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IAC/INTERACTIVECORP
FORM 10-K
(Annual Report)
Filed 02/29/12 for the Period Ending 12/31/11
Address 152 WEST 57TH ST
42ND FLOOR
NEW YORK, NY 10019
Telephone 2123147300
CIK 0000891103
Symbol IACI
SIC Code 5990 - Retail Stores, Not Elsewhere Classified
Industry Computer Services
Sector Technology
Fiscal Year 12/01
http://www.edgar-online.com
© Copyright 2012, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    ... WEST 57TH ST 42ND FLOOR NEW YORK, NY 10019 2123147300 0000891103 IACI 5990 - Retail Stores, Not Elsewhere Classified Computer Services Technology 12/01 Telephone CIK Symbol SIC Code Industry Sector Fiscal Year http://www.edgar-online.com © Copyright 2012, EDGAR Online, Inc. All Rights Reserved...

  • Page 2
    ... 29, 2012 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2011 Commission File No. 0-20570 IAC/INTERACTIVECORP (Exact name of registrant...

  • Page 3
    ...June 30, 2011 was $3,079,546,221. For the purpose of the foregoing calculation only, all directors and executive officers of the Registrant are assumed to be affiliates of the Registrant. Documents Incorporated By Reference: Portions of the Registrant's proxy statement for its 2012 Annual Meeting of...

  • Page 4
    ... of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Consolidated Financial Statements and Supplementary Data Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART...

  • Page 5
    ..., the Company changed its name to USA Interactive. In September 2002, the Company acquired Interval International. In 2003, the Company acquired the minority interests in its former public subsidiaries, Expedia.com, Hotels.com and Ticketmaster, and acquired a number of other companies, including...

  • Page 6
    ... PeopleMedia, a leading operator of targeted dating websites. In May 2010, we acquired a majority stake in DailyBurn.com, a diet and fitness tracking website. In June 2010, Citysearch changed its name to CityGrid Media in connection with the launch of CityGrid®, its local advertising network, and...

  • Page 7
    ... other websites. In the case of CityGrid Media, revenue is derived primarily from the sale of local and national online advertising distributed through CityGrid, our leading local content and advertising network. Toolbars Through Mindspark, we develop, market and distribute a variety of downloadable...

  • Page 8
    ... market and distribute Ask.com branded and custom toolbars to third parties through the Ask Partner Network, a leading provider of custom applications and search solutions to software, media and other companies. Ask Partner Network works closely with third parties to design and develop customized...

  • Page 9
    ...Media is an online media company that operates CityGrid, a leading local content and advertising network through which local business listings, advertising and content are distributed to publishers across web and mobile platforms, as well as consumeroriented websites Citysearch.com, InsiderPages.com...

  • Page 10
    ... information from such listing) is viewed on a CityGrid Property or a user calls a metered number to reach a business. In the case of resellers, advertisers pay resellers for CityGrid Advertising, which resellers in turn share the revenue received with CityGrid Media pursuant to a variety of models...

  • Page 11
    ... applications. Marketing We market our services through a wide variety of offline and online marketing activities. Our offline marketing activities consist of traditional marketing and business development activities, including television, print, radio and outdoor advertising and related public...

  • Page 12
    ....com, a leading French website for consumer information regarding home improvement; 123Devis.com, a French lead generation business with one of the largest networks of home service professionals in France; and 123GetAQuote.co.uk, a leading lead generation platform for home service professionals...

  • Page 13
    ...We also promote online enrollment in our network through search engine marketing, relationships with trade associations and affiliate marketing relationships. Revenue ServiceMagic's revenue is derived from fees paid by members of our network of service professionals for consumer leads, regardless of...

  • Page 14
    ... the website of any IAC business, is incorporated by reference in this report, or in any other filings with, or in any other information furnished or submitted to, the SEC. The Company makes available, free of charge through its website, its Annual Reports on Form 10-K, Quarterly Reports on Form 10...

  • Page 15
    ...Factors Cautionary Statement Regarding Forward-Looking Information This annual report on Form 10-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as "anticipates," "estimates," "expects," "intends," "plans" and...

  • Page 16
    ... from our search services or the parameters applicable to the display of paid listings could have an adverse effect on our business, financial condition and results of operations. Such changes could come about for a number of reasons, including general market conditions, competition or policy...

