10/18/12

Press Release

EX-99.1 2 d426664dex991.htm PRESS RELEASE

Exhibit99.1 GoogleInc.AnnouncesThirdQuarter2012Results MOUNTAINVIEW,Calif.October18,2012GoogleInc.(NASDAQ:GOOG)todayannouncedfinancialresultsforthe quarterendedSeptember30,2012. PENDINGLARRYQUOTE Q3FinancialSummary GoogleInc.reportedconsolidatedrevenuesof$14.10billionforthequarterendedSeptember30,2012,anincreaseof45% comparedtothethirdquarterof2011.GoogleInc.reportsitsrevenues,consistentwithGAAP,onagrossbasiswithout deductingtrafficacquisitioncosts(TAC).Inthethirdquarterof2012,TACtotaled$2.77billion,or26%ofadvertising revenues. Operatingincome,operatingmargin,netincome,andearningspershare(EPS)arereportedonaGAAPandnonGAAPbasis. ThenonGAAPmeasures,aswellasfreecashflow,analternativenonGAAPmeasureofliquidity,aredescribedbelowandare reconciledtothecorrespondingGAAPmeasuresattheendofthisrelease. GAAPoperatingincomeinthethirdquarterof2012was$2.74billion,or19%ofrevenues.ThiscomparestoGAAP operatingincomeof$3.06billion,or31%ofrevenues,inthethirdquarterof2011.NonGAAPoperatingincomein thethirdquarterof2012was$3.80billion,or27%ofrevenues.ThiscomparestononGAAPoperatingincomeof $3.63billion,or37%ofrevenues,inthethirdquarterof2011. GAAPnetincomeinthethirdquarterof2012was$2.18billion,comparedto$2.73billioninthethirdquarterof 2011.NonGAAPnetincomeinthethirdquarterof2012was$3.01billion,comparedto$3.18billioninthethird quarterof2011. GAAPEPSinthethirdquarterof2012was$6.53on333milliondilutedsharesoutstanding,comparedto$8.33in thethirdquarterof2011on327milliondilutedsharesoutstanding.NonGAAPEPSinthethirdquarterof2012was $9.03,comparedto$9.72inthethirdquarterof2011. NonGAAPoperatingincomeandnonGAAPoperatingmarginexcludestockbasedcompensation(SBC)expense, aswellasrestructuringandrelatedchargesrecordedinourMotorolabusiness.NonGAAPnetincomeandnon GAAPEPSexcludetheexpensesnotedabove,netoftherelatedtaxbenefits.Inthethirdquarterof2012,the expenserelatedtoSBCandtherelatedtaxbenefitswere$715millionand$155millioncomparedto$571million and$116millioninthethirdquarterof2011.Inthethirdquarterof2012,restructuringandrelatedchargesrecorded inourMotorolabusinesswere$349million,andtherelatedtaxbenefitswere$76million.

www.sec.gov/Archives/edgar/data/1288776/000119312512426975/d426664dex991.htm

1/14

10/18/12

Press Release

Q3FinancialHighlights RevenuesandotherinformationOnaconsolidatedbasis,GoogleInc.revenuesforthequarterendedSeptember30,2012 was$14.10billion,anincreaseof45%comparedtothethirdquarterof2011. GoogleRevenues(advertisingandother)Googlerevenueswere$11.53billion,or82%ofconsolidated revenues,inthethirdquarterof2012,representinga19%increaseoverthirdquarter2011revenuesof$9.72billion. GoogleSitesRevenuesGoogleownedsitesgeneratedrevenuesof$7.73billion,or67%oftotalGoogle revenues,inthethirdquarterof2012.Thisrepresentsa15%increaseoverthirdquarter2011Googlesites revenuesof$6.74billion. GoogleNetworkRevenuesGooglespartnersitesgeneratedrevenuesof$3.13billion,or27%oftotal Googlerevenues,inthethirdquarterof2012.Thisrepresentsa21%increasefromthirdquarter2011Google networkrevenuesof$2.60billion.

GoogleInternationalRevenuesGooglerevenuesfromoutsideoftheUnitedStatestotaled$6.11billion, representing53%oftotalGooglerevenuesinthethirdquarterof2012,comparedto54%inthesecondquarterof 2012and55%inthethirdquarterof2011. ForeignExchangeImpactonGoogleRevenuesExcludinggainsrelatedtoourforeignexchangerisk managementprogram,hadforeignexchangeratesremainedconstantfromthesecondquarterof2012throughthe thirdquarterof2012,ourGooglerevenuesinthethirdquarterof2012wouldhavebeen$136millionhigher. Excludinggainsrelatedtoourforeignexchangeriskmanagementprogram,hadforeignexchangeratesremained constantfromthethirdquarterof2011throughthethirdquarterof2012,ourGooglerevenuesinthethirdquarter of2012wouldhavebeen$557millionhigher. GooglerevenuesfromtheUnitedKingdomtotaled$1.22billion,representing11%ofGooglerevenuesinthe thirdquarterof2012,comparedto11%inthethirdquarterof2011. Inthethirdquarterof2012,werecognizedabenefitof$62milliontoGooglerevenuesthroughourforeign exchangeriskmanagementprogram,comparedto$1millioninthethirdquarterof2011.

