ServiceMagic 2010 Annual Report Download - page 36

Table of Contents
Depreciation in 2010 increased $2.5 million from 2009 primarily due to the write-off of certain capitalized software costs associated with
the Ask.com restructuring.
Depreciation in 2009 decreased $6.3 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.
Operating Income Before Amortization
Operating Income Before Amortization in 2010 increased $67.7 million from 2009 primarily due to increases of $33.9 million and
$27.9 million from Search and Match, respectively, and reduced losses of $7.7 million at Media & Other. The increase in Operating Income
Before Amortization reflects higher revenue across these segments, as well as lower marketing costs from Search, a reduction in acquisition
related expenses from Match and cost savings related to certain businesses that have been sold or shutdown and the profit participations related
to our interests in Reveille from Media & Other.
Operating Income Before Amortization in 2009 increased $5.7 million from 2008 primarily due to a decrease of $55.5 million in corporate
expenses due in part to the inclusion in 2008 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 $53.3 million from Search
resulting primarily from lower overall revenue and higher traffic acquisition costs as a percentage of revenue.
Operating income (loss)
Operating income in 2010 increased $1.1 billion from 2009 primarily due to a decrease of $888.8 million in goodwill impairment charges
described below and an increase of $67.7 million in Operating Income Before Amortization described above. Further contributing to the increase
in operating income are decreases of $16.8 million in amortization of intangibles, exclusive of the impairment charges noted below, and
$15.9 million in amortization of non-cash marketing, partially offset by an increase of $14.2 million in non-cash compensation expense. The
decrease in amortization of intangibles is primarily due to a decrease at Search, partially offset by an increase at Match relating to the acquisition
of Singlesnet and its venture formed with Meetic in Latin America. The amortization of non-cash marketing referred to in this report consists of
non-cash advertising credits secured from Universal Television as part of the transaction pursuant to which Vivendi Universal
Entertainment, LLLP ("VUE") was created, and the subsequent transaction by which IAC sold its partnership interests in VUE. 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.
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Years Ended December 31,
2010
% Change
2009
% Change
2008
(Dollars in thousands)
Operating Income Before Amortization
$189,579
56%
$121,861
5%
$116,174
As a percentage of total revenue
12%
253 bp
9%
81 bp
8%
Years Ended December 31,
2010
% Change
2009 % Change 2008
(Dollars in thousands)
Operating income (loss)
$49,795
NM
$(1,037,987)
(2,246)%
$(44,254)
As a percentage of total revenue
3%
NM
(77)%
(7,394) bp
(3)%