  • Page 17
    ... revenues and adversely affect our business, financial condition and results of operations. Our success depends upon the continued growth and acceptance of online advertising, particularly paid listings, as an effective alternative to traditional, offline advertising and the continued commercial use...

  • Page 18
    ... and/or new products or services to the market. Our inability to provide quality products and services would adversely affect user and customer experiences, which would result in decreases in users, customers and revenues, which would adversely affect our business, financial condition and results...

  • Page 19
    ...this nature, sales and marketing costs as a percentage of revenue would increase over the long-term. Any failure to attract and acquire new, and retain existing, traffic, users and customers in a cost-effective manner could adversely affect our business, financial condition and results of operations...

  • Page 20
    ...in turn adversely impacts our revenues. Our failure to successfully modify our toolbars and other search services in a cost-effective manner in response to the introduction and adoption of these new technologies and applications could adversely affect our business, financial condition and results of...

  • Page 21
    ... on our business, financial condition and results of operations. We operate in various international markets, some in which we have limited experience. As a result, we face additional risks in connection with our international operations. Also, we may not be able to successfully expand into new, or...

  • Page 22
    ..., the provision of online services, transactions with users and customers and advertising on our websites. The sharing, use, disclosure and protection of this information are governed by the respective privacy and data security policies maintained by our various businesses. Moreover, there are...

  • Page 23
    ...our various toolbar brands, Match.com, OkCupid.com, Meetic.com and ServiceMagic.com and related domain names and logos), through which they market their products and services and seek to build and maintain brand loyalty and recognition. So long as these businesses continue to use these trademarks to...

  • Page 24
    ... or other unwanted computer programs, applications and activity that make changes to users' computers and interfere with the overall experience of our services, such as by hijacking queries to these websites or altering or replacing search results generated. This type of interference often...

  • Page 25
    ...business, financial condition and results of operations and otherwise be costly to remedy. Item 1B. Unresolved Staff Comments Not applicable. Item 2. Properties IAC believes that the facilities for its management and operations are generally adequate for its current and near-term future needs. IAC...

  • Page 26
    ...138.5 million, Diamond Castle's total investment in PRC. Discovery commenced in 2010. In January 2011, the Company, alleging that during the auction process Diamond Castle had secretly obtained extensive confidential information from PRC's then-CEO, filed counterclaims and third-party claims against...

  • Page 27
    ... public trading market for IAC Class B common stock. The table below sets forth, for the calendar periods indicated, the high and low sales prices per share for IAC common stock as reported on NASDAQ. High Low Year Ended December 31, 2011 Fourth Quarter Third Quarter Second Quarter First Quarter...

  • Page 28
    ... Company of its common stock during the quarter ended December 31, 2011: (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) (d) Maximum Number of Shares that May Yet Be Purchased Under Publicly Announced Plans or Programs (3) Period (a) Total Number of Shares...

  • Page 29
    .... Year Ended December 31, 2010 2009 2008 (Dollars in thousands, except per share data) 2011 2007 Statement of Operations Data: (1) Revenue Earnings (loss) from continuing operations Earnings (loss) per common share from continuing operations attributable to IAC shareholders: Basic Diluted Cash...

  • Page 30
    ... Income Before Amortization (as defined in IAC's Principles of Financial Reporting) for the years ended December 31, 2011, 2010 and 2009. Years Ended December 31, 2010 Growth (Dollars in thousands) 2011 Growth 2009 Revenue: Search Match ServiceMagic Media & Other Inter-segment elimination Total...

  • Page 31
    ..., 2011, 2010 and 2009, revenue earned from Google was $970.4 million, $727.9 million and $561.9 million, respectively. The majority of this revenue was earned by the businesses comprising the Search segment. We market and offer our products and services directly to consumers through branded websites...

  • Page 32
    ... growth at Pronto, Shoebuy, CollegeHumor and Vimeo. The increase from ServiceMagic was primarily due to an increase in domestic service request accepts driven primarily by increased marketing efforts and a more active service provider network. Cost of revenue Years Ended December 31, % Change 2010...

  • Page 33
    ... expense at CityGrid Media. Selling and marketing expense at Match increased primarily due to the acquisition of Meetic and increases in offline and online marketing spend associated with the OurTime.com website and an advertising agreement entered into during the second quarter of 2010 with Yahoo...

  • Page 34
    .... Under the agreement, Liberty agreed to exchange with IAC 4.3 million shares of common stock and 8.5 million shares of Class B common stock, which were valued at $364.2 million based on the closing price of IAC common stock on December 1, 2010, for Evite, Gifts.com and IAC Advertising Solutions and...

