ServiceMagic 2010 Annual Report Download - page 70

Table of Contents
IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
currency are included in the consolidated statement of operations as a component of other income (expense), net.
Stock-Based Compensation
Stock-based compensation is measured at the grant date based on the fair value of the award and expensed over the requisite service period.
See Note 13 for a further description of the Company's stock-based compensation plans.
Redeemable Noncontrolling Interests
Redeemable noncontrolling interests as of December 31, 2010 primarily relate to the international operations of Match, certain operations
included in the Media & Other segment, the international operations of ServiceMagic and certain operations included in the Search segment.
Redeemable noncontrolling interests as of December 31, 2009 primarily relate to certain operations included in the Media & Other segment, the
international operations of ServiceMagic and certain operations included in the Search segment. Redeemable noncontrolling interests as of
December 31, 2008 primarily relate to certain operations included in the Media & Other segment.
In connection with the acquisition of certain subsidiaries, management of these businesses has retained an ownership interest. The Company
is party to fair value put and call arrangements with respect to these interests. These put and call arrangements allow management of these
businesses to require the Company to purchase their interests or allow the Company to acquire such interests at fair value, respectively. These
put and call arrangements become exercisable by the Company and the counter-party at various dates over the next six years. During 2010 and
2009, none of these arrangements became exercisable. These put arrangements are exercisable by the counter-party outside the control of the
Company. Accordingly, to the extent that the fair value of these interests exceeds the value determined by normal noncontrolling interest
accounting, the value of such interests is adjusted to fair value with a corresponding adjustment to additional paid-in capital. At December 31,
2010 and 2009, the Company recorded adjustments of $(2.1) million and $1.0 million, respectively, to (reduce) increase these interests to fair
value.
Noncontrolling interests in the consolidated subsidiaries of the Company should be reported on the consolidated balance sheet within
shareholders' equity, separately from the Company's equity. However, in accordance with Accounting Standards Update ("ASU") 2009-04,
"Accounting for Redeemable Equity Investments-Amendment to ASC 480-10-
599", securities that are redeemable at the option of the holder and
not solely within the control of the issuer, must be classified outside of shareholders' equity. Since the redemption of the noncontrolling interests
is outside the control of the Company, these interests are included in the mezzanine section of the accompanying consolidated balance sheet,
outside of shareholders' equity.
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,
which expires on December 31, 2012. The termination of the paid listing
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