ServiceMagic 2012 Annual Report Download - page 76

IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The purchase price was based on the expected financial performance of The About Group, not on the value of the net identifiable assets at
the time of acquisition, which resulted in a significant portion of the purchase price being attributed to goodwill. The expected financial
performance of The About Group reflects that it is complementary and synergistic to the existing businesses of the Company's Search &
Applications segment, particularly Ask.com.
Intangible assets are as follows:
The About Group's other current assets, property and equipment, other assets, current liabilities and other long-term liabilities were
reviewed and adjusted to their fair values at the date of acquisition, as necessary. The fair value of trade names was determined using a relief
from royalty method. The fair value of content was determined using an excess earnings method. The fair value of developed technology was
determined using replacement cost. The fair value of advertiser relationships was determined using a "with and without" method, which
determines the present value of profits that would be lost without the relationships. The fair value of customer lists was determined using an
excess earnings method. The valuations of the intangible assets incorporate significant unobservable inputs and require significant judgment and
estimates, including the amount and timing of future cash flows and the determination of royalty and discount rates. Substantially all of the
amount attributed to goodwill is tax deductible.
Acquisition of Meetic
In 2009, Match acquired a 27% ownership interest in Meetic. Match accounted for this interest under the equity method of accounting
through August 31, 2011. During the third quarter of 2011, Match acquired an additional 12.5 million shares of Meetic for $272.0 million
in cash
pursuant to a tender offer. These additional shares increased Match's voting interest and ownership interest in Meetic to 79% and 81% ,
respectively, resulting in Match obtaining a controlling financial interest in Meetic. Accordingly, this purchase was accounted for under the
acquisition method of accounting and the financial results of Meetic are included within IAC's consolidated financial statements and the Match
operating segment beginning September 1, 2011. For the year ended December 31, 2011, the Company included $46.1 million
of revenue, net of
a $32.6 million write-off of deferred revenue, and a net loss of $8.6 million in its consolidated statement of operations related to Meetic.
Pro forma financial information
The unaudited pro forma financial information in the table below summarizes the combined results of IAC, Meetic and The About Group
as if the acquisition of The About Group had occurred on January 1, 2011 and the acquisition of Meetic had occurred on January 1, 2010. The
pro forma financial information includes adjustments required under the acquisition method of accounting and is presented for informational
purposes only and is not necessarily indicative of what the results would have been had the acquisitions actually occurred on the dates specified
above. For the years ended December 31, 2012 and 2011, pro forma adjustments reflected below include a decrease of $6.3 million and an
increase of $24.3 million in amortization of intangible assets, respectively.
60
(In thousands)
Weighted-Average
Useful Life (Years)
Indefinite-lived trade names
$
33,700
Indefinite
Content
47,800
4.0
Technology
12,789
3.0
Advertiser relationships
7,500
2.0
Customer lists
1,500
3.0
Total
$
103,289
3.6
Years Ended December 31,
2012
2011
(In thousands, except per share data)
Revenue
$
2,881,117
$
2,374,812
Net earnings attributable to IAC shareholders
179,839
228,116
Basic earnings per share attributable to IAC shareholders
2.09
2.63
Diluted earnings per share attributable to IAC shareholders
1.93
2.42