ServiceMagic 2009 Annual Report Download - page 36

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Table of Contents
As of December 31, 2009, there was $137.3 million of unrecognized compensation cost, net of estimated forfeitures, related to all equity-
based awards, which is expected to be recognized over a weighted average period of approximately 2.6 years.
General and administrative expense in 2008 increased $75.6 million from 2007 primarily due to increases of $39.5 million from corporate
and $25.4 million from Media & Other. The increase from corporate is principally due to an increase of $37.9 million in expenses related to the
Spin-Off and an increase of $13.8 million in non-cash compensation expense, partially offset by a decrease of $5.8 million in professional fees,
excluding Spin-Off related expenses noted above, a reduction of $3.7 million in insurance reserves due to favorable loss experience and a
decrease of $3.5 million in rent expense. The increase in non-
cash compensation expense is primarily due to the acceleration and modification of
certain equity awards associated with the Spin-Off. General and administrative expense from Media & Other increased primarily due to the
inclusion in the prior year of an $8.2 million reimbursement of previously expensed advances related to the restructuring of our interests in a
business venture as well as increased operating expenses associated with Connected Ventures, InstantAction.com, RushmoreDrive.com and
various early stage businesses not in the year ago period.
Product development expense
Product development expense consists primarily of compensation and other employee-related costs (including stock-based compensation)
that are not capitalized for personnel engaged in the design, development, testing and enhancement of product offerings and related technology.
Product development expense in 2009 decreased $7.2 million from 2008 primarily due to a decrease of $5.1 million in compensation and
other employee-related costs from Search which is due in part to a decrease of 7% in average headcount at IAC Search & Media. Also
contributing to the decrease in product development expense is an increase in costs being capitalized in the current year period related to the
development and enhancement of IAC Search & Media's product offerings and related technology.
Product development expense in 2008 increased $10.3 million from 2007, primarily due to increases of $5.7 million and $4.5 million in
compensation and other employee-related costs from Search and Match, respectively. The increases from Search and Match are due in part to an
approximate 8% and 30% increase in average headcount, respectively, as they continued to upgrade and enhance their technology and products.
Depreciation
Depreciation in 2009 decreased $6.4 million from 2008 primarily due to certain fixed assets becoming fully depreciated, partially offset by
the incremental depreciation associated with capital expenditures made during 2009 and 2008.
31
Years Ended December 31,
2009
% Change
2008
% Change
2007
(Dollars in thousands)
Product development expense
$64,307
(10)%
$71,536
17%
$61,245
As a percentage of total revenue
5%
(28) bp
5%
35 bp
5%
Years Ended December 31,
2009
% Change
2008
% Change
2007
(Dollars in thousands)
Depreciation
$64,633
(9)%
$71,051
19%
$59,861
As a percentage of total revenue
5%
(22) bp
5%
42 bp
4%