GOOGLE INC. - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - January 30, 2014

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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
December 31,
2013


 
(unaudited)
Assets

 

Current assets:

 

Cash and cash equivalents
$
14,778

 
$
18,898

Marketable securities
33,310

 
39,819

Total cash, cash equivalents, and marketable securities (including securities loaned of $3,160 and $5,059)
48,088

 
58,717

Accounts receivable, net of allowance of $581 and $631
7,885

 
8,882

Inventories
505

 
426

Receivable under reverse repurchase agreements
700

 
100

Deferred income taxes, net
1,144

 
1,526

Income taxes receivable, net
0

 
408

Prepaid revenue share, expenses and other assets
2,132

 
2,827

Total current assets
60,454

 
72,886

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

 
1,976

Non-marketable equity investments
1,469

 
1,976

Property and equipment, net
11,854

 
16,524

Intangible assets, net
7,473

 
6,066

Goodwill
10,537

 
11,492

Total assets
$
93,798

 
$
110,920

Liabilities and Stockholders’ Equity

 

Current liabilities:

 

Accounts payable
$
2,012

 
$
2,453

Short-term debt
2,549

 
3,009

Accrued compensation and benefits
2,239

 
2,502

Accrued expenses and other current liabilities
3,258

 
3,755

Accrued revenue share
1,471

 
1,729

Securities lending payable
1,673

 
1,374

Deferred revenue
895

 
1,062

Income taxes payable, net
240

 
24

Total current liabilities
14,337

 
15,908

Long-term debt
2,988

 
2,236

Deferred revenue, non-current
100

 
139

Income taxes payable, non-current
2,046

 
2,638

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

 
1,947

Other long-term liabilities
740

 
743

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 335,832 (Class A 279,325, Class B 56,507) and par value of $336 (Class A $279, Class B $57) shares issued and outstanding
22,835

 
25,922





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

 
125

Retained earnings
48,342

 
61,262

Total stockholders’ equity
71,715

 
87,309

Total liabilities and stockholders’ equity
$
93,798

 
$
110,920




    





Google Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except share amounts which are reflected in thousands and per share amounts)
 
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
 
2012
 
2013
 
2012
 
2013
 
(unaudited)
 
 
 
(unaudited)
Revenues:

 

 

 

Google (advertising and other)
$
12,905

 
$
15,707

 
$
46,039

 
$
55,519

Motorola Mobile (hardware and other)
1,514

 
1,151

 
4,136

 
4,306

Total revenues
14,419

 
16,858

 
50,175

 
59,825

Costs and expenses:

 

 

 

Cost of revenues - Google (advertising and other) (1)
4,963

 
6,253

 
17,176

 
21,993

Cost of revenues - Motorola Mobile (hardware and other) (1)
1,250

 
1,185

 
3,458

 
3,865

Research and development (1)
1,935

 
2,111

 
6,793

 
7,952

Sales and marketing (1)
1,751

 
2,126

 
6,143

 
7,253

General and administrative (1)
1,126

 
1,261

 
3,845

 
4,796

Total costs and expenses
11,025

 
12,936

 
37,415

 
45,859

Income from operations
3,394

 
3,922

 
12,760

 
13,966

Interest and other income, net
152

 
125

 
626

 
530

Income from continuing operations before income taxes
3,546

 
4,047

 
13,386

 
14,496

Provision for income taxes
639

 
666

 
2,598

 
2,282

Net income from continuing operations
2,907

 
3,381

 
10,788

 
12,214

Net income (loss) from discontinued operations
(21
)
 
(5
)
 
(51
)
 
706

Net income
$
2,886

 
$
3,376

 
$
10,737

 
$
12,920

Net income (loss) per share - basic:

 

 

 

Continuing operations
$
8.83

 
$
10.10

 
$
32.97

 
$
36.70

Discontinued operations
(0.06
)
 
(0.02
)
 
(0.16
)
 
2.12

Net income (loss) per share - basic
$
8.77

 
$
10.08

 
$
32.81

 
$
38.82

Net income (loss) per share - diluted:

 

 

 

Continuing operations
$
8.68

 
$
9.91

 
$
32.46

 
$
36.05

Discontinued operations
(0.06
)
 
(0.01
)
 
(0.15
)
 
2.08

Net income (loss) per share - diluted
$
8.62

 
$
9.90

 
$
32.31

 
$
38.13



 

 

 

Shares used in per share calculation - basic
329,363

 
334,836

 
327,213

 
332,846

Shares used in per share calculation - diluted
334,977

 
341,003

 
332,305

 
338,809



 

 

 

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

 

 

 

Cost of revenues - Google (advertising and other)
$
101

 
$
127

 
$
359

 
$
469

Cost of revenues - Motorola Mobile (hardware and other)
4

 
4

 
14

 
18

Research and development
364

 
482

 
1,325

 
1,717

Sales and marketing
130

 
159

 
498

 
578

General and administrative
109

 
130

 
453

 
486


$
708

 
$
902

 
$
2,649

 
$
3,268






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

Three Months Ended
 
Twelve Months Ended

December 31,
 
December 31,

2012
 
2013
 
2012
 
2013

(unaudited)
 
