Match Group, Inc. - FORM 10-Q

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As filed with the Securities and Exchange Commission on October 29, 2010

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2010
Or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File No. 0-20570

IAC/INTERACTIVECORP
(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		59-2712887 (I.R.S. Employer Identification No.)
555 West 18^th Street, New York, New York 10011 (Address of registrant's principal executive offices)
(212) 314-7300 (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer ý		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

As of October 22, 2010, the following shares of the registrant's common stock were outstanding:


Common Stock			87,582,242
Class B Common Stock			12,799,999

Total outstanding Common Stock			100,382,241

The aggregate market value of the voting common stock held by non-affiliates of the registrant as of October 22, 2010 was $2,160,316,388. For the purpose of the foregoing calculation only, all directors and executive officers of the registrant are assumed to be affiliates of the registrant.

PART I
FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

IAC/INTERACTIVECORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

		September 30, 2010			December 31, 2009

		(unaudited)			(audited)
		(In thousands, except share data)
ASSETS
Cash and cash equivalents		$	902,214		$	1,245,997
Marketable securities			471,215			487,591
Accounts receivable, net of allowance of $11,004 and $11,283, respectively			113,251			101,834
Other current assets			144,898			164,627

	Total current assets		1,631,578			2,000,049
Property and equipment, net			282,143			297,412
Goodwill			1,047,139			999,355
Intangible assets, net			262,221			261,172
Long-term investments			209,890			272,930
Other non-current assets			179,227			184,971

TOTAL ASSETS		$	3,612,198		$	4,015,889

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable, trade		$	43,292		$	39,173
Deferred revenue			72,694			57,822
Accrued expenses and other current liabilities			202,051			193,282

	Total current liabilities		318,037			290,277
Long-term debt			95,844			95,844
Income taxes payable			467,130			450,129
Other long-term liabilities			19,302			23,633
Redeemable noncontrolling interests			60,192			28,180
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Common stock $.001 par value; authorized 1,600,000,000 shares; issued 225,183,876 and 222,657,925 shares, respectively, and outstanding 87,558,245 and 108,131,736 shares, respectively			225			223
Class B convertible common stock $.001 par value; authorized 400,000,000 shares; issued 16,157,499 shares and outstanding 12,799,999 shares			16			16
Additional paid-in capital			11,381,922			11,322,993
Accumulated deficit			(738,982	)		(751,377	)
Accumulated other comprehensive income			7,929			24,503
Treasury stock 137,625,631 and 114,526,189 shares, respectively			(7,999,417	)		(7,468,532	)

	Total shareholders' equity		2,651,693			3,127,826

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	3,612,198		$	4,015,889

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

IAC/INTERACTIVECORP AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

		Three Months Ended September 30,						Nine Months Ended September 30,

		2010			2009			2010			2009
		(In thousands, except per share data)
Revenue		$	421,652		$	336,577		$	1,210,436		$	1,008,632
Costs and expenses:
	Cost of revenue (exclusive of depreciation shown separately below)		148,558			106,029			422,704			323,462
	Selling and marketing expense		123,347			107,603			379,153			360,121
	General and administrative expense		78,327			72,314			236,387			218,802
	Product development expense		17,812			12,972			47,974			45,092
	Depreciation		15,364			15,289			50,608			48,380
	Amortization of intangibles		2,310			10,250			10,423			26,311
	Amortization of non-cash marketing		—			4,999			—			7,504
	Goodwill impairment		—			—			—			1,056

Total costs and expenses			385,718			329,456			1,147,249			1,030,728

	Operating income (loss)		35,934			7,121			63,187			(22,096	)
Other income (expense):
	Interest income		1,550			2,374			4,851			8,546
	Interest expense		(1,321	)		(1,345	)		(3,967	)		(4,070	)
	Equity in losses of unconsolidated affiliates		(547	)		(3,961	)		(27,162	)		(7,973	)
	Other income, net		586			53,892			5,259			115,849

Total other income (expense), net			268			50,960			(21,019	)		112,352

Earnings from continuing operations before income taxes			36,202			58,081			42,168			90,256
Income tax provision			(14,820	)		(34,269	)		(23,785	)		(53,733	)

Earnings from continuing operations			21,382			23,812			18,383			36,523
Loss from discontinued operations, net of tax			(3,737	)		(2,514	)		(7,227	)		(3,472	)

Net earnings			17,645			21,298			11,156			33,051
Net (earnings) loss attributable to noncontrolling interests			(136	)		384			1,239			1,058

Net earnings attributable to IAC shareholders		$	17,509		$	21,682		$	12,395		$	34,109

Per share information attributable to IAC shareholders:
	Basic earnings per share from continuing operations	$	0.21		$	0.18		$	0.18		$	0.26
	Diluted earnings per share from continuing operations	$	0.20		$	0.18		$	0.17		$	0.26
	Basic earnings per share	$	0.17		$	0.16		$	0.11		$	0.24
	Diluted earnings per share	$	0.16		$	0.16		$	0.11		$	0.24
Non-cash compensation expense by function:
	Cost of revenue	$	1,113		$	819		$	3,065		$	2,148
	Selling and marketing expense		889			733			2,843			2,270
	General and administrative expense		13,903			13,694			50,782			40,882
	Product development expense		1,427			1,269			4,295			3,387

Total non-cash compensation expense		$	17,332		$	16,515		$	60,985		$	48,687

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

IAC/INTERACTIVECORP AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

		Nine Months Ended September 30,

		2010			2009
		(In thousands)
Cash flows from operating activities attributable to continuing operations:
Net earnings		$	11,156		$	33,051
Less: from discontinued operations, net of tax			7,227			3,472

