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Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures
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The following table presents certain non-GAAP consolidated results before certain items (in millions, except per share amounts, unaudited):
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Three Months Ended June 30, 2014 Three Months Ended June 30, 2015
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GAAP Actual Adjustments Non-GAAP Results GAAP Actual Adjustments Non-GAAP Results
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Revenues $15,955 $15,955 $17,727 $17,727
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Cost of revenues 6,114 $100 (b) 6,014 6,583 $163 (b) 6,420
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Research and development 2,238 447 (b) 1,791 2,789 583 (b) 2,206
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Sales and marketing 1,941 158 (b) 1,783 2,080 196 (b) 1,884
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General and administrative 1,404 175 (b) 1,229 1,450 190 (b) 1,260
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Income from operations $4,258 $880 $5,138 $4,825 $1,132 $5,957
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Operating Margin (a) 26.7% 32.2% 27.2% 33.6%
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$880 (b) $1,132 (b)
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(195) (c) (234) (c)
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68 (d) 0 (d)
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Net income $3,351 $753 $4,104 $3,931 $898 $4,829
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Less: Adjustment Payment to Class C capital stockholders 0 0 0 522 (522) (e) 0
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Net income available to all stockholders $3,351 $753 $4,104 $3,409 $1,420 $4,829
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Diluted net income per share of Class A and B common stock $4.88 $5.98 $4.93 $6.99
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Diluted net income per share of Class C capital stock $4.88 $5.98 $6.43 $6.99
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(a) Operating margin is defined as income from operations divided by revenues.
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Non-GAAP operating margin is defined as non-GAAP income from operations divided by revenues.
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(b) To eliminate stock-based compensation expense from continuing operations.
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(c) To eliminate income tax effects related to expense noted in (b).
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(d) To eliminate net loss from discontinued operations.
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(e) To eliminate the Adjustment Payment paid to Class C capital stockholders in May 2015.
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Non-GAAP operating income and operating margin. We define non-GAAP operating income as operating income excluding expenses related to SBC, and, as applicable, other special items. Non-GAAP operating margin is defined as non-GAAP operating income divided by revenues. Google considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of SBC, and as applicable, other special items so that Google's management and investors can compare Google's recurring core business operating results over multiple periods. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC Topic 718, Google's management believes that providing a non-GAAP financial measure that excludes SBC allows investors to make meaningful comparisons between Google's recurring core business operating results and those of other companies, as well as providing Google's management with an important tool for financial and operational decision making and for evaluating Google's own recurring core business operating results over different periods of time. There are a number of limitations related to the use of non-GAAP operating income versus operating income calculated in accordance with GAAP. First, non-GAAP operating income excludes some costs, namely, SBC, that are recurring. SBC has been and will continue to be for the foreseeable future a significant recurring expense in Google's business. Second, SBC is an important part of our employees' compensation. Third, the components of the costs that we exclude in our calculation of non-GAAP operating income may differ from the components that our peer companies exclude when they report their results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating income and evaluating non-GAAP operating income together with operating income calculated in accordance with GAAP.
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Non-GAAP net income and diluted EPS. We define non-GAAP net income as net income excluding expenses related to SBC and, as applicable, other special items less the related tax effects, as well as net income (loss) from discontinued operations. The tax effects of SBC and, as applicable, other special items are calculated using the tax-deductible portion of SBC, and, as applicable, other special items, and applying the entity-specific, U.S. federal and blended state tax rates.  We define non-GAAP diluted EPS as non-GAAP net income divided by total weighted average outstanding shares, on a fully-diluted basis. We consider these non-GAAP financial measures to be useful metrics for management and investors for the same reasons that Google uses non-GAAP operating income and non-GAAP operating margin. However, in order to provide a complete picture of our recurring core business operating results, we exclude from non-GAAP net income and non-GAAP diluted EPS the tax effects associated with SBC and, as applicable, other special items. Without excluding these tax effects, investors would only see the gross effect that excluding these expenses had on our operating results. The same limitations described above regarding Google's use of non-GAAP operating income and non-GAAP operating margin apply to our use of non-GAAP net income and non-GAAP diluted EPS. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP diluted EPS and evaluating non-GAAP net income and non-GAAP diluted EPS together with net income and diluted EPS calculated in accordance with GAAP.