ServiceMagic 2012 Annual Report Download - page 31

Table of Contents
Operating income (loss)
Refer to Note 15 to the consolidated financial statements for reconciliations of Operating Income Before Amortization to operating income
(loss) by reportable segment.
For the year ended December 31, 2012 compared to the year ended December 31, 2011
Operating income in 2012 increased from 2011 primarily due to the increase of $136.6 million in Operating Income Before Amortization
described above and a decrease of $3.0 million in non-cash compensation expense, partially offset by an increase of $13.7 million in
amortization of intangibles. The increase in amortization of intangibles is primarily related to The About Group and News_Beast.
At December 31, 2012, there was $92.4 million of unrecognized compensation cost, net of estimated forfeitures, related to all equity-based
awards, which is expected to be recognized over a weighted average period of approximately 2.4 years.
For the year ended December 31, 2011 compared to the year ended December 31, 2010
Operating income in 2011 increased from 2010 primarily due to an increase of $118.8 million in Operating Income Before Amortization
described above and decreases of $28.0 million in goodwill and $15.5 million in intangible asset impairment charges, described below, partially
offset by an increase of $4.3 million in non-cash compensation expense. The increase in non-cash compensation expense is primarily related to
equity grants issued subsequent to 2010 and the impact of the cancellation and acceleration of certain equity awards during the second and third
quarters of 2011, respectively, partially offset by awards becoming fully vested. Excluding the intangible asset impairment charge in 2010,
amortization of intangibles increased $10.1 million primarily due to the acquisition of Meetic.
In connection with the Company’s annual impairment assessment in the fourth quarter of 2010, the Company identified and recorded
impairment charges at the Other segment related to the write-down of the goodwill and intangible assets of Shoebuy of $28.0 million and $4.5
million, respectively, and the write-down of an indefinite-lived intangible asset of Search & Applications of $11.0 million. The goodwill and
indefinite-lived intangible asset impairment charges at Shoebuy reflected expectations of lower revenue and profit performance in future years
due to Shoebuy’s 2010 fourth quarter revenue and profit performance, which is its seasonally strongest quarter. The indefinite-lived intangible
asset impairment charge at Search & Applications was primarily due to lower future revenue projections associated with a trade name and
trademark based largely upon the impact of 2010’s full year results.
Equity in losses of unconsolidated affiliates
Equity in losses of unconsolidated affiliates in 2012 includes a pre-tax non-cash charge of $18.6 million related to the re-measurement of
the carrying value of our equity method investment in News_Beast to fair value in connection with our acquisition of a controlling interest as
well as losses related to News_Beast through May 31, 2012.
Equity in losses of unconsolidated affiliates in 2011 includes losses related to our equity method investment in News_Beast and a pre-tax
non-cash charge of $11.7 million related to the re-measurement of the carrying value of Match's 27%
28
Years Ended December 31,
2012
$ Change % Change 2011 $ Change % Change 2010
(Dollars in thousands)
Search & Applications
$
305,644
$
101,638
50
%
$
204,006
$
75,650
59
%
$
128,356
Match
205,492
67,937
49
%
137,555
22,188
19
%
115,367
Local
21,735
(3,798
)
(15
)%
25,533
17,128
204
%
8,405
Media
(51,776
)
(35,501
)
(218
)%
(16,275
)
7,110
30
%
(23,385
)
Other
(7,689
)
(3,793
)
(97
)%
(3,896
)
27,704
88
%
(31,600
)
Corporate
(149,838
)
(677
)
—
%
(
149,161
)
(1,813
)
(1
)%
(147,348
)
Total
$
323,568
$
125,806
64
%
$
197,762
$
147,967
297
%
$
49,795
Years Ended December 31,
2012
$ Change % Change 2011 $ Change % Change 2010
(Dollars in thousands)
Equity in losses of unconsolidated affiliates $(25,345) $10,955 30% $(36,300) $(10,624) (41)% $(25,676)