ReconciliationsofournonGAAPinternationalrevenuesexcludingtheimpactofforeignexchangeandhedgingto GAAPinternationalrevenuesareincludedattheendofthisrelease. PaidClicksAggregatepaidclicks,whichincludeclicksrelatedtoadsservedonGooglesitesandthesitesofour Networkmembers,increasedapproximately33%overthethirdquarterof2011andincreasedapproximately6% overthesecondquarterof2012. CostPerClickAveragecostperclick,whichincludesclicksrelatedtoadsservedonGooglesitesandthesitesof ourNetworkmembers,decreasedapproximately15%overthethirdquarterof2011anddecreasedapproximately 3%overthesecondquarterof2012. TACTrafficacquisitioncosts,theportionofrevenuessharedwithGooglespartners,increasedto$2.77billionin thethirdquarterof2012,comparedto$2.21billioninthethirdquarterof2011.TACasapercentageofadvertising revenueswas26%inthethirdquarterof2012,comparedto24%inthethirdquarterof2011. ThemajorityofTACisrelatedtoamountsultimatelypaidtoourNetworkmembers,whichtotaled$2.21billionin thethirdquarterof2012.TACalsoincludesamountsultimatelypaidtocertaindistributionpartnersandotherswho directtraffictoourwebsite,whichtotaled$556millioninthethirdquarterof2012.

www.sec.gov/Archives/edgar/data/1288776/000119312512426975/d426664dex991.htm

2/14

10/18/12

Press Release

MotorolaRevenues(hardwareandother)Motorolarevenueswere$2.58billion($1.78billionfromthemobile segmentand$797millionfromthehomesegment),or18%ofconsolidatedrevenuesinthethirdquarterof2012.

OtherCostofRevenuesOthercostofrevenues,whichiscomprisedprimarilyofdatacenteroperationalexpenses, amortizationofintangibleassets,contentacquisitioncosts,creditcardprocessingcharges,andmanufacturingandinventory relatedcosts,increasedto$3.78billion,or27%ofrevenues,inthethirdquarterof2012,comparedto$1.17billion,or12%of revenues,inthethirdquarterof2011. OperatingExpensesOperatingexpenses,otherthancostofrevenues,were$4.81billioninthethirdquarterof2012,or 34%ofrevenues,comparedto$3.28billioninthethirdquarterof2011,or34%ofrevenues. AmortizationExpensesAmortizationexpensesofacquisitionrelatedintangibleassetswere$317millionforthethird quarterof2012,comparedto$126millioninthethirdquarterof2011.Ofthe$317million,$182millionwasasaresultof theacquisitionofMotorola,ofwhich$109millionwasallocatedtoGoogleand$73millionwasallocatedtoMotorola. StockBasedCompensation(SBC)Inthethirdquarterof2012,thetotalchargerelatedtoSBCwas$762million,ofwhich $47millionwasrestructuringrelated,comparedto$571millioninthethirdquarterof2011. WecurrentlyestimateSBCchargesforgrantstoemployeespriortoSeptember30,2012tobeapproximately$2.7billionfor 2012.Thisestimatedoesnotincludeexpensestoberecognizedrelatedtoemployeestockawardsthataregrantedafter September30,2012ornonemployeestockawardsthathavebeenormaybegranted. OperatingIncomeOnaconsolidatedbasis,GAAPoperatingincomeinthethirdquarterof2012was$2.74billion,or19% ofrevenues.ThiscomparestoGAAPoperatingincomeof$3.06billion,or31%ofrevenues,inthethirdquarterof2011.Non GAAPoperatingincomeinthethirdquarterof2012was$3.80billion,or27%ofrevenues.ThiscomparestononGAAP operatingincomeof$3.63billion,or37%ofrevenues,inthethirdquarterof2011. GoogleOperatingIncomeGAAPoperatingincomeforGooglewas$3.26billion,or28%ofGooglerevenues,in thethirdquarterof2012.ThiscomparestoGAAPoperatingincomeof$3.06billion,or31%ofGooglerevenues,in thethirdquarterof2011.NonGAAPoperatingincomeinthethirdquarterof2012was$3.95billion,or34%of Googlerevenues.ThiscomparestononGAAPoperatingincomeof$3.63billioninthethirdquarterof2011,or 37%ofGooglerevenues. MotorolaOperatingLossGAAPoperatinglossforMotorolawas$527million($505millionforthemobile segmentand$22millionforthehomesegment),or20%ofMotorolarevenuesinthethirdquarterof2012.Non GAAPoperatinglossforMotorolainthethirdquarterof2012was$151million,or6%ofMotorolarevenues.

