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Google Inc · 10-Q · For 6/30/04

Filed On 8/16/04 4:41pm ET · SEC File 0-50726 · Accession Number 1193125-4-141838

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

 8/16/04  Google Inc                        10-Q        6/30/04    3:85                                     1193125

Quarterly Report · Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report on Form 10-Q                       HTML    628K 
 2: EX-31.1     Certifications of Chief Executive and Financial     HTML     18K 
                          Officers Pursuant to Section 302                       
 3: EX-32.1     Certifications of Chief Executive and Financial     HTML      9K 
                          Officers Pursuant to Section 906

10-Q · Quarterly Report on Form 10-Q
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities Consolidated Balance Sheets June 30, 2004 (unaudited) and December 31, 2003 Consolidated Statements of Cash Flows Six Months Ended June 30, 2004 and 2003 (unaudited) Consolidated Statements of Income Three and Six Months Ended June 30, 2004 and 2003 (unaudited) Controls and Procedures Defaults Upon Senior Securities Exhibit Index Exhibits and Reports on Form 8-K Financial Statements Legal Proceedings Management s Discussion and Analysis of Financial Condition and Results of Operations Notes to Unaudited Consolidated Financial Statements Other Information Part I. Financial Information Part Ii. Other Information Quantitative and Qualitative Disclosures About Market Risk Signatures Submission of Matters to a Vote of Security Holders Table of Contents
1	1st Page
"	Table of Contents
"	Part I. Financial Information
"	Financial Statements
"	Consolidated Balance Sheets June 30, 2004 (unaudited) and December 31, 2003
"	Consolidated Statements of Income Three and Six Months Ended June 30, 2004 and 2003 (unaudited)
"	Consolidated Statements of Cash Flows Six Months Ended June 30, 2004 and 2003 (unaudited)
"	Notes to Unaudited Consolidated Financial Statements
"	Management s Discussion and Analysis of Financial Condition and Results of Operations
"	Quantitative and Qualitative Disclosures About Market Risk
"	Controls and Procedures
"	Part Ii. Other Information
"	Legal Proceedings
"	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
"	Defaults Upon Senior Securities
"	Submission of Matters to a Vote of Security Holders
"	Other Information
"	Exhibits and Reports on Form 8-K
"	Signatures
"	Exhibit Index

This is an EDGAR HTML document rendered as filed. [ Alternative Formats ]

Quarterly Report on Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2004

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-50726

Google Inc.

(Exact name of registrant as specified in its charter)

Delaware

77-0493581

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer

Identification Number)

1600 Amphitheatre Parkway

Mountain View, CA 94043

(Address of principal executive offices)

(Zip code)

(650) 623-4000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ¨ NO x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act) YES ¨ NO x

At July 31, 2004, the number of shares outstanding of the registrant’s Class A common stock, $0.001 par value, Class B common stock, $0.001 par value, and preferred stock was 12,398,854, 162,861,743 and 79,099,884, respectively.

GOOGLE INC.

Form 10-Q

For the Quarter Ended June 30, 2004

INDEX


		Page No.
	PART I. FINANCIAL INFORMATION
Item 1	Financial Statements

	Consolidated Balance Sheets—June 30, 2004 (unaudited) and December 31, 2003	1

	Consolidated Statements of Income—Three and Six Months Ended June 30, 2004 and 2003 (unaudited)	2

	Consolidated Statements of Cash Flows—Six Months Ended June 30, 2004 and 2003 (unaudited)	3

	Notes to Unaudited Consolidated Financial Statements	4

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3	Quantitative and Qualitative Disclosures About Market Risk	50

Item 4	Controls and Procedures	51

	PART II. OTHER INFORMATION

Item 1	Legal Proceedings	53

Item 2	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	53

Item 3	Defaults Upon Senior Securities	53

Item 4	Submission of Matters to a Vote of Security Holders	53

Item 5	Other Information	54

Item 6	Exhibits and Reports on Form 8-K	54

	Signatures	55

	Exhibit Index	56

	Certifications

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Google Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)


	As of December 31, 2003			As of June 30, 2004
				(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	148,995		$	254,698
Short-term investments		185,723			293,989
Accounts receivable, net of allowance of $4,670 and $5,611		154,690			191,187
Income taxes receivable		—			45,047
Deferred income taxes		22,105			30,334
Prepaid revenue share, expenses and other assets		48,721			66,634

Total current assets		560,234			881,889
Property and equipment, net		188,255			320,718
Goodwill		87,442			87,442
Intangible assets, net		18,114			16,313
Prepaid revenue share, expenses and other assets, non-current		17,413			21,660

Total assets	$	871,458		$	1,328,022

Liabilities, Redeemable Convertible Preferred Stock Warrant and Stockholders’ Equity
Current liabilities:
Accounts payable	$	46,175		$	61,830
Accrued compensation and benefits		33,522			33,931
Accrued expenses and other current liabilities		26,411			41,054
Accrued revenue share		88,672			93,435
Deferred revenue		15,346			18,256
Income taxes payable		20,705			—
Current portion of equipment leases		4,621			3,751