Earnings from continuing operations			18,383			36,523
Adjustments to reconcile earnings from continuing operations to net cash provided by operating activities attributable to continuing operations:
	Depreciation		50,608			48,380
	Amortization of intangibles		10,423			26,311
	Amortization of non-cash marketing		—			7,504
	Goodwill impairment		—			1,056
	Impairment of long-term investment		—			4,785
	Non-cash compensation expense		60,985			48,687
	Deferred income taxes		6,987			83,278
	Equity in losses of unconsolidated affiliates		27,162			7,973
	Gain on sale of Match Europe		—			(132,244	)
	Gain on sales of investments		(3,989	)		(25,570	)
	Decrease in the fair value of the derivative asset related to Arcandor AG stock		—			38,204
Changes in current assets and liabilities:
	Accounts receivable		(15,809	)		(2,045	)
	Other current assets		1,451			(2,614	)
	Accounts payable and other current liabilities		8,007			(1,077	)
	Income taxes payable		17,678			(13,820	)
	Deferred revenue		15,628			9,677
Other, net			8,048			11,300

Net cash provided by operating activities attributable to continuing operations			205,562			146,308

Cash flows from investing activities attributable to continuing operations:
	Acquisitions, net of cash acquired		(17,334	)		(85,534	)
	Capital expenditures		(34,042	)		(28,854	)
	Proceeds from sales and maturities of marketable debt securities		607,127			150,257
	Purchases of marketable debt securities		(600,993	)		(367,573	)
	Proceeds from sales of investments		5,325			58,123
	Purchases of long-term investments		(1,630	)		(2,982	)
	Dividend received from Meetic, an equity method investee		11,355			—
	Receivable created in the sale of Match Europe		—			(6,829	)
	Other, net		(127	)		(7,873	)

Net cash used in investing activities attributable to continuing operations			(30,319	)		(291,265	)

Cash flows from financing activities attributable to continuing operations:
	Purchase of treasury stock		(537,824	)		(336,537	)
	Issuance of common stock, net of withholding taxes		13,263			150,032
	Excess tax benefits from stock-based awards		6,551			368
	Settlement of vested stock-based awards denominated in a subsidiary's equity		—			(14,000	)
	Other, net		46			1,111

Net cash used in financing activities attributable to continuing operations			(517,964	)		(199,026	)

Total cash used in continuing operations			(342,721	)		(343,983	)
Net cash used in operating activities attributable to discontinued operations			(396	)		(930	)
Effect of exchange rate changes on cash and cash equivalents			(666	)		5,689

Net decrease in cash and cash equivalents			(343,783	)		(339,224	)
Cash and cash equivalents at beginning of period			1,245,997			1,744,994

Cash and cash equivalents at end of period		$	902,214		$	1,405,770

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

IAC is a leading internet company with more than 50 brands serving consumer audiences across more than 30 countries...our mission is to harness the power of interactivity to make daily life easier and more productive for people all over the world. IAC includes the businesses comprising its Search segment; its Match and ServiceMagic segments; the businesses comprising its Media & Other segment; as well as investments in unconsolidated affiliates.

All references to "IAC," the "Company," "we," "our" or "us" in this report are to IAC/InterActiveCorp.

Basis of Presentation

The consolidated financial statements include the accounts of the Company, all entities that are wholly-owned by the Company and all entities in which the Company has a controlling financial interest, whether through voting interests or variable interests. The Company's consolidated financial statements include one variable interest entity, an entity in which the Company has a controlling financial interest through voting rights and is also the primary beneficiary. Intercompany transactions and accounts have been eliminated. Investments in entities in which the Company has the ability to exercise significant influence over the operating and financial matters of the investee, but does not own a controlling voting interest, are accounted for using the equity method and are included in "Long-term investments" in the accompanying consolidated balance sheet.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation. Interim results are not necessarily indicative of the results that may be expected for a full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2009.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Accounting Estimates

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make certain estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and the related disclosure of contingent assets and liabilities. Actual amounts could differ materially from these estimates. On an ongoing basis, the Company evaluates its estimates and judgments including those related to the fair values of financial instruments, long-term investments, goodwill and indefinite-lived intangible assets, the useful lives and carrying values of definite-lived intangible assets and property and equipment, the carrying value of accounts receivable, including the determination of the allowances for doubtful accounts and other revenue related allowances, the reserves for income tax contingencies and the valuation allowances for deferred income tax assets and the fair value of stock-based awards, among others. The Company bases its estimates and

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

judgments on historical experience, its forecasts and budgets and other factors that the Company considers relevant.

Certain Risks and Concentrations

A significant portion of the Company's revenue is derived from online advertising, the market for which is highly competitive and rapidly changing. Significant changes in this industry or changes in customer buying behavior or advertiser spending behavior could adversely affect our operating results. A significant majority of the Company's online advertising is attributable to a paid listing supply agreement with Google Inc. ("Google"), which expires on December 31, 2012. For the three and nine months ended September 30, 2010, revenue earned from Google was $180.1 million and $530.7 million, respectively. For the three and nine months ended September 30, 2009, revenue earned from Google was $140.6 million and $406.0 million, respectively. The majority of this revenue is earned by the businesses comprising the Search segment. Accounts receivable related to revenue earned from Google totaled $60.9 million at September 30, 2010 and $55.0 million at December 31, 2009.

The termination of the paid listing supply agreement by Google or the failure of Google to perform its obligations under the agreement would have an adverse effect on our business, financial condition and results of operations. If this were to occur, we may not be able to find another suitable alternate paid listings provider (or if so, the terms of the agreements and the quality of paid listings may be inferior relative to our arrangements with, and the paid listings supplied by, Google) or otherwise replace the lost revenues.