InterestandOtherIncome,NetInterestandotherincome,net,was$63millioninthethirdquarterof2012,comparedto $302millioninthethirdquarterof2011. IncomeTaxesOureffectivetaxratewas22%forthethirdquarterof2012. NetIncomeGAAPnetincomeinthethirdquarterof2012was$2.18billion,comparedto$2.73billioninthethirdquarter of2011.NonGAAPnetincomewas$3.01billioninthethirdquarterof2012,comparedto$3.18billioninthethirdquarter of2011.GAAPEPSinthethirdquarterof2012was$6.53on333milliondilutedsharesoutstanding,comparedto$8.33in thethirdquarterof2011on327milliondilutedsharesoutstanding.NonGAAPEPSinthethirdquarterof2012was$9.03, comparedto$9.72inthethirdquarterof2011.

www.sec.gov/Archives/edgar/data/1288776/000119312512426975/d426664dex991.htm

3/14

10/18/12

Press Release

CashFlowandCapitalExpendituresNetcashprovidedbyoperatingactivitiesinthethirdquarterof2012totaled$4.0 billion,comparedto$3.95billioninthethirdquarterof2011.Inthethirdquarterof2012,capitalexpenditureswere$872 million,themajorityofwhichwasforproductionequipmentandfacilitiesrelatedpurchases.Freecashflow,analternative nonGAAPmeasureofliquidity,isdefinedasnetcashprovidedbyoperatingactivitieslesscapitalexpenditures.Inthethird quarterof2012,freecashflowwas$3.13billion. Weexpecttocontinuetomakesignificantcapitalexpenditures. Areconciliationoffreecashflowtonetcashprovidedbyoperatingactivities,theGAAPmeasureofliquidity,isincludedat theendofthisrelease. CashAsofSeptember30,2012,cash,cashequivalents,andshorttermmarketablesecuritieswere$45.7billion. HeadcountOnaworldwidebasis,weemployed53,546fulltimeemployees(36,118inourGooglebusinessand17,428in ourMotorolabusiness)asofSeptember30,2012,comparedto54,604fulltimeemployeesasofJune30,2012. WEBCASTANDCONFERENCECALLINFORMATION AliveaudiowebcastofGooglesthirdquarter2012earningsreleasecallwillbeavailableat http://investor.google.com/webcast.html.Thecallbeginstodayat1:30PM(PT)/4:30PM(ET).Thispressrelease,the financialtables,aswellasothersupplementalinformationincludingthereconciliationsofcertainnonGAAPmeasuresto theirnearestcomparableGAAPmeasures,arealsoavailableonthatsite. FORWARDLOOKINGSTATEMENTS Thispressreleasecontainsforwardlookingstatementsthatinvolverisksanduncertainties.Thesestatementsinclude statementsregardingourcontinuedinvestmentsinourcoreareasofstrategicfocus,ourexpectedSBCcharges,andourplans tomakesignificantcapitalexpenditures.Actualresultsmaydiffermateriallyfromtheresultspredicted,andreportedresults shouldnotbeconsideredasanindicationoffutureperformance.Thepotentialrisksanduncertaintiesthatcouldcauseactual resultstodifferfromtheresultspredictedinclude,amongothers,unforeseenchangesinourhiringpatternsandourneedto expendcapitaltoaccommodatethegrowthofthebusiness,aswellasthoserisksanduncertaintiesincludedunderthe captionsRiskFactorsandManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperationsin ourAnnualReportonForm10KfortheyearendedDecember31,2011andourmostrecentQuarterlyReportonForm10Q forthequarterendedJune30,2012,whichareonfilewiththeSECandareavailableonourinvestorrelationswebsiteat investor.google.comandontheSECwebsiteatwww.sec.gov.AdditionalinformationwillalsobesetforthinourQuarterly ReportonForm10QforthequarterendedSeptember30,2012.Allinformationprovidedinthisreleaseandinthe attachmentsisasofOctober18,2012,andweundertakenodutytoupdatethisinformationunlessrequiredbylaw. ABOUTNONGAAPFINANCIALMEASURES Tosupplementourconsolidatedfinancialstatements,whichstatementsarepreparedandpresentedinaccordancewithGAAP, weusethefollowingnonGAAPfinancialmeasures:nonGAAPoperatingincome,nonGAAPoperatingmargin,nonGAAP netincome,nonGAAPEPS,freecashflow,andnonGAAPinternationalrevenues.Thepresentationofthisfinancial informationisnotintendedtobeconsideredinisolationorasasubstitutefor,orsuperiorto,thefinancialinformation preparedandpresentedinaccordancewithGAAP.FormoreinformationonthesenonGAAPfinancialmeasures,pleasesee thetablescaptionedReconciliationsofselectednonGAAPfinancialmeasurestothenearestcomparableGAAPfinancial measures,ReconciliationsofnonGAAPresultsofoperationsmeasuresto

