ServiceMagic 2009 Annual Report Download - page 37

Table of Contents
Depreciation in 2008 increased $11.2 million from 2007 primarily due to the incremental depreciation associated with capital expenditures
made during 2007 and 2008 and various acquisitions, partially offset by certain fixed assets becoming fully depreciated during the period.
Operating Income Before Amortization
Operating Income Before Amortization in 2009 increased $2.7 million from 2008 primarily due to a decrease of $55.9 million in corporate
expenses due in part to the inclusion in the prior year period of $42.0 million in expenses related to the Spin-Off and a decrease in compensation
and other-employee related costs. Partially offsetting these increases in Operating Income Before Amortization is a decrease of $54.6 million
from Search resulting primarily from lower overall revenue and higher traffic acquisition costs as a percentage of revenue.
Operating Income Before Amortization in 2008 increased $19.6 million from 2007 primarily due to growth of $50.9 million, $12.9 million
and $5.5 million from Search, Match and ServiceMagic, respectively. These increases in Operating Income Before Amortization were partially
offset by decreases of $27.1 million from Media & Other and $22.6 million from corporate. Contributing favorably to Operating Income Before
Amortization is the impact of higher revenue and lower traffic acquisition costs from Search. Partially offsetting the increases in Operating
Income Before Amortization at certain segments is the favorable impact 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 within Media & Other, as well as increased operating
expenses associated with various early stage businesses not in the year ago period, InstantAction.com, RushmoreDrive.com and Connected
Ventures. Operating Income Before Amortization was further impacted by an increase of $37.9 million in expenses related to the Spin-Off,
partially offset by lower non-Spin-
Off related professional fees, a reduction in insurance reserves due to favorable loss experience and a decrease
in rent expense from corporate.
Operating loss
In connection with the Company's annual impairment assessment, in the fourth quarter of 2009, the Company identified and recorded
impairment charges at the Search segment related to the write-down of the goodwill and intangible assets of IAC Search & Media of
$916.9 million and $128.3 million, respectively. The impairments reflect lower growth projections for revenue and profits at IAC Search &
Media in future years that reflect the Company's consideration of industry growth rates, competitive dynamics and IAC Search & Media's
current operating strategies and the impact of these factors on the fair value of IAC Search & Media and its goodwill and intangible assets. In the
fourth quarter of 2008, the Company identified and recorded impairment charges related to the write-down of the goodwill and indefinite-lived
intangible assets of Connected Ventures, which is included in the Media & Other segment, of $11.6 million and $3.4 million, respectively, and
the indefinite-lived intangible assets of the Search segment of $9.2 million. The impairment at Connected Ventures
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Years Ended December 31,
2009
% Change
2008
% Change
2007
(Dollars in thousands)
Operating Income Before Amortization
$102,843
3%
$100,098
24%
$80,484
As a percentage of total revenue
7%
55 bp
7%
89 bp
6%
Years Ended December 31,
2009
% Change
2008
% Change
2007
(Dollars in thousands)
Operating loss
$(1,058,506)
(1,608)%
$(61,961)
21%
$(78,504)
As a percentage of total revenue
(77)%
(7,265) bp
(4)%
160 bp
(6)%