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Please find page 40 of the 2013 Google annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.34 GOOGLE INC.
PART II
ITEM7.Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations
Ourprovisionforincometaxesandoureectivetaxratedecreasedfrom2012to2013,primarilyasaresultofproportionately
moreearningsrealizedincountriesthathavelowerstatutorytaxratesaswellasthefederalresearchanddevelopmentcredit
relatedtotheAmericanTaxpayerReliefActof2012.
Our provision for income taxes increased from 2011 to 2012, primarily as a result of increases in federal income taxes, driven
byhighertaxableincomeyearoveryearandexpirationofthefederalresearchanddevelopmentcredit,partiallyosetby
proportionatelymoreearningsrealizedincountriesthathavelowerstatutorytaxrates.Oureectivetaxratedecreasedfrom
2011to2012,primarilyasaresultofproportionatelymoreearningsrealizedincountriesthathavelowerstatutorytaxratesas
wellasadiscreteitemrelatedtoaninvestigationbytheDepartmentofJusticerecognizedin2011,whichwasnotdeductiblefor
incometaxpurposes.
Oureectivetaxratecoulductuatesignicantlyonaquarterlybasisandcouldbeadverselyaectedtotheextentearnings
are lower than anticipated in countries that have lower statutory rates and higher than anticipated in countries that have higher
statutoryrates.Oureectivetaxratecouldalsouctuateduetothenetgainsandlossesrecognizedbylegalentitiesoncertain
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
wellascertaindiscreteitems.Inaddition,wearesubjecttothecontinuousexaminationofourincometaxreturnsbytheInternal
RevenueService(IRS)andothertaxauthorities,includingEuropeangovernments.Weregularlyassessthelikelihoodofadverse
outcomesresultingfromtheseexaminationstodeterminetheadequacyofourprovisionforincometaxes.
SeeCriticalAccountingPoliciesandEstimatesbelowforadditionalinformationaboutourprovisionforincometaxes.
AreconciliationofthefederalstatutoryincometaxratetooureectivetaxrateissetforthinNote14ofNotestoConsolidated
FinancialStatementsincludedinItem8ofthisAnnualReportonForm10-K.
Net Income (Loss) from Discontinued Operations
OnApril17,2013,wecompletedthedispositionoftheMotorolaHomesegmenttoArrisandcertainotherpersonsforconsideration
ofapproximately$2,412millionincash,includingcashof$2,238millionreceivedontheclosingdateandcertainpost-closing
adjustmentsof$174millionreceivedinthethirdquarterof2013,andapproximately$175millioninArris’commonstock(10.6million
shares).Subsequenttothetransaction,weownapproximately7.8%oftheoutstandingsharesofArris.Additionally,inconnection
with the disposition, we agreed to indemnify Arris for potential liability from certain intellectual property infringement litigation,
forwhichwerecordedanindemnicationliabilityof$175million,themajorityofwhichwassettledduring2013.
Thedispositionresultedinanetgainof$757million,whichwaspresentedaspartofnetincomefromdiscontinuedoperations
intheConsolidatedStatementsofIncomefortheyearendedDecember31,2013.
TheMotorolaHomesegmentresultshavebeenpresentedasadiscontinuedoperationfortheyearsendedDecember31,2012
and2013.Thefollowingtableprovidesthenancialresultsincludedinnetincome(loss)fromdiscontinuedoperationsduring
the periods presented (in millions):
Year Ended December31,
2012 2013
Revenues $2,028 $ 804
Lossfromdiscontinuedoperationsbeforeincometaxes (22) (67)
(Provisionfor)/Benetsfromincometaxes (29) 16
Gain on disposal 0 757
Net (loss) income from discontinued operations $ (51) $ 706
Quarterly Results of Operations
Thefollowingtablespresentingourquarterlyresultsofoperationsshouldbereadinconjunctionwiththeconsolidatednancial
statementsandrelatednotesincludedinItem8ofthisAnnualReportonForm10-K.Wehavepreparedtheunauditedinformation
onthesamebasisasourauditedconsolidatednancialstatements.Ouroperatingresultsforanyquarterarenotnecessarily
indicativeofresultsforanyfuturequartersorforafullyear.Pleasenotethatpreviouslyreportedquartershavebeenadjusted
toshowdiscontinuedoperationsforthedispositionoftheMotorolaHomebusiness.
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