  • Page 35
    ... in capitalized software costs in the third quarter of 2011 associated with the exit from the Company's direct sponsored listings business. Depreciation in 2010 increased from 2009 primarily due to the write-off of certain capitalized software costs associated with the Ask.com restructuring. 32

  • Page 36
    ... at Search, partially offset by an increase at Match relating to the acquisition of Singlesnet and its venture formed with Meetic in Latin America. The amortization of non-cash marketing referred to in this report consists of non-cash advertising credits secured from Universal Television as part of...

  • Page 37
    ...-lived intangible asset impairment charge at IAC Search & Media is primarily due to lower future revenue projections associated with a trade name and trademark based largely upon the impact of 2010's full year results. In the fourth quarter of 2009, the Company identified and recorded impairment...

  • Page 38
    ... and expirations of statutes of limitations and foreign income taxed at lower rates. In connection with the acquisition of Meetic, the Company concluded that it intends to permanently reinvest outside of the United States the earnings of Match's international operations related to Meetic, including...

  • Page 39
    ... operations during the fourth quarter of 2010, and Evite, Gifts.com and IAC Advertising Solutions through December 1, 2010. The Company recognized after-tax gains of $140.8 million on the tax-free exchange of Evite, Gifts.com and IAC Advertising Solutions in 2010. The 2011 loss is primarily due...

  • Page 40
    ... we develop, market and distribute downloadable applications, and our B2B operations, through which we provide customized browser-based applications for software and media companies; destination websites, including Ask.com and Dictionary.com, through which we provide search and additional services...

  • Page 41
    ... totaling $1.045 billion related to IAC Search & Media. In 2010 the Company identified and recorded an indefinite-lived intangible asset impairment charge of $11.0 million. The charge is due to lower future revenue projections associated with a trade name and trademark based largely upon the impact...

  • Page 42
    ... related to offline and online marketing spend associated with the OurTime.com website and an advertising agreement entered into during the second quarter of 2010 with Yahoo. General and administrative expense increased from 2010, primarily due to an increase in professional fees due, in part, to...

  • Page 43
    ...a 14% increase in service requests and a 19% increase in service request accepts domestically and from growth internationally, partially offset by lower average lead acceptance fees. The increase in service requests was driven primarily by increased online and offline marketing efforts. The increase...

  • Page 44
    ... is an increase of $0.6 million in amortization of intangibles, exclusive of the impairment charge noted above. Corporate For the year ended December 31, 2011 compared to the year ended December 31, 2010 Operating Income Before Amortization loss decreased by $1.4 million to a loss of $62.8 million...

  • Page 45
    ...accrued employee compensation and benefits and an increase in accrued revenue share expense. The increase in accrued advertising expense is primarily due to an increase in advertising and promotional expenditures at Search due to increased online marketing related to its destination websites and new...

  • Page 46
    ... to the growth in revenue earned from our paid listing supply agreement with Google; the related receivable from Google was $105.7 million and $70.5 million at December 31, 2011 and 2010, respectively. While our Match, Media & Other and ServiceMagic businesses experienced strong growth, the accounts...

  • Page 47
    ... to the growth in revenue earned from our paid listing supply agreement with Google; the related receivable from Google was $70.5 million and $53.7 million at December 31, 2010 and 2009, respectively. While our Match, Media & Other and ServiceMagic businesses experienced strong growth, the accounts...

  • Page 48
    ...IAC management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook. The Company believes its existing cash, cash equivalents and marketable securities, together with its expected positive cash flows generated from operations in 2012...

  • Page 49
    ... reliable estimate of the period in which these liabilities might be paid. For additional information on income taxes, see Note 4 to the consolidated financial statements. Represents contractual amounts due including interest. The purchase obligations primarily include advertising commitments...

  • Page 50
    ...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, including non-cash compensation, non-cash marketing, and acquisition...

  • Page 51
    ... acquisition, the identifiable definite-lived intangible assets of the acquired company, such as customer lists, technology and supplier agreements, are valued and amortized over their estimated lives. Value is also assigned to acquired indefinite-lived intangible assets, which comprise trade names...

  • Page 52
    ... and industry specific factors. The discount rates used in the Company's annual goodwill impairment assessment ranged from 13% to 20% in both 2011 and 2010. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill of the reporting unit is not impaired and the second...

