Brent Callinicos, CPA Vice President and Treasurer Google, Inc. November 2007

Presentation Outline G o o g l e info Starting with a clean slate Treasury innovation, G o o g l e -style Some insight into what we’re doing in: F/X Portfolio Financial Risk Systems

G o o g l e info

Starting with a clean slate

Treasury innovation, G o o g l e -style

Some insight into what we’re doing in:

F/X

Portfolio

Financial Risk

Systems

G o o g l e ’s Mission Organize the world's information and make it universally accessible and useful

Search : At the Core Search is at the heart of everything G o o g l e does More engineers working on search than ever before Search is not a solved problem – offline info, personal info, personalized results, mobile experience

G o o g l e Strategy : Search. Ads. Apps. Search. Ads. Apps.

Anti-Strategy – We Do Not… Projects Content Users Think small Build niche solutions Build for the short term Develop vertical solutions Create content Discount tail content Focus on the average user Hold user data hostage

Think small

Build niche solutions

Build for the short term

Develop vertical solutions

Create content

Discount tail content

Focus on the average user

Hold user data hostage

G o o g l e Evolution 1995 1998 2000 2003 2005 2004 2006 ? Core Search Ads Monetization Communications Collaboration ?

G o o g l e Is a Data-Driven Company… Search, Sites, My Ads G o o g l e Analytics G o o g l e Website Optimizer G o o g l e Trends G o o g l e Ad Metrics My Sites

Continued Strong Performance Gross Revenue (millions) GAAP Operating Profit GAAP EPS (Diluted) Operating Cash Flow (millions) (millions)

Some Interesting G o o g l e Data-Points Searches per day : Every day millions of people search on G o o g l e for information International traffic : More than half our searches come from outside the U.S. G o o g l e Network reach/frequency ( G o o g l e Network includes all G o o g l e sites and AdSense for content pages) The G o o g l e Network reaches more than 80% of worldwide Internet users The G o o g l e Network reaches more Internet users worldwide than any other web property or ad network PageRank ( just one of more than 200 signals we use to determine the rank of a website) The web changes all the time (10–20% of the web is brand new every time we crawl it) G o o g l e has never seen 20–25% of its queries before, showing the creativity of our users and proving that small indices aren’t useful G o o g l e updates its search algorithms on a weekly basis G o o g l e News: now includes articles from over 10,000 news sources in more than 18 languages worldwide. Among these, over 4,500 are English language news sources Advertisers : Hundreds of thousands of advertisers worldwide Client Software: G o o g l e Toolbar has millions of users worldwide G o o g l e Desktop : has millions of users worldwide Audio Advertising : More than 1,600 radio stations available to U.S. AdWords advertisers Print Advertising : More than 600 newspapers now available to U.S. AdWords advertiser TV Advertising : We are currently in a closed trial to test an auction-based TV advertising system working with EchoStar and Astound Cable YouTube : People watch hundreds of millions of videos on YouTube every day Hundreds of thousands of videos are being uploaded to YouTube daily Every minute, eight hours of video is uploaded to YouTube

Searches per day : Every day millions of people search on G o o g l e for information

International traffic : More than half our searches come from outside the U.S.

G o o g l e Network reach/frequency ( G o o g l e Network includes all G o o g l e sites and AdSense for content pages)

The G o o g l e Network reaches more than 80% of worldwide Internet users

The G o o g l e Network reaches more Internet users worldwide than any other web property or ad network

PageRank ( just one of more than 200 signals we use to determine the rank of a website)

The web changes all the time (10–20% of the web is brand new every time we crawl it)

G o o g l e has never seen 20–25% of its queries before, showing the creativity of our users and proving that small indices aren’t useful

G o o g l e updates its search algorithms on a weekly basis

G o o g l e News: now includes articles from over 10,000 news sources in more than 18 languages worldwide. Among these, over 4,500 are English language news sources

Advertisers : Hundreds of thousands of advertisers worldwide

Client Software: G o o g l e Toolbar has millions of users worldwide

G o o g l e Desktop : has millions of users worldwide

Audio Advertising : More than 1,600 radio stations available to U.S. AdWords advertisers