www.sec.gov/Archives/edgar/data/1288776/000119312512426975/d426664dex991.htm

4/14

10/18/12

Press Release

thenearestcomparableGAAPmeasures,Reconciliationfromnetcashprovidedbyoperatingactivitiestofreecashflow, andReconciliationfromGAAPinternationalrevenuestononGAAPinternationalrevenuesincludedattheendofthis release. WeusethesenonGAAPfinancialmeasuresforfinancialandoperationaldecisionmakingandasameanstoevaluateperiod toperiodcomparisons.OurmanagementbelievesthatthesenonGAAPfinancialmeasuresprovidemeaningfulsupplemental informationregardingourperformanceandliquiditybyexcludingcertainexpensesandexpendituresthatmaynotbe indicativeofourrecurringcorebusinessoperatingresults,meaningouroperatingperformanceexcludingnotonlynoncash charges,suchasSBC,butalsodiscretecashchargesthatareinfrequentinnature.Webelievethatbothmanagementand investorsbenefitfromreferringtothesenonGAAPfinancialmeasuresinassessingourperformanceandwhenplanning, forecasting,andanalyzingfutureperiods.ThesenonGAAPfinancialmeasuresalsofacilitatemanagementsinternal comparisonstoourhistoricalperformanceandliquidityaswellascomparisonstoourcompetitorsoperatingresults.We believethesenonGAAPfinancialmeasuresareusefultoinvestorsbothbecause(1)theyallowforgreatertransparencywith respecttokeymetricsusedbymanagementinitsfinancialandoperationaldecisionmakingand(2)theyareusedbyour institutionalinvestorsandtheanalystcommunitytohelpthemanalyzethehealthofourbusiness. NonGAAPoperatingincomeandoperatingmargin.WedefinenonGAAPoperatingincomeasoperatingincomeplus expensesrelatedtoSBC,and,asapplicable,otherspecialitems.NonGAAPoperatingmarginisdefinedasnonGAAP operatingincomedividedbyrevenues.GoogleconsidersthesenonGAAPfinancialmeasurestobeusefulmetricsfor managementandinvestorsbecausetheyexcludetheeffectofSBC,andasapplicable,otherspecialitemssothatGoogles managementandinvestorscancompareGooglesrecurringcorebusinessoperatingresultsovermultipleperiods.Becauseof varyingavailablevaluationmethodologies,subjectiveassumptionsandthevarietyofawardtypesthatcompaniescanuse underFASBASCTopic718,GooglesmanagementbelievesthatprovidinganonGAAPfinancialmeasurethatexcludes SBCallowsinvestorstomakemeaningfulcomparisonsbetweenGooglesrecurringcorebusinessoperatingresultsandthose ofothercompanies,aswellasprovidingGooglesmanagementwithanimportanttoolforfinancialandoperationaldecision makingandforevaluatingGooglesownrecurringcorebusinessoperatingresultsoverdifferentperiodsoftime.Therearea numberoflimitationsrelatedtotheuseofnonGAAPoperatingincomeversusoperatingincomecalculatedinaccordance withGAAP.First,nonGAAPoperatingincomeexcludessomecosts,namely,SBC,thatarerecurring.SBChasbeenandwill continuetobefortheforeseeablefutureasignificantrecurringexpenseinGooglesbusiness.Second,SBCisanimportant partofouremployeescompensationandimpactstheirperformance.Third,thecomponentsofthecoststhatweexcludein ourcalculationofnonGAAPoperatingincomemaydifferfromthecomponentsthatourpeercompaniesexcludewhenthey reporttheirresultsofoperations.Managementcompensatesfortheselimitationsbyprovidingspecificinformationregarding theGAAPamountsexcludedfromnonGAAPoperatingincomeandevaluatingnonGAAPoperatingincometogetherwith operatingincomecalculatedinaccordancewithGAAP. NonGAAPnetincomeandEPS.WedefinenonGAAPnetincomeasnetincomeplusexpensesrelatedtoSBCand,as applicable,otherspecialitemslesstherelatedtaxeffects.ThetaxeffectsofSBCand,asapplicable,otherspecialitemsare calculatedusingthetaxdeductibleportionofSBC,and,asapplicable,otherspecialitems,andapplyingtheentityspecific, U.S.federalandblendedstatetaxrates.WedefinenonGAAPEPSasnonGAAPnetincomedividedbytheweightedaverage outstandingshares,onafullydilutedbasis.WeconsiderthesenonGAAPfinancialmeasurestobeausefulmetricfor managementandinvestorsforthesamereasonsthatGoogleusesnonGAAPoperatingincomeandnonGAAPoperating margin.However,inordertoprovideacompletepictureofourrecurringcorebusinessoperatingresults,weexcludefromnon GAAPnetincomeandnonGAAPEPSthetaxeffectsassociatedwithSBCand,asapplicable,otherspecialitems.Without excludingthesetaxeffects,investorswouldonlyseethegrosseffectthatexcludingtheseexpenseshadonouroperating results.ThesamelimitationsdescribedaboveregardingGooglesuseofnonGAAPoperatingincomeandnonGAAP operatingmarginapplytoouruseofnonGAAPnetincomeandnonGAAPEPS.Managementcompensatesforthese limitationsbyprovidingspecificinformationregardingtheGAAPamountsexcludedfromnonGAAPnetincomeandnon GAAPEPSandevaluatingnonGAAPnetincomeandnonGAAPEPStogetherwithnetincomeandEPScalculatedin accordancewithGAAP.

