Groupon 2013 Annual Report Download - page 74

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66
North America
Segment operating income in our North America segment, which excludes stock-based compensation and acquisition-
related expense (benefit), net, increased by $134.9 million to $139.7 million for the year ended December 31, 2012, as compared
to $4.8 million for the year ended December 31, 2011. The increase in segment operating income was primarily attributable to
an increase in gross profit, partially offset by an increase in segment operating expenses.
EMEA
Segment operating income in our EMEA segment, which excludes stock-based compensation and acquisition-related
expense (benefit), net, increased by $40.8 million to $106.0 million for the year ended December 31, 2012, as compared to $65.2
million for the year ended December 31, 2011. The increase in segment operating income was primarily attributable to an increase
in gross profit.
Rest of World
Segment operating loss in our Rest of World segment, which excludes stock-based compensation and acquisition-related
expense (benefit), net, decreased by $172.4 million to a loss of $42.0 million for the year ended December 31, 2012, as compared
to a loss of $214.4 million for the year ended December 31, 2011. The decrease in segment operating loss was primarily attributable
to a decrease in segment operating expenses and an increase in gross profit.
Other Income, Net
Other income, net includes foreign currency transaction gains and losses, primarily resulting from intercompany balances
related to our foreign subsidiaries that are denominated in currencies other than their functional currencies, interest income on our
cash and cash equivalents and other non-operating gains and losses.
Other income, net was $6.2 million for the year ended December 31, 2012, as compared to $6.0 million for the year ended
December 31, 2011. During the year ended December 31, 2012, other income, net included a $56.0 million gain resulting from
the E-Commerce transaction partially offset by a $50.6 million impairment of our investments in F-tuan. The impairments of our
investments in F-tuan and the gain on the E-Commerce transaction are described in Note 6 "Investments." During the year ended
December 31, 2011, other income, net included $4.9 million related to the return of 400,000 shares of non-voting common stock
from a former executive officer in connection with a separation agreement.
Provision for Income Taxes
For the years ended December 31, 2012 and 2011, we recorded income tax expense of $146.0 million and $43.7 million,
respectively.
The effective tax rate was 153.7% for the year ended December 31, 2012, as compared to (17.2)% for the year ended
December 31, 2011. The most significant factors impacting our effective tax rate for the year ended December 31, 2012 were the
impact of unrecognized tax benefits related to income tax uncertainties in certain foreign jurisdictions, losses in jurisdictions that
we are not able to benefit due to uncertainty as to the realization of those losses, amortization of the tax effects of intercompany
sales of intellectual property and nondeductible stock-based compensation expense. The most significant factors impacting our
effective tax rate for the year ended December 31, 2011 were losses in jurisdictions that we are not able to benefit due to uncertainty
as to the realization of those losses and nondeductible stock-based compensation expense.