  • Page 53
    ... expected future cash flows generated by the respective intangible assets. The royalty rates used in the DCF analyses are based upon an estimate of the royalty rates that a market participant would pay to license the Company's trade names and trademarks. Assumptions used in the avoided royalty DCF...

  • Page 54
    ... notes to the consolidated financial statements, the Company estimated the fair value of stock options issued in 2011, 2010 and 2009 using a Black-Scholes option pricing model with the following weighted average assumptions: risk-free interest rates of 2.3%, 2.4% and 2.1%, respectively, a dividend...

  • Page 55
    ... rates with no other subsequent changes for the remainder of the period. Equity Price Risk The Company is exposed to market risk as it relates to changes in the market value of its investments. At December 31, 2011, the Company has four investments in equity securities of publicly traded companies...

  • Page 56
    ... exchange gains and losses are not material to the Company's earnings in 2011, 2010 and 2009. As foreign currency exchange rates change, translation of the statements of operations of the Company's international businesses into U.S. dollars affects year-overyear comparability of operating results...

  • Page 57
    ... financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), IAC/InterActiveCorp's internal control over financial reporting...

  • Page 58
    ...31, 2011 2010 (In thousands, except share data) ASSETS Cash and cash equivalents Marketable securities Accounts receivable, net of allowance of $7,309 and $8,848, respectively Other current assets Total current assets Property and equipment, net Goodwill Intangible assets, net Long-term investments...

  • Page 59
    ... CONSOLIDATED STATEMENT OF OPERATIONS Years Ended December 31, 2011 2010 2009 (In thousands, except per share data) Revenue Costs and expenses: Cost of revenue (exclusive of depreciation shown separately below) Selling and marketing expense General and administrative expense Product development...

  • Page 60
    IAC/INTERACTIVECORP AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY Class B Convertible Common Accumulated Stock $.001 Other Par Value Additional Accumulated Comprehensive Noncontrolling Paid-in Treasury $ Shares Capital Stock Deficit Income (Loss) Interests (In thousands) 227,445 $ ...

  • Page 61
    ..., ILG, Ticketmaster and Tree.com to shareholders Balance as of December 31, 2009 $ Comprehensive income: Net earnings attributable to IAC shareholders for the year ended December 31, 2010 Change in foreign currency translation adjustment, net of tax benefit of $4,711 Change in net unrealized losses...

  • Page 62
    ... taxes Income tax benefit related to the exercise of stock options, vesting of restricted stock units and other Issuance of common stock upon the exercise of warrants Cash dividend declared on common stock Purchase of treasury stock Receipt of stock from Liberty Media Corporation Fair value of...

  • Page 63
    ...-term investments Deferred income taxes Equity in losses of unconsolidated affiliates Gain on sale of Match Europe Gain on sales of investments Decrease in the fair value of the derivative asset related to Arcandor AG stock Changes in assets and liabilities, net of effects of acquisitions: Accounts...

  • Page 64
    Cash and cash equivalents at end of period $ 704,153 $ 742,099 $1,245,997 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 58

  • Page 65
    ... States that connects consumers, by way of patented proprietary technologies, with home and other local service professionals, all of which are pre-screened and the majority of which are customer-rated. Through ServiceMagic International, we operate businesses in the local lead generation space in...

  • Page 66
    ... limited to: the current business environment, including competition; going concern considerations such as financial condition and 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...

  • Page 67
    .... Match also earns revenue from online advertising, primarily from OkCupid, which was acquired in January 2011. Online advertising revenue is recognized every time an ad is displayed. ServiceMagic ServiceMagic's lead acceptance revenue is generated and recognized when an in-network home service...

  • Page 68
    ... experience. Shipping and handling fees billed to customers are recorded as revenue. The costs associated with shipping goods to customers are recorded as cost of revenue. Revenue of media businesses included in this segment is generated primarily through online advertising, media production...

  • Page 69
    ... pay its obligation to the Company and the condition of the general economy and the customer's industry. The Company writes off accounts receivable when they become uncollectible. The Company also maintains allowances to reserve for potential credits issued to customers or other revenue adjustments...

  • Page 70
    ... Reportable Segment IAC Search & Media Search CityGrid Media Search Match Match ServiceMagic ServiceMagic Media & Shoebuy Other Connected Media & Ventures Other Media & Other includes other operating segments that do not have goodwill. See Note 15 for additional information regarding the Company...

