Groupon 2011 Annual Report Download - page 51

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make cash payments if certain financial and performance earn-out targets are achieved. We recorded a liability on our consolidated balance sheet of
$17.8
million as of the original acquisition date for this consideration and subsequently remeasured the liability as of December 31, 2011. As a result of this
remeasurment, we recorded a net gain of $4.5
million for the year ended December 31, 2011. These liabilities have not yet been settled and are subject to future
remeasurement.
In May 2010, we acquired CityDeal, a European1
based collective buying power business similar to ours. As part of the overall consideration paid, we
were obligated to issue additional shares of our common stock in December 2010 due to the achievement of financial and performance earn-
out targets. We
recorded a liability on our consolidated balance sheet as of the original acquisition date for this consideration and subsequently remeasured the liability on a
periodic basis until final settlement. As a result of this remeasurement, we recorded a total expense of $204.2 million for the year ended December 31, 2010 as
acquisition1related expenses, which was partially offset by other nominal acquisition1
related items. This liability is settled and is no longer subject to future
remeasurement.
Loss from Operations
For the years ended December 31, 2009, 2010 and 2011, our loss from operations was $1.1 million, $420.3 million and $233.4
million, respectively.
The increases in loss from operations from 2009 to 2010 were primarily related to global expansion. Loss from operations decreased from 2010 to 2011 as the
Company was able to continue to generate revenue on subscribers and customers acquired in prior periods using upfront marketing, sales and infrastructure
investments. Additionally, we have consistently seen that once a customer is active, his or her purchasing behavior is consistent over time, and therefore reduces
our incremental marketing costs to drive repeat purchases, which leads us to achieve higher profitability. The unfavorable impact on operating loss from year-
over-year changes in foreign exchange rates for the year ended December 31, 2011 was $ 13.0 million.
2011 compared to 2010. Loss from operations decreased by $187.0 million to $233.4
million for the year ended December 31, 2011 as compared to
the year ended December 31, 2010.
North America
Segment operating income for our North America segment increased by $15.2 million to $4.8
million for the year ended December 31, 2011 as
compared to the year ended December 31, 2010. The increase in the segment operating income was primarily attributable to our expansion within North
America. We invested heavily in upfront marketing, sales and infrastructure related to the build out of our operations.
International
Segment operating loss for our International segment decreased by $21.4 million to $149.1
million for the year ended December 31, 2011 as compared
to the year ended December 31, 2010. The International segment operating loss was driven by our rapid expansion in the segment during the year. In 2011, we
made significant marketing investments in our International segment to accelerate growth and establish our presence in new markets. As a result, we experienced
much larger operating losses for our International segment than we did for our North America segment.
2010 compared to 2009.
Loss from operations increased by $419.3 million to $420.3 million for the year ended December 31, 2010 as compared to the
year ended December 31, 2009.
North America
Segment operating loss for our North America segment increased by $9.5 million to $10.4 million for the year ended December 31, 2010 as compared
to the year ended December 31, 2009. The increase in the loss from operations was primarily attributable to our expansion within North America. We invested
heavily in upfront marketing, sales and infrastructure related to the build out of our operations in the domestic markets.
International
Segment operating loss for our International segment was $170.6 million for the year ended December 31, 2010. We entered into the international
market in 2010. The International segment operating loss was driven by our rapid expansion in the segment during the period. We invested heavily in upfront
marketing, sales and infrastructure related to the build out of our operations in the international markets.
Interest and Other Income (Expense), net
49