www.sec.gov/Archives/edgar/data/1288776/000119312512426975/d426664dex991.htm

5/14

10/18/12

Press Release

Freecashflow.Wedefinefreecashflowasnetcashprovidedbyoperatingactivitieslesscapitalexpenditures.Weconsider freecashflowtobealiquiditymeasurethatprovidesusefulinformationtomanagementandinvestorsabouttheamountof cashgeneratedbythebusinessthat,aftertheacquisitionofpropertyandequipment,includinginformationtechnology infrastructureandlandandbuildings,canbeusedforstrategicopportunities,includinginvestinginourbusiness,making strategicacquisitions,andstrengtheningthebalancesheet.Analysisoffreecashflowalsofacilitatesmanagements comparisonsofouroperatingresultstocompetitorsoperatingresults.AlimitationofusingfreecashflowversustheGAAP measureofnetcashprovidedbyoperatingactivitiesasameansforevaluatingGoogleisthatfreecashflowdoesnotrepresent thetotalincreaseordecreaseinthecashbalancefromoperationsfortheperiodbecauseitexcludescashusedforcapital expendituresduringtheperiod.Ourmanagementcompensatesforthislimitationbyprovidinginformationaboutourcapital expendituresonthefaceofthestatementofcashflowsandunderthecaptionManagementsDiscussionandAnalysisof FinancialConditionandResultsofOperationsinourQuarterlyReportonForm10QandAnnualReportonForm10K. Googlehascomputedfreecashflowusingthesameconsistentmethodfromquartertoquarterandyeartoyear. NonGAAPinternationalrevenues.WedefinenonGAAPinternationalrevenuesasinternationalrevenuesexcludingthe impactofforeignexchangeandhedging.NonGAAPinternationalrevenuesarecalculatedbytranslatingcurrentquarter revenuesusingpriorquarterandprioryearexchangerates,aswellasexcludinganyhedginggainsrealizedinthecurrent quarter.WeconsidernonGAAPinternationalrevenuesasausefulmetricasitfacilitatesmanagementsinternalcomparisonto ourhistoricalperformance. TheaccompanyingtableshavemoredetailsonthenonGAAPfinancialmeasuresthataremostdirectlycomparabletoGAAP financialmeasuresandtherelatedreconciliationsbetweenthesefinancialmeasures. Contact: WillaChalmers InvestorRelations +16502143381 willa@google.com

www.sec.gov/Archives/edgar/data/1288776/000119312512426975/d426664dex991.htm

6/14

10/18/12

Press Release

GoogleInc. CONSOLIDATEDBALANCESHEETS (Inmillions)

Asof December31, 2011* Asof September30, 2012 (unaudited)

Assets Currentassets: Cashandcashequivalents Marketablesecurities Accountsreceivable,netofallowance Inventories Receivableunderreverserepurchaseagreements Deferredincometaxes,net Prepaidrevenueshare,expensesandotherassets Totalcurrentassets Prepaidrevenueshare,expensesandotherassets,noncurrent Nonmarketableequitysecurities Propertyandequipment,net Intangibleassets,net Goodwill Totalassets LiabilitiesandStockholdersEquity Currentliabilities: Accountspayable Shorttermdebt Accruedcompensationandbenefits Accruedexpensesandothercurrentliabilities Accruedrevenueshare Securitieslendingpayable Deferredrevenue Incometaxespayable,net Totalcurrentliabilities Longtermdebt Deferredrevenue,noncurrent Incometaxespayable,noncurrent Deferredincometaxes,net,noncurrent Otherlongtermliabilities Stockholdersequity: Commonstockandadditionalpaidincapital Accumulatedothercomprehensiveincome Retainedearnings Totalstockholdersequity Totalliabilitiesandstockholdersequity * Derivedfromauditedfinancialstatements.

$ 9,983 34,643 5,427 35 745 215 1,710 52,758 499 790 9,603 1,578 7,346 $ 72,574

$ $

16,260 29,464 7,259 618 550 230 2,440 56,821 2,206 1,063 11,401 7,754 10,485 89,730

$ $

588 1,218 1,818 1,370 1,168 2,007 547 197 8,913 2,986 44 1,693 287 506 20,264 276 37,605 58,145 72,574

$ $

2,233 3,218 1,926 3,313 1,108 1,686 905 45 14,434 2,988 100 2,034 1,461 685 22,204 368 45,456 68,028 89,730

www.sec.gov/Archives/edgar/data/1288776/000119312512426975/d426664dex991.htm

7/14

10/18/12

Press Release

GoogleInc. CONSOLIDATEDSTATEMENTSOFINCOME (Inmillions,exceptshareamountswhicharereflectedinthousandsandpershareamounts)

ThreeMonthsEnded September30, 2011 2012 (unaudited) NineMonthsEnded September30, 2011 2012

