Google Financial Report - Third Quarter 2008 Results

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.

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

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