Google Inc.
CONSOLIDATED BALANCE SHEETS
(In millions)
As of
December 31,
2011
Assets
Current assets:
Cash and cash equivalents
Marketable securities
Accounts receivable, net of allowance
Inventories
Receivable under reverse repurchase agreements
Deferred income taxes, net
Prepaid revenue share, expenses and other assets
Total current assets
Prepaid revenue share, expenses and other assets, non-current
Non-marketable equity securities
Property and equipment, net
Intangible assets, net
Goodwill
Total assets
$9,983
34,643
5,427
35
745
215
1,710
52,758
499
790
9,603
1,578
7,346
$72,574
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
Short-term debt
Accrued compensation and benefits
Accrued expenses and other current liabilities
Accrued revenue share
Securities lending payable
Deferred revenue
Income taxes payable, net
Total current liabilities
Long-term debt
Deferred revenue, non-current
Income taxes payable, non-current
Deferred income taxes, net, non-current
Other long-term liabilities
Stockholders' equity:
Common stock and additional paid-in capital
Accumulated other comprehensive income
Retained earnings
Total stockholders' equity
Total liabilities and stockholders' equity
20,264
276
37,605
58,145
$72,574
$588
1,218
1,818
1,370
1,168
2,007
547
197
8,913
2,986
44
1,693
287
506
As of
December 31,
2012
(unaudited)
$14,778
33,310
7,885
505
700
1,144
2,132
60,454
2,011
1,469
11,854
7,473
10,537
$93,798
$2,012
2,549
2,239
3,258
1,471
1,673
895
240
14,337
2,988
100
2,046
1,872
740
22,835
538
48,342
71,715
$93,798

Revenues:
Google (advertising and other)
Motorola Mobile (hardware and other)
Total revenues
Costs and expenses:
Cost of revenues - Google (advertising and other) (1)
Cost of revenues - Motorola Mobile (hardware and other) (1)
Research and development (1)
Sales and marketing (1)
General and administrative (1)
Charge related to the resolution of Department of Justice investigation
Total costs and expenses
Income from operations
Interest and other income, net
Income from continuing operations before income taxes
Provision for income taxes
Net income from continuing operations
Net loss from discontinued operations
Net income
Net income (loss) per share - basic:
Continuing operations
Discontinued operations
Net income per share - basic
Net income (loss) per share - diluted:
Continuing operations
Discontinued operations
Net income per share - diluted
Shares used in per share calculation - basic
Shares used in per share calculation - diluted
(1) Includes stock-based compensation expense as follows:
Cost of revenues - Google (advertising and other)
Cost of revenues - Motorola Mobile (hardware and other)
Research and development
Sales and marketing
General and administrative
Google Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except share amounts which are reflected in thousands and per share amounts)
2011
Three Months Ended
December 31,
(unaudited)
2012
$10,584
-
10,584
$12,905
1,514
14,419
3,507
(18)
3,489
784
2,705
-
$2,705
3,702
-
1,298
1,268
809
-
7,077
$8.34
-
$8.34
$8.22
-
$8.22
324,204
329,002
$8.68
-0.06
$8.62
329,363
334,977
4,963
1,250
1,935
1,751
1,126
-
11,025
3,394
152
3,546
639
2,907
(21)
$2,886
$8.83
-0.06
$8.77
$77
-
266
105
88
$536
$101
4
364
130
109
$708
2011
Twelve Months Ended
December 31,
2012
(unaudited)
$37,905
-
37,905
$46,039
4,136
50,175
13,188
-
5,162
4,589
2,724
500
26,163
11,742
584
12,326
2,589
9,737
-
$9,737
$30.17
-
$30.17
$32.97
-0.16
$32.81
17,176
3,458
6,793
6,143
3,845
-
37,415
12,760
626
13,386
2,598
10,788
(51)
$10,737
$29.76
-
$29.76
322,778
327,214
$32.46
-0.15
$32.31
327,213
332,305
$249
-
1,061
361
303
$1,974
$359
14
1,325
498
453
$2,649

