ServiceMagic 2012 Annual Report Download - page 88

IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
There are no gains or losses included in earnings for the years ended December 31, 2012 , 2011 and 2010
, relating to the Company's assets
and liabilities that are measured at fair value on a recurring basis using significant unobservable inputs.
Auction rate security
The Company's auction rate security is valued by discounting the estimated future cash flow streams of the security over the life of the
security. Credit spreads and other risk factors are also considered in establishing fair value. The cost basis of the auction rate security is $10.0
million , with gross unrealized losses of $1.9 million and $4.1 million at December 31, 2012 and December 31, 2011 , respectively. The
unrealized losses are included in "Accumulated other comprehensive loss" in the accompanying consolidated balance sheet. At December 31,
2012 , the auction rate security is rated A-/WR and matures in 2035. The Company does not consider the auction rate security to be other-than-
temporarily impaired at December 31, 2012 , due to its high credit rating and because the Company does not intend to sell this security, and it is
not more likely than not that the Company will be required to sell this security, before the recovery of its amortized cost basis, which may be
maturity.
Contingent consideration arrangement
On January 20, 2011, Match acquired OkCupid for $50.0 million in cash, plus potential additional consideration of up to $40.0 million
that
was contingent upon OkCupid's 2011 earnings performance. During the second quarter of 2011, the provisions of this contingent consideration
arrangement were amended. Pursuant to the amendment, $30.0 million was paid to the former owners of OkCupid, and a potential additional
payment of up to $10.0 million was contingent upon revised performance goals. The fair value of the OkCupid contingent consideration
arrangement at December 31, 2011 was based upon the achievement of the performance goals which required a $10.0 million payment.
NOTE 10—FINANCIAL INSTRUMENTS
The fair values of the financial instruments listed below have been determined by the Company using available market information and
appropriate valuation methodologies.
For the Year Ended
December 31, 2012
December 31, 2011
Auction Rate
Security
Contingent
Consideration
Arrangement
Auction Rate
Securities
Contingent
Consideration
Arrangement
(In thousands)
Balance at January 1
$
5,870
$
(10,000
)
$
13,100
$
—
Total net gains (losses) (realized and unrealized):
Included in other comprehensive loss
2,230
— (
2,230
)
—
Fair value at date of acquisition
—
—
—
(
40,000
)
Settlements
—
10,000
(5,000
)
30,000
Balance at December 31
$
8,100
$
—
$
5,870
$
(10,000
)
December 31, 2012 December 31, 2011
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
(In thousands)
Assets:
Cash and cash equivalents
$
749,977
$
749,977
$
704,153
$
704,153
Marketable securities
20,604
20,604
165,695
165,695
Long-term marketable equity securities
31,244
31,244
74,691
74,691
Liabilities:
Current maturities of long-term debt
(15,844
)
(15,875
)
— —
Long-term debt, net of current maturities
(580,000
)
(581,994
)
(95,844
)
(93,339
)