Google 2011 Annual Report Download - page 72

Purchase Obligations
Purchase obligations represent non-cancelable contractual obligations at December 31, 2011. These
contracts are primarily related to distribution arrangements, video and other content licensing revenue sharing
arrangements, as well as data center operations and facility build-outs. In addition, we had $2.8 billion of open
purchase orders for which we have not received the related services or goods at December 31, 2011. This amount
is not included in the above table because we have the right to cancel the purchase orders prior to the date of
delivery.
Long-term Debt Obligations
Long-term debt obligations represent principal and interest payments to be made over the life of our
unsecured senior notes issued in May 2011. Please see Note 4 of the Notes to Consolidated Financial Statements
included in Item 8 of this Annual Report on Form 10-K for further details.
Other Long-Term Liabilities
Other long-term liabilities consist of cash obligations, primarily the legal settlement with the Authors Guild
and the Association of American Publishers (AAP), and milestone and royalty payments owed in connection with
certain acquisitions and licensing agreements.
In addition to the amounts above, we recorded additional long-term taxes payable of $438 million in 2011
related to tax positions for which the timing of the ultimate resolution is uncertain. At this time, we are unable to
make a reasonably reliable estimate of the timing of payments in individual years beyond 12 months due to
uncertainties in the timing of tax audit outcomes. As a result, this amount is not included in the above table.
Off-Balance Sheet Entities
At December 31, 2011, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of
Regulation S-K promulgated by the SEC, that have or are reasonably likely to have a current or future effect on our
financial condition, changes in our financial condition, revenues, or expenses, results of operations, liquidity, capital
expenditures, or capital resources that is material to investors.
Critical Accounting Policies and Estimates
We prepare our consolidated financial statements in accordance with accounting principles generally
accepted in the U.S. (U.S. GAAP). In doing so, we have to make estimates and assumptions that affect our reported
amounts of assets, liabilities, revenues, and expenses, as well as related disclosure of contingent assets and
liabilities. In some cases, we could reasonably have used different accounting policies and estimates. In some
cases, changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly,
actual results could differ materially from our estimates. To the extent that there are material differences between
these estimates and actual results, our financial condition or results of operations will be affected. We base our
estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and
we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical
accounting policies and estimates, which we discuss further below. We have reviewed our critical accounting
policies and estimates with the audit committee of our board of directors.
Income Taxes
We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Significant judgment is
required in evaluating our uncertain tax positions and determining our provision for income taxes.
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