ServiceMagic 2011 Annual Report Download - page 34

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Table of Contents
Selling and marketing expense in 2010 increased from 2009 primarily due to increases of $21.0 million from ServiceMagic, $15.1 million
from Match and $7.0 million from Media & Other, partially offset by a decrease of $13.4 million from Search. The increase from ServiceMagic
is due to increases of $14.0 million and $7.0 million in marketing and compensation and other employee-
related costs, respectively. The increase
in compensation and other employee-related costs from ServiceMagic is primarily due to the expansion of its sales force. The increase from
Match is primarily due to an increase of $13.3 million in advertising and promotional expenditures related primarily to an advertising agreement
entered into during the second quarter of 2010 with Yahoo as well as the impact of the acquisitions of People Media and Singlesnet and the
formation of the Latin America venture, partially offset by the sale of Match Europe to Meetic. Selling and marketing expense from Media &
Other increased primarily due to higher online marketing costs at Pronto and advertising and promotional expenditures related to Vimeo's 2010
video festival. Partially offsetting these factors is a decrease from Search primarily due to lower advertising and promotional expenditures of
$7.2 million, as 2009 included expenditures associated with the NASCAR partnership and an ad campaign to rebrand the Ask Jeeves UK
website, as well as a decrease in compensation and other employee-related costs at CityGrid Media, due in part, to a decrease in average
headcount.
General and administrative expense
General and administrative expense consists primarily of compensation and other employee-related costs (including stock-based
compensation) for personnel engaged in executive management, finance, legal, tax and human resources, facilities costs and fees for professional
services.
General and administrative expense in 2011 increased from 2010 primarily due to increases of $18.0 million from Match, partially offset by
a decrease of $7.1 million from Search. The increase from Match resulted primarily from the acquisition of Meetic, as well as an increase in
professional fees due, in part, to $4.0 million in transaction fees associated with the Meetic acquisition, and operating expenses from OkCupid,
which was not in the prior year period. General and administrative expense from Search decreased primarily due to lower professional fees,
including a decrease in litigation related expenses, and the inclusion in 2010 of lease termination costs associated with the Ask.com
restructuring, partially offset by an increase in compensation and other employee-related costs at Mindspark and CityGrid Media. As a
percentage of revenue, general and administrative expense decreased from 2010 primarily due to operating expense leverage.
General and administrative expense in 2010 increased from 2009 primarily due to increases of $12.4 million from corporate, $10.5 million
from Media & Other, $5.6 million from ServiceMagic and $5.5 million from Search. General and administrative expense from corporate
increased primarily due to an increase of $10.3 million in non-cash compensation expense and $5.3 million of transaction expenses in 2010
related to the exchange of substantially all of Liberty Media Corporation's ("Liberty") equity stake in IAC, partially offset by lower salary
expense. On December 1, 2010, the Company entered into a stock exchange agreement with Liberty. Under the agreement, Liberty agreed to
exchange with IAC 4.3 million shares of common stock and 8.5 million shares of Class B common stock, which were valued at $364.2 million
based on the closing price of IAC common stock on December 1, 2010, for Evite, Gifts.com and IAC Advertising Solutions and $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 from Media &
31
Years Ended December 31,
2011
$ Change
% Change
2010
$ Change
% Change
2009
(Dollars in thousands)
General and
administrative
expense
$328,728
$12,228
4%
$316,500
$34,107
12%
$282,393
As a percentage of
revenue
16%
(337) bp
19%
(163) bp
21%