NOTE 2—CONSOLIDATED FINANCIAL STATEMENT DETAILS

Property and equipment, net

		September 30, 2010			December 31, 2009

		(In thousands)
Buildings and leasehold improvements		$	224,693		$	233,829
Computer equipment and capitalized software			203,840			188,283
Furniture and other equipment			51,595			41,134
Projects in progress			9,269			8,655
Land			5,117			5,117

			494,514			477,018
Less: accumulated depreciation and amortization			(212,371	)		(179,606	)

	Property and equipment, net	$	282,143		$	297,412

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 2—CONSOLIDATED FINANCIAL STATEMENT DETAILS (Continued)

Redeemable noncontrolling interests

		September 30, 2010			December 31, 2009

		(In thousands)
Balance at January 1		$	28,180		$	22,771
Noncontrolling interests related to acquisitions			23,544			3,561
Contribution from owners of noncontrolling interests			46			1,750
Distribution to owners of noncontrolling interests			—			(216	)
Net loss attributable to noncontrolling interests			(1,239	)		(1,090	)
Change in fair value of redeemable noncontrolling interests			(5,721	)		1,033
Noncontrolling interest created by a decrease in ownership of a subsidiary			15,750			—
Change in effect of foreign currency translation			(368	)		371

	Balance at end of period	$	60,192		$	28,180

Accumulated other comprehensive income

		September 30, 2010		December 31, 2009

		(In thousands)
Foreign currency translation, net of tax		$	7,796	$	20,264
Unrealized gains on available-for-sale securities, net of tax			133		4,239

	Accumulated other comprehensive income, net of tax	$	7,929	$	24,503

Other income, net

		Three Months Ended September 30,					Nine Months Ended September 30,

		2010		2009			2010		2009
		(In thousands)
Gain on sale of Match Europe(a)		$	—	$	15,437		$	—	$	132,244
Net decrease in the fair value of the derivative asset related to Arcandor AG ("ARO") stock			—		—			—		(38,204	)
Gain on sales of investments			—		37,875			3,989		25,570
Impairment of shares of ARO stock			—		(558	)		—		(4,442	)
Other income			586		1,138			1,270		681

	Other income, net	$	586	$	53,892		$	5,259	$	115,849

(a): The gain recorded on the sale of Match Europe to Meetic S.A. ("Meetic") was increased by $15.4 million during the third quarter of 2009 due to a reduction in the goodwill allocated to

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 2—CONSOLIDATED FINANCIAL STATEMENT DETAILS (Continued)

Match Europe upon its sale reflecting a more time proximate estimate of the fair value of the Match reporting unit as of the date of sale.

Comprehensive income (loss)

		Three Months Ended September 30,					Nine Months Ended September 30,

		2010		2009			2010			2009
		(In thousands)
Net earnings attributable to IAC shareholders		$	17,509	$	21,682		$	12,395		$	34,109

Foreign currency translation, net of tax			1,195		3,605			(12,468	)		10,528
Changes in net unrealized gains (losses) on available-for-sale securities, net of tax			3,636		(22,536	)		(4,106	)		9,235

Other comprehensive income (loss)			4,831		(18,931	)		(16,574	)		19,763

	Comprehensive income (loss)	$	22,340	$	2,751		$	(4,179	)	$	53,872

The specific-identification method is used to determine the cost of a security sold or the amount of unrealized gains and losses reclassified from other comprehensive income into earnings. The amount of unrealized gains, net of tax, reclassified from other comprehensive income and recognized into earnings related to the sales and maturities of available-for-sale securities for the three and nine months ended September 30, 2010 were $0.2 million and $2.9 million, respectively. The amount of unrealized gains, net of tax, reclassified from other comprehensive income and recognized into earnings related to the sales and maturities of available-for-sale securities for the three and nine months ended September 30, 2009 was $26.1 million and $0.6 million, respectively.

NOTE 3—INCOME TAXES

At the end of each interim period, the Company makes its best estimate of the annual expected effective tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to significant, unusual, or extraordinary items that will be separately reported or reported net of their related tax effect are individually computed and recognized in the interim period in which those items occur. In addition, the effect of changes in enacted tax laws or rates, tax status, or judgment on the realizability of a beginning-of-the-year deferred tax asset in future years is recognized in the interim period in which the change occurs.

The computation of the annual expected effective tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences, and the likelihood of the realizability of deferred tax assets generated in the current year. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, more experience is acquired, additional information is obtained or our tax environment changes. To the extent that the expected annual effective tax rate changes during a quarter, the effect of the change on prior quarters is included in tax expense for the quarter in which the change occurs. Included in the income tax provision for the three months ended September 30, 2009 is a provision of $14.1 million due to a lower estimated annual effective tax rate from that applied to ordinary loss from continuing operations through the six months ended June 30,

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 3—INCOME TAXES (Continued)

2009. The lower estimated annual effective tax rate was primarily due to the reduced impact that forecasted non-deductible and non-taxable items had on a change in forecasted ordinary pre-tax income.

For the three and nine months ended September 30, 2010, the Company recorded an income tax provision for continuing operations of $14.8 million and $23.8 million, respectively, which represent effective tax rates of 41% and 56%, respectively. The tax rate for the three months ended September 30, 2010 is higher than the federal statutory rate of 35% due principally to state taxes and interest on tax contingencies, partially offset by the reversal of a valuation allowance on the deferred tax asset related to an unconsolidated affiliate and foreign income taxed at lower rates. The tax rate for the nine months ended September 30, 2010 is higher than the federal statutory rate of 35% due principally to interest on tax contingencies, a valuation allowance on the deferred tax asset created by the impairment charge for our investment in The HealthCentral Network, Inc. ("HealthCentral"), and state taxes, partially offset by foreign tax credits and the reversal of a valuation allowance on the deferred tax asset related to an unconsolidated affiliate.

