ServiceMagic 2012 Annual Report Download - page 34

Table of Contents
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2012, the Company had $750.0 million of cash and cash equivalents, $20.6 million of marketable securities and
$595.8 million of long-term debt, including current maturities of $15.8 million. Domestically, cash equivalents primarily consist of AAA rated
money market funds. Internationally, cash equivalents primarily consist of AAA rated money market funds and time deposits. Marketable
securities primarily consist of short-to-intermediate-
term debt securities issued by investment grade corporate issuers. The Company only invests
in marketable securities with active secondary or resale markets to ensure portfolio liquidity and the ability to readily convert investments into
cash to fund current operations or satisfy other cash requirements as needed. From time to time, the Company may invest in marketable equity
securities as part of its investment strategy. Long-term debt, including current maturities, is comprised of $500.0 million in 2012 Senior Notes
due December 15, 2022, $80.0 million in Liberty Bonds due September 1, 2035 and $15.8 million in 2002 Senior Notes, which was paid on
January 15, 2013.
At December 31, 2012, $244.0 million of the $ 750.0 million of cash and cash equivalents and none of the $ 20.6 million of marketable
securities were held by the Company's foreign subsidiaries. No U.S. federal or state income taxes have been provided on the indefinitely
reinvested earnings of any of the Company's foreign subsidiaries that hold this cash and cash equivalents. If needed for our operations in the
U.S., most of the cash and cash equivalents held by the Company's foreign subsidiaries could be repatriated to the U.S. but, under current law,
would be subject to U.S. federal and state income taxes. However, the Company's intent is to indefinitely reinvest these funds outside of the U.S.
The Company currently does not anticipate a need to repatriate them to fund our U.S. operations.
In summary, the Company's cash flows attributable to continuing operations are as follows:
Net cash provided by operating activities attributable to continuing operations consists of earnings or loss from continuing operations
adjusted for non-cash items, including non-cash compensation expense, depreciation, amortization of intangibles, deferred income taxes, asset
impairment charges and equity in income or losses of unconsolidated affiliates, and the effect of changes in working capital activities. Net cash
provided by operating activities attributable to continuing operations in 2012 was $354.5 million and consists of earnings from continuing
operations of $ 169.8 million , adjustments for non-cash items of $261.3 million and cash used in working capital activities of $76.6 million.
Adjustments for non-cash items primarily consists of $ 85.6 million of non-cash compensation expense, $ 52.5 million of depreciation, $37.1
million of deferred income taxes and $ 25.3 million of equity in losses of unconsolidated affiliates, which includes a non-cash charge of
$18.6 million to re-measure the carrying value of our investment in News_Beast to fair value in connection with our acquisition of a controlling
interest. The deferred income tax provision primarily relates to the vesting of restricted stock units, the exercise of stock options and the
accelerated payment of 2012 bonuses. The decrease in cash from changes in working capital activities primarily consists of an increase of $ 31.0
million in accounts receivable, an increase of $ 23.0 million in other current assets, a decrease in accounts payable and other current liabilities
of $ 14.4 million and a decrease in income taxes payable of $ 10.1 million . The increase in accounts receivable is primarily due to the growth in
revenue at Search & Applications earned from our services agreement with Google; the related receivable from Google was $ 125.3 million and
$ 105.7 million at December 31, 2012 and 2011, respectively. While our Match and HomeAdvisor businesses experienced growth, the accounts
receivable at these businesses are principally credit card receivables and, accordingly, are not significant in relation to the revenue of these
businesses. The increase in other current assets is primarily related to a receivable for insurance claims related to Hurricane Sandy, an increase in
capitalized downloadable search toolbar costs and an increase in short-term production costs at certain of our Media businesses that are
capitalized as the television program, video or film is being produced. The decrease in accounts payable and other current liabilities is primarily
due to a decrease in accrued employee compensation and benefits, partially offset by an increase in accrued advertising expense. The decrease in
accrued employee compensation and benefits is due to the payment of the 2012 and 2011 bonuses in 2012. The increase in accrued advertising
expense is primarily due to an increase in advertising and promotional expenditures at Search & Applications. The decrease in income taxes
payable is due to current year income tax payments in excess of current year income tax accruals.
Net cash used in investing activities attributable to continuing operations in 2012 of $ 352.1 million includes cash consideration used in
acquisitions and investments of $447.0 million primarily related to the acquisition of The About Group, and capital expenditures of
$51.2 million primarily related to the internal development of software to support our products and
31
December 31,
2012
2011 2010
(In thousands)
Net cash provided by operating activities
$
354,527
$
372,386
$
340,707
Net cash used in investing activities
(352,088
)
(25,186
)
(118,096
)
Net cash provided by (used in) financing activities
44,301
(372,233
)
(717,210
)