Google 2013 Annual Report Download - page 43


PART II
ITEM7.Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations
$3.1billion.Theestimatedfairvaluewasbasedonquotedpricesforourpublicly-tradeddebtasofDecember31,2013.Weare
notsubjecttoanynancialcovenantsunderthenotes.
InAugust2013,weenteredintoa$258millioncapitalleaseobligationoncertainpropertyexpiringin2028withanoptionto
purchasein2016.Theeectiverateofthecapitalleaseobligationapproximatesthemarketrate.Theestimatedfairvalueofthe
capitalleaseobligationapproximateditscarryingvalueatDecember31,2013.
Insummary,ourcashowsareasfollows(inmillions):
Year Ended December31,
2011 2012 2013
Net cash provided by operating activities $ 14,565 $ 16,619 $ 18,659
Net cash used in investing activities (19,041) (13,056) (13,679)
Netcashprovidedby(usedin)nancingactivities 807 1,229 (857)
Cash Provided by Operating Activities
OurlargestsourceofcashprovidedbyoperatingcashowsisadvertisingrevenuesgeneratedbyGooglewebsitesandGoogle
NetworkMembers’websites.Wealsogeneratecashfromthesaleofourhardwareproducts,primarilyintheMotorolaMobile
segment.OurprimaryusesofcashfromoperatingactivitiesincludepaymentstoourGoogleNetworkMembersanddistribution
partners,whicharebasedontherevenueshareorxedfeearrangements,aswellaspaymentsformanufacturingandinventory-
relatedcostsprimarilyfortheMotorolaMobilesegment.Inaddition,usesofcashfromoperatingactivitiesincludecompensation
andrelatedcosts,othergeneralcorporateexpendituresandincometaxes.
Cashprovidedbyoperatingactivitiesconsistofnetincomeadjustedforcertainnon-cashitems,includingstock-basedcompensation
expense,depreciation,amortization,deferredincometaxes,excesstaxbenetsfromstock-basedawardactivities,aswellasthe
eectofchangesinworkingcapitalandotheractivities.
Netcashprovidedbyoperatingactivitiesincreasedfrom2012to2013,primarilyduetoincreasednetincomeadjustedforgain
ondivestitureofbusinesses,depreciationandamortizationexpenseonpropertyandequipment,stock-basedcompensation
expense,andamortizationofintangibleassets.Theseincreaseswerepartiallyosetbythenetdecreaseincashfromchanges
inworkingcapitalprimarilyasaresultofadecreaseinincometaxes,anincreaseinaccountsreceivableandinventories,oset
byanincreaseinaccountspayable.
Netcashprovidedbyoperatingactivitiesincreasedfrom2011to2012,primarilyduetoincreasednetincomeadjustedforgain
ondivestitureofbusinesses,stock-basedcompensationexpense,depreciationandamortizationexpenseonpropertyand
equipmentandamortizationofintangibleassets.Inaddition,therewasanetincreaseincashfromchangesinworkingcapital
primarilydrivenbyanincreaseinincometaxesandadecreaseinaccountsreceivableandinventories.Theseincreaseswere
partiallyosetbythenetincreaseinprepaidandotherassetsandadecreaseinaccountspayable.
Asweexpandourbusinessinternationally,wehaveoeredpaymenttermstocertainadvertisersthatarestandardintheirlocales
butlongerthantermswewouldgenerallyoertoourdomesticadvertisers.Thismayincreaseourworkingcapitalrequirements
andmayhaveanegativeeectoncashprovidedbyouroperatingactivities.
Cash Used In Investing Activities
Cash provided by or used in investing activities primarily consist of purchases, maturities, and sales of marketable securities,
acquisitionsofbusinessesandintangibleassets,divestitureofbusinesses,andpurchasesofpropertyandequipment.Inaddition,
cash provided by or used in investing activities include our investments in reverse repurchase agreements and the cash collateral
receivedorreturnedfromoursecuritieslendingprogram.
Cash used in investing activities increased from 2012 to 2013, primarily attributable to a net increase in purchases of marketable
securities and an increase in capital expenditures primarily related to our production equipment, data centers, and real estate
purchases.Thisincreasewaspartiallyosetbylowerspendrelatedtoacquisitionsandanincreaseinproceedsreceivedfrom
divestitureofbusinesses.
Cash used in investing activities decreased from 2011 to 2012, primarily attributable to a decrease in purchases of marketable
securities,partiallyosetbyadecreaseinmaturitiesandsalesofmarketablesecuritiesandanincreaseinspendrelatedto
acquisitionsduetothepurchaseofMotorolain2012.
Inordertomanageexpectedincreasesininternettrac,advertisingtransactions,andnewproductsandservices,andtosupport
ouroverallglobalbusinessexpansion,weexpecttomakesignicantinvestmentsinproductionequipment,oursystems,data
centers,corporatefacilities,andinformationtechnologyinfrastructurein2014andthereafter.However,theamountofourcapital
expenditureshasuctuatedandmaycontinuetouctuateonaquarterlybasis.
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