Total current liabilities		235,452			252,257
Long-term portion of equipment leases		1,988			456
Deferred revenue, long-term		5,014			6,023
Liability for stock options exercised early, long-term		6,341			8,576
Deferred income taxes		18,510			42,199
Other long-term liabilities		1,512			1,512

Commitments and contingencies

Redeemable convertible preferred stock warrant		13,871			—

Stockholders’ equity:
Convertible preferred stock, $0.001 par value, issuable in series: 164,782 and 164,782 shares authorized at December 31, 2003 and June 30, 2004, 71,662 and 79,099 shares issued and outstanding at December 31, 2003 and June 30, 2004, liquidation preference of $40,815 and $62,458 at December 31, 2003 and June 30, 2004		44,346			79,860
Class A and Class B common stock, $0.001 par value: 700,000 shares authorized, 160,866 and 165,012 shares issued and outstanding, excluding 11,987 and 10,203 shares subject to repurchase at December 31, 2003 and June 30, 2004		161			165
Additional paid-in capital		725,219			956,882
Note receivable from officer/stockholder		(4,300	)		—
Deferred stock-based compensation		(369,668	)		(352,815	)
Accumulated other comprehensive income		1,660			(1,481	)
Retained earnings		191,352			334,388

Total stockholders’ equity		588,770			1,016,999

Total liabilities, redeemable convertible preferred stock warrant and stockholders’ equity	$	871,458		$	1,328,022

See accompanying notes.

Google Inc.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)


	Three Months Ended June 30,					Six Months Ended June 30,
	2003		2004			2003		2004
	(unaudited)
Revenues	$	311,199	$	700,212		$	559,817	$	1,351,835
Costs and expenses:
Cost of revenues		117,401		326,377			204,596		641,775
Research and development		17,492		45,762			29,997		80,781
Sales and marketing		24,822		56,777			42,589		104,681
General and administrative		12,535		25,577			22,562		47,083
Stock-based compensation(1)		34,165		74,761			70,583		151,234

Total costs and expenses		206,415		529,254			370,327		1,025,554

Income from operations		104,784		170,958			189,490		326,281
Interest income (expense) and other, net		766		(1,498	)		719		(1,198	)

Income before income taxes		105,550		169,460			190,209		325,083
Provision for income taxes		73,382		90,397			132,241		182,047

Net income	$	32,168	$	79,063		$	57,968	$	143,036

Net income per share:
Basic	$	0.24	$	0.51		$	0.44	$	0.93

Diluted	$	0.12	$	0.30		$	0.23	$	0.54

Number of shares used in per share calculations:
Basic		135,710		155,441			131,525		153,263

Diluted		257,361		266,263			253,024		265,223

(1) Stock-based compensation is allocated as follows (see Note 1):

	Three Months Ended June 30,					Six Months Ended June 30,
	2003		2004			2003		2004
	(unaudited)
Cost of revenues	$	1,361	$	2,546		$	2,813	$	7,622
Research and development		18,814		45,836			38,237		92,102
Sales and marketing		7,093		13,431			14,711		27,576
General and administrative		6,897		12,948			14,822		23,934

	$	34,165	$	74,761		$	70,583	$	151,234

See accompanying notes.

Google Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Six Months Ended June 30,
	2003			2004
	(unaudited)
Operating activities
Net income	$	57,968		$	143,036
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment		15,885			49,824
Amortization of warrants		4,732			62
Amortization of intangibles		2,114			4,801
In-process research and development		—			950
Stock-based compensation		70,583			151,234
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable		(34,174	)		(36,497	)
Income taxes, net		16,619			42,950
Prepaid revenue share, expenses and other assets		(13,750	)		(21,946	)
Accounts payable		10,727			15,642
Accrued expenses and other liabilities		6,232			11,866
Accrued revenue share		35,923			4,763
Deferred revenue		4,315			3,919

Net cash provided by operating activities		177,174			370,604

Investing activities
Purchases of property and equipment		(60,553	)		(182,283	)
Purchase of short-term investments		(89,528	)		(471,081	)
Maturities and sales of short-term investments		97,474			361,908
Acquisitions, net of cash acquired		(39,452	)		(3,538	)

Net cash used in investing activities		(92,059	)		(294,994	)

Financing activities
Proceeds from exercise of stock options, net		7,845			8,553
Proceeds from exercise of warrants		—			21,877
Payments of notes receivable from stockholders		—			4,300
Payments of principal on capital leases and equipment loans		(3,946	)		(2,403	)

Net cash provided by financing activities		3,899			32,327

Effect of exchange rate changes on cash and cash equivalents		(689	)		(2,234	)

Google Inc · 10-Q · For 6/30/04

Filed On 8/16/04 4:41pm ET · SEC File 0-50726 · Accession Number 1193125-4-141838

Quarterly Report · Form 10-QFiling Table of Contents

10-Q · Quarterly Report on Form 10-QDocument Table of Contents

This is an EDGAR HTML document rendered as filed. [ Alternative Formats ]

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Quarterly Report · Form 10-Q
Filing Table of Contents

10-Q · Quarterly Report on Form 10-Q
Document Table of Contents