Operating activities
Net income
Adjustments:
Depreciation and amortization of property and equipment
Amortization of intangible and other assets
Stock-based compensation expense
Excess tax benefits from stock-based award activities
Deferred income taxes
Impairment of equity investments
Gain on divestiture of business
Other
Changes in assets and liabilities, net of effects of acquisitions and divestiture:
Accounts receivable
Income taxes, net
Inventories
Prepaid revenue share, expenses and other assets
Accounts payable
Accrued expenses and other liabilities
Accrued revenue share
Deferred revenue
Net cash provided by operating activities
Investing activities
Purchases of property and equipment
Purchases of marketable securities
Maturities and sales of marketable securities
Investments in non-marketable equity securities
Cash collateral related to securities lending
Investments in reverse repurchase agreements
Acquisitions, net of cash acquired and proceeds received from divestiture, and purchases of intangibles and other assets
Net cash used in investing activities
Financing activities
Net proceeds (payments) related to stock-based award activities
Excess tax benefits from stock-based award activities
Proceeds from issuance of debt, net of costs
Repayments of debt
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Google Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(951)
(17,979)
15,639
(70)
(1,048)
400
(550)
(4,559)
Three Months Ended
December 31,
2011
(unaudited)
2012
$2,705 $2,886
(909)
463
(12)
(104)
29
540
189
79
385
118
536
(25)
(183)
110
-
3
(559)
156
113
382
(225)
278
356
(19)
630
323
716
(75)
(289)
-
(4)
-
3,924 4,669
(1,020)
(9,164)
5,380
(450)
(13)
(150)
(97)
(5,514)
15
25
2,125
(2,125)
40
(52)
(647)
10,630
$9,983
(98)
75
3,984
(4,653)
(692)
55
(1,482)
16,260
$14,778
(3,438)
(61,672)
48,746
(428)
(354)
5
(1,900)
(19,041)
Twelve Months Ended
December 31,
2011 2012
(unaudited)
$9,737 $10,737
(1,156)
731
(30)
(232)
101
795
259
162
1,396
455
1,974
(86)
343
110
6
-
(787)
1,492
301
(833)
(499)
762
299
163
1,988
974
2,692
(188)
(266)
-
(188)
(28)
14,565 16,619
(3,273)
(33,410)
35,180
(696)
(334)
45
(10,568)
(13,056)
(5)
86
10,905
(10,179)
807
22
(3,647)
13,630
$9,983
(287)
188
16,109
(14,781)
1,229
3
4,795
9,983
$14,778

Reconciliations of selected non-GAAP financial measures to the nearest comparable GAAP financial meaures
The following tables present reconciliations of selected non-GAAP financial measures to the nearest comparable GAAP financial measures (in millions, unaudited):
Revenues
Costs and expenses:
Cost of revenues
Research and development
Sales and marketing
General and administrative
Total costs and expenses
Income from operations
Three Months Ended December 31, 2011
Google
GAAP
$10,584
Adjustments (1) Non-GAAP
$10,584
3,702
1,298
1,268
809
7,077
$3,507
$77
266
105
88
536
3,625
1,032
1,163
721
6,541
$4,043
Revenues
Costs and expenses:
Cost of revenues
Research and development
Sales and marketing
General and administrative
Total costs and expenses
Income (loss) from operations
GAAP
$12,905
4,963
1,660
1,525
1,010
9,158
$3,747
Google
Adjustments (1)
101
346
124
106
677
Three Months Ended December 31, 2012
Non-GAAP
$12,905
4,862
1,314
1,401
904
8,481
$4,424
(1) To eliminate stock-based compensation expense.
(2) To eliminate stock-based compensation expense, as well as restructuring and related charges recorded in Motorola Mobile.
GAAP
$1,514
1,250
275
226
116
1,867
($353)
Motorola Mobile
Adjustments (2)
70
102
16
13
201
Non-GAAP
$1,514
1,180
173
210
103
1,666
($152)
GAAP
$14,419
6,213
1,935
1,751
1,126
11,025
$3,394
Consolidated
Adjustments (2)
171
448
140
119
878
Non-GAAP
$14,419
6,042
1,487
1,611
1,007
10,147
$4,272

Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures
The following table presents certain non-GAAP results before certain material items (in millions, except share amounts which are reflected in thousands and per share amounts, unaudited):
Three Months Ended December 31, 2011 Three Months Ended December 31, 2012
Consolidated
Income from operations
GAAP Actual
$3,507
Operating
Margin (a)
33.1%
Net income
Net income per share - diluted
Shares used in per share calculation - diluted
$2,705
$8.22
329,002
$422
(a) Operating margin is defined as consolidated income from operations divided by consolidated revenues.
(b) Non-GAAP operating margin is defined as non-GAAP consolidated income from operations divided by consolidated revenues.
(c) To eliminate $536 million of stock-based compensation expense recorded in the fourth quarter of 2011.
(d) To eliminate $700 million of stock-based compensation expense recorded in the fourth quarter of 2012.
(e) To eliminate $178 million of restructuring and related charges recorded in our Motorola Mobile business.
(f) To eliminate income tax effects related to expenses noted in (c) and (d).
(g) To eliminate income tax effects related to expense noted in (e).
(h) To eliminate net loss from discontinued operations.
(i) To include $35 million of impact from Motorola Home.
Adjustments
$536 (c)
Non-GAAP
Results
Non-GAAP
Operating
Margin (b)
$536
$536 (c)
(114) (f)
$4,043
$3,127
$9.50
329,002
38.2%
GAAP Actual
$3,394
$2,886
$8.62
334,977
Operating
Margin (a)
23.5%
Adjustments
$700 (d)
178 (e)
$878
Non-GAAP
Results
Non-GAAP
Operating
Margin (b)
$4,272 29.6%
$700 (d)
(152) (f)
178 (e)
(65) (g)
21 (h)
$682 $3,568
$10.65
334,977
Adjustment
35 (i)
$35
Non-GAAP
Results with
Home
$4,307
The following tables present certain non-GAAP results before certain material items by business (in millions, unaudited):
Three Months Ended December 31, 2011 Three Months Ended December 31, 2012
Google
Income from operations
GAAP Actual
$3,507
Operating
Margin (j)
33.1%
Adjustments
$536 (l)
$536
Non-GAAP
Results
Non-GAAP
Operating
Margin (k) GAAP Actual
$4,043 38.2% $3,747
Operating
Margin (j)
29.0%
Adjustments
$677 (m)
$677
Non-GAAP
Results
Non-GAAP
Operating
Margin (k)
$4,424 34.3%
(j) Operating margin is defined as Google income from operations divided by Google revenues.
(k) Non-GAAP operating margin is defined as non-GAAP Google income from operations divided by Google revenues.
(l) To eliminate $536 million of stock-based compensation expense recorded in the fourth quarter of 2011.
(m) To eliminate $677 million of stock-based compensation expense recorded in the fourth quarter of 2012.
Motorola Mobile
Loss from operations
(n) Operating margin is defined as Motorola Mobile loss from operations divided by Motorola Mobile revenues.
(o) Non-GAAP operating margin is defined as non-GAAP Motorola Mobile loss from operations divided by Motorola Mobile revenues.
(p) To eliminate $23 million of stock-based compensation expense recorded in the fourth quarter of 2012.
(q) To eliminate $178 million of restructuring and related charges recorded in our Motorola Mobile business.
Three Months Ended December 31, 2012
GAAP Actual
($353)
Operating
Margin (n)
-23.3%
Adjustments
$23 (p)
178 (q)
$201
Non-GAAP
Results
Non-GAAP
Operating
Margin (o)
($152) -10.0%

