ServiceMagic 2014 Annual Report Download - page 44

Table of Contents
Interest expense
Interest expense in 2014 increased from 2013 primarily due to the 4.875% Senior Notes due November 30, 2018 (the "2013 Senior Notes"),
which were issued on November 15, 2013.
Interest expense in 2013 increased from 2012 primarily due to the 4.75% Senior Notes due December 15, 2022 (the "2012 Senior Notes"),
which were issued on December 21, 2012, and the 2013 Senior Notes.
Other (expense) income, net
Other expense, net in 2014 includes $66.6 million in other-than-temporary impairment charges related to certain cost method investments as a
result of our assessment of the near-term prospects and financial condition of the investees, partially offset by a $19.4 million gain related to the
sale of Urbanspoon and $3.6 million in gains related to the sale of several long-term investments.
Other income, net in 2013 includes $35.9 million in gains related to the sale of long-term investments, partially offset by a $5.0 million other-
than-temporary impairment charge related to a cost method investment.
Other expense, net in 2012 includes an $8.7 million other-than-temporary impairment charge related to a long-
term marketable equity security
as a result of the Company's assessment of the near-term prospects of the issuer in relation to the severity and duration of its unrealized loss.
Partially offsetting the impairment charge is $3.5 million in interest income and a $3.3 million gain related to the sale of certain marketable equity
securities.
Income tax provision
In 2014, the Company recorded an income tax provision for continuing operations of $35.4 million , which represents an effective income tax
rate of 13%. The effective rate is lower than the statutory rate of 35% due principally to a reduction in tax reserves and related interest due to the
expiration of statutes of limitations for federal income taxes for 2001 through 2009 of $88.2 million and foreign income taxed at lower rates,
partially offset by the largely unbenefited loss associated with the write-downs of certain of the Company's investments and non-deductible
goodwill associated with the sale of Urbanspoon. In 2013, the Company recorded an income tax provision for continuing operations of $134.5
million , which represents an effective income tax rate of 32%. The effective rate is lower than the statutory rate of 35% due primarily to foreign
income taxed at lower rates. In 2012, the Company recorded an income tax provision for continuing operations of $119.2 million
, which represents
an effective income tax rate of 41%. The effective rate is higher than the statutory rate of 35% due primarily to an increase in reserves for and
interest on reserves for income tax contingencies, a valuation allowance on the deferred tax asset created by an other-than-temporary impairment
charge and state taxes, partially offset by foreign income taxed at lower rates.
The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. Included in the
income tax provision for continuing operations and discontinued operations for the year ended December 31, 2014 is a $58.5 million and a $19.7
million benefit, respectively, net of related deferred taxes, from the decrease in interest on unrecognized tax benefits as a result of the expiration of
statutes of limitations described above. Included in the
Years Ended December 31,
2014
$ Change % Change 2013 $ Change % Change 2012
(Dollars in thousands)
Interest expense $(56,314) $(22,718) (68)% $(33,596) $(27,447) (446)% $(6,149)
Years Ended December 31,
2014
$ Change % Change 2013 $ Change % Change 2012
(Dollars in thousands)
Other (expense) income, net $(42,787) $(73,096) NM $30,309 $33,321 NM $(3,012)
Years Ended December 31,
2014
$ Change % Change 2013 $ Change % Change 2012
(Dollars in thousands)
Income tax provision $(35,372) NM NM $(134,502) NM NM $(119,215)