Google 2013 Annual Report Download - page 42

 GOOGLE INC.
PART II
ITEM7.Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations
The following table presents our unaudited quarterly results of operations as a percentage of revenues for the eight quarters
ended December 31, 2013:
Quarter Ended
Mar31,
2012
Jun30,
2012
Sep30,
2012
Dec31,
2012
Mar31,
2013
Jun30,
2013
Sep30,
2013
Dec31,
2013
Revenues:
Google (advertising and other) 100.0%92.9%86.6%89.5%92.7%92.9%92.4%93.2%
Motorola Mobile (hardware and other) 0 7.1 13.4 10.5 7.3 7.1 7.6 6.8
Total revenues 100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%
Costs and expenses:
Cost of revenues—Google
(advertising and other) 35.6 33.7 33.4 34.4 36.8 36.8 36.3 37.1
Cost of revenues—Motorola Mobile
(hardware and other) 0 5.9 11.3 8.7 5.7 6.2 6.7 7.0
Research and development 13.5 13.0 14.1 13.4 13.2 14.1 13.5 12.5
Sales and marketing 11.9 12.0 12.9 12.2 11.4 12.3 12.1 12.6
General and administrative 7.2 8.0 7.7 7.8 8.0 8.5 8.3 7.5
Total costs and expenses 68.2 72.6 79.4 76.5 75.1 77.9 76.9 76.7
Income from operations 31.8 27.4 20.6 23.5 24.9 22.1 23.1 23.3
Interest and other income, net 1.5 2.1 0.5 1.1 1.0 1.8 0.2 0.7
Income from continuing operations
before income taxes 33.3 29.5 21.1 24.6 25.9 23.9 23.3 24.0
Provision for income taxes 6.2 5.5 4.9 4.4 2.1 5.8 3.4 4.0
Net income from continuing operations 27.1%24.0%16.2%20.2%23.8%18.1%19.9%20.0%
Net income (loss) from discontinued
operations 0% (0.4)% 0.1%(0.2)% 0.2%4.8%0.1% 0%
Net income 27.1%23.6%16.3%20.0%24.0%22.9%20.0%20.0%
Liquidity and Capital Resources
AsofDecember31,2013,wehad$58.7billionofcash,cashequivalents,andmarketablesecurities.Cashequivalentsand
marketable securities are comprised of time deposits, money market and other funds, including cash collateral received related
tooursecuritieslendingprogram,highlyliquiddebtinstrumentsoftheU.S.governmentanditsagencies,debtinstrumentsissued
byforeigngovernments,debtinstrumentsissuedbymunicipalitiesintheU.S.,corporatesecurities,mortgage-backedsecurities
andasset-backedsecurities.
AsofDecember31,2013,$33.6billionofthe$58.7billionofcash,cashequivalents,andmarketablesecuritieswasheldbyour
foreignsubsidiaries.IfthesefundsareneededforouroperationsintheU.S.,wewouldberequiredtoaccrueandpayU.S.taxes
torepatriatethesefunds.However,ourintentistopermanentlyreinvestthesefundsoutsideoftheU.S.andourcurrentplans
donotdemonstrateaneedtorepatriatethemtofundourU.S.operations.
Ourprincipalsourcesofliquidityareourcash,cashequivalents,andmarketablesecurities,aswellasthecashowthatwegenerate
fromouroperations.AtDecember31,2013,wehadunusedlettersofcreditforapproximately$173million.Webelievethatour
sourcesoffundingwillbesucienttosatisfyourcurrentlyanticipatedcashrequirementsthroughatleastthenext12months.
Ourliquiditycouldbenegativelyaectedbyadecreaseindemandforourproductsandservices.Inaddition,wemaymake
acquisitions or license products and technologies complementary to our business and may need to raise additional capital through
futuredebtorequitynancingtoprovideforgreaterexibilitytofundanysuchacquisitionsandlicensingactivities.Additional
nancingmaynotbeavailableatallorontermsfavorabletous.
Wehaveadebtnancingprogramofupto$3.0billionthroughtheissuanceofcommercialpaper.Netproceedsfromthis
programareusedforgeneralcorporatepurposes.AsofDecember31,2013,wehad$2.0billionofcommercialpaperoutstanding
recordedasshort-termdebt,withaweighted-averageinterestrateof0.1%thatmatureatvariousdatesthroughJune2014.
Averagecommercialpaperborrowingsduringtheyearwere$2.1billionandthemaximumamountoutstandingduringtheyear
was$2.5billion.Inconjunctionwiththisprogram,wehavea$3.0billionrevolvingcreditfacilityexpiringinJuly2016.Theinterest
rateforthecreditfacilityisdeterminedbasedonaformulausingcertainmarketrates.AsofDecember31,2013,wewerein
compliancewiththenancialcovenantinthecreditfacilityandnoamountswereoutstanding.
InMay2011,weissued$3.0billionofunsecuredseniornotesinthreeequaltranches,duein2014,2016,and2021,withstated
interestratesof1.25%,2.125%,and3.625%.Thenetproceedsfromthesaleofthenoteswereusedtorepayaportionofour
outstandingcommercialpaperandforgeneralcorporatepurposes.InMay2013,wereclassiedthersttrancheof$1.0billion
unsecuredseniornotesdueinMay2014asshort-termdebt.Weplantoissue$1.0billionoflong-termdebtwhenthisnote
maturesin2014.AsofDecember31,2013,thetotalcarryingvalueandestimatedfairvalueofthesenoteswere$3.0billionand
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