Google 8-K Google Inc. Announces Second Quarter 2012 Results

Exhibit 99.2

Google Inc.

CONSOLIDATED BALANCE SHEETS

(In millions)

	As of December 31, 2011*		As of June 30, 2012
			(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	9,983	$	15,437
Marketable securities		34,643		27,685
Accounts receivable, net of allowance		5,427		6,866
Inventories		35		634
Receivable under reverse repurchase agreements		745		475
Deferred income taxes, net		215		146
Prepaid revenue share, expenses and other assets		1,710		2,614
Total current assets		52,758		53,857
Prepaid revenue share, expenses and other assets, non-current		499		2,263
Non-marketable equity securities		790		1,040
Property and equipment, net		9,603		10,909
Intangible assets, net		1,578		7,862
Goodwill		7,346		10,120
Total assets	$	72,574	$	86,051
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	588	$	2,419
Short-term debt		1,218		3,218
Accrued compensation and benefits		1,818		1,626
Accrued expenses and other current liabilities		1,370		2,750
Accrued revenue share		1,168		1,175
Securities lending payable		2,007		1,916
Deferred revenue		547		767
Income taxes payable, net		197		157
Total current liabilities		8,913		14,028
Long-term debt		2,986		2,987
Deferred revenue, non-current		44		97
Income taxes payable, non-current		1,693		1,898
Deferred income taxes, net, non-current		287		1,509
Other long-term liabilities		506		811
Stockholders’ equity:
Common stock and additional paid-in capital		20,264		21,357
Accumulated other comprehensive income		276		84
Retained earnings		37,605		43,280
Total stockholders’ equity		58,145		64,721
Total liabilities and stockholders’ equity	$	72,574	$	86,051

* Derived from audited financial statements.

Google Inc.

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except share amounts which are reflected in thousands and per share amounts)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2011		2012		2011		2012
	(unaudited)
Revenues:
Google (advertising and other)	$	9,026	$	10,964	$	17,602	$	21,609
Motorola (hardware and other)		—		1,250		—		1,250
Total revenues		9,026		12,214		17,602		22,859
Costs and expenses:
Cost of revenues - Google (advertising and other)(1)		3,172		3,984		6,107		7,773
Cost of revenues - Motorola (hardware and other)(1)		—		1,029		—		1,029
Research and development(1)		1,234		1,585		2,456		3,026
Sales and marketing(1)		1,091		1,433		2,117		2,702
General and administrative(1)		648		980		1,244		1,737
Charge related to the resolution of Department of Justice investigation		—		—		500		—
Total costs and expenses		6,145		9,011		12,424		16,267
Income from operations		2,881		3,203		5,178		6,592
Interest and other income, net		204		254		300		410
Income before income taxes		3,085		3,457		5,478		7,002
Provision for income taxes		580		672		1,174		1,327
Net income	$	2,505	$	2,785	$	4,304	$	5,675
Net income per share - basic	$	7.77	$	8.54	$	13.37	$	17.42
Net income per share - diluted	$	7.68	$	8.42	$	13.19	$	17.17
Shares used in per share calculation - basic		322,228		326,272		321,878		325,786
Shares used in per share calculation - diluted		326,036		330,793		326,209		330,464
(1)      Includes stock-based compensation expense as follows:
Cost of revenues - Google (advertising and other)	$	51	$	82	$	100	$	156
Cost of revenues - Motorola (hardware and other)		—		5		—		5
Research and development		247		291		484		590
Sales and marketing		74		120		152		217
General and administrative		63		160		130		246

Google Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2012			2011			2012
	(unaudited)
Operating activities
Net income	$	2,505		$	2,785		$	4,304		$	5,675
Adjustments:
Depreciation and amortization of property and equipment		347			473			648			851
Amortization of intangible and other assets		108			197			208			330
Stock-based compensation expense		435			658			866			1,214
Excess tax benefits from stock-based award activities		(9	)		(27	)		(33	)		(55	)
Deferred income taxes		175			(163	)		464			191
Gain on sale of marketable equity securities		—			—			—			(44	)
Gain on divestiture of business		—			(188	)		—			(188	)
Other		19			12			55			(12	)
Changes in assets and liabilities, net of effects of acquisitions and divestiture:
Accounts receivable		(205	)		(222	)		(24	)		79
Income taxes, net		(171	)		1,026			(98	)		1,169
Inventories		2			202			(1	)		170
Prepaid revenue share, expenses and other assets		(72	)		(912	)		(147	)		(1,188	)
Accounts payable		50			(249	)		77			(80	)
Accrued expenses and other liabilities		260			612			297			(243	)
Accrued revenue share		39			34			6			23
Deferred revenue		36			14			69			54
Net cash provided by operating activities		3,519			4,252			6,691			7,946
Investing activities
Purchases of property and equipment		(917	)		(774	)		(1,807	)		(1,381	)
Purchases of marketable securities		(13,364	)		(6,854	)		(20,955	)		(15,542	)
Maturities and sales of marketable securities		8,982			5,456			13,627			22,657
Investments in non-marketable equity securities		(212	)		(99	)		(343	)		(202	)
Cash collateral related to securities lending		57			(336	)		(424	)		(91	)
Investments in reverse repurchase agreements		(445	)		75			(270	)		270
Acquisitions, net of cash acquired and proceeds received from divestiture, and purchases of intangibles and other assets		(715	)		(9,854	)		(863	)		(9,946	)
Net cash used in investing activities		(6,614	)		(12,386	)		(11,035	)		(4,235	)
Financing activities
Net proceeds (payments) related to stock-based award activities		(28	)		(137	)		88			(184	)
Excess tax benefits from stock-based award activities		9			27			33			55
Proceeds from issuance of debt, net of costs		5,846			4,602			8,030			7,751
Repayments of debt		(4,869	)		(3,853	)		(7,304	)		(5,753	)
Net cash provided by financing activities		958			639			847			1,869
Effect of exchange rate changes on cash and cash equivalents		42			(176	)		187			(126	)
Net increase (decrease) in cash and cash equivalents		(2,095	)		(7,671	)		(3,310	)		5,454
Cash and cash equivalents at beginning of period		12,415			23,108			13,630			9,983
Cash and cash equivalents at end of period	$	10,320		$	15,437		$	10,320		$	15,437

The following table presents our consolidated revenues by revenue source (in millions, unaudited):

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2012		2011		2012
Advertising revenues:
Google websites	$	6,232	$	7,542	$	12,111	$	14,854
Google Network Members’ websites		2,484		2,983		4,911		5,896
Total advertising revenues	��	8,716		10,525		17,022		20,750
Other revenues		310		439		580		859
Total Google revenues (advertising and other)		9,026		10,964		17,602		21,609
Total Motorola revenues (hardware and other)		—		1,250		—		1,250
Consolidated Revenues	$	9,026	$	12,214	$	17,602	$	22,859

The following table presents our Google revenues, by revenue source, as a percentage of Google revenues (unaudited):

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2012			2011			2012
Advertising revenues:
Google websites		69	%		69	%		69	%		69	%
Google Network Members’ websites		28	%		27	%		28	%		27	%
Total advertising revenues		97	%		96	%		97	%		96	%
Other revenues		3	%		4	%		3	%		4	%
Google revenues		100	%		100	%		100	%		100	%