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Google Inc · S-1/A · On 8/13/04

Filed On 8/13/04 6:17am ET   ·   SEC File 333-114984   ·   Accession Number 1193125-4-139655

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  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 8/13/04  Google Inc                        S-1/A                  3:406                                    1193125

Pre-Effective Amendment to Registration Statement (General Form)   ·   Form S-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-1/A       Amendment No. 7 to Form S-1                         HTML  2,680K 
 2: EX-23.01    Consent of Ernst & Young Llp, Independent           HTML      6K 
                          Registered Public Accounting Firm                      
 3: EX-23.02    Consent of Ernst & Young Llp, Independent           HTML      6K 
                          Registered Public Accounting Firm                      


S-1/A   ·   Amendment No. 7 to Form S-1
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page
"Table of Contents
"Prospectus Summary
"Risk Factors
"Special Note Regarding Forward-Looking Statements
"Letter from the Founders
"Auction Process
"How to Participate in the Auction for our IPO
"Use of Proceeds
"Dividend Policy
"Cash and Capitalization
"Dilution
"Selected Consolidated Financial Data
"Management s Discussion and Analysis of Financial Condition and Results of Operations
"Business
"Management
"Certain Relationships and Related Party Transactions
"Principal and Selling Stockholders
"Description of Capital Stock
"Rescission Offer
"Shares Eligible for Future Sale
"Underwriters
"Notice to Canadian Residents
"Material United States Federal Tax Considerations for Non-U.S. Holders of Common Stock
"Legal Matters
"Experts
"Where You Can Find Additional Information
"Index to Consolidated Financial Statements
"Report of Ernst & Young LLP, Independent Registered Public Accounting Firm
"Consolidated Balance Sheets
"Consolidated Statements of Income
"Consolidated Statements of Redeemable Convertible Preferred Stock Warrant and Stockholders Equity
"Consolidated Statements of Cash Flows
"Notes to Consolidated Financial Statements
"Index to Financial Statements of Applied Semantics, Inc
"Balance Sheet
"Statement of Operations
"Statement of Redeemable Convertible Preferred Stock and Net Capital Deficiency
"Statement of Cash Flows
"Notes to Financial Statements
"Index to Condensed Financial Statements of Applied Semantics Inc
"Statements of Operations
"Statements of Cash Flows
"Notes to Condensed Financial Statements
"Appendix A Meet the Management Presentation
"Appendix B September 2004 Magazine Article

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  Amendment No. 7 to Form S-1  
Table of Contents

As filed with the Securities and Exchange Commission on August 13, 2004

Registration No. 333-114984


SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


AMENDMENT NO. 7

TO

FORM S-1

REGISTRATION STATEMENT

Under

The Securities Act of 1933


GOOGLE INC.

(Exact name of Registrant as specified in its charter)


Delaware   7375   77-0493581

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

 

1600 Amphitheatre Parkway

Mountain View, CA 94043

(650) 623-4000

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)


Eric Schmidt

Chief Executive Officer

Google Inc.

1600 Amphitheatre Parkway

Mountain View, CA 94043

(650) 623-4000

(Name, address, including zip code, and telephone number, including area code, of agent for service)


Copies to:

Larry W. Sonsini, Esq.

David J. Segre, Esq.

Wilson Sonsini Goodrich & Rosati

Professional Corporation

650 Page Mill Road

Palo Alto, California 94304-1050

(650) 493-9300

 

David C. Drummond, Esq.

Jeffery L. Donovan, Esq.

Anna Itoi, Esq.

Google Inc.

1600 Amphitheatre Parkway

Mountain View, CA 94043

(650) 623-4000

 

William H. Hinman, Jr., Esq.

Simpson Thacher & Bartlett LLP

3330 Hillview Avenue

Palo Alto, California 94304

(650) 251-5000


Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

 

If any of the securities being registered on this Form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), check the following box.  ¨

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.  ¨

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.  ¨

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

 

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box.  ¨


CALCULATION OF REGISTRATION FEE


Title of Each Class of

Securities to be Registered

  Amount to be
Registered (1)
 

Proposed Maximum
Offering Price

Per Share (2)

  Proposed Maximum
Aggregate
Offering Price
  Amount of
Registration Fee (3)

Class A common stock, par value $0.001 per share

  29,552,157 shares   $ 135.00   $ 3,989,541,195   $ 505,474.87

(1)   Includes 3,854,628 shares which the underwriters have the option to purchase to cover over-allotments, if any.
(2)   Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) promulgated under the Securities Act of 1933.
(3)   Previously paid.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.



