ServiceMagic 2012 Annual Report Download - page 36

Table of Contents
income taxes payable, an increase of $ 54.2 million in accounts payable and other current liabilities and an increase in deferred revenue of $
19.7
million , partially offset by an increase in accounts receivable of $ 32.9 million . The increase in income taxes payable was primarily a result of
income tax refunds received in 2010 related to the federal carryback of net capital losses generated from the sale of ARO stock in 2009 and the
receipt of refundable New York State tax credits under the Brownfield Cleanup Program Act, which were recorded as an income tax receivable
in 2007 and principally related to the construction of the Company's headquarters building in New York City. The increase in accounts payable
and other current liabilities is primarily due to an increase in accrued revenue share expense and an increase in accrued advertising expense. The
increase in accrued revenue share expense is primarily due to an increase in the proportion of revenue from our B2B customized browser-based
applications and other arrangements with third parties who direct traffic to our websites as well as a shift in partner mix to partners carrying
higher traffic acquisition costs. The increase in accrued advertising expense is primarily due to an increase in advertising and promotional
expenditures in the fourth quarter of 2010 relative to the fourth quarter of 2009 at Search & Applications and Match. The increase in deferred
revenue is primarily due to the growth in subscription revenue at Match. The increase in accounts receivable is primarily due to the growth in
revenue earned from our services agreement with Google; the related receivable from Google was $ 70.5 million and $ 53.7 million at
December 31, 2010 and 2009, respectively. While our Match, Media and HomeAdvisor businesses experienced strong 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.
Net cash used in investing activities attributable to continuing operations in 2010 of $ 118.1 million includes net purchases of marketable
debt securities of $ 74.8 million , capital expenditures of $ 39.8 million primarily related to the internal development of software to support our
offerings and our increased number of users, cash consideration used in acquisitions and investments of $ 19.6 million primarily related to the
acquisitions of Singlesnet and DailyBurn.com, partially offset by a cash dividend of $ 11.4 million received from Meetic.
Net cash used in financing activities attributable to continuing operations in 2010 of $ 717.2 million includes $ 539.6 million for the
repurchase of 23.1 million shares of common stock at an average price of $22.98 per share and $ 217.9 million in cash related to the Liberty
Exchange described below, partially offset by proceeds related to the issuance of common stock, net of withholding taxes of $ 25.9 million and
excess tax benefits from stock-based awards of $ 14.3 million . On December 1, 2010, the Company completed the tax-free exchange of Evite,
Gifts.com, IAC Advertising Solutions and $ 217.9 million in cash for substantially all of Liberty's equity stake in IAC, representing 8.5 million
shares of Class B common stock and 4.3 million shares of IAC common stock.
The Company's principal sources of liquidity are its cash and cash equivalents and marketable securities as well as its cash flows generated
from operations. The Company has a $300.0 million revolving credit facility, which is available as an additional source of financing. At
December 31, 2012, there were no outstanding borrowings under the revolving credit facility.
The Company anticipates that it will need to make capital and other expenditures in connection with the development and expansion of its
operations. The Company expects that 2013 capital expenditures will be higher than 2012. At December 31, 2012, IAC had 3.1 million shares
remaining in its share repurchase authorization. IAC may purchase shares over an indefinite period of time on the open market and in privately
negotiated transactions, depending on those factors IAC management deems relevant at any particular time, including, without limitation, market
conditions, share price and future outlook. On February 5, 2013, IAC declared a quarterly cash dividend of $0.24 per share of common and Class
B common stock outstanding; the dividend is payable on March 1, 2013 to stockholders of record on February 15, 2013. Future declarations of
dividends are subject to the determination of IAC's Board of Directors.
The Company believes its existing cash, cash equivalents and marketable securities, together with its expected positive cash flows
generated from operations in 2013 and available borrowing capacity under its $300.0 million revolving credit facility will be sufficient to fund
its normal operating requirements, including capital expenditures, share repurchases, quarterly cash dividends, and investing and other
commitments for the foreseeable future. Our liquidity could be negatively affected by a decrease in demand for our products and services. The
Company may make acquisitions and investments that could reduce its cash, cash equivalents and marketable securities balances and as a result,
the Company may need to raise additional capital through future debt or equity financing to provide for greater financial flexibility. Additional
financing may not be available at all or on terms favorable to us.
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