For the three and nine months ended September 30, 2009, the Company recorded an income tax provision for continuing operations of $34.3 million and $53.7 million, respectively, which represent effective tax rates of 59% and 60%, respectively. The tax rate for the three months ended September 30, 2009 is higher than the federal statutory rate of 35% due principally to a change in the estimated annual effective tax rate, interest on tax contingencies and state taxes, partially offset by a non-taxable gain associated with the sale of Match Europe and net adjustments related to the reconciliation of tax returns to provision accruals. The tax rate for the nine months ended September 30, 2009 is higher than the federal statutory rate of 35% due principally to non-deductible goodwill associated with the sale of Match Europe, an increase in reserves and related interest for tax contingencies, and an increase in valuation allowances on deferred tax assets related to the impairments of the Company's shares of ARO stock and the related contingent value right ("CVR"), offset by foreign tax credits related to the sale of Match Europe.

At September 30, 2010 and December 31, 2009, unrecognized tax benefits, including interest, were $479.6 million and $462.9 million, respectively. Of the total unrecognized tax benefits as of September 30, 2010, $467.1 million is included in "non-current income taxes payable," $11.8 million relates to deferred tax assets included in "other non-current assets" and $0.7 million is included in "accrued expenses and other current liabilities." Included in unrecognized tax benefits at September 30, 2010 is $105.5 million relating to tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. If unrecognized tax benefits as of September 30, 2010 are subsequently recognized, $102.9 million and $197.8 million, net of related deferred tax assets and interest, would reduce income tax expense from continuing operations and discontinued operations, respectively. In addition, a continuing operations tax provision of $4.5 million would be required upon the subsequent recognition of unrecognized tax benefits for an increase in the Company's valuation allowance against certain deferred tax assets.

The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in income tax expense. Included in income tax expense from continuing operations for the three and nine months ended September 30, 2010 is a $2.5 million expense, net of related deferred taxes of $1.7 million, and a $7.2 million expense, net of related deferred taxes of $4.9 million, respectively, for interest on unrecognized tax benefits. At September 30, 2010 and December 31, 2009, the Company

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 3—INCOME TAXES (Continued)

has accrued $90.4 million and $68.7 million, respectively, for the payment of interest. At September 30, 2010 and December 31, 2009, the Company has accrued $5.0 million for penalties.

The Company is routinely under audit by federal, state, local and foreign authorities in the area of income tax. These audits include questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. The Internal Revenue Service is currently examining the Company's tax returns for the years ended December 31, 2001 through 2006. The statute of limitations for these years has been extended to December 31, 2011. Various state, local and foreign jurisdictions are currently under examination, the most significant of which are California, New York and New York City, for various tax years beginning with December 31, 2003. These examinations are expected to be completed by 2011. Income taxes payable include reserves considered sufficient to pay assessments that may result from examination of prior year tax returns. Changes to reserves from period to period and differences between amounts paid, if any, upon resolution of issues raised in audits and amounts previously provided may be material. Differences between the reserves for tax contingencies and the amounts owed by the Company are recorded in the period they become known. The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by $19.9 million within twelve months of the current reporting date due to the reversal of deductible temporary differences which will primarily result in a corresponding increase in net deferred tax liabilities, the reversal of state tax reserves based upon the receipt of favorable income tax rulings, statute of limitations expirations, and settlements. An estimate of other changes in unrecognized tax benefits, while potentially significant, cannot be made.

NOTE 4—MARKETABLE SECURITIES

At September 30, 2010, available-for-sale marketable securities were as follows (in thousands):

		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value

Corporate debt securities		$	182,452	$	937	$	(38	)	$	183,351
States of the U.S. and state political subdivisions			112,294		697		(47	)		112,944
U.S. Treasury securities			174,911		13		(4	)		174,920

	Total debt securities		469,657		1,647		(89	)		471,215

	Total marketable securities	$	469,657	$	1,647	$	(89	)	$	471,215

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 4—MARKETABLE SECURITIES (Continued)

At December 31, 2009, available-for-sale marketable securities were as follows (in thousands):

		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value

Corporate debt securities		$	194,609	$	841	$	(258	)	$	195,192
States of the U.S. and state political subdivisions			110,650		1,228		(15	)		111,863
U.S. Treasury securities			174,929		16		(2	)		174,943
Other fixed term obligations			705		—		(17	)		688

	Total debt securities		480,893		2,085		(292	)		482,686
	Equity securities		1,336		3,569		—			4,905

	Total marketable securities	$	482,229	$	5,654	$	(292	)	$	487,591

The net unrealized gains in the tables above are included in accumulated other comprehensive income for their respective periods.