Table of Contents

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting any offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

Prospectus (Subject to Completion)

Dated August 13, 2004

 

25,697,529 Shares

 

Picture -- LOGO

 

Class A Common Stock

 


 

Google Inc. is offering 14,142,135 shares of Class A common stock and the selling stockholders are offering 11,555,394 shares of Class A common stock. We will not receive any proceeds from the sale of shares by the selling stockholders. This is our initial public offering and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $108.00 and $135.00 per share.

 


 

Following this offering, we will have two classes of authorized common stock, Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to ten votes per share and is convertible at any time into one share of Class A common stock.

 


 

Our Class A common stock has been approved for quotation on The Nasdaq National Market under the symbol “GOOG,” subject to official notice of issuance.

 


 

Investing in our Class A common stock involves risks. See “ Risk Factors” beginning on page 4.

 


 

Price $         A Share

 


 

     Price to
Public


   Underwriting
Discounts and
Commissions


   Proceeds to
Google


   Proceeds to
Selling
Stockholders


Per Share

   $             $                     $                     $                 

Total

   $             $                     $                     $                 

 


 

The selling stockholders have granted the underwriters the right to purchase up to an additional 3,854,628 shares to cover over-allotments.

 

The price to the public and allocation of shares will be determined by an auction process. The minimum size for a bid in the auction will be five shares of our Class A common stock. The method for submitting bids and a more detailed description of this auction process are included in “Auction Process” beginning on page 34. As part of this auction process, we are attempting to assess the market demand for our Class A common stock and to set the size and price to the public of this offering to meet that demand. As a result, buyers should not expect to be able to sell their shares for a profit shortly after our Class A common stock begins trading. We will determine the method for allocating shares to bidders who submitted successful bids following the closing of the auction.

 

The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

It is expected that the shares will be delivered to purchasers on or about August     , 2004.

 


 

Morgan Stanley   Credit Suisse First Boston

Goldman, Sachs & Co.   Citigroup
Lehman Brothers   Allen & Company LLC
JPMorgan   UBS Investment Bank
WR Hambrecht+Co   Thomas Weisel Partners LLC

 


Table of Contents

 TABLE OF CONTENTS

 

     Page

Prospectus Summary

   1

Risk Factors

   4

Special Note Regarding Forward-Looking Statements

   26

Letter from the Founders

   27

Auction Process

   34

How to Participate in the Auction for our IPO

   42

Use of Proceeds

   44

Dividend Policy

   44

Cash and Capitalization

   44

Dilution

   46

Selected Consolidated Financial Data

   48

Management’s Discussion and Analysis of Financial Condition and Results of Operations

   50

Business

   73

Management

   87

Certain Relationships and Related Party Transactions

   100

Principal and Selling Stockholders

   102
     Page

Description of Capital Stock

   105

Rescission Offer

   111

Shares Eligible for Future Sale

   113

Underwriters

   117

Notice to Canadian Residents

   121

Material United States Federal Tax Considerations for Non-U.S. Holders of Common Stock

   122

Legal Matters

   124

Experts

   124

Where You Can Find Additional Information

   124

Index to Consolidated Financial Statements

   F-1

Index to Financial Statements of Applied Semantics, Inc.

   F-39

Index to Condensed Financial Statements of Applied Semantics Inc.

   F-55

Appendix A—Meet the Management Presentation

   A-1

Appendix B—September 2004 Magazine Article

   B-1

 


 

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information that is different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of our Class A common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is complete and accurate only as of the date of the front cover regardless of the time of delivery of this prospectus or of any sale of shares. Except where the context requires otherwise, in this prospectus, the “Company,” “Google,” “we,” “us” and “our” refer to Google Inc., a Delaware corporation, and, where appropriate, its subsidiaries.

 

We have not undertaken any efforts to qualify this offering for offers to individual investors in any jurisdiction outside the U.S.; therefore, individual investors located outside the U.S. should not expect to be eligible to participate in this offering.

 

Until                     , 2004, 25 days after the date of this offering, all dealers that effect transactions in our shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.


Table of Contents

 PROSPECTUS SUMMARY

 

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. You should read this summary together with the more detailed information, including our financial statements and the related notes, elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in “Risk Factors.”

 

Google Inc.

 

Google is a global technology leader focused on improving the ways people connect with information. Our innovations in web search and advertising have made our web site a top Internet destination and our brand one of the most recognized in the world. We maintain the world’s largest online index of web sites and other content, and we make this information freely available to anyone with an Internet connection. Our automated search technology helps people obtain nearly instant access to relevant information from our vast online index.

