ServiceMagic 2010 Annual Report Download - page 37

Table of Contents
As of December 31, 2010, there was $137.9 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 2.2 years.
In connection with the Company's annual impairment assessment in the fourth quarter of 2010, the Company identified and recorded
impairment charges at the Media & Other segment related to the write-down of the goodwill and intangible assets of Shoebuy of $28.0 million
and $4.5 million, respectively, and at the Search segment related to the write-down of an indefinite-
lived intangible asset of IAC Search & Media
of $11.0 million. The goodwill and indefinite-lived intangible asset impairment charges at Shoebuy reflect expectations of lower revenue and
profit performance in future years due to Shoebuy's 2010 fourth quarter revenue and profit performance, which is its seasonally strongest quarter.
The indefinite-lived intangible asset impairment charge at IAC Search & Media is primarily due to lower future revenue projections associated
with a trade name and trademark based largely upon the impact of 2010's full year results. 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 reflected lower projections for revenue and profits at IAC Search & Media
in future years that reflected the Company's consideration of industry growth rates, competitive dynamics and IAC Search & Media's 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 resulted from the Company's
assessment of its future profitability. The impairment at the Search segment primarily resulted from the decline in revenue and profitability at
IAC Search & Media's Excite, iWon and MyWay portals businesses. The intangible asset impairment charges are included in amortization of
intangibles in the accompanying consolidated statement of operations. The intangible asset impairment charges were determined by comparing
the fair values of the respective reporting unit's intangible assets with the carrying values. The goodwill impairment charges were determined by
comparing the implied fair value of the respective reporting unit's goodwill with the carrying value. Fair values were determined using
discounted cash flow analyses.
Operating loss in 2009 increased $993.7 million from 2008 primarily due to the impairment charges described above. Partially offsetting
this increase in operating loss is an increase of $5.7 million in Operating Income Before Amortization described above and the decreases of
$15.7 million in non-cash compensation expense, $4.1 million in amortization of non-cash marketing and $1.7 million in amortization of
intangibles, exclusive of the impairment charges described above. The decrease in non-cash compensation expense is primarily due to the
expense in the prior year related to the acceleration and modification of certain equity awards associated with the Spin-Off.
33