The contractual maturities of debt securities classified as available-for-sale as of September 30, 2010 are as follows (in thousands):

		Amortized Cost		Estimated Fair Value

Due in one year or less		$	352,943	$	353,798
Due after one year through five years			116,714		117,417

	Total	$	469,657	$	471,215

The following tables summarize those investments with unrealized losses that have been in a continuous unrealized loss position for less than twelve months and those in a continuous unrealized loss position for twelve months or longer (in thousands):

		As of September 30, 2010

		Less than 12 months					12 months or longer				Total
		Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Corporate debt securities		$	30,327	$	(38	)	$	—	$	—	$	30,327	$	(38	)
States of the U.S. and state political subdivisions			20,407		(47	)		—		—		20,407		(47	)
U.S. Treasury securities			49,956		(4	)		—		—		49,956		(4	)

	Total	$	100,690	$	(89	)	$	—	$	—	$	100,690	$	(89	)

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 4—MARKETABLE SECURITIES (Continued)

		As of December 31, 2009

		Less than 12 months					12 months or longer					Total
		Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Corporate debt securities		$	74,839	$	(176	)	$	519	$	(82	)	$	75,358	$	(258	)
States of the U.S. and state political subdivisions			4,501		(15	)		—		—			4,501		(15	)
U.S. Treasury securities			49,965		(2	)		—		—			49,965		(2	)
Other fixed term obligations			—		—			688		(17	)		688		(17	)

	Total	$	129,305	$	(193	)	$	1,207	$	(99	)	$	130,512	$	(292	)

All of the Company's debt securities are rated investment grade. Because the Company does not intend to sell any marketable securities and it is not more likely than not that the Company will be required to sell any marketable securities before recovery of their amortized cost bases, which may be maturity, the Company does not consider any of its marketable securities to be other-than-temporarily impaired at September 30, 2010.

The following table presents the proceeds from sales and maturities of available-for-sale marketable securities and the related gross realized gains and losses (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,

	2010		2009			2010			2009
Proceeds from sales and maturities of available-for-sale marketable securities	$	240,584	$	143,280		$	612,452		$	208,380
Gross realized gains		328		38,413			4,660			38,788
Gross realized losses		—		(1	)		(7	)		(12,306	)

Gross realized gains and losses from the sale of marketable securities and from the sale of investments are included in "Other income, net" in the accompanying consolidated statement of operations.

NOTE 5—EQUITY METHOD INVESTMENTS IN UNCONSOLIDATED AFFILIATES

At September 30, 2010 and December 31, 2009, the Company's investments in unconsolidated affiliates accounted for under the equity method totaled $137.8 million and $200.4 million, respectively, and are included in "Long-term investments" in the accompanying consolidated balance sheet.

During the first quarter of 2010, the Company recorded an $18.3 million impairment charge to write-down its investment in HealthCentral to fair value. The decline in value was determined to be other-than-temporary due to HealthCentral's continued losses and negative operating cash flows, which are due, in part, to macroeconomic and industry specific factors. The valuation of our investment in HealthCentral reflects the Company's assessment of these factors. The Company estimated the fair value of its investment in HealthCentral using a multiple of revenue approach in the context of a different valuation environment than that which prevailed when our initial investment was made.

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 5—EQUITY METHOD INVESTMENTS IN UNCONSOLIDATED AFFILIATES (Continued)

The Company records its share of the results of HealthCentral on a one-quarter lag and, along with the related impairment charge described above, includes it within "Equity in losses of unconsolidated affiliates" in the accompanying consolidated statement of operations.

Summarized financial information for HealthCentral is as follows:

	Nine Months Ended June 30,

	2010			2009
	(In thousands)
Net sales	$	14,045		$	10,619
Gross profit	$	9,000		$	7,207
Net loss	$	(8,178	)	$	(7,939	)

NOTE 6—FAIR VALUE MEASUREMENTS

The Company categorizes its assets and liabilities measured at fair value into a fair value hierarchy that prioritizes the inputs used in pricing the asset or liability. The three levels of the fair value hierarchy are:

•: Level 1: Observable inputs obtained from independent sources, such as quoted prices for identical assets and liabilities in active markets.
•: Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs that are derived principally from or corroborated by observable market data. The fair value of the Company's level 2 financial assets is primarily obtained from observable market prices for identical underlying securities that may not be actively traded. Certain of these securities may have different market prices from multiple market data sources, in which case a weighted average market price is used.
•: Level 3: Unobservable inputs for which there is little or no market data and require the Company to develop its own assumptions, based on the best information available in the circumstances, about the assumptions market participants would use in pricing the asset or liability. See below for a discussion of assets measured at fair value using level 3 inputs.

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6—FAIR VALUE MEASUREMENTS (Continued)

The following tables present the Company's assets and liabilities that are measured at fair value on a recurring basis:

		September 30, 2010

		Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
		(In thousands)
Cash equivalents:
	Treasury and government agency money market funds	$	420,646	$	—	$	—	$	420,646
	Commercial paper		—		336,461		—		336,461
	Time deposits		—		88,550		—		88,550
Marketable securities:
	Corporate debt securities		—		183,351		—		183,351
	States of the U.S. and state political subdivisions		—		112,944		—		112,944
	U.S. Treasury securities		174,920		—		—		174,920
Long-term investments:
	Marketable equity security		14,152		—		—		14,152
	Auction rate securities		—		—		12,350		12,350

Total		$	609,718	$	721,306	$	12,350	$	1,343,374

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6—FAIR VALUE MEASUREMENTS (Continued)

		December 31, 2009

		Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
		(In thousands)
Cash equivalents:
	Treasury and government agency money market funds	$	807,257	$	—	$	—	$	807,257
	Commercial paper		—		300,226		—		300,226
	U.S. Treasury securities		25,000		—		—		25,000
	Time deposits		—		41,850		—		41,850
	Corporate debt securities		—		1,915		—		1,915
Marketable securities:
	Corporate debt securities		—		195,192		—		195,192
	States of the U.S. and state political subdivisions		—		111,863		—		111,863
	U.S. Treasury securities		174,943		—		—		174,943
	Other fixed term obligations		—		688		—		688
	Equity securities		4,905		—		—		4,905
Long-term investments:
	Marketable equity security		15,608		—		—		15,608
	Auction rate securities		—		—		12,635		12,635

