GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION

The 2012 Senior Notes are unconditionally guaranteed, jointly and severally, by certain domestic subsidiaries which are 100% owned by the Company. The following tables present condensed consolidating financial information at September 30, 2013 and December 31, 2012 and for the three and nine months ended September 30, 2013 and 2012 for: IAC, on a stand-alone basis; the combined guarantor subsidiaries of IAC; the combined non-guarantor subsidiaries of IAC; and IAC on a consolidated basis.

Balance sheet at September 30, 2013:



	IAC		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Total Eliminations			IAC Consolidated
	(In thousands)
Cash and cash equivalents	$	452,097	$	—	$	289,555	$	—		$	741,652
Marketable securities	15,445		—		10,895		—			26,340
Accounts receivable, net	19		129,189		80,741		—			209,949
Other current assets	43,317		68,415		41,229		(981		)	151,980
Intercompany receivables	—		498,273		1,722,874		(2,221,147		)	—
Property and equipment, net	4,088		217,650		68,732		—			290,470
Goodwill	—		1,179,888		492,817		—			1,672,705
Intangible assets, net	—		310,248		148,123		—			458,371
Investment in subsidiaries	4,510,043		697,685		—		(5,207,728		)	—
Other non-current assets	87,167		20,647		150,354		(4,853		)	253,315
Total assets	$	5,112,176	$	3,121,995	$	3,005,320	$	(7,434,709	)	$	3,804,782

Accounts payable, trade	$	2,262	$	39,414	$	31,290	$	—		$	72,966
Other current liabilities	69,965		252,040		208,295		(1,715		)	528,585
Long-term debt, net of current maturities	500,000		80,000		—		—			580,000
Income taxes payable	358,327		25,199		27,646		—			411,172
Intercompany liabilities	2,221,147		—		—		(2,221,147		)	—
Other long-term liabilities	225,419		85,975		84,009		(4,119		)	391,284
Redeemable noncontrolling interests	—		—		32,779		—			32,779
IAC shareholders' equity	1,735,056		2,639,367		2,568,361		(5,207,728		)	1,735,056
Noncontrolling interests	—		—		52,940		—			52,940
Total liabilities and shareholders' equity	$	5,112,176	$	3,121,995	$	3,005,320	$	(7,434,709	)	$	3,804,782

Balance sheet at December 31, 2012:



	IAC		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Total Eliminations			IAC Consolidated
	(In thousands)
Cash and cash equivalents	$	501,075	$	—	$	248,902	$	—		$	749,977
Marketable securities	20,604		—		—		—			20,604
Accounts receivable, net	43		142,627		87,160		—			229,830
Other current assets	58,452		53,720		45,204		(1,037		)	156,339
Intercompany receivables	—		482,926		10,276,178		(10,759,104		)	—
Property and equipment, net	4,116		194,515		71,881		—			270,512
Goodwill	—		1,190,199		425,955		—			1,616,154
Intangible assets, net	—		340,631		142,273		—			482,904
Investment in subsidiaries	12,913,694		611,851		—		(13,525,545		)	—
Other non-current assets	153,155		16,509		109,912		(68		)	279,508
Total assets	$	13,651,139	$	3,032,978	$	11,407,465	$	(24,285,754	)	$	3,805,828

Accounts payable, trade	$	4,366	$	64,888	$	29,060	$	—		$	98,314
Other current liabilities	74,214		216,010		238,003		(1,652		)	526,575
Long-term debt, net of current maturities	500,000		80,000		—		—			580,000
Income taxes payable	440,110		26,389		13,446		—			479,945
Intercompany liabilities	10,759,104		—		—		(10,759,104		)	—
Other long-term liabilities	217,617		91,119		45,950		547			355,233
Redeemable noncontrolling interests	—		1,388		56,738		—			58,126
IAC shareholders' equity	1,655,728		2,553,184		10,972,361		(13,525,545		)	1,655,728
Noncontrolling interests	—		—		51,907		—			51,907
Total liabilities and shareholders' equity	$	13,651,139	$	3,032,978	$	11,407,465	$	(24,285,754	)	$	3,805,828

