EFTA01378012

stock-based compensation expense due to the modification of certain equity awards and new grants. Additionally, 2014 was impacted by a $3 9 million benefit related to the expiration of the statute of limitations for a non-income tax matter. Non-dating general and administrative expense increased $26.5 million. or 185.0%, driven by the acquisition of The Princeton Review. Product development expense Nine months ended September 30, 2014 2015 change Product development expense Percentage of revenue (dollars in thousands) $ 36.614 $ 50.740 38.6% 5.6% 6.7% Product development expense Increased $14.1 million, or 38.6%, in 2015 versus 2014, driven prlmanly by $4.0 million in severance expense and costs in the current year related to our ongoing consolidation and streamlining of technology systems and European operations at Dating, increased salaries and wages at existing businesses at Dating, and $3.2 million related to acquisitions. Depreciation Depreciation Percentage of revenue Nine months ended September 30, Ob 2014 2015 change (dollars in thousands) 17.122 19.804 15.7% 26% 26% Depreciation increased $2 7 million. or 15 7% n 2015 versus 2014. dnven by the acquisition of The Princeton Review, partially offset by a decline in depreoation of Dating. Adjusted EBITDA Adjusted EBITDA is a non-GAAP measure and is defined in "-Principles of financial reporting." Refer to Note 5 to our combined interim financial statements for reconciliations of Adjusted EBITDA to operating income and net eamings attributable to Match Group. Inc.'s shareholder. Nine months ended September 30, 2014 2015 change Adjusted EBITDA Percentage of revenue (dollars in thousands) $ 188.021 $ 179.355 (4.6)56 29 0% 23.8% Adjusted EBITDA decreased $8.7 million, or 4.6%, in 2015 versus 2014. Dating Adjusted EBITDA decreased $13.5 million, or 6.8%, despite higher revenue, primarily due to $14.8 million of costs in the current year across our expense categories related to our ongoing consolidation and streamlining of technology systems and European operations, an increase in cost of revenue and a $3.9 million benefit in the prior year related to the expiration of the statute of limitations for a non-income tax matter. Non-dating Adjusted EBITDA loss declined $4.8 million, or 45.8%. pnmarily due to reduced kisses from The Princeton Review. 72 Table of Content Operating income Nine months ended September 30, 2014 2015 change Operating income Percentage of revenue (dollars In thousands) 161,029 125,918 (21.8)% 24.8% 16.7% Operating income decreased 535.1 million, or 21.8%. in 2015 versus 2014. Dating operating income decreased $32.6 million, or 18.6%, primarily due to the decrease of $13.5 million in Adjusted EBITDA described above and increases of $14.6 million in stock-based compensation expense. The increase in stock-based compensation expense is due to the modification of certain equity http:ihivtv. seve'An:Itivcs daW15751891100104746915006431 1222645Rn-I ahlml l t 92013911:17 AIM CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) CONFIDENTIAL DB-SDNY-0075172 SONY GM_00221356 EFTA01378012