Print Advertising : More than 600 newspapers now available to U.S. AdWords advertiser

TV Advertising : We are currently in a closed trial to test an auction-based TV advertising system working with EchoStar and Astound Cable

YouTube : People watch hundreds of millions of videos on YouTube every day

Hundreds of thousands of videos are being uploaded to YouTube daily

Every minute, eight hours of video is uploaded to YouTube

Starting with a clean slate very small group few legacy systems no inertia around “how we’ve always done things” Deep Dive G o o g l e ’s culture bottoms-up and tops-down G o o g l e ’s objectives ascertain Treasury’s involvement Treasury’s history (and timeline) how fast do we move? what has focus been? Existing Treasury personnel skills and career goals Listen!!!! Starting with a Clean Slate

Starting with a clean slate

very small group

few legacy systems

no inertia around “how we’ve always done things”

Deep Dive

G o o g l e ’s culture

bottoms-up and tops-down

G o o g l e ’s objectives

ascertain Treasury’s involvement

Treasury’s history (and timeline)

how fast do we move?

what has focus been?

Existing Treasury personnel

skills and career goals

Listen!!!!

Treasury Areas of Initial Focus Take a big Bite! Foreign Exchange Portfolio Management Corporate Finance Financial Risk Management Cash Management / Operations Insurance / Business Risk Management Stock Services SYSTEMS!

Take a big Bite!

Foreign Exchange

Portfolio Management

Corporate Finance

Financial Risk Management

Cash Management / Operations

Insurance / Business Risk Management

Stock Services

SYSTEMS!

Aim high Take a deeply analytical approach to everything A sophisticated approach doesn’t have to be scary Risk management as a foundation for forecasting, strategies etc. Strive for as-close-to-as-possible visibility into exposures, market values of positions, risk metrics, etc Diversify your portfolio All insurance should be strategic Use systems wherever possible Straight-through processing is critical Look at entire transactions and processes from start to finish and to use real-time numbers Directional Themes

Aim high

Take a deeply analytical approach to everything

A sophisticated approach doesn’t have to be scary

Risk management as a foundation for forecasting, strategies etc.

Strive for as-close-to-as-possible visibility into exposures, market values of positions, risk metrics, etc

Diversify your portfolio

All insurance should be strategic

Use systems wherever possible

Straight-through processing is critical

Look at entire transactions and processes from start to finish and to use real-time numbers

Take a long-term focus Hire for strategy High level strategy drives hires Personnel drive bottoms-up strategy validation and details Don’t rush hiring Hire expertise + adaptive intelligence Bar should be to be as good as counterparties Personnel Focus

Take a long-term focus

Hire for strategy

High level strategy drives hires

Personnel drive bottoms-up strategy validation and details

Don’t rush hiring

Hire expertise + adaptive intelligence

Bar should be to be as good as counterparties

G o o g l e Treasury Organization – Q1 ‘07 Brent Callinicos VP, Treasurer Assistant Treasurer (1 HC) Portfolio Manager (1 HC) Operations & Cash Management (1 HC) Stock Services (4 HC)

G o o g l e Treasury Organization – Q3 ‘07 Blue = Heads at end of Q1 Grey = hired in Q2/Q3 Green = Heads to be hired Brent Callinicos VP, Treasurer Assistant Treasurer Portfolio Management Assistant Treasurer Cash Mgmt, Insurance & Stock Services Assistant Treasurer F/X Portfolio Manager Portfolio Analyst Portfolio Manager Portfolio Analyst Business Risk Mgmt (Insurance) Business Risk Mgmt (Insurance) Operations & Cash Management F/X Manager F/X Analyst Corporate Finance & F/X Mgr Executive Assistant Operations & Cash Management Operations & Cash Management Stock Services (3 HC) Stock Services Corporate Finance Analyst