Total		$	1,027,713	$	651,734	$	12,635	$	1,692,082

The following tables present the changes in the Company's assets and liabilities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

		Three Months Ended September 30,

		2010		2009
		Auction Rate Securities		Auction Rate Securities		Derivative Asset Related to ARO Stock
		(In thousands)
Balance at July 1		$	11,255	$	11,370	$	18,850
Total net gains (realized and unrealized):
	Included in other comprehensive income		1,095		1,015		730

Balance at September 30		$	12,350	$	12,385	$	19,580

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6—FAIR VALUE MEASUREMENTS (Continued)

		Nine Months Ended September 30,

		2010			2009
		Auction Rate Securities			Auction Rate Securities		Derivative Asset Related to ARO Stock
		(In thousands)
Balance at January 1		$	12,635		$	10,725	$	57,189
Total net gains (losses) (realized and unrealized):
	Included in earnings		—			—		(38,204	)
	Included in other comprehensive income		(285	)		1,660		595

Balance at September 30		$	12,350		$	12,385	$	19,580

The losses included in earnings relating to the Company's assets and liabilities that are measured at fair value on a recurring basis using significant unobservable inputs were unrealized and are included in "Other income, net" in the accompanying consolidated statement of operations.

Marketable equity security

The cost basis of this marketable equity security is $12.9 million at September 30, 2010 and December 31, 2009, with gross unrealized gains of $1.3 million and $2.7 million at September 30, 2010 and December 31, 2009, respectively, included in "Accumulated other comprehensive income" in the accompanying consolidated balance sheet.

Auction rate securities

Historically, the Company's auction rate securities ("ARS") had determinable market values arising from the auction process. However, these auctions began to fail in the third quarter of 2007. As a result of these failed auctions, the ARS no longer have readily determinable market values and are instead valued by discounting the estimated future cash flow streams of the securities over the lives of the securities. Credit spreads and other risk factors are also considered in establishing a fair value. At September 30, 2010, the ARS are rated either A+/WR or A/WR. The cost basis of these ARS is $15.0 million at September 30, 2010 and December 31, 2009, with gross unrealized losses of $2.7 million and $2.4 million at September 30, 2010 and December 31, 2009, respectively. Due to their high credit rating and because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell these securities before the recovery of their amortized cost bases, which may be maturity, the Company does not consider the ARS to be other-than-temporarily impaired at September 30, 2010. The unrealized losses are included in "Accumulated other comprehensive income" in the accompanying consolidated balance sheet. The ARS mature in 2025 and 2035.

Derivative asset related to ARO stock

The CVR was accounted for as a derivative asset and maintained at fair value relying on significant unobservable inputs including credit risk. During the fourth quarter of 2009, the Company wrote the value of the CVR down to zero. This reflected the increased credit risk due to ARO's insolvency filing and the Company's assessment of the value that it expects to recover.

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6—FAIR VALUE MEASUREMENTS (Continued)

Assets measured at fair value on a nonrecurring basis

The Company's non-financial assets, such as goodwill, intangible assets and property and equipment, as well as equity and cost method investments, are measured at fair value only when an impairment charge is recognized. Such impairment charges incorporate fair value measurements based on level 3 inputs. See Note 5 for a description of an impairment charge recorded in the first quarter of 2010 related to an equity method investment.

NOTE 7—FINANCIAL INSTRUMENTS

The fair value of financial instruments listed below has been determined by the Company using available market information and appropriate valuation methodologies.

	September 30, 2010						December 31, 2009

	Carrying Amount			Fair Value			Carrying Amount			Fair Value
	(In thousands)
Cash and cash equivalents	$	902,214		$	902,214		$	1,245,997		$	1,245,997
Marketable securities		471,215			471,215			487,591			487,591
Long-term marketable equity security		14,152			14,152			15,608			15,608
Auction rate securities		12,350			12,350			12,635			12,635
Notes receivable		3,811			3,277			3,271			2,426
Long-term debt		(95,844	)		(90,829	)		(95,844	)		(77,123	)
Guarantee and letters of credit		N/A			(346	)		N/A			(535	)

The carrying amounts of cash equivalents approximate fair value due to their short-term maturity. The fair value of notes receivable is based on discounting the expected future cash flow streams using yields of the underlying credit. The fair value of long-term debt is estimated using quoted market prices or indices for similar liabilities and taking into consideration other factors such as credit quality and maturity. The fair values of the guarantee and letters of credit are based on the present value of the costs associated with maintaining these instruments over their expected term. See Note 4 for discussion of the fair value of marketable securities and Note 6 for discussion of the fair value of the long-term marketable equity security and auction rate securities.

Investments accounted for under the cost method are included in "Long-term investments" in the accompanying consolidated balance sheet and have a carrying value of $45.5 million and $44.3 million at September 30, 2010 and December 31, 2009, respectively. The Company evaluates each cost method investment for impairment on a quarterly basis and recognizes an impairment loss if a decline in value is determined to be other-than-temporary. Such impairment evaluations include, but are not limited to: the current business environment, including competition; going concern considerations such as financial condition, the rate at which the investee company utilizes cash and the investee company's ability to obtain additional financing to achieve its business plan; the need for changes to the investee company's existing business model due to changing business environments and its ability to successfully implement necessary changes; and comparable valuations. If the Company has not identified events or changes in circumstances that may have a significant adverse effect on the fair value of a cost method investment, then the fair value of such cost method investment is not estimated, as it is impracticable to do so.