 

We generate revenue by delivering relevant, cost-effective online advertising. Businesses use our AdWords program to promote their products and services with targeted advertising. In addition, the thousands of third-party web sites that comprise our Google Network use our Google AdSense program to deliver relevant ads that generate revenue and enhance the user experience. Advertisers in our AdWords program pay us a fee each time a user clicks on one of their ads displayed either on our web sites or on the web sites of Google Network members that participate in our AdSense program. When a user clicks on an ad displayed on a web site of a Google Network member, we retain only a small portion of the advertiser fee, while most of the fee is paid to the Google Network member.

 

Our mission is to organize the world’s information and make it universally accessible and useful. We believe that the most effective, and ultimately the most profitable, way to accomplish our mission is to put the needs of our users first. We have found that offering a high-quality user experience leads to increased traffic and strong word-of-mouth promotion. Our dedication to putting users first is reflected in three key commitments we have made to our users:

 

    We will do our best to provide the most relevant and useful search results possible, independent of financial incentives. Our search results will be objective and we will not accept payment for inclusion or ranking in them.

 

    We will do our best to provide the most relevant and useful advertising. Whenever someone pays for something, we will make it clear to our users. Advertisements should not be an annoying interruption.

 

    We will never stop working to improve our user experience, our search technology and other important areas of information organization.

 

We believe that our user focus is the foundation of our success to date. We also believe that this focus is critical for the creation of long-term value. We do not intend to compromise our user focus for short-term economic gain.

 

Corporate Information

 

We were incorporated in California in September 1998. In August 2003, we reincorporated in Delaware. Our principal executive offices are located at 1600 Amphitheatre Parkway, Mountain View, California 94043, and our telephone number is (650) 623-4000. We maintain a number of web sites including www.google.com. The information on our web sites is not part of this prospectus.

 

Google® is a registered trademark in the U.S. and several other countries. Our unregistered trademarks include: AdSense, AdWords, Blogger, Froogle, Gmail, I’m Feeling Lucky and PageRank. All other trademarks, trade names and service marks appearing in this prospectus are the property of their respective holders.

 

1


Table of Contents

 The Offering

 

Class A common stock offered:

    

By Google

   14,142,135 Shares

By the selling stockholders

   11,555,394 Shares

Total

   25,697,529 Shares

Class A common stock to be outstanding after this offering

   39,695,863 Shares

Class B common stock to be outstanding after this offering

   231,523,780 Shares

Total common stock to be outstanding after this offering

   271,219,643 Shares

Use of proceeds

   We intend to use the net proceeds from this offering for general corporate purposes, including working capital, and possible acquisitions of complementary businesses, technologies or other assets. We will not receive any of the proceeds from the sale of shares by the selling stockholders. See “Use of Proceeds” for additional information.

Proposed Nasdaq symbol

   GOOG

 

The number of shares of Class A and Class B common stock that will be outstanding after this offering is based on the number of shares outstanding at June 30, 2004 and includes (i) 2,700,000 shares of Class A common stock issued to Yahoo! Inc. in connection with a settlement arrangement, (ii) 62,187 shares of Class A common stock that will be sold in the offering by one of our selling stockholders following exercise of a warrant to purchase Class B common stock and (iii) the conversion of the shares of Class B common stock into Class A common stock in connection with this sale, and excludes:

 

    1,933,953 shares of Class B common stock issuable upon the exercise of warrants outstanding at June 30, 2004, at a weighted average exercise price of $0.62 per share.

 

    6,276,573 shares of Class A common stock issuable upon the exercise of options outstanding at June 30, 2004, at a weighted average exercise price of $9.42 per share.

 

    10,456,084 shares of Class B common stock issuable upon the exercise of options outstanding at June 30, 2004, at a weighted average exercise price of $2.68 per share.

 

    3,891,192 shares of common stock available for future issuance under our stock option plans at June 30, 2004.

 

Unless otherwise indicated, all information in this prospectus assumes that the underwriters do not exercise the over-allotment option to purchase 3,854,628 additional shares of Class A common stock in this offering and that all shares of our preferred stock are converted into Class B common stock prior to this offering.

 

The Auction Process

 

The auction process being used for our initial public offering differs from methods that have been traditionally used in most other underwritten initial public offerings in the U.S. In particular, the initial public offering price and the allocation of shares will be determined by an auction process conducted by us and our underwriters. You should be aware that we have selected an underwriting group that serves a broad range of the investing public, and each member of the underwriting group makes different suitability determinations with respect to investors participating in the auction process. We encourage you to discuss any questions you have regarding underwriter requirements with the underwriter through which you intend to bid because these requirements could affect your ability to submit a bid. For more information about the auction process, see “Auction Process.”