Blue = Heads at end of Q1

Grey = hired in Q2/Q3

Green = Heads to be hired

Foreign Exchange Net Revenue must be hedged F/X risks should be managed in-house You need robust underlying risk systems, operational controls, trading and reporting platforms You need industry standard benchmarks Not measuring performance is a mistake Having a handful of professionals in house is necessary Options are more flexible, have better accounting treatment and are better risk management tools than forwards

Net Revenue must be hedged

F/X risks should be managed in-house

You need robust underlying risk systems, operational controls, trading and reporting platforms

You need industry standard benchmarks

Not measuring performance is a mistake

Having a handful of professionals in house is necessary

Options are more flexible, have better accounting treatment and are better risk management tools than forwards

Diversification is key – a concentrated risk is not a good risk, even if it seems safe Asset allocation is key vs. trading A mix of in-house and external management is logical You need robust underlying risk systems, operational controls, trading and reporting platforms You need industry standard benchmarks (i.e. universe of money managers) Having a handful of stellar Capital markets professionals in house is necessary and economically sound (external managers are more expensive) Although derivatives can obviously be abused, they are ideal risk management tools Portfolio

Diversification is key – a concentrated risk is not a good risk, even if it seems safe

Asset allocation is key vs. trading

A mix of in-house and external management is logical

You need robust underlying risk systems, operational controls, trading and reporting platforms

You need industry standard benchmarks (i.e. universe of money managers)

Having a handful of stellar Capital markets professionals in house is necessary and economically sound (external managers are more expensive)

Although derivatives can obviously be abused, they are ideal risk management tools

Financial Risk Management Without underlying Operation and Risk systems, it is impossible to innovate or truly understand/model the risks being taken or quantify the risks that need to be mitigated Robust systems can also provide a competitive advantage Multiple risk measurement methodologies is important VaR Sensitivity analysis Scenario analysis F/X and Portfolio policies should incorporate statistical risk measures Risk limits Risk-adjusted returns relative to benchmarks

Without underlying Operation and Risk systems, it is impossible to innovate or truly understand/model the risks being taken or quantify the risks that need to be mitigated

Robust systems can also provide a competitive advantage

Multiple risk measurement methodologies is important

VaR

Sensitivity analysis

Scenario analysis

F/X and Portfolio policies should incorporate statistical risk measures

Risk limits

Risk-adjusted returns relative to benchmarks

Implementation example: F/X STARTING POINT: No dedicated personnel Broad policy Balance Sheet only No specific risk parameters Forwards only No systems CURRENT STATUS: Team of 2 (going to 3 in ’08) Focused world-class policy Full F/X revenue cycle Statistical risk drives policy Full range of economically-efficient instruments Full range of systems imminent trading platform (F/X all) exposure measurement trade management Robust accounting (FAS133)

STARTING POINT:

No dedicated personnel

Broad policy

Balance Sheet only

No specific risk parameters

Forwards only

No systems

CURRENT STATUS:

Team of 2 (going to 3 in ’08)

Focused world-class policy

Full F/X revenue cycle

Statistical risk drives policy

Full range of economically-efficient instruments

Full range of systems imminent

trading platform (F/X all)

exposure measurement

trade management

Robust accounting (FAS133)

Systems Simultaneous search Portfolio F/X (whole lifecycle including FASB133 acctg module) Financial Risk Management Treasury Workstation Logic and cost/benefit dictates choice Not just cost

Simultaneous search

Portfolio

F/X (whole lifecycle including FASB133 acctg module)

Financial Risk Management

Treasury Workstation

Logic and cost/benefit dictates choice

Not just cost

C AUG SEPT Consultant & Google Vendor Landscape Process Overview Onsite Vendor Overviews Surveys Detailed RFP Detailed Onsite Demos Demo Score Cards eAuction (SW license, maintenance fees, hosting) Full Day Deep Dive Demos Systems Selection - Methodology JULY DEMOS FINALIST VENDORS Final Vendors FINAL APPROVAL GO-FORWARD DECISION B A F G E J H D M I RFP A L B C

Process Overview

Onsite Vendor Overviews

Surveys

Detailed RFP

Detailed Onsite Demos

Demo Score Cards

eAuction (SW license, maintenance fees, hosting)

Full Day Deep Dive Demos