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8—EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share attributable to IAC shareholders:

	Three Months Ended September 30,

	2010						2009
	Basic			Diluted			Basic			Diluted
	(In thousands, except per share data)
Numerator:
Earnings from continuing operations	$	21,382		$	21,382		$	23,812		$	23,812
Net (earnings) loss attributable to noncontrolling interests		(136	)		(136	)		384			384

Earnings from continuing operations attributable to IAC shareholders		21,246			21,246			24,196			24,196
Loss from discontinued operations, net of tax		(3,737	)		(3,737	)		(2,514	)		(2,514	)

Net earnings attributable to IAC shareholders	$	17,509		$	17,509		$	21,682		$	21,682

Denominator:
Weighted average basic shares outstanding		103,152			103,152			132,764			132,764
Dilutive securities including stock options, warrants, RSUs and PSUs(a)		—			3,076			—			2,103

Denominator for earnings per share—weighted average shares(a)		103,152			106,228			132,764			134,867

Earnings (loss) per share attributable to IAC shareholders:
Earnings per share from continuing operations	$	0.21		$	0.20		$	0.18		$	0.18
Discontinued operations, net of tax		(0.04	)		(0.04	)		(0.02	)		(0.02	)

Earnings per share	$	0.17		$	0.16		$	0.16		$	0.16

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8—EARNINGS PER SHARE (Continued)

	Nine Months Ended September 30,

	2010						2009
	Basic			Diluted			Basic			Diluted
	(In thousands, except per share data)
Numerator:
Earnings from continuing operations	$	18,383		$	18,383		$	36,523		$	36,523
Net loss attributable to noncontrolling interests		1,239			1,239			1,058			1,058

Earnings from continuing operations attributable to IAC shareholders		19,622			19,622			37,581			37,581
Loss from discontinued operations, net of tax		(7,227	)		(7,227	)		(3,472	)		(3,472	)

Net earnings attributable to IAC shareholders	$	12,395		$	12,395		$	34,109		$	34,109

Denominator:
Weighted average basic shares outstanding		109,580			109,580			142,289			142,289
Dilutive securities including stock options, warrants, RSUs and PSUs(a)		—			3,288			—			1,974

Denominator for earnings per share—weighted average shares(a)		109,580			112,868			142,289			144,263

Earnings (loss) per share attributable to IAC shareholders:
Earnings per share from continuing operations	$	0.18		$	0.17		$	0.26		$	0.26
Discontinued operations, net of tax		(0.07	)		(0.06	)		(0.02	)		(0.02	)

Earnings per share	$	0.11		$	0.11		$	0.24		$	0.24

(a): If the effect is dilutive, weighted average common shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock options and warrants and vesting of restricted stock units ("RSUs") and performance stock units ("PSUs"). For the three and nine months ended September 30, 2010, approximately 23.1 million and 23.5 million shares, respectively, related to potentially dilutive securities were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. For the three and nine months ended September 30, 2009, approximately 29.2 million and 30.0 million shares, respectively, related to potentially dilutive securities were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 9—SEGMENT INFORMATION

The overall concept that IAC employs in determining its operating segments is to present the financial information in a manner consistent with how the chief operating decision maker and executive management view the businesses, how the businesses are organized as to segment management, and the focus of the businesses with regards to the types of services or products offered or the target market. Entities included in discontinued operations are excluded from the tables below. Operating segments are combined for reporting purposes if they meet certain aggregation criteria, which principally relate to the similarity of their economic characteristics or, in the case of Media & Other, do not meet the quantitative thresholds that require presentation as separate operating segments.

In the fourth quarter of 2009, IAC renamed and realigned its reportable segments. The Media & Advertising segment was renamed "Search," and the Emerging Businesses segment was renamed "Media & Other." Further, Evite was moved from the Search segment (formerly Media & Advertising) to the Media & Other segment (formerly Emerging Businesses).

		Three Months Ended September 30,						Nine Months Ended September 30,

		2010			2009			2010			2009
		(In thousands)
Revenue:
	Search	$	205,075		$	170,202		$	601,230		$	502,758
	Match		106,197			80,992			292,433			259,343
	ServiceMagic		48,397			43,902			140,128			117,655
	Media & Other		62,715			43,497			178,206			134,373
	Inter-segment elimination		(732	)		(2,016	)		(1,561	)		(5,497	)

	Total	$	421,652		$	336,577		$	1,210,436		$	1,008,632

		Three Months Ended September 30,						Nine Months Ended September 30,

		2010			2009			2010			2009
		(In thousands)
Operating Income (Loss):
	Search	$	28,872		$	20,154		$	91,546		$	30,481
	Match		38,126			23,873			77,318			62,012
	ServiceMagic		6,205			4,318			14,349			12,001
	Media & Other		(4,583	)		(8,286	)		(17,726	)		(31,329	)
	Corporate		(32,686	)		(32,938	)		(102,300	)		(95,261	)

	Total	$	35,934		$	7,121		$	63,187		$	(22,096	)

The Company's primary metric is Operating Income Before Amortization, which is defined as operating income excluding, if applicable: (1) non-cash compensation expense, (2) amortization of non-cash marketing, (3) amortization and impairment of intangibles, (4) goodwill impairment, (5) pro forma adjustments for significant acquisitions, and (6) one-time items. The Company believes this measure is useful to investors because it represents the operating results from IAC's segments, taking into account depreciation, which it believes is an ongoing cost of doing business, but excluding the effects of any other non-cash expenses. Operating Income Before Amortization has certain limitations in that it does not take into account the impact to IAC's statement of operations of certain expenses,

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 9—SEGMENT INFORMATION (Continued)

including non-cash compensation, non-cash marketing, and acquisition related accounting. IAC endeavors to compensate for the limitations of the non-U.S. GAAP measure presented by providing the comparable U.S. GAAP measure with equal or greater prominence, financial statements prepared in accordance with U.S. GAAP, and descriptions of the reconciling items, including quantifying such items, to derive the non-U.S. GAAP measure.

