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SEGMENT REPORTING
 9 Months Ended
Sep. 30, 2013
Segment Reporting [Abstract]  
SEGMENT REPORTING
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 consist primarily of CoStar Suite™ and FOCUS™ services. CoStar Suite is sold as a platform of service offerings consisting of CoStar Property Professional®, CoStar COMPS Professional® and CoStar Tenant® and through the Company's mobile application, CoStarGo®. CoStar Suite is 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. Additionally, the Company introduced CoStar Suite in the U.K. in the fourth quarter of 2012. CoStar's and its subsidiaries' subscription-based services consist primarily of similar services offered over the Internet to commercial real estate industry and related professionals. 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 the Company's 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.

11.
SEGMENT REPORTING — (CONTINUED)

Summarized information by operating segment consists of the following (in thousands):
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
Revenues
 
 
 
 
 
 
 
United States
$
107,230

 
$
91,153

 
$
310,762

 
$
235,606

International
 

 
 

 
 

 
 

External customers
5,071

 
4,848

 
14,571

 
14,247

Intersegment revenue
131

 
388

 
277

 
1,154

Total international revenue
5,202

 
5,236

 
14,848

 
15,401

Intersegment eliminations
(131
)
 
(388
)
 
(277
)
 
(1,154
)
Total revenues
$
112,301

 
$
96,001

 
$
325,333

 
$
249,853

 
 
 
 
 
 
 
 
EBITDA
 

 
 

 
 

 
 

United States
$
30,855

 
$
22,688

 
$
66,609

 
$
46,302

International
(1,063
)
 
(3,047
)
 
(3,917
)
 
(6,568
)
Total EBITDA
$
29,792

 
$
19,641

 
$
62,692

 
$
39,734

Reconciliation of EBITDA to net income
 
 
 
 
 
 
 
EBITDA
$
29,792

 
$
19,641

 
$
62,692

 
$
39,734

Purchase amortization in cost of revenues
(2,954
)
 
(3,027
)
 
(9,007
)
 
(5,607
)
Purchase amortization in operating expenses
(3,680
)
 
(4,824
)
 
(11,699
)
 
(9,038
)
Depreciation and other amortization
(3,388
)
 
(2,844
)
 
(9,531
)
 
(7,554
)
Interest income
52

 
59

 
239

 
440

Interest expense
(1,736
)
 
(1,822
)
 
(5,249
)
 
(3,022
)
Income tax expense, net
(7,034
)
 
(404
)
 
(10,510
)
 
(9,752
)
Net income
$
11,052

 
$
6,779

 
$
16,935

 
$
5,201



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.

U.S. EBITDA includes an allocation of approximately $300,000 and $0 for the three months ended September 30, 2013 and 2012, respectively. U.S. EBITDA includes an allocation of approximately $600,000 and $0 for the nine months ended September 30, 2013 and 2012, respectively. This allocation represents costs incurred for International employees involved in development activities of the Company's U.S. operating segment.

International EBITDA includes a corporate allocation of approximately $100,000 and $2.3 million for the three months ended September 30, 2013 and 2012, respectively. International EBITDA includes a corporate allocation of approximately $300,000 and $4.5 million for the nine months ended September 30, 2013 and 2012, respectively. The corporate allocation represents costs incurred for U.S. employees involved in management and expansion activities of the Company's International operating segment.

11.
SEGMENT REPORTING — (CONTINUED)

Summarized information by operating segment consists of the following (in thousands):
 
September 30,
2013
 
December 31,
2012
Property and equipment, net
 
 
 
United States
$
51,781

 
$
42,480

International
3,922

 
3,828

Total property and equipment, net
$
55,703

 
$
46,308

 
 
 
 
Goodwill
 

 
 

United States
$
692,639

 
$
692,639

International
25,400

 
25,439

Total goodwill
$
718,039

 
$
718,078

 
 
 
 
Assets
 

 
 

United States
$
1,285,779

 
$
1,215,949

International
41,963

 
40,933

Total operating segment assets
$
1,327,742

 
$
1,256,882

 
 
 
 
Reconciliation of operating segment assets to total assets
 

 
 

Total operating segment assets
$
1,327,742

 
$
1,256,882

Investment in subsidiaries
(18,344
)
 
(18,344
)
Intersegment receivables
(79,024
)
 
(73,399
)
Total assets
$
1,230,374

 
$
1,165,139

 
 
 
 
Liabilities
 

 
 

United States
$
326,850

 
$
335,855

International
77,209

 
70,108

Total operating segment liabilities
$
404,059

 
$
405,963

 
 
 
 
Reconciliation of operating segment liabilities to total liabilities
 

 
 

Total operating segment liabilities
$
404,059

 
$
405,963

Intersegment payables
(73,004
)
 
(67,167
)
Total liabilities
$
331,055

 
$
338,796