  • Page 71
    ... ended December 31, 2011, 2010 and 2009, respectively. The Company capitalizes and amortizes the costs associated with certain distribution arrangements that require it to pay a fee per access point delivered. These access points are generally in the form of downloadable applications associated with...

  • Page 72
    ... and expensed over the requisite service period. See Note 14 for a further description of the Company's stock-based compensation plans. Redeemable Noncontrolling Interests In connection with the acquisition of certain subsidiaries, management of these businesses has retained an ownership interest...

  • Page 73
    ...million, respectively. The majority of this revenue was earned by the businesses comprising the Search segment. Accounts receivable related to revenue earned from Google totaled $105.7 million and $70.5 million at December 31, 2011 and 2010, respectively. The Company's business is subject to certain...

  • Page 74
    IAC/INTERACTIVECORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 3-CONSOLIDATED FINANCIAL STATEMENT DETAILS Other current assets December 31, 2011 2010 (In thousands) Deferred income taxes Prepaid expenses Capitalized downloadable search toolbar costs, net Income ...

  • Page 75
    ... TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 3-CONSOLIDATED FINANCIAL STATEMENT DETAILS (Continued) Accrued expenses and other current liabilities December 31, 2011 2010 (In thousands) Accrued employee compensation and benefits Accrued revenue share expense Accrued advertising expense...

  • Page 76
    ... of service revenue Cost of product revenue Cost of revenue Other income (expense), net $ 666,424 $ 508,640 $ 352,824 94,820 85,176 77,025 $ 761,244 $ 593,816 $ 429,849 Years Ended December 31, 2011 2010 2009 (In thousands) Interest income Interest expense Non-income tax refunds related to Match...

  • Page 77
    IAC/INTERACTIVECORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 4-INCOME TAXES U.S. and foreign earnings (loss) from continuing operations before income taxes are as follows: Years Ended December 31, 2010 2009 (In thousands) 2011 U.S. Foreign Total $ 142,623 $ 20,...

  • Page 78
    ...benefit will not be realized. December 31, 2011 2010 (In thousands) Deferred tax assets: Accrued expenses Net operating loss carryforwards Tax credit carryforwards Stock...to limitations under state laws similar to Section 382 of the Internal Revenue Code of 1986. At December 31, 2011, the Company had...

  • Page 79
    IAC/INTERACTIVECORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 4-INCOME TAXES (Continued) between 2012 and 2031. During 2011, the Company recognized tax benefits related to NOLs of $2.7 million. Included in this amount was $1.1 million of tax benefits of acquired ...

  • Page 80
    ... against certain deferred tax assets. The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in income tax provision. Included in income tax provision for continuing operations for the years ended December 31, 2011, 2010 and 2009 is a $1.4 million expense...

  • Page 81
    ... method of accounting and the financial results of Meetic are included within IAC's consolidated financial statements and the Match operating segment beginning September 1, 2011. For the year ended December 31, 2011, the Company included $46.1 million of revenue, net of a $32.6 million write-off of...

  • Page 82
    ... the time of acquisition, which resulted in a significant portion of the purchase price being allocated to goodwill. The Company's expected financial performance of Meetic reflects anticipated synergies between Match and Meetic. Meetic's business model is similar to Match's businesses and we believe...

  • Page 83
    IAC/INTERACTIVECORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 5-BUSINESS COMBINATIONS (Continued) Intangible assets are as follows: Weighted-Average (In thousands) Amortization Life (Years) Indefinite-lived trade names Customer lists Technology Total $ $ 129,...

  • Page 84
    ... expected future cash flows generated by the respective intangible assets. The royalty rates used in the DCF analyses are based upon an estimate of the royalty rates that a market participant would pay to license the Company's trade names and trademarks. Assumptions used in the avoided royalty DCF...

  • Page 85
    ... charge at IAC Search & Media was primarily due to lower future revenue projections associated with a trade name and trademark based largely upon the impact of 2010's full year results. In connection with its annual assessment and its review of definite-lived intangible assets in 2009, the Company...

  • Page 86
    ... by reporting unit, including the changes in the carrying value of goodwill, for the year ended December 31, 2011: Balance as of December 31, 2010 Foreign Exchange Translation Balance as of December 31, 2011 Additions (Deductions) (In thousands) IAC Search & Media CityGrid Media Search Match...