 
 
(unaudited)
Operating activities
 
 
 
 
 
 
 
Net income
$
2,886

 
$
3,376

 
$
10,737

 
$
12,920

Adjustments:

 

 

 

Depreciation and amortization of property and equipment
630

 
757

 
1,988

 
2,781

Amortization of intangible and other assets
323

 
279

 
974

 
1,158

Stock-based compensation expense
716

 
902

 
2,692

 
3,343

Excess tax benefits from stock-based award activities
(75
)
 
(179
)
 
(188
)
 
(481
)
Deferred income taxes
(289
)
 
(562
)
 
(266
)
 
(437
)
Loss (gain) on divestiture of businesses
0

 
5

 
(188
)
 
(700
)
Other
(4
)
 
62

 
(28
)
 
106

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

 

 

 

Accounts receivable
(559
)
 
(853
)
 
(787
)
 
(1,307
)
Income taxes, net
156

 
480

 
1,492

 
401

Inventories
113

 
(188
)
 
301

 
(234
)
Prepaid revenue share, expenses and other assets
382

 
(547
)
 
(833
)
 
(696
)
Accounts payable
(225
)
 
320

 
(499
)
 
605

Accrued expenses and other liabilities
278

 
983

 
762

 
713

Accrued revenue share
356

 
246

 
299

 
254

Deferred revenue
(19
)
 
157

 
163

 
233

Net cash provided by operating activities
4,669

 
5,238

 
16,619

 
18,659

Investing activities

 

 

 

Purchases of property and equipment
(1,020
)
 
(2,255
)
 
(3,273
)
 
(7,358
)
Purchases of marketable securities
(9,164
)
 
(13,698
)
 
(33,410
)
 
(45,444
)
Maturities and sales of marketable securities
5,380

 
15,073

 
35,180

 
38,314

Investments in non-marketable equity investments
(450
)
 
(98
)
 
(696
)
 
(569
)
Cash collateral related to securities lending
(13
)
 
(519
)
 
(334
)
 
(299
)
Investments in reverse repurchase agreements
(150
)
 
0

 
45

 
600

Proceeds from divestiture of businesses
0

 
0

 
0

 
2,525

Acquisitions, net of cash acquired, and purchases of intangibles and other assets
(97
)
 
(120
)
 
(10,568
)
 
(1,448
)
Net cash used in investing activities
(5,514
)
 
(1,617
)
 
(13,056
)
 
(13,679
)
Financing activities

 

 

 

Net payments related to stock-based award activities
(98
)
 
(144
)
 
(287
)
 
(781
)
Excess tax benefits from stock-based award activities
75

 
179

 
188

 
481

Proceeds from issuance of debt, net of costs
3,984

 
2,418

 
16,109

 
10,768

Repayments of debt
(4,653
)
 
(2,421
)
 
(14,781
)
 
(11,325
)




Net cash provided by (used in) financing activities
(692
)
 
32

 
1,229

 
(857
)
Effect of exchange rate changes on cash and cash equivalents
55

 
3

 
3

 
(3
)
Net increase (decrease) in cash and cash equivalents
(1,482
)
 
3,656

 
4,795

 
4,120

Cash and cash equivalents at beginning of period
16,260

 
15,242

 
9,983

 
14,778

Cash and cash equivalents at end of period
$
14,778

 
$
18,898

 
$
14,778

 
$
18,898







The following table presents our Google segment revenues by revenue source(a) (in millions):
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
 
2012
 
2013
 
2012
 
2013
 
(unaudited)
 
 
 
(unaudited)
Advertising revenues:

 

 

 

Google websites
$
8,640

 
$
10,551

 
$
31,221

 
$
37,453

Google Network Members' websites
3,436

 
3,522

 
12,465

 
13,125

Total advertising revenues
12,076

 
14,073

 
43,686

 
50,578

Other revenues
829

 
1,647

 
2,353

 
4,972

Google segment revenues
$
12,905

 
$
15,720

 
$
46,039

 
$
55,550


(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 $13 million and $31 million of revenues resulting from intersegment transactions that are eliminated in our consolidated results for the three months and twelve months ended December 31, 2013, respectively.  


The following table presents our Google segment revenues, by revenue source, as a percentage of Google segment revenues(a):
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
 
2012
 
2013
 
2012
 
2013
 
(unaudited)
 
 
 
(unaudited)
Advertising revenues:

 

 

 

Google websites
67
%
 
67
%
 
68
%
 
67
%
Google Network Members' websites
27
%
 
23
%
 
27
%
 
24
%
Total advertising revenues
94
%
 
90
%
 
95
%
 
91
%
Other revenues
6
%
 
10
%
 
5
%
 
9
%
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 $13 million and $31 million of revenues resulting from intersegment transactions that are eliminated in our consolidated results for the three months and twelve months ended December 31, 2013, respectively.  



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