Revenues: Google(advertisingandother) Motorola(hardwareandother) Totalrevenues Costsandexpenses: CostofrevenuesGoogle(advertisingandother)(1) CostofrevenuesMotorola(hardwareandother)(1) Researchanddevelopment(1) Salesandmarketing(1) Generalandadministrative(1) ChargerelatedtotheresolutionofDepartmentofJustice investigation Totalcostsandexpenses Incomefromoperations Interestandotherincome,net Incomebeforeincometaxes Provisionforincometaxes Netincome Netincomepersharebasic Netincomepersharediluted Sharesusedinpersharecalculationbasic Sharesusedinpersharecalculationdiluted
(1)Includesstockbasedcompensationexpenseasfollows:

$ $ $ $

9,720 9,720 3,378 1,404 1,204 676 6,662 3,058 302 3,360 631 2,729 8.44 8.33

$ 11,526 2,575 14,101 4,440 2,114 2,009 1,760 1,042

$ 27,322 27,322 9,485 3,861 3,322 1,919

$ 33,135 3,825 36,960 12,213 3,143 5,035 4,462 2,779 27,632 9,328 473 9,801 1,950 $ 7,851 $ $ 24.05 23.69

11,365 2,736 63 2,799 623 $ 2,176 $ $ 6.64 6.53

500 19,087 8,235 602 8,837 1,804 $ 7,033 $ $ 21.82 21.53

323,155 327,439

327,785 333,314

322,304 326,619

326,452 331,414

CostofrevenuesGoogle(advertisingandother) CostofrevenuesMotorola(hardwareandother) Researchanddevelopment Salesandmarketing Generalandadministrative

$ $

72 311 104 84 571

$ $

103 8 378 155 118 762

$ $

172 795 256 214 1,437

$ $

259 13 968 372 364 1,976

www.sec.gov/Archives/edgar/data/1288776/000119312512426975/d426664dex991.htm

8/14

10/18/12

Press Release

GoogleInc. CONSOLIDATEDSTATEMENTSOFCASHFLOWS (Inmillions)

ThreeMonthsEnded NineMonthsEnded September30, September30, 2011 2012 2011 2012 (unaudited)

Operatingactivities Netincome Adjustments: Depreciationandamortizationofpropertyandequipment Amortizationofintangibleandotherassets Stockbasedcompensationexpense Excesstaxbenefitsfromstockbasedawardactivities Deferredincometaxes Gainondivestitureofbusiness Other Changesinassetsandliabilities,netofeffectsofacquisitionsand divestiture: Accountsreceivable Incometaxes,net Inventories Prepaidrevenueshare,expensesandotherassets Accountspayable Accruedexpensesandotherliabilities Accruedrevenueshare Deferredrevenue Netcashprovidedbyoperatingactivities Investingactivities Purchasesofpropertyandequipment Purchasesofmarketablesecurities Maturitiesandsalesofmarketablesecurities Investmentsinnonmarketableequitysecurities Cashcollateralrelatedtosecuritieslending Investmentsinreverserepurchaseagreements Acquisitions,netofcashacquiredandproceedsreceivedfromdivestiture, andpurchasesofintangiblesandotherassets Netcashusedininvestingactivities Financingactivities Netpaymentsrelatedtostockbasedawardactivities Excesstaxbenefitsfromstockbasedawardactivities Proceedsfromissuanceofdebt,netofcosts Repaymentsofdebt Netcashprovidedby(usedin)financingactivities Effectofexchangeratechangesoncashandcashequivalents Netincrease(decrease)incashandcashequivalents Cashandcashequivalentsatbeginningofperiod Cashandcashequivalentsatendofperiod

$ 2,729 $ 2,176 $ 7,033 $ 7,851 363 129 571 (28) 62 (52) 507 321 762 (58) (168) 32 1,011 337 1,437 (61) 526 3 1,358 651 1,976 (113) 23 (188) (24)

(223) 366 (20) 22 (5) (42) 64 14 3,950

(307) 167 18 (27) (194) 727 (80) 128 4,004

(247) 268 (18) (128) 72 255 70 83 10,641

(228) 1,336 188 (1,215) (274) 484 (57) 182 11,950 (2,253) (24,246) 29,800 (246) (321) 195

(680) (22,738) 19,480 (15) 1,119 (125)

(872) (2,487) (8,704) (43,693) 7,143 33,107 (44) (358) (230) 694 (75) (395)

(488) (525) (1,350) (10,471) (3,447) (3,307) (14,482) (7,542) (108) 28 750 (750) (80) (113) (5) (20) (189) 58 61 113 4,374 8,780 12,125 (4,375) (8,054) (10,128) 52 767 1,921 74 74 (52)

310 823 (3,000) 6,277 10,320 15,437 13,630 9,983 $ 10,630 $16,260 $ 10,630 $ 16,260

www.sec.gov/Archives/edgar/data/1288776/000119312512426975/d426664dex991.htm

9/14

10/18/12

Press Release

ReconciliationsofselectednonGAAPfinancialmeasurestothenearestcomparableGAAPfinancialmeaures ThefollowingtablespresentreconciliationsofselectednonGAAPfinancialmeasurestothenearestcomparableGAAP financialmeasures(inmillions,unaudited):