  • Page 87
    ... lives are trade names and trademarks acquired in various acquisitions. At December 31, 2011, intangible assets with definite lives are as follows: Accumulated Amortization (In thousands) Weighted-Average Amortization Life (Years) Cost Net Customer lists Technology Supplier agreements Other Total...

  • Page 88
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 7-MARKETABLE SECURITIES At December 31, 2011, available-for-sale marketable securities are as follows: Amortized Cost Gross Gross Unrealized Unrealized Gains Losses (In thousands) Estimated Fair Value Corporate debt securities States...

  • Page 89
    ...ARO on June 19, 2007, IAC received approximately 5.5 million shares of ARO stock plus additional consideration in the form of a contingent value right ("CVR") (See Note 9 for additional information on the CVR). During 2009, the Company sold its 5.5 million shares of ARO stock, resulting in a pre-tax...

  • Page 90
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 8-LONG-TERM INVESTMENTS The balance of long-term investments is comprised of: December 31, 2011 2010 (In thousands) Equity method investments Cost method investments Auction rate securities Long-term marketable equity securities Total...

  • Page 91
    ... of unconsolidated affiliates" in the accompanying consolidated statement of operations. Cost method investments During the third quarter of 2011, the Company acquired a 20% interest in Zhenai Inc. ("Zhenai"), a leading provider of online matchmaking services in China. Our voting power is limited by...

  • Page 92
    ...: Treasury and government agency money market funds Commercial paper Time deposits Marketable securities: Corporate debt securities States of the U.S. and state political subdivisions Equity security Long-term investments: Auction rate security Marketable equity securities Total Liabilities...

  • Page 93
    ... 31, 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. For the year ended December 31, 2009, a loss of $57.2 million was included in earnings related to the CVR, which was accounted for as...

  • Page 94
    ... related to the OkCupid acquisition. 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. December 31, 2011 December 31, 2010 Carrying Fair Carrying Fair...

  • Page 95
    ... 1 which commenced March 1, 2006 Long-term debt $ 15,844 $ 15,844 80,000 80,000 $ 95,844 $ 95,844 In connection with the financing of the construction of IAC's corporate headquarters, on August 31, 2005, the New York City Industrial Development Agency (the "Agency") issued $80 million in aggregate...

  • Page 96
    ... B common stock. During 2011, Mr. Diller exchanged 1.5 million shares of common stock for 1.5 million shares of Class B common stock. Further, on December 1, 2010, the Company entered into a stock exchange agreement with Liberty. Under the agreement, Liberty agreed to exchange with IAC an aggregate...

  • Page 97
    ... of record as of the close of business on November 15, 2011. Reserved Common Shares In connection with equity compensation plans, warrants, and other matters, 42.0 million shares of IAC common stock were reserved as of December 31, 2011. Warrants A summary of changes in outstanding warrants is as...

  • Page 98
    ... million and 23.1 million shares of IAC common stock for aggregate consideration, on a trade date basis, of $518.6 million and $530.9 million, respectively. In addition, on December 1, 2010, the Company completed the tax-free exchange of Evite, Gifts.com, IAC Advertising Solutions and $217.9 million...

  • Page 99
    ... TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 13-EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings (loss) per share attributable to IAC shareholders. Years Ended December 31, 2010 Basic Diluted (In thousands, except per share data) 2011 Basic...

  • Page 100
    93

  • Page 101
    ..., 2011, there were 9.2 million shares available for grant under the Company's stock-based compensation plans. The plans described above have a stated term of ten years and provide that the exercise price of stock options granted will not be less than the market price of the Company's common stock on...

  • Page 102
    .... The fair value of each stock option award is estimated on the grant date using the Black-Scholes option pricing model. Approximately 2.6 million, 2.4 million and 0.9 million stock options were granted by the Company during the years ended December 31, 2011, 2010 and 2009, respectively. 95

  • Page 103
    ... and expected term. For purposes of this model, no dividends have been assumed. During 2011 and 2010, expected stock price volatilities were estimated based on the Company's historical volatility. Prior to 2010, due to the lack of sufficient historical IAC stock price volatilities subsequent...

  • Page 104
    ... or upon the occurrence of certain prescribed events. In some cases, IAC has taken a preferred interest in the subsidiary with a face value equal to the subsidiary's acquisition price or, when funding a start-up business, its investment cost, or a certain other fixed amount. In some cases, these...

