Groupon 2013 Annual Report Download - page 139

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GROUPON, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
131
The following table summarizes the Company's gross profit by category for its three reportable segments for the years
ended December 31, 2013 and 2012 (in thousands):
North America EMEA Rest of World Consolidated
Year Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
2013 2012 2013 2012 2013 2012 2013 2012
Local (1):
Third party.................... $ 580,438 $ 528,893 $ 381,185 $ 450,009 $ 151,783 $ 170,100 $ 1,113,406 $ 1,149,002
Direct ............................ (782) 1,909 ————(782) 1,909
Total gross profit........ 579,656 530,802 381,185 450,009 151,783 170,100 1,112,624 1,150,911
Goods:
Third party.................... 15,319 48,288 116,357 168,429 39,699 66,271 171,375 282,988
Direct ............................ 66,753 36,188 13,194 (2,521) (224) (2,563) 79,723 31,104
Total gross profit........ 82,072 84,476 129,551 165,908 39,475 63,708 251,098 314,092
Travel and other:
Third party and other.... 51,109 40,031 59,390 72,738 27,312 37,231 137,811 150,000
Direct ............................ ———529———529
Total gross profit........ 51,109 40,031 59,390 73,267 27,312 37,231 137,811 150,529
Total gross profit.............. $ 712,837 $ 655,309 $ 570,126 $ 689,184 $ 218,570 $ 271,039 $ 1,501,533 $ 1,615,532
(1) Includes gross profit from deals with local merchants, from deals with national merchants, and through local events.
16. RELATED PARTY TRANSACTIONS
Business Combination
During 2013, the Company acquired Boomerang, Inc., a Lightbank LLC portfolio company, for total cash consideration
of $1.0 million. Eric Lefkofsky, the Company's current CEO and former Chairman, and Bradley Keywell, one of the Company's
directors, co-founded Lightbank, a private investment firm specializing in information technology companies. They are the majority
shareholders of Lightbank, and Mr. Keywell is the managing director.
Marketing Services
During 2011, the Company engaged InnerWorkings, Inc. ("InnerWorkings") to provide marketing services. At that time
Eric Lefkofsky was the Executive Chairman and a significant stockholder of InnerWorkings. Mr. Lefkofsky is no longer a director
nor a significant stockholder in InnerWorkings. The Company recognized $1.1 million and $1.3 million of expense under its
agreement with InnerWorkings for the years ended December 31, 2012 and 2011, respectively.
Logistics Services
In connection with the Company's expansion of Goods offerings during 2012, the Company entered into a transportation
and supply chain management agreement with Echo Global Logistics, Inc. ("Echo"). Eric Lefkofsky, Bradley Keywell and Peter
Barris, one of the Company's other directors, either are currently or were previously directors of Echo and have direct and/or
indirect ownership interests in Echo. The Company terminated its arrangement with Echo during 2012. Echo received payments
of approximately $1.9 million for its services under the agreement for the year ended December 31, 2012, which were expensed
by the Company through "Cost of revenue" on the consolidated statement of operations.