ThreeMonthsEndedSeptember30,2011 Google GAAP Adjustments(1) NonGAAP

Revenues Costsandexpenses: Costofrevenues Researchanddevelopment Salesandmarketing Generalandadministrative Totalcostsandexpenses Incomefromoperations

$9,720 $ 3,378 1,404 1,204 676 6,662 3,058 $ $ 72 311 104 84 571

$ 9,720 $ $ 3,306 1,093 1,100 592 6,091 3,629

Revenues Costsandexpenses: Costofrevenues Researchand development Salesandmarketing Generaland administrative Totalcostsandexpenses Income(loss)fromoperations

GAAP $11,526

Google Adjustments(1)

ThreeMonthsEndedSeptember30,2012 Motorola Consolidated NonGAAP GAAP Adjustments(2) NonGAAP GAAP Adjustments(2) NonGAAP $ 11,526 $2,575 $ 2,575 $14,101 $ 14,101 4,337 2,114 1,190 1,259 469 375 91 132 113 40 376 $ 2,023 6,554 337 2,009 262 1,760 104 1,042 2,726 11,365 (151) $ 2,736 194 482 239 149 1,064 $ 6,360 1,527 1,521 893 10,301 3,800

4,440 1,540 1,385 898 8,263 $ 3,263

103 350 126 109 688 $

789 144 7,575 3,102 3,951 $ (527)

(1) Toeliminatestockbasedcompensationexpense. (2) Toeliminatestockbasedcompensationexpense,aswellasrestructuringandrelatedchargesrecordedinourMotorolabusiness.

www.sec.gov/Archives/edgar/data/1288776/000119312512426975/d426664dex991.htm

10/14

10/18/12

Press Release

ReconciliationsofnonGAAPresultsofoperationsmeasurestothenearestcomparableGAAPmeasures ThefollowingtablepresentscertainnonGAAPresultsbeforecertainmaterialitems(inmillions,exceptshareamountswhich arereflectedinthousandsandpershareamounts,unaudited):

ThreeMonthsEndedSeptember30,2011 Consolidated GAAP Actual Operating Margin(a) Adjustments $ 571(c) NonGAAP NonGAAP Operating Results Margin(b) GAAP Actual ThreeMonthsEndedSeptember30,2012 Operating Margin(a) Adjustments $ 715(d) 349(e) 1,064 NonGAAP Results NonGAAP Operating Margin(b)

Incomefrom operations

3,058

31.5% $ $

571 571(c) (116)(f)

3,629

37.3% $

2,736

19.4% $ $ $

3,800

26.9%

Netincome

2,729

455

3,184

2,176

715(d) (155)(f) 349(e) (76)(g) 833 $

3,009

Netincomeper share diluted $ 8.33 Sharesusedin pershare calculation diluted 327,439 (a) (b) (c) (d) (e) (f) (g)

9.72

6.53

9.03

327,439

333,314

333,314

Operatingmarginisdefinedasconsolidatedincomefromoperationsdividedbyconsolidatedrevenues. NonGAAPoperatingmarginisdefinedasnonGAAPconsolidatedincomefromoperationsdividedbyconsolidatedrevenues. Toeliminate$571millionofstockbasedcompensationexpenserecordedinthethirdquarterof2011. Toeliminate$715millionofstockbasedcompensationexpenserecordedinthethirdquarterof2012. Toeliminate$349millionofrestructuringandrelatedchargesrecordedinourMotorolabusiness,ofwhich$47millionwasrelatedtostockbasedcompensation. Toeliminateincometaxeffectsrelatedtoexpensesnotedin(c)and(d). Toeliminateincometaxeffectsrelatedtoexpensenotedin(e).

ThefollowingtablespresentcertainnonGAAPresultsbeforecertainmaterialitemsbybusiness(inmillions,unaudited):
ThreeMonthsEndedSeptember30,2011 Google Incomefrom operations (h) (i) (j) (k) GAAP Operating Actual Margin(h) Adjustments $ 571(j) 571 NonGAAP Results NonGAAP Operating Margin(i) GAAP Actual ThreeMonthsEndedSeptember30,2012 Operating Margin(h) Adjustments $ 688(k) 688 NonGAAP Results NonGAAP Operating Margin(i)

$3,058

31.5% $

3,629

37.3% $3,263

28.3% $

3,951

34.3%

OperatingmarginisdefinedasGoogleincomefromoperationsdividedbyGooglerevenues. NonGAAPoperatingmarginisdefinedasnonGAAPGoogleincomefromoperationsdividedbyGooglerevenues. Toeliminate$571millionofstockbasedcompensationexpenserecordedinthethirdquarterof2011. Toeliminate$688millionofstockbasedcompensationexpenserecordedinthethirdquarterof2012. ThreeMonthsEndedSeptember30,2012

Motorola

GAAP Actual

Operating Margin(l)