 

2


Table of Contents

Summary Consolidated Financial Data

 

The following table summarizes financial data regarding our business and should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus.

 

    Year Ended December 31,

  Six Months Ended
June 30,


 
    1999

    2000

    2001

    2002

    2003

  2003

  2004

 
    (in thousands, except per share data)  
        (unaudited)  

Consolidated Statements of Operations Data:

                                                   

Revenues

  $ 220     $ 19,108     $ 86,426     $ 439,508     $ 1,465,934   $ 559,817   $ 1,351,835  

Costs and expenses:

                                                   

Cost of revenues

    908       6,081       14,228       131,510       625,854     204,596     641,775  

Research and development

    2,930       10,516       16,500       31,748       91,228     29,997     80,781  

Sales and marketing

    1,677       10,385       20,076       43,849       120,328     42,589     104,681  

General and administrative

    1,221       4,357       12,275       24,300       56,699     22,562     47,083  

Stock-based compensation

          2,506       12,383       21,635       229,361     70,583     151,234  
   


 


 


 


 

 

 


Total costs and expenses

    6,736       33,845       75,462       253,042       1,123,470     370,327     1,025,554  
   


 


 


 


 

 

 


Income (loss) from operations

    (6,516 )     (14,737 )     10,964       186,466       342,464     189,490     326,281  

Interest income (expense) and other, net

    440       47       (896 )     (1,551 )     4,190     719     (1,198 )
   


 


 


 


 

 

 


Income (loss) before income taxes

    (6,076 )     (14,690 )     10,068       184,915       346,654     190,209     325,083  

Provision for income taxes

                3,083       85,259       241,006     132,241     182,047  
   


 


 


 


 

 

 


Net income (loss)

  $ (6,076 )   $ (14,690 )   $ 6,985     $ 99,656     $ 105,648   $ 57,968   $ 143,036  
   


 


 


 


 

 

 


Net income (loss) per share:

                                                   

Basic

  $ (0.14 )   $ (0.22 )   $ 0.07     $ 0.86     $ 0.77   $ 0.44   $ 0.93  

Diluted

  $ (0.14 )   $ (0.22 )   $ 0.04     $ 0.45     $ 0.41   $ 0.23   $ 0.54  

Number of shares used in per share calculations:

                                                   

Basic

    42,445       67,032       94,523       115,242       137,697     131,525     153,263  

Diluted

    42,445       67,032       186,776       220,633       256,638     253,024     265,223  

 

The following table presents a summary of our balance sheet data at June 30, 2004:

 

    On an actual basis.

 

    On a pro forma as adjusted basis to give effect to the conversion of all outstanding shares of our preferred stock into shares of Class B common stock prior to the closing of this offering and to further give effect to the sale by us of shares of our Class A common stock at an assumed initial public offering price of $121.50 per share, and the receipt of the net proceeds from this offering, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, as set forth under “Use of Proceeds” and “Cash and Capitalization.”

 

    At June 30, 2004

 
    Actual

   

Pro Forma

as Adjusted


 
    (in thousands)  
    (unaudited)  

Consolidated Balance Sheet Data:

               

Cash, cash equivalents and short-term investments

  $ 548,687     $ 2,215,334  

Total assets

    1,328,022       2,994,669  

Total long-term liabilities

    58,766       58,766  

Deferred stock-based compensation

    (352,815 )     (352,815 )

Total stockholders’ equity

    1,016,999       2,683,646  

 

3


Table of Contents

 RISK FACTORS

 

An investment in Google involves significant risks. You should read these risk factors carefully before deciding whether to invest in our company. The following is a description of what we consider our key challenges and risks.

 

Risks Related to Our Business and Industry

 

We face significant competition from Microsoft and Yahoo.

 

We face formidable competition in every aspect of our business, and particularly from other companies that seek to connect people with information on the web and provide them with relevant advertising. Currently, we consider our primary competitors to be Microsoft and Yahoo. Microsoft has announced plans to develop a new web search technology that may make web search a more integrated part of the Windows operating system. We expect that Microsoft will increasingly use its financial and engineering resources to compete with us. Yahoo has become an increasingly significant competitor, having acquired Overture Services, which offers Internet advertising solutions that compete with our AdWords and AdSense programs, as well as the Inktomi, AltaVista and AllTheWeb search engines. Since June 2000, Yahoo h