ServiceMagic 2010 Annual Report Download - page 35

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Table of Contents
$217.9 million in cash (referred to herein as the "Liberty Exchange"). The increase in non-cash compensation expense is primarily related to an
increase in expense attributable to awards granted subsequent to the second quarter of 2009, partially offset by awards having become fully
vested. The increase in general and administrative expense from Media & Other is principally due to Electus and Notional, which were not in the
full prior year period, as well as increased operating expenses associated with Vimeo, partially offset by the cost savings related to certain
businesses that have been sold or shutdown. General and administrative expense at ServiceMagic increased primarily due to higher
compensation and other employee-related costs. The increase in general and administrative expense from Search is primarily due to an increase
in compensation and other employee-related costs at our toolbar business and employee termination costs associated with the Ask.com
restructuring, partially offset by a decrease in litigation related expenses.
General and administrative expense in 2009 decreased $64.2 million from 2008 primarily due to a decrease of $66.1 million from corporate.
The decrease from corporate is primarily due to the inclusion in 2008 of $42.0 million in expenses related to the Spin-Off, as well as a decrease
in the current year in compensation and other employee-related costs, including stock-based compensation. The decrease in non-cash
compensation of $16.4 million reflects the impact in 2008 of the acceleration and modification of certain equity awards associated with the Spin-
Off.
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 2010 increased $7.3 million from 2009 primarily due to increases of $3.3 million from Match and
$2.3 million from Search. Contributing to the increase in product development expense at Match is an increase in compensation and other
employee-related costs driven by growth in headcount related to recent acquisitions. The increase in product development expense from Search
is primarily due to the inclusion in the current year of employee termination costs associated with the Ask.com restructuring.
Product development expense in 2009 decreased $6.0 million from 2008 primarily due to a decrease of $4.9 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 and an increase
in costs being capitalized in 2009 related to IAC Search & Media's product offerings and related technology.
Depreciation
31
Years Ended December 31,
2010
% Change
2009
% Change
2008
(Dollars in thousands)
Product development expense
$65,097
13%
$57,843
(9)%
$63,817
As a percentage of total revenue
4%
(32) bp
4%
(23) bp
5%
Years Ended December 31,
2010
% Change
2009
% Change
2008
(Dollars in thousands)
Depreciation
$63,897
4%
$61,391
(9)%
$67,716
As a percentage of total revenue
4%
(65) bp
5%
(24) bp
5%