ServiceMagic 2014 Annual Report Download - page 69

IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Cash and Cash Equivalents
Cash and cash equivalents include cash and short-term investments, with maturities of less than 91 days from the date of purchase.
Domestically, cash equivalents primarily consist of commercial paper rated A2/P2 or better and AAA rated money market funds. Internationally,
cash equivalents primarily consist of AAA rated money market funds and time deposits.
Marketable Securities
At December 31, 2014, marketable securities consist of short-to-medium-term debt securities issued by investment grade corporate issuers
and an equity security. The Company invests in marketable debt securities with active secondary or resale markets to ensure portfolio liquidity to
fund current operations or satisfy other cash requirements as needed. The Company also invests in marketable equity securities as part of its
investment strategy. All marketable securities are classified as available-for-sale and are reported at fair value. The unrealized gains and losses on
marketable securities, net of tax, are included in accumulated other comprehensive income as a separate component of shareholders' equity. The
specific-identification method is used to determine the cost of securities sold and the amount of unrealized gains and losses reclassified out of
accumulated other comprehensive income into earnings.
The Company employs a methodology that considers available evidence in evaluating potential other-than-temporary impairments of its
investments. Investments are considered to be impaired when a decline in fair value below the amortized cost basis is determined to be other-than-
temporary. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has
been less than the amortized cost basis, the financial condition and near-term prospects of the issuer, and whether it is not more likely than not that
the Company will be required to sell the security before the recovery of the amortized cost basis, which may be maturity. If a decline in fair value is
determined to be other-than-temporary, an impairment charge is recorded in current earnings and a new cost basis in the investment is established.
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
changing. Significant changes in this industry or changes in advertising spending behavior or in customer buying behavior could adversely affect
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,
Google may unilaterally update its policies and guidelines, which could require modifications to, or prohibit and/or render obsolete certain of our
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, 2014 , 2013 and 2012 , revenue earned from Google is $1.4 billion , $1.5
billion and $1.4 billion
, respectively. This revenue is earned by the businesses comprising the Search & Applications segment. Accounts receivable
related to revenue earned from Google totaled $118.7 million and $112.3 million at December 31, 2014 and 2013 , 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.
Accounts Receivable
Accounts receivable are stated at amounts due from customers, net of an allowance for doubtful accounts and revenue reserves. Accounts
receivable outstanding longer than the contractual payment terms are considered past due. The Company determines its allowance by considering a
number of factors, including the length of time accounts receivable are past due, the Company's previous loss history, the specific customer's ability
to 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.
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