Segment Reporting

6 Months Ended

Jun. 30, 2011

Segment Reporting [Abstract]

Segment Reporting

9. SEGMENT REPORTING

The Company manages its business geographically in two operating segments, with the primary areas of measurement and decision-making being the U.S. and International, which includes the U.K. and France. The Company's subscription-based information services, consisting primarily of CoStar Property Professional®, CoStar Tenant®, CoStar COMPS Professional®, and FOCUSTM services, currently generate more than 93% of the Company's total revenues. CoStar Property Professional, CoStar Tenant, and CoStar COMPS Professional are generally sold as a suite of similar services and comprise the Company's primary service offering in the U.S. operating segment.  FOCUS is the Company's primary service offering in the International operating segment.Management relies on an internal management reporting process that provides revenue and operating segment EBITDA, which is the Company's net income before interest, income taxes, depreciation and amortization. Management believes that operating segment EBITDA is an appropriate measure for evaluating the operational performance of our operating segments.  EBITDA is used by management to internally measure operating and management performance and to evaluate the performance of the business. However, this measure should be considered in addition to, not as a substitute for or superior to, income from operations or other measures of financial performance prepared in accordance with GAAP.

Summarized information by operating segment was as follows (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Revenues
United States	$	57,540		$	51,538		$	112,576		$	102,155
International
External customers		4,587			4,300			9,169			8,776
Intersegment revenue		224			359			478			691
Total international revenue		4,811			4,659			9,647			9,467
Intersegment eliminations		(224	)		(359	)		(478	)		(691	)
Total revenues	$	62,127		$	55,838		$	121,745		$	110,931
EBITDA
United States	$	8,262		$	10,173		$	19,623		$	19,585
International		(1,145	)		(2,376	)		(1,978	)		(3,038	)
Total EBITDA	$	7,117		$	7,797		$	17,645		$	16,547
Reconciliation of EBITDA to net income
EBITDA	$	7,117		$	7,797		$	17,645		$	16,547
Purchase amortization in cost of revenues		(308	)		(315	)		(615	)		(815	)
Purchase amortization in operating expenses		(546	)		(532	)		(1,089	)		(1,222	)
Depreciation and other amortization		(2,354	)		(2,459	)		(4,936	)		(4,917	)
Interest income, net		178			196			380			434
Income tax expense, net		(1,450	)		(1,436	)		(4,216	)		(3,887	)
Net income	$	2,637		$	3,251		$	7,169		$	6,140

Intersegment revenue is attributable to services performed for the Company's wholly owned subsidiary, Property and Portfolio Research, Inc. (“PPR”) by Property and Portfolio Research Ltd., a wholly owned subsidiary of PPR.  Intersegment revenue is recorded at an amount the Company believes approximates fair value.  U.S. EBITDA includes a corresponding cost for the services performed by Property and Portfolio Research Ltd. for PPR.

International EBITDA includes a corporate allocation of approximately $100,000 for each of the three months ended June 30, 2011 and 2010.  International EBITDA includes a corporate allocation of approximately $100,000 and $300,000 for the six months ended June 30, 2011 and 2010, respectively.  The corporate allocation represents costs incurred for U.S. employees involved in management and expansion activities of the Company's International operating segment.

Summarized information by operating segment consists of the following (in thousands):

	June 30,			December 31,
	2011			2010
Property and equipment, net
United States	$	34,497		$	67,076
International		2,649			2,845
Total property and equipment, net	$	37,146		$	69,921
Goodwill
United States	$	55,260		$	55,260
International		25,206			24,342
Total goodwill	$	80,466		$	79,602
Assets
United States	$	790,424		$	469,449
International		39,705			39,038
Total operating segment assets	$	830,129		$	508,487
Reconciliation of operating segment assets to total assets
Total operating segment assets	$	830,129		$	508,487
Investment in subsidiaries		(18,344	)		(18,344	)
Intercompany receivables		(53,929	)		(50,495	)
Total assets	$	757,856		$	439,648
Liabilities
United States	$	106,620		$	52,482
International		52,392			47,944
Total operating segment liabilities	$	159,012		$	100,426
Reconciliation of operating segment liabilities to total liabilities
Total operating segment liabilities	$	159,012		$	100,426
Intercompany payables		(47,020	)		(42,280	)
Total liabilities	$	111,992		$	58,146