Statement of operations for the three months ended September 30, 2013:



	IAC			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Eliminations			IAC Consolidated
	(In thousands)
Revenue	$	—		$	519,972		$	237,990		$	(1,090	)	$	756,872
Costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	578			134,280			114,627			(629		)	248,856
Selling and marketing expense	743			182,195			65,691			(347		)	248,282
General and administrative expense	23,334			36,715			16,042			(114		)	75,977
Product development expense	1,321			23,858			10,053			—			35,232
Depreciation	340			8,187			4,962			—			13,489
Amortization of intangibles	—			9,003			4,029			—			13,032
Total costs and expenses	26,316			394,238			215,404			(1,090		)	634,868
Operating (loss) income	(26,316		)	125,734			22,586			—			122,004
Equity in earnings (losses) of unconsolidated affiliates	95,701			19,670			(56		)	(118,568		)	(3,253		)
Interest expense	(6,520		)	(1,061		)	(42		)	—			(7,623		)
Other income (expense), net	20,882			(9,813		)	5,650			—			16,719
Earnings from continuing operations before income taxes	83,747			134,530			28,138			(118,568		)	127,847
Income tax benefit (provision)	9,279			(40,929		)	(4,476		)	—			(36,126		)
Earnings from continuing operations	93,026			93,601			23,662			(118,568		)	91,721
Earnings from discontinued operations, net of tax	3,914			—			3			(3		)	3,914
Net earnings	96,940			93,601			23,665			(118,571		)	95,635
Net loss attributable to noncontrolling interests	—			—			1,305			—			1,305
Net earnings attributable to IAC shareholders	$	96,940		$	93,601		$	24,970		$	(118,571	)	$	96,940
Comprehensive income attributable to IAC shareholders	$	122,502		$	94,037		$	37,401		$	(131,438	)	$	122,502

Statement of operations for the three months ended September 30, 2012:



	IAC			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Eliminations			IAC Consolidated
	(In thousands)
Revenue	$	—		$	495,065		$	220,943		$	(1,538	)	$	714,470
Costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	1,347			143,348			118,908			(1,328		)	262,275
Selling and marketing expense	1,250			177,896			56,195			(211		)	235,130
General and administrative expense	31,539			37,769			23,765			1			93,074
Product development expense	1,486			18,107			8,003			—			27,596
Depreciation	203			8,508			4,439			—			13,150
Amortization of intangibles	—			468			4,744			—			5,212
Total costs and expenses	35,825			386,096			216,054			(1,538		)	636,437
Operating (loss) income	(35,825		)	108,969			4,889			—			78,033
Equity in (losses) earnings of unconsolidated affiliates	(9,808		)	10,572			(3,062		)	(1,000		)	(3,298		)
Interest expense	(277		)	(1,063		)	(51		)	—			(1,391		)
Other income (expense), net	205,214			(578		)	(204,189		)	—			447
Earnings (loss) from continuing operations before income taxes	159,304			117,900			(202,413		)	(1,000		)	73,791
Income tax (provision) benefit	(112,963		)	(35,809		)	121,166			—			(27,606		)
Earnings (loss) from continuing operations	46,341			82,091			(81,247		)	(1,000		)	46,185
(Loss) earnings from discontinued operations, net of tax	(5,624		)	—			598			(598		)	(5,624		)
Net earnings (loss)	40,717			82,091			(80,649		)	(1,598		)	40,561
Net loss attributable to noncontrolling interests	—			146			10			—			156
Net earnings (loss) attributable to IAC shareholders	$	40,717		$	82,237		$	(80,639	)	$	(1,598	)	$	40,717
Comprehensive income (loss)attributable to IAC shareholders	$	44,386		$	82,188		$	(68,147	)	$	(14,041	)	$	44,386

Statement of operations for the nine months ended September 30, 2013:



	IAC			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Eliminations			IAC Consolidated
	(In thousands)
Revenue	$	—		$	1,589,162		$	712,656		$	(3,286	)	$	2,298,532
Costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	1,804			444,655			333,476			(2,408		)	777,527
Selling and marketing expense	1,884			540,405			196,816			(756		)	738,349
General and administrative expense	69,161			120,882			85,295			(122		)	275,216
Product development expense	3,087			69,956			31,358			—			104,401
Depreciation	1,051			28,568			14,922			—			44,541
Amortization of intangibles	—			30,070			15,177			—			45,247
Total costs and expenses	76,987			1,234,536			677,044			(3,286		)	1,985,281
Operating (loss) income	(76,987		)	354,626			35,612			—			313,251
Equity in earnings (losses) of unconsolidated affiliates	286,178			30,981			(279		)	(321,302		)	(4,422		)
Interest expense	(19,592		)	(3,204		)	(148		)	—			(22,944		)
Other (expense) income, net	(31,457		)	(38,170		)	88,000			—			18,373
Earnings from continuing operations before income taxes	158,142			344,233			123,185			(321,302		)	304,258
Income tax benefit (provision)	48,823			(116,383		)	(33,728		)	—			(101,288		)
Earnings from continuing operations	206,965			227,850			89,457			(321,302		)	202,970
Earnings from discontinued operations, net of tax	1,902			—			14			(14		)	1,902
Net earnings	208,867			227,850			89,471			(321,316		)	204,872
Net loss attributable to noncontrolling interests	—			412			3,583			—			3,995
Net earnings attributable to IAC shareholders	$	208,867		$	228,262		$	93,054		$	(321,316	)	$	208,867
Comprehensive income attributable to IAC shareholders	$	234,411		$	228,560		$	83,895		$	(312,455	)	$	234,411

Statement of operations for the nine months ended September 30, 2012:



	IAC			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Eliminations			IAC Consolidated
	(In thousands)
Revenue	$	—		$	1,428,316		$	611,954		$	(4,588	)	$	2,035,682
Costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	4,040			422,193			300,297			(3,651		)	722,879
Selling and marketing expense	3,022			497,647			165,453			(954		)	665,168
General and administrative expense	89,599			108,886			72,683			17			271,185
Product development expense	4,309			57,072			21,247			—			82,628
Depreciation	495			26,151			10,844			—			37,490
Amortization of intangibles	—			1,694			16,364			—			18,058
Total costs and expenses	101,465			1,113,643			586,888			(4,588		)	1,797,408
Operating (loss) income	(101,465		)	314,673			25,066			—			238,274
Equity in earnings (losses) of unconsolidated affiliates	196,390			28,757			(25,774		)	(227,581		)	(28,208		)
Interest expense	(832		)	(3,193		)	(77		)	—			(4,102		)
Other (expense) income, net	(3,350		)	(2,369		)	8,554			—			2,835
Earnings from continuing operations before income taxes	90,743			337,868			7,769			(227,581		)	208,799
Income tax benefit (provision)	34,365			(110,884		)	(6,841		)	—			(83,360		)
Earnings from continuing operations	125,108			226,984			928			(227,581		)	125,439
(Loss) earnings from discontinued operations, net of tax	(6,581		)	—			856			(856		)	(6,581		)
Net earnings	118,527			226,984			1,784			(228,437		)	118,858
Net loss (earnings) attributable to noncontrolling interests	—			183			(514		)				(331		)
Net earnings attributable to IAC shareholders	$	118,527		$	227,167		$	1,270		$	(228,437	)	$	118,527
Comprehensive income (loss)attributable to IAC shareholders	$	119,079		$	226,908		$	(2,587	)	$	(224,321	)	$	119,079

Statement of cash flows for the nine months ended September 30, 2013:



	IAC			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Eliminations		IAC Consolidated
	(In thousands)
Net cash (used in) provided by operating activities attributable to continuing operations	$	(55,102	)	$	392,407		$	(12,975	)	$	—	$	324,330
Cash flows from investing activities attributable to continuing operations:
Acquisitions, net of cash acquired	—			(6,084		)	(33,373		)	—		(39,457		)
Capital expenditures	(742		)	(52,098		)	(11,274		)	—		(64,114		)
Proceeds from maturities and sales of marketable debt securities	12,502			—			—			—		12,502
Proceeds from sales of long-term investments	41,976			—			310			—		42,286
Purchases of long-term investments	(17,362		)	—			(9,243		)	—		(26,605		)
Other, net	—			(1,717		)	10,621			—		8,904
Net cash provided by (used in) investing activities attributable to continuing operations	36,374			(59,899		)	(42,959		)	—		(66,484		)
Cash flows from financing activities attributable to continuing operations:
Purchase of treasury stock	(168,376		)	—			—			—		(168,376		)
Issuance of common stock, net of withholding taxes	6,456			—			—			—		6,456
Dividends	(58,882		)	—			—			—		(58,882		)
Excess tax benefits from stock-based awards	26,430			—			—			—		26,430
Purchase of noncontrolling interests	—			—			(55,561		)	—		(55,561		)
Principal payments on long-term debt	(15,844		)	—			—			—		(15,844		)
Intercompany	178,663			(331,295		)	152,632			—		—
Other, net	(951		)	(1,225		)	(1,210		)	—		(3,386		)
Net cash (used in) provided by financing activities attributable to continuing operations	(32,504		)	(332,520		)	95,861			—		(269,163		)
Total cash (used in) provided by continuing operations	(51,232		)	(12		)	39,927			—		(11,317		)
Total cash provided by discontinued operations	2,254			—			3			—		2,257
Effect of exchange rate changes on cash and cash equivalents	—			12			723			—		735
Net (decrease) increase in cash and cash equivalents	(48,978		)	—			40,653			—		(8,325		)
Cash and cash equivalents at beginning of period	501,075			—			248,902			—		749,977
Cash and cash equivalents at end of period	$	452,097		$	—		$	289,555		$	—	$	741,652

Statement of cash flows for the nine months ended September 30, 2012:



	IAC			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Eliminations		IAC Consolidated
	(In thousands)
Net cash (used in) provided by operating activities attributable to continuing operations	$	(25,409	)	$	337,883		$	11,133		$	—	$	323,607
Cash flows from investing activities attributable to continuing operations:
Acquisitions, net of cash acquired	—			(341,906		)	(35,217		)	—		(377,123		)
Capital expenditures	(805		)	(20,295		)	(11,263		)	—		(32,363		)
Proceeds from maturities and sales of marketable debt securities	79,353			—			—			—		79,353
Purchases of marketable debt securities	(47,902		)	—			—			—		(47,902		)
Proceeds from sales of long-term investments	12,744			—			—			—		12,744
Purchases of long-term investments	(2,588		)	(724		)	(6,719		)	—		(10,031		)
Other, net	(350		)	117			(12,031		)	—		(12,264		)
Net cash provided by (used in) investing activities attributable to continuing operations	40,452			(362,808		)	(65,230		)	—		(387,586		)
Cash flows from financing activities attributable to continuing operations:
Purchase of treasury stock	(434,041		)	—			—			—		(434,041		)
Issuance of common stock, net of withholding taxes	320,070			—			—			—		320,070
Dividends	(43,695		)	—			—			—		(43,695		)
Excess tax benefits from stock-based awards	18,594			4,892			—			—		23,486
Purchase of noncontrolling interests	(1,937		)	—			(2,954		)	—		(4,891		)
Intercompany	(153,633		)	20,052			133,581			—		—
Other, net	—			—			195			—		195
Net cash (used in) provided by financing activities attributable to continuing operations	(294,642		)	24,944			130,822			—		(138,876		)
Total cash (used in) provided by continuing operations	(279,599		)	19			76,725			—		(202,855		)
Total cash provided by (used in) discontinued operations	2,576			—			(4,442		)	—		(1,866		)
Effect of exchange rate changes on cash and cash equivalents	—			(19		)	2,366			—		2,347
Net (decrease) increase in cash and cash equivalents	(277,023		)	—			74,649			—		(202,374		)
Cash and cash equivalents at beginning of period	545,222			—			158,931			—		704,153
Cash and cash equivalents at end of period	$	268,199		$	—		$	233,580		$	—	$	501,779