Reconciliation from net cash provided by operating activities to free cash flow (in millions, unaudited):
Net cash provided by operating activities
Less purchases of property and equipment
Free cash flow
Net cash used in investing activities*
Net cash used in financing activities
*Includes purchases of property and equipment.
Three Months Ended
December 31, 2012
$4,669
(1,020)
$3,649
($5,514)
($692)

Reconciliation from GAAP international revenues to non-GAAP international revenues (in millions, unaudited):
Consolidated
United Kingdom revenues (GAAP)
Exclude foreign exchange impact on Q4'12 revenues using Q4'11 rates
Exclude foreign exchange impact on Q4'12 revenues using Q3'12 rates
Exclude hedging gains recognized in Q4'12
United Kingdom revenues excluding foreign exchange and hedging impact (Non-GAAP)
Rest of the world revenues (GAAP)
Exclude foreign exchange impact on Q4'12 revenues using Q4'11 rates
Exclude foreign exchange impact on Q4'12 revenues using Q3'12 rates
Exclude hedging gains recognized in Q4'12
Rest of the world revenues excluding foreign exchange and hedging impact (Non-GAAP)
Three Months Ended
December 31, 2012
(using Q411's FX rates)
$1,323
(17)
(1)
$1,305
$6,340
238
(36)
$6,542
Three Months Ended
December 31, 2012
(using Q312's FX rates)
$1,323
(28)
(1)
$1,294
$6,340
(106)
(36)
$6,198
Google
United Kingdom revenues (GAAP)
Exclude foreign exchange impact on Q4'12 revenues using Q4'11 rates
Exclude foreign exchange impact on Q4'12 revenues using Q3'12 rates
Exclude hedging gains recognized in Q4'12
United Kingdom revenues excluding foreign exchange and hedging impact (Non-GAAP)
Rest of the world revenues (GAAP)
Exclude foreign exchange impact on Q4'12 revenues using Q4'11 rates
Exclude foreign exchange impact on Q4'12 revenues using Q3'12 rates
Exclude hedging gains recognized in Q4'12
Rest of the world revenues excluding foreign exchange and hedging impact (Non-GAAP)
Three Months Ended
December 31, 2012
(using Q411's FX rates)
$1,305
(16)
(1)
$1,288
$5,608
209
(36)
$5,781
Three Months Ended
December 31, 2012
(using Q312's FX rates)
$1,305
(27)
(1)
$1,277
$5,608
(103)
(36)
$5,469

The following table presents our consolidated revenues by revenue source (in millions):
Three Months Ended
December 31,
2011 2012
(unaudited)
Advertising revenues:
Google websites
Google Network Members' websites
Total advertising revenues
Other revenues
Total Google revenues (advertising and other)
Total Motorola Mobile revenues (hardware and other)
Consolidated revenues
$7,294
2,880
10,174
410
10,584
$10,584
-
$8,640
3,436
12,076
829
12,905
1,514
$14,419
Twelve Months Ended
December 31,
2011 2012
(unaudited)
$26,145
10,386
36,531
1,374
37,905
-
$37,905
$31,221
12,465
43,686
2,353
46,039
4,136
$50,175
The following table presents our Google revenues, by revenue source, as a percentage of Google revenues:
Three Months Ended
December 31,
2011 2012
(unaudited)
Advertising revenues:
Google websites
Google Network Members' websites
Total advertising revenues
Other revenues
Google revenues
69%
27%
96%
4%
100%
67%
27%
94%
6%
100%
Twelve Months Ended
December 31,
2011 2012
(unaudited)
69%
27%
96%
4%
100%
68%
27%
95%
5%
100%