167

 
77

 
1,336

 
(79
)
Inventories
18

 
112

 
188

 
(46
)
Prepaid revenue share, expenses and other assets
(27
)
 
199

 
(1,215
)
 
(149
)
Accounts payable
(194
)
 
357

 
(274
)
 
285

Accrued expenses and other liabilities
727

 
93

 
484

 
(270
)
Accrued revenue share
(80
)
 
0

 
(57
)
 
8

Deferred revenue
128

 
92

 
182

 
76

Net cash provided by operating activities
4,004

 
5,083

 
11,950

 
13,421

Investing activities

 

 

 

Purchases of property and equipment
(872
)
 
(2,289
)
 
(2,253
)
 
(5,103
)
Purchases of marketable securities
(8,704
)
 
(8,964
)
 
(24,246
)
 
(31,746
)
Maturities and sales of marketable securities
7,143

 
6,235

 
29,800

 
23,241

Investments in non-marketable equity investments
(44
)
 
(299
)
 
(246
)
 
(471
)
Cash collateral related to securities lending
(230
)
 
(1,318
)
 
(321
)
 
220

Investments in reverse repurchase agreements
(75
)
 
670

 
195

 
600

Proceeds from divestiture of businesses
0

 
174

 
201

 
2,525

Acquisitions, net of cash acquired, and purchases of intangibles and other assets
(525
)
 
(27
)
 
(10,672
)
 
(1,328
)
Net cash used in investing activities
(3,307
)
 
(5,818
)
 
(7,542
)
 
(12,062
)
Financing activities

 

 

 

Net payments related to stock-based award activities
(5
)
 
(369
)
 
(189
)
 
(637
)
Excess tax benefits from stock-based award activities
58

 
104

 
113

 
302

Proceeds from issuance of debt, net of costs
4,374

 
2,699

 
12,125

 
8,350

Repayments of debt
(4,375
)
 
(2,701
)
 
(10,128
)
 
(8,904
)




Net cash provided by (used in) financing activities
52

 
(267
)
 
1,921

 
(889
)
Effect of exchange rate changes on cash and cash equivalents
74

 
80

 
(52
)
 
(6
)
Net increase (decrease) in cash and cash equivalents
823

 
(922
)
 
6,277

 
464

Cash and cash equivalents at beginning of period
15,437

 
16,164

 
9,983

 
14,778

Cash and cash equivalents at end of period
$
16,260

 
$
15,242

 
$
16,260

 
$
15,242







The following table presents our Google segment revenues by revenue source(a) (in millions):
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2012
 
2013
 
2012
 
2013
 
(unaudited)
Advertising revenues:

 

 

 

Google websites
$
7,727

 
$
9,394

 
$
22,581

 
$
26,902

Google Network Members' websites
3,133

 
3,148

 
9,029

 
9,603

Total advertising revenues
10,860

 
12,542

 
31,610

 
36,505

Other revenues
666

 
1,230

 
1,525

 
3,325

Google segment revenues
$
11,526

 
$
13,772

 
$
33,135

 
$
39,830


(a) In accordance with GAAP, Google segment revenues (and related percentages) are presented consistent with what is provided to the chief operating decision maker for purposes of making decisions about allocating resources to that segment and assessing its performance, and include $18 million of revenues resulting from intersegment transactions that would be eliminated on consolidation.  


The following table presents our Google segment revenues, by revenue source, as a percentage of Google segment revenues(a):
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2012
 
2013
 
2012
 
2013
 
(unaudited)
Advertising revenues:

 

 

 

Google websites
67
%
 
68
%
 
68
%
 
68
%
Google Network Members' websites
27
%
 
23
%
 
27
%
 
24
%
Total advertising revenues
94
%
 
91
%
 
95
%
 
92
%
Other revenues
6
%
 
9
%
 
5
%
 
8
%
Google segment revenues
100
%
 
100
%
 
100
%
 
100
%

(a) In accordance with GAAP, Google segment revenues (and related percentages) are presented consistent with what is provided to the chief operating decision maker for purposes of making decisions about allocating resources to that segment and assessing its performance, and include $18 million of revenues resulting from intersegment transactions that would be eliminated on consolidation.  



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