		Three Months Ended September 30,						Nine Months Ended September 30,

		2010			2009			2010			2009
		(In thousands)
Operating Income Before Amortization:
	Search	$	29,268		$	26,559		$	92,852		$	52,695
	Match		39,354			26,793			83,264			65,280
	ServiceMagic		6,692			9,940			15,676			19,450
	Media & Other		(3,638	)		(7,715	)		(13,714	)		(28,128	)
	Corporate		(16,100	)		(16,692	)		(43,483	)		(47,835	)

	Total	$	55,576		$	38,885		$	134,595		$	61,462

The following tables reconcile Operating Income Before Amortization to operating income (loss) for the Company's reporting segments and to net earnings attributable to IAC shareholders in total (in thousands):

		Three Months Ended September 30, 2010

		Operating Income Before Amortization			Non-Cash Compensation Expense			Amortization of Intangibles			Operating Income (Loss)
Search		$	29,268		$	(59	)	$	(337	)	$	28,872
Match			39,354			—			(1,228	)		38,126
ServiceMagic			6,692			—			(487	)		6,205
Media & Other			(3,638	)		(687	)		(258	)		(4,583	)
Corporate			(16,100	)		(16,586	)		—			(32,686	)

	Total	$	55,576		$	(17,332	)	$	(2,310	)		35,934

Other income, net												268

Earnings from continuing operations before income taxes												36,202
Income tax provision												(14,820	)

Earnings from continuing operations												21,382
Loss from discontinued operations, net of tax												(3,737	)

Net earnings												17,645
Net earnings attributable to noncontrolling interests												(136	)

Net earnings attributable to IAC shareholders											$	17,509

IAC/INTERACTIVECORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 9—SEGMENT INFORMATION (Continued)

	Three Months Ended September 30,

	2010		% Change	2009
	(Dollars in thousands)
Selling and marketing expense	$	123,347	15%	$	107,603
As a percentage of revenue		29%	(272) bp		32%

	Three Months Ended September 30,

	2010		% Change	2009
	(Dollars in thousands)
General and administrative expense	$	78,327	8%	$	72,314
As a percentage of revenue		19%	(291) bp		21%

	Nine Months Ended September 30,

	2010		% Change	2009
	(Dollars in thousands)
General and administrative expense	$	236,387	8%	$	218,802
As a percentage of revenue		20%	(216) bp		22%

	Three Months Ended September 30,

	2010		% Change	2009
	(Dollars in thousands)
Product development expense	$	17,812	37%	$	12,972
As a percentage of revenue		4%	37 bp		4%

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		September 30, 2010		December 31, 2009

		(In thousands)
Long-lived assets (excluding goodwill and intangible assets):
	United States	$	281,151	$	296,543
	All other countries		992		869

	Total	$	282,143	$	297,412

		Three Months Ended September 30,							Nine Months Ended September 30,

		2010			Growth	2009*			2010			Growth	2009*
Revenue:
Search		$	205,075		20%	$	170,202		$	601,230		20%	$	502,758
Match			106,197		31%		80,992			292,433		13%		259,343
ServiceMagic			48,397		10%		43,902			140,128		19%		117,655
Media & Other			62,715		44%		43,497			178,206		33%		134,373
Inter-segment elimination			(732	)	64%		(2,016	)		(1,561	)	72%		(5,497	)

	Total	$	421,652		25%	$	336,577		$	1,210,436		20%	$	1,008,632

	Payments Due by Period

Contractual Obligations(a)	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
	(In thousands)
Long-term obligations(b)	$	198,617	$	5,109	$	25,508	$	8,000	$	160,000
Purchase obligations(c)		72,179		15,988		31,881		24,310		—
Operating leases		294,536		20,889		37,678		25,910		210,059

Total contractual cash obligations	$	565,332	$	41,986	$	95,067	$	58,220	$	370,059

Period		(b) Average Price Paid Per Share(1)

July 2010	1,140,200	$	22.41	1,140,200	12,055,057
August 2010	3,149,522	$	24.54	3,149,522	8,905,535
September 2010	1,704,538	$	26.14	1,704,538	7,200,997

Total	5,994,260	$	24.59	5,994,260	7,200,997

	Description	Location

3.1	Restated Certificate of Incorporation of IAC/InterActiveCorp.	Exhibit 3.1 to the Registrant's Registration Statement on Form 8-A/A, filed on August 12, 2005.
3.2	Certificate of Amendment of the Restated Certificate of Incorporation of IAC/InterActiveCorp.	Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on August 22, 2008.
3.3	Amended and Restated By-Laws of IAC/InterActiveCorp.	Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on July 2, 2008.
31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act.(1)
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act.(1)
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act.(2)
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act.(2)
101.INS	XBRL Instance(3)
101.SCH	XBRL Taxonomy Extension Schema(3)
101.CAL	XBRL Taxonomy Extension Calculation(3)
101.DEF	XBRL Taxonomy Extension Definition(3)
101.LAB	XBRL Taxonomy Extension Labels(3)
101.PRE	XBRL Taxonomy Extension Presentation(3)


		IAC/INTERACTIVECORP
		By:		/s/ THOMAS J. MCINERNEY Thomas J. McInerney Executive Vice President and Chief Financial Officer

Signature	Title	Date


/s/ THOMAS J. MCINERNEY Thomas J. McInerney	Executive Vice President and Chief Financial Officer	October 29, 2010