ServiceMagic 2013 Annual Report Download - page 72

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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Stock-Based Compensation
Stock-based compensation is measured at the grant date based on the fair value of the award and is generally 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. 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.
call arrangements become exercisable by the Company and the counter-party at various dates over the next two years. During 2013, two of these
arrangements became exercisable. There are no put and call arrangements that became exercisable during 2012. During 2011, one 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. During the years ended
December 31, 2013 , 2012 and 2011 , the Company recorded adjustments of $40.6 million , $4.3 million and $4.3 million , respectively, to
increase these interests to fair value. Fair value determinations require high levels of judgment and are based on various valuation techniques,
including market comparables and discounted cash flow projections.
Noncontrolling interests in the consolidated subsidiaries of the Company should ordinarily be reported on the consolidated balance sheet
within shareholders' equity, separately from the Company's equity. However, 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. Accordingly, if redemption of the noncontrolling
interests is outside the control of the Company, the interests are included outside of shareholders' equity in the accompanying consolidated
balance sheet.
Redeemable noncontrolling interests at December 31, 2013 and 2012 relate to certain operations included in the Match, Media and Other
segments.
Noncontrolling Interests
Noncontrolling interests at December 31, 2013 and 2012 relate principally to Meetic.
Certain Risks and Concentrations
A substantial portion of the Company's revenue is derived from online advertising, the market for which is highly competitive and rapidly
our operating results. Most of the Company's online advertising revenue is attributable to a services agreement with Google, which expires on
March 31, 2016. Our services agreement requires that we comply with certain guidelines promulgated by Google. Subject to certain limitations,
products, services and/or business practices, which could be costly to address or otherwise have an adverse effect on our business, financial
condition and results of operations. For the years ended December 31, 2013 , 2012 and 2011 , revenue earned from Google is $1.5 billion , $1.4
billion and $970.4 million , respectively. This revenue is earned by the businesses comprising the Search & Applications segment. Accounts
receivable related to revenue earned from Google totaled $112.3 million and $125.3 million at December 31, 2013 and 2012 , respectively.
The Company's business is subject to certain risks and concentrations including dependence on third party technology providers, exposure
to risks associated with online commerce security and credit card fraud.
Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents
and marketable securities. Cash and cash equivalents are maintained with financial institutions and are in excess of Federal Deposit Insurance
Corporation insurance limits.
Reclassifications