  • Page 105
    ... of the businesses with regards to the types of services or products offered or the target market. 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...

  • Page 106
    IAC/INTERACTIVECORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 15-SEGMENT INFORMATION (Continued) December 31, 2011 2010 (In thousands) Segment Assets(b): Search Match ServiceMagic Media & Other Corporate Total $ 271,298 $ 280,773 190,338 196,177 13,862 13,834 ...

  • Page 107
    ... the measure of segment assets presented above. Revenue by geography is based on where the customer is located. Geographic information about revenue and long-lived assets is presented below: Years Ended December 31, 2010 (In thousands) 2011 2009 Revenue United States All other countries Total...

  • Page 108
    ... STATEMENTS (Continued) NOTE 15-SEGMENT INFORMATION (Continued) Year Ended December 31, 2010 Operating Income Before Amortization Non-Cash Compensation Expense Amortization of Intangibles (In thousands) Goodwill Impairment Operating Income (Loss) Search Match ServiceMagic Media & Other Corporate...

  • Page 109
    ... the third quarter of 2011, Match obtained a controlling financial interest in Meetic. Accordingly, this purchase was accounted for under the acquisition method of accounting. NOTE 16-COMMITMENTS The Company leases land, office space, data center facilities and equipment used in connection with its...

  • Page 110
    ...Company received 0.1 million shares of IAC common stock, valued at $2.9 million, in fulfillment of post-closing working capital adjustments. On January 31, 2011, IAC contributed The Daily Beast, previously reported in IAC's Media & Other segment, to a newly formed venture with Harman Newsweek called...

  • Page 111
    ...., Giftco, Inc. and IAC Advertising, LLC, for substantially all of Liberty's shares of IAC common stock and all of its shares of Class B common stock, which were valued at $364.2 million based on the closing price of IAC common stock on December 1, 2010. On March 10, 2010, Match and Meetic completed...

  • Page 112
    ... information regarding this exchange. In connection with and following the Expedia spin-off, the Company and Expedia entered into various commercial agreements, which generally include distribution agreements, services agreements and advertising agreements, as well as a cost sharing agreement...

  • Page 113
    ... 31, 2011 Revenue Cost of revenue Operating income Earnings from continuing operations (Loss) earnings from discontinued operations, net of tax Net earnings Net earnings attributable to IAC shareholders Per share information attributable to IAC shareholders: Basic earnings per share from continuing...

  • Page 114
    ...of 2010 includes a gain of $140.8 million related to the tax-free exchange of Evite, Gifts.com and IAC Advertising Solutions to Liberty, and an after-tax impairment charge of $31.6 million related to the write-down of the goodwill of InstantAction. NOTE 22-SUBSEQUENT EVENTS On February 1, 2012, IAC...

  • Page 115
    ... Act) for the Company. The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally...

  • Page 116
    ... for the year ended December 31, 2010 and in the Forms 10-Q for the quarterly periods ended March 31, 2011, June 30, 2011 and September 30, 2011. Specifically, the Company increased the level of review of work performed by Company personnel and third-party tax professionals in the identification and...

  • Page 117
    ...regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also...

  • Page 118
    ...reference to IAC's definitive Proxy Statement to be used in connection with its 2012 Annual Meeting of Stockholders, or the 2012 Proxy Statement, as set forth below, in accordance with General Instruction G(3) of Form 10-K. Item 10. Directors, Executive Officers and Corporate Governance Information...

  • Page 119
    ... and Financial Statement Schedules (a) List of documents filed as part of this Report: (1) Consolidated Financial Statements of IAC Report of Independent Registered Public Accounting Firm: Ernst & Young LLP. Consolidated Balance Sheet as of December 31, 2011 and 2010. Consolidated Statement of...

  • Page 120
    ... 6, 2010. Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed on August 22, 2008. 10.5 IAC/InterActiveCorp 2008 Stock and Annual Annex F to the Registrant's Definitive Proxy Incentive Plan.(1) Statement, filed on July 10, 2008. 10.6 Form of Terms and Conditions of Stock Exhibit...

  • Page 121
    ... of Contents Exhibit No. Description Location 10.12 Stock Option Agreement between the Registrant and Barry Diller, dated as of June 7, 2005.(1) 10.13 Match.com, Inc. Equity Program(1) Exhibit 10.8 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2005...

