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

Exhibit 99.2

Google Inc.

CONSOLIDATED BALANCE SHEETS

(In millions)

	As of December 31, 2011*		As of September 30, 2012
			(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	9,983	$	16,260
Marketable securities		34,643		29,464
Accounts receivable, net of allowance		5,427		7,259
Inventories		35		618
Receivable under reverse repurchase agreements		745		550
Deferred income taxes, net		215		230
Prepaid revenue share, expenses and other assets		1,710		2,440
Total current assets		52,758		56,821
Prepaid revenue share, expenses and other assets, non-current		499		2,206
Non-marketable equity securities		790		1,063
Property and equipment, net		9,603		11,401
Intangible assets, net		1,578		7,754
Goodwill		7,346		10,485
Total assets	$	72,574	$	89,730
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	588	$	2,233
Short-term debt		1,218		3,218
Accrued compensation and benefits		1,818		1,926
Accrued expenses and other current liabilities		1,370		3,313
Accrued revenue share		1,168		1,108
Securities lending payable		2,007		1,686
Deferred revenue		547		905
Income taxes payable, net		197		45
Total current liabilities		8,913		14,434
Long-term debt		2,986		2,988
Deferred revenue, non-current		44		100
Income taxes payable, non-current		1,693		2,034
Deferred income taxes, net, non-current		287		1,461
Other long-term liabilities		506		685
Stockholders’ equity:
Common stock and additional paid-in capital		20,264		22,204
Accumulated other comprehensive income		276		368
Retained earnings		37,605		45,456
Total stockholders’ equity		58,145		68,028
Total liabilities and stockholders’ equity	$	72,574	$	89,730

* 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 September 30,				Nine Months Ended September 30,
	2011		2012		2011		2012
	(unaudited)
Revenues:
Google (advertising and other)	$	9,720	$	11,526	$	27,322	$	33,135
Motorola (hardware and other)		—		2,575		—		3,825
Total revenues		9,720		14,101		27,322		36,960
Costs and expenses:
Cost of revenues - Google (advertising and other)(1)		3,378		4,440		9,485		12,213
Cost of revenues - Motorola (hardware and other)(1)		—		2,114		—		3,143
Research and development(1)		1,404		2,009		3,861		5,035
Sales and marketing(1)		1,204		1,760		3,322		4,462
General and administrative(1)		676		1,042		1,919		2,779
Charge related to the resolution of Department of Justice investigation		—		—		500		—
Total costs and expenses		6,662		11,365		19,087		27,632
Income from operations		3,058		2,736		8,235		9,328
Interest and other income, net		302		63		602		473
Income before income taxes		3,360		2,799		8,837		9,801
Provision for income taxes		631		623		1,804		1,950
Net income	$	2,729	$	2,176	$	7,033	$	7,851
Net income per share - basic	$	8.44	$	6.64	$	21.82	$	24.05
Net income per share - diluted	$	8.33	$	6.53	$	21.53	$	23.69
Shares used in per share calculation - basic		323,155		327,785		322,304		326,452
Shares used in per share calculation - diluted		327,439		333,314		326,619		331,414
(1)       Includes stock-based compensation expense as follows:
Cost of revenues - Google (advertising and other)	$	72	$	103	$	172	$	259
Cost of revenues - Motorola (hardware and other)		—		8		—		13
Research and development		311		378		795		968
Sales and marketing		104		155		256		372
General and administrative		84		118		214		364
	$	571	$	762	$	1,437	$	1,976

Google Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2012			2011			2012
	(unaudited)
Operating activities
Net income	$	2,729		$	2,176		$	7,033		$	7,851
Adjustments:
Depreciation and amortization of property and equipment		363			507			1,011			1,358
Amortization of intangible and other assets		129			321			337			651
Stock-based compensation expense		571			762			1,437			1,976
Excess tax benefits from stock-based award activities		(28	)		(58	)		(61	)		(113	)
Deferred income taxes		62			(168	)		526			23
Gain on divestiture of business		—			—			—			(188	)
Other		(52	)		32			3			(24	)
Changes in assets and liabilities, net of effects of acquisitions and divestiture:
Accounts receivable		(223	)		(307	)		(247	)		(228	)
Income taxes, net		366			167			268			1,336
Inventories		(20	)		18			(18	)		188
Prepaid revenue share, expenses and other assets		22			(27	)		(128	)		(1,215	)
Accounts payable		(5	)		(194	)		72			(274	)
Accrued expenses and other liabilities		(42	)		727			255			484
Accrued revenue share		64			(80	)		70			(57	)
Deferred revenue		14			128			83			182
Net cash provided by operating activities		3,950			4,004			10,641			11,950
Investing activities
Purchases of property and equipment		(680	)		(872	)		(2,487	)		(2,253	)
Purchases of marketable securities		(22,738	)		(8,704	)		(43,693	)		(24,246	)
Maturities and sales of marketable securities		19,480			7,143			33,107			29,800
Investments in non-marketable equity securities		(15	)		(44	)		(358	)		(246	)
Cash collateral related to securities lending		1,119			(230	)		694			(321	)
Investments in reverse repurchase agreements		(125	)		(75	)		(395	)		195
Acquisitions, net of cash acquired and proceeds received from divestiture, and purchases of intangibles and other assets		(488	)		(525	)		(1,350	)		(10,471	)
Net cash used in investing activities		(3,447	)		(3,307	)		(14,482	)		(7,542	)
Financing activities
Net payments related to stock-based award activities		(108	)		(5	)		(20	)		(189	)
Excess tax benefits from stock-based award activities		28			58			61			113
Proceeds from issuance of debt, net of costs		750			4,374			8,780			12,125
Repayments of debt		(750	)		(4,375	)		(8,054	)		(10,128	)
Net cash provided by (used in) financing activities		(80	)		52			767			1,921
Effect of exchange rate changes on cash and cash equivalents		(113	)		74			74			(52	)
Net increase (decrease) in cash and cash equivalents		310			823			(3,000	)		6,277
Cash and cash equivalents at beginning of period		10,320			15,437			13,630			9,983
Cash and cash equivalents at end of period	$	10,630		$	16,260		$	10,630		$	16,260

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2012		2011		2012
Advertising revenues:
Google websites	$	6,740	$	7,727	$	18,851	$	22,581
Google Network Members’ websites		2,595		3,133		7,506		9,029
Total advertising revenues		9,335		10,860		26,357		31,610
Other revenues		385		666		965		1,525
Total Google revenues (advertising and other)		9,720		11,526		27,322		33,135
Total Motorola revenues (hardware and other)		—		2,575		—		3,825
Consolidated revenues	$	9,720	$	14,101	$	27,322	$	36,960

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2012			2011			2012
Advertising revenues:
Google websites		69	%		67	%		69	%		68	%
Google Network Members’ websites		27	%		27	%		27	%		27	%
Total advertising revenues		96	%		94	%		96	%		95	%
Other revenues		4	%		6	%		4	%		5	%
Google revenues		100	%		100	%		100	%		100	%