Google 2013 Annual Report Download - page 40

34 GOOGLE INC.
PART II
ITEM7.Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations
Ourprovisionforincometaxesandoureectivetaxratedecreasedfrom2012to2013,primarilyasaresultofproportionately
moreearningsrealizedincountriesthathavelowerstatutorytaxratesaswellasthefederalresearchanddevelopmentcredit
relatedtotheAmericanTaxpayerReliefActof2012.
Our provision for income taxes increased from 2011 to 2012, primarily as a result of increases in federal income taxes, driven
byhighertaxableincomeyearoveryearandexpirationofthefederalresearchanddevelopmentcredit,partiallyosetby
proportionatelymoreearningsrealizedincountriesthathavelowerstatutorytaxrates.Oureectivetaxratedecreasedfrom
2011to2012,primarilyasaresultofproportionatelymoreearningsrealizedincountriesthathavelowerstatutorytaxratesas
wellasadiscreteitemrelatedtoaninvestigationbytheDepartmentofJusticerecognizedin2011,whichwasnotdeductiblefor
incometaxpurposes.
Oureectivetaxratecoulductuatesignicantlyonaquarterlybasisandcouldbeadverselyaectedtotheextentearnings
are lower than anticipated in countries that have lower statutory rates and higher than anticipated in countries that have higher
statutoryrates.Oureectivetaxratecouldalsouctuateduetothenetgainsandlossesrecognizedbylegalentitiesoncertain
hedges and related hedged intercompany and other transactions under our foreign exchange risk management program, by
changes in the valuation of our deferred tax assets or liabilities, or by changes in tax laws, regulations, or accounting principles, as
wellascertaindiscreteitems.Inaddition,wearesubjecttothecontinuousexaminationofourincometaxreturnsbytheInternal
RevenueService(IRS)andothertaxauthorities,includingEuropeangovernments.Weregularlyassessthelikelihoodofadverse
outcomesresultingfromtheseexaminationstodeterminetheadequacyofourprovisionforincometaxes.
SeeCriticalAccountingPoliciesandEstimatesbelowforadditionalinformationaboutourprovisionforincometaxes.
AreconciliationofthefederalstatutoryincometaxratetooureectivetaxrateissetforthinNote14ofNotestoConsolidated
FinancialStatementsincludedinItem8ofthisAnnualReportonForm10-K.
Net Income (Loss) from Discontinued Operations
OnApril17,2013,wecompletedthedispositionoftheMotorolaHomesegmenttoArrisandcertainotherpersonsforconsideration
ofapproximately$2,412millionincash,includingcashof$2,238millionreceivedontheclosingdateandcertainpost-closing
adjustmentsof$174millionreceivedinthethirdquarterof2013,andapproximately$175millioninArris’commonstock(10.6million
shares).Subsequenttothetransaction,weownapproximately7.8%oftheoutstandingsharesofArris.Additionally,inconnection
with the disposition, we agreed to indemnify Arris for potential liability from certain intellectual property infringement litigation,
forwhichwerecordedanindemnicationliabilityof$175million,themajorityofwhichwassettledduring2013.
Thedispositionresultedinanetgainof$757million,whichwaspresentedaspartofnetincomefromdiscontinuedoperations
intheConsolidatedStatementsofIncomefortheyearendedDecember31,2013.
TheMotorolaHomesegmentresultshavebeenpresentedasadiscontinuedoperationfortheyearsendedDecember31,2012
and2013.Thefollowingtableprovidesthenancialresultsincludedinnetincome(loss)fromdiscontinuedoperationsduring
the periods presented (in millions):
Year Ended December31,
2012 2013
Revenues $2,028 $ 804
Lossfromdiscontinuedoperationsbeforeincometaxes (22) (67)
(Provisionfor)/Benetsfromincometaxes (29) 16
Gain on disposal 0 757
Net (loss) income from discontinued operations $ (51) $ 706
Quarterly Results of Operations
Thefollowingtablespresentingourquarterlyresultsofoperationsshouldbereadinconjunctionwiththeconsolidatednancial
statementsandrelatednotesincludedinItem8ofthisAnnualReportonForm10-K.Wehavepreparedtheunauditedinformation
onthesamebasisasourauditedconsolidatednancialstatements.Ouroperatingresultsforanyquarterarenotnecessarily
indicativeofresultsforanyfuturequartersorforafullyear.Pleasenotethatpreviouslyreportedquartershavebeenadjusted
toshowdiscontinuedoperationsforthedispositionoftheMotorolaHomebusiness.


contents