Adjustments

NonGAAP Results

NonGAAP Operating Margin(m)

Lossfromoperations
(l) (m) (n) (o)

$(527)

20.5%

$ $

27(n) 349(o) 376

(151)

5.9%

OperatingmarginisdefinedasMotorolaincomefromoperationsdividedbyMotorolarevenues. NonGAAPoperatingmarginisdefinedasnonGAAPMotorolaincomefromoperationsdividedbyMotorolarevenues. Toeliminate$27millionofstockbasedcompensationexpenserecordedinthethirdquarterof2012. Toeliminate$349millionofrestructuringandrelatedchargesrecordedinourMotorolabusiness,ofwhich$47millionwasrelatedtostockbasedcompensation.

www.sec.gov/Archives/edgar/data/1288776/000119312512426975/d426664dex991.htm

11/14

10/18/12

Press Release

Reconciliationfromnetcashprovidedbyoperatingactivitiestofreecashflow(inmillions,unaudited):
ThreeMonthsEnded September30,2012

Netcashprovidedbyoperatingactivities Lesspurchasesofpropertyandequipment Freecashflow Netcashusedininvestingactivities* Netcashprovidedbyfinancingactivities * Includespurchasesofpropertyandequipment.

$ $ $ $

4,004 (872) 3,132 (3,307) 52

www.sec.gov/Archives/edgar/data/1288776/000119312512426975/d426664dex991.htm

12/14

10/18/12

Press Release

ReconciliationfromGAAPinternationalrevenuestononGAAPinternationalrevenues(inmillions,unaudited): Consolidated UnitedKingdomrevenues(GAAP) ExcludeforeignexchangeimpactonQ312revenues usingQ311rates ExcludeforeignexchangeimpactonQ312revenues usingQ212rates ExcludehedginggainsrecognizedinQ312 UnitedKingdomrevenuesexcludingforeignexchangeand hedgingimpact(NonGAAP) Restoftheworldrevenues(GAAP) ExcludeforeignexchangeimpactonQ312revenues usingQ311rates ExcludeforeignexchangeimpactonQ312revenues usingQ212rates ExcludehedginggainsrecognizedinQ312 Restoftheworldrevenuesexcludingforeignexchangeand hedgingimpact(NonGAAP) Google UnitedKingdomrevenues(GAAP) ExcludeforeignexchangeimpactonQ312revenues usingQ311rates ExcludeforeignexchangeimpactonQ312revenues usingQ212rates ExcludehedginggainsrecognizedinQ312 UnitedKingdomrevenuesexcludingforeignexchangeand hedgingimpact(NonGAAP) Restoftheworldrevenues(GAAP) ExcludeforeignexchangeimpactonQ312revenues usingQ311rates ExcludeforeignexchangeimpactonQ312revenues usingQ212rates ExcludehedginggainsrecognizedinQ312 Restoftheworldrevenuesexcludingforeignexchangeand hedgingimpact(NonGAAP)
ThreeMonthsEnded September30,2012 (usingQ311sFXrates) ThreeMonthsEnded September30,2012 (usingQ212sFXrates)

1,226 48

1,226

$ $

(6) 1,268 5,876 584

$ $

17 (6) 1,237 5,876

(56) 6,404

140 (56) 5,960

ThreeMonthsEnded September30,2012 (usingQ311sFXrates)

ThreeMonthsEnded September30,2012 (usingQ212sFXrates)

1,216 47

1,216

$ $

(6) 1,257 4,894 510

$ $

17 (6) 1,227 4,894

(56) 5,348

119 (56) 4,957

www.sec.gov/Archives/edgar/data/1288776/000119312512426975/d426664dex991.htm

13/14

10/18/12

Press Release

Thefollowingtablepresentsourconsolidatedrevenuesbyrevenuesource(inmillions,unaudited):
ThreeMonthsEnded September30, 2011 2012 NineMonthsEnded September30, 2011 2012

Advertisingrevenues: Googlewebsites GoogleNetworkMemberswebsites Totaladvertisingrevenues Otherrevenues TotalGooglerevenues(advertisingandother) TotalMotorolarevenues(hardwareandother) Consolidatedrevenues

$6,740 2,595 9,335 385 9,720 $9,720

$ 7,727 3,133 10,860 666 11,526 2,575 $14,101

$18,851 7,506 26,357 965 27,322 $27,322

$22,581 9,029 31,610 1,525 33,135 3,825 $36,960

ThefollowingtablepresentsourGooglerevenues,byrevenuesource,asapercentageofGooglerevenues(unaudited):
ThreeMonthsEnded September30, 2011 2012 NineMonthsEnded September30, 2011 2012

Advertisingrevenues: Googlewebsites GoogleNetworkMembers websites Totaladvertisingrevenues Otherrevenues Googlerevenues

69%

67%

69%

68%

27% 96% 4% 100%

27% 94% 6% 100%

27% 96% 4% 100%

27% 95% 5% 100%

www.sec.gov/Archives/edgar/data/1288776/000119312512426975/d426664dex991.htm

14/14