ServiceMagic 2012 Annual Report Download - page 75

IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
provision for discontinued operations for the years ended December 31, 2012 , 2011 and 2010 is a $2.8 million benefit, $6.7 million expense
and $7.0 million expense, respectively, net of related deferred taxes of $1.7 million , $4.2 million and $4.4 million , respectively, for interest on
unrecognized tax benefits. At December 31, 2012 and 2011 , the Company has accrued $117.5 million and $111.2 million , respectively, for the
payment of interest. Included in the income tax provision for continuing operations for the year ended December 31, 2012 is a $0.4 million
expense for an increase in penalties on unrecognized tax benefits. Included in income tax provision for continuing operations for the year ended
December 31, 2011 is a $2.5 million benefit for a reduction in penalties on unrecognized tax benefits. At December 31, 2012 and 2011 , the
Company has accrued $5.0 million and $2.5 million , respectively, for penalties.
The Company is routinely under audit by federal, state, local and foreign authorities in the area of income tax. These audits include
questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions.
The Internal Revenue Service ("IRS") has substantially completed its audit of the Company's tax returns for the years ended December 31, 2001
through 2009. The settlement of these tax years has not yet been submitted to the Joint Committee of Taxation for approval. The statute of
limitations for the years 2001 through 2009 has been extended to December 31, 2013, and we expect it to be extended further. Various state and
local jurisdictions are currently under examination, the most significant of which are California, New York and New York City for various tax
years beginning with 2005. Income taxes payable include reserves considered sufficient to pay assessments that may result from examination of
prior year tax returns. Changes to reserves from period to period and differences between amounts paid, if any, upon resolution of issues raised
in audits and amounts previously provided may be material. Differences between the reserves for income tax contingencies and the amounts
owed by the Company are recorded in the period they become known. The Company believes that it is reasonably possible that its unrecognized
tax benefits could decrease by $122.2 million within twelve months of the current reporting date, of which approximately $13.4 million could
decrease income tax provision, primarily due to settlements, expirations of statutes of limitations, and the reversal of deductible temporary
differences that will primarily result in a corresponding decrease in net deferred tax assets. An estimate of other changes in unrecognized tax
benefits, while potentially significant, cannot be made.
NOTE 5—BUSINESS COMBINATIONS
Acquisition of About, Inc.
On September 24, 2012, IAC completed its purchase of all the outstanding shares of About, Inc. (“The About Group”), an online content
and reference library offering expert, quality content across 90,000 topics. The purchase price was $300 million in cash, plus an amount equal to
the net working capital of $17.1 million at closing.
The financial results of The About Group are included in IAC's consolidated financial statements, within the Search & Applications
segment, beginning October 1, 2012. For the year ended December 31, 2012, the Company included $30.1 million of revenue and net earnings
of $3.8 million in its consolidated statement of operations related to The About Group.
The table below summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:
59
(In thousands)
Cash and cash equivalents
$
998
Other current assets
22,657
Property and equipment
8,988
Goodwill
190,616
Intangible assets
103,289
Other assets
770
Total assets
327,318
Current liabilities
(7,027
)
Other long-term liabilities
(3,179
)
Net assets
$
317,112