Google 8-K Google Announces Third Quarter 2008 Results

Exhibit 99.2

Google Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands)

	December 31, 2007*		September 30, 2008
			(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	6,081,593	$	8,370,469
Marketable securities		8,137,020		6,042,140
Accounts receivable, net of allowance		2,162,521		2,541,492
Deferred income taxes, net		68,538		111,401
Income taxes receivable		145,253		—
Prepaid revenue share, expenses and other assets		694,213		897,349
Total current assets		17,289,138		17,962,851
Prepaid revenue share, expenses and other assets, non-current		168,530		426,478
Deferred income taxes, net, non-current		33,219		165,448
Non-marketable equity securities		1,059,694		1,100,896
Property and equipment, net		4,039,261		5,213,167
Intangible assets, net		446,596		1,047,717
Goodwill		2,299,368		4,821,646
Total assets	$	25,335,806	$	30,738,203
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	282,106	$	240,706
Accrued compensation and benefits		588,390		622,658
Accrued expenses and other current liabilities		465,032		532,627
Accrued revenue share		522,001		515,949
Deferred revenue		178,073		200,378
Income taxes payable		—		99,959
Total current liabilities		2,035,602		2,212,277
Deferred revenue, non-current		30,249		29,992
Deferred income taxes, net, non-current		—		20,420
Income taxes payable, non-current		478,372		783,348
Other long-term liabilities		101,904		161,075
Stockholders’ equity:
Common stock		313		315
Additional paid-in capital		13,241,221		14,194,197
Accumulated other comprehensive income		113,373		101,162
Retained earnings		9,334,772		13,235,417
Total stockholders’ equity		22,689,679		27,531,091
Total liabilities and stockholders’ equity	$	25,335,806	$	30,738,203

* Derived from audited financial statements.

Google Inc.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts, unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2007		2008		2007		2008
	(unaudited)
Revenues	$	4,231,351	$	5,541,391	$	11,767,307	$	16,094,646
Costs and expenses:
Cost of revenues (including stock-based compensation expense of $4,031, $10,729, $16,080, $29,240)		1,662,579		2,173,390		4,693,261		6,431,501
Research and development (including stock-based compensation expense of $130,655, $169,263, $408,425, $550,343)		548,712		704,571		1,489,202		2,059,851
Sales and marketing (including stock-based compensation expense of $29,918, $64,497, $93,553, $149,666)		380,820		508,801		1,038,976		1,440,252
General and administrative (including stock-based compensation expense of $33,352, $35,550, $105,288, $104,345)		321,398		411,964		902,202		1,296,178
Total costs and expenses		2,913,509		3,798,726		8,123,641		11,227,782
Income from operations		1,317,842		1,742,665		3,643,666		4,866,864
Interest income and other, net		154,428		21,217		422,287		246,485
Income before income taxes		1,472,270		1,763,882		4,065,953		5,113,349
Provision for income taxes		402,281		417,715		1,068,682		1,212,704
Net income	$	1,069,989	$	1,346,167	$	2,997,271	$	3,900,645
Net income per share - basic	$	3.44	$	4.28	$	9.66	$	12.43
Net income per share - diluted	$	3.38	$	4.24	$	9.50	$	12.28
Shares used in per share calculation - basic		311,221		314,241		310,324		313,729
Shares used in per share calculation - diluted		316,576		317,776		315,638		317,730

Google Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2007			2008			2007			2008
	(unaudited)
Operating activities
Net income	$	1,069,989		$	1,346,167		$	2,997,271		$	3,900,645
Adjustments:
Depreciation and amortization of property and equipment		207,415			309,482			565,841			898,762
Amortization of intangibles and other		41,960			76,764			111,881			215,615
Stock-based compensation		197,956			280,039			623,346			833,594
Excess tax benefits from stock-based award activity		(58,762	)		(19,791	)		(238,577	)		(114,770	)
Deferred income taxes		(2,079	)		20,164			(184,520	)		(85,726	)
Other, net		(7,180	)		10,169			(7,215	)		(14,488	)
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable		(234,391	)		78,049			(559,425	)		(218,326	)
Income taxes, net		99,720			24,314			615,568			552,673
Prepaid revenue share, expenses and other assets		(29,738	)		42,744			(237,262	)		(140,059	)
Accounts payable		94,817			(191,402	)		20,155			(152,165	)
Accrued expenses and other liabilities		185,641			185,133			206,522			37,882
Accrued revenue share		54,294			12,017			136,446			(4,433	)
Deferred revenue		13,001			11,106			32,131			21,354
Net cash provided by operating activities		1,632,643			2,184,955			4,082,162			5,730,558
Investing activities
Purchases of property and equipment		(552,640	)		(451,503	)		(1,724,631	)		(1,990,617	)
Purchases of marketable securities		(4,412,277	)		(2,892,983	)		(11,756,147	)		(7,814,293	)
Maturities and sales of marketable securities		4,501,783			2,218,344			11,519,001			9,634,903
Investments in non-marketable equity securities		(11,000	)		(35,377	)		(21,288	)		(44,869	)
Acquisitions, net of cash acquired, proceeds received from divestiture, and purchases of intangible and other assets		(615,552	)		24,562			(823,092	)		(3,287,708	)
Net cash used in investing activities		(1,089,686	)		(1,136,957	)		(2,806,157	)		(3,502,584	)
Financing activities
Net proceeds (payments) related to stock-based award activity		(9,751	)		(15,506	)		19,073			(38,252	)
Excess tax benefits from stock-based award activity		58,762			19,791			238,577			114,770
Net cash provided by financing activities		49,011			4,285			257,650			76,518
Effect of exchange rate changes on cash and cash equivalents		20,784			(45,350	)		28,078			(15,616	)
Net increase in cash and cash equivalents		612,752			1,006,933			1,561,733			2,288,876
Cash and cash equivalents at beginning of period		4,493,652			7,363,536			3,544,671			6,081,593
Cash and cash equivalents at end of period	$	5,106,404		$	8,370,469		$	5,106,404		$	8,370,469

The following table presents our revenues, by revenue source, for the periods presented (in thousands, unaudited):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2007			2008			2007			2008
Advertising revenues:
Google web sites	$	2,734,756		$	3,672,111		$	7,503,167		$	10,602,660
Google Network web sites		1,454,721			1,679,861			4,152,102			5,021,283
Total advertising revenues		4,189,477			5,351,972			11,655,269			15,623,943
Licensing and other revenues		41,874			189,419			112,038			470,703
Revenues	$	4,231,351		$	5,541,391		$	11,767,307		$	16,094,646
The following table presents our revenues, by revenue source, as a percentage of total revenues for the periods presented (unaudited):
	Three Months Ended September 30,						Nine Months Ended September 30,
	2007			2008			2007			2008
Advertising revenues:
Google web sites		65	%		67	%		64	%		66	%
Google Network web sites		34	%		30	%		35	%		31	%
Total advertising revenues		99	%		97	%		99	%		97	%
Licensing and other revenues		1	%		3	%		1	%		3	%
Revenues		100	%		100	%		100	%		100	%