  • Page 122
    ...Location 32.1 Certification of the Chief Executive Officer...the Chief Financial Officer pursuant to...plans. Filed herewith. Furnished herewith. Pursuant to applicable securities laws and regulations, the Registrant is deemed to have complied with the reporting...of a registration statement or prospectus ...

  • Page 123
    .... IAC/INTERACTIVECORP By: /s/ GREGORY R. BLATT Gregory R. Blatt Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on February 29, 2012...

  • Page 124
    Donald R. Keough /s/ BRYAN LOURD Bryan Lourd /s/ ARTHUR C. MARTINEZ Arthur C. Martinez /s/ DAVID S. ROSENBLATT David S. Rosenblatt /s/ ALAN G. SPOON Alan G. Spoon /s/ ALEXANDER VON FURSTENBERG Alexander von Furstenberg /s/ RICHARD F. ZANNINO Richard F. Zannino 117 Director Director Director Director...

  • Page 125
    ... Charges to Earnings Charges to Other Accounts (In thousands) Balance at End of Period Description Deductions 2011 Allowance for doubtful accounts and revenue reserves Sales returns accrual Deferred tax valuation allowance Other reserves 2010 Allowance for doubtful accounts and revenue reserves...

  • Page 126

  • Page 127
    ... New York Delaware Delaware Canada Jersey-Channel Islands Australia Netherlands Germany Entity Jurisdiction of Formation IAC Search & Media Europe Limited IAC Search & Media International, Inc. IAC Search & Media Massachusetts, Inc. IAC Search & Media Technologies Limited IAC Search & Media UK...

  • Page 128
    ....com Pegasus Limited Match.com SN, LLC Match.com, Inc. Match.com, L.L.C. Meetic SA Mindspark Interactive Network, Inc. MM LatAm, LLC Mojo Acquisition Corp. Neu.de GmbH Nexus Dating Limited Notional, LLC Parperfeito Comunicacao SA People Media, Inc. People Media, LLC Points Investments, Inc. Power...

  • Page 129
    Targeted Media Solutions LLC TDB Holdings, Inc. The IAC Foundation, Inc. TM Travel, LLC TMC Realty, L.L.C. TMNV HoldCo, Inc. Trustic, Inc. TV Travel Europe Ltd. TV Travel Group Ltd. TV Travel Shop Broadcasting Ltd. TV Travel Shop Holidays Ltd. TV Travel Shop Ltd. uDate.com Ltd. uDate.com, Inc. ...

  • Page 130
    QuickLinks Exhibit 21.1 IAC/InterActiveCorp Subsidiaries As of December 31, 2011

  • Page 131
    ... February 29, 2012, with respect to the consolidated financial statements and schedule of IAC/InterActiveCorp, and the effectiveness of internal control over financial reporting of IAC/InterActiveCorp, included in this Annual Report (Form 10-K) for the year ended December 31, 2011. COMMISSION FILE...

  • Page 132
    QuickLinks Exhibit 23.1 COMMISSION FILE NO.

  • Page 133
    ... Exhibit 31.1 Certification I, Gregory R. Blatt, certify that: 1. 2. I have reviewed this annual report on Form 10-K for the fiscal year ended December 31, 2011 of IAC; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact...

  • Page 134
    QuickLinks Exhibit 31.1 Certification

  • Page 135
    ... caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles...

  • Page 136
    QuickLinks Exhibit 31.2 Certification

  • Page 137
    ... Exhibit 31.3 Certification I, Thomas J. McInerney, certify that: 1. 2. I have reviewed this annual report on Form 10-K for the fiscal year ended December 31, 2011 of IAC; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact...

  • Page 138
    QuickLinks Exhibit 31.3 Certification

  • Page 139
    ... the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge: (1) the Annual Report on Form 10-K for the fiscal year ended December 31, 2011 of IAC/InterActiveCorp (the "Report") which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the...

  • Page 140
    QuickLinks Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANESOXLEY ACT OF 2002

  • Page 141
    ... the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge: (1) the Annual Report on Form 10-K for the fiscal year ended December 31, 2011 of IAC/InterActiveCorp (the "Report") which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the...

  • Page 142
    QuickLinks Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANESOXLEY ACT OF 2002

  • Page 143
    ... the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge: (1) the Annual Report on Form 10-K for the fiscal year ended December 31, 2011 of IAC/InterActiveCorp (the "Report") which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the...

  • Page 144
    QuickLinks Exhibit 32.3 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANESOXLEY ACT OF 2002