GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION

The 2013 and 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, 2014 and December 31, 2013 and for the three and nine months ended September 30, 2014 and 2013 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, 2014:



	IAC		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Total Eliminations			IAC Consolidated
	(In thousands)
Cash and cash equivalents	$	675,152	$	—	$	256,560	$	—		$	931,712
Marketable securities	116,941		—		2,108		—			119,049
Accounts receivable, net	9		144,114		90,912		—			235,035
Other current assets	17,143		84,236		71,365		(3,261		)	169,483
Intercompany receivables	—		1,576,294		918,724		(2,495,018		)	—
Property and equipment, net	5,837		218,408		76,710		—			300,955
Goodwill	—		1,216,948		582,492		—			1,799,440
Intangible assets, net	—		298,314		212,941		—			511,255
Investment in subsidiaries	4,984,246		982,324		—		(5,966,570		)	—
Other non-current assets	47,606		21,260		101,776		839			171,481
Total assets	$	5,846,934	$	4,541,898	$	2,313,588	$	(8,464,010	)	$	4,238,410

Accounts payable, trade	$	5,353	$	32,631	$	36,924	$	—		$	74,908
Other current liabilities	58,796		289,719		230,270		—			578,785
Long-term debt	1,000,000		80,000		—		—			1,080,000
Income taxes payable	3,720		5,463		25,518		—			34,701
Intercompany liabilities	2,495,018		—		—		(2,495,018		)	—
Other long-term liabilities	309,019		98,823		53,861		(2,422		)	459,281
Redeemable noncontrolling interests	—		—		33,910		—			33,910
IAC shareholders' equity	1,975,028		4,035,262		1,931,308		(5,966,570		)	1,975,028
Noncontrolling interests	—		—		1,797		—			1,797
Total liabilities and shareholders' equity	$	5,846,934	$	4,541,898	$	2,313,588	$	(8,464,010	)	$	4,238,410

Balance sheet at December 31, 2013:



	IAC		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Total Eliminations			IAC Consolidated
	(In thousands)
Cash and cash equivalents	$	782,022	$	—	$	318,422	$	—		$	1,100,444
Marketable securities	1,007		—		4,997		—			6,004
Accounts receivable, net	38		135,651		71,719		—			207,408
Other current assets	45,111		76,572		40,661		(814		)	161,530
Intercompany receivables	—		569,030		847,423		(1,416,453		)	—
Property and equipment, net	5,316		221,386		67,262		—			293,964
Goodwill	—		1,180,159		495,164		—			1,675,323
Intangible assets, net	—		302,082		143,254		—			445,336
Investment in subsidiaries	3,833,751		782,840		—		(4,616,591		)	—
Other non-current assets	83,207		15,521		252,576		(6,629		)	344,675
Total assets	$	4,750,452	$	3,283,241	$	2,241,478	$	(6,040,487	)	$	4,234,684

Accounts payable, trade	$	4,310	$	51,525	$	21,818	$	—		$	77,653
Other current liabilities	41,623		280,549		187,072		—			509,244
Long-term debt	1,000,000		80,000		—		—			1,080,000
Income taxes payable	383,926		6,768		25,690		—			416,384
Intercompany liabilities	1,416,453		—		—		(1,416,453		)	—
Other long-term liabilities	217,404		96,239		72,941		(7,443		)	379,141
Redeemable noncontrolling interests	—		—		42,861		—			42,861
IAC shareholders' equity	1,686,736		2,768,160		1,848,431		(4,616,591		)	1,686,736
Noncontrolling interests	—		—		42,665		—			42,665
Total liabilities and shareholders' equity	$	4,750,452	$	3,283,241	$	2,241,478	$	(6,040,487	)	$	4,234,684

Statement of operations for the three months ended September 30, 2014:



	IAC			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Eliminations			IAC Consolidated
	(In thousands)
Revenue	$	—		$	557,604		$	227,629		$	(3,002	)	$	782,231
Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	387			121,230			105,263			(688		)	226,192
Selling and marketing expense	723			218,976			59,197			(2,273		)	276,623
General and administrative expense	28,046			50,317			29,820			10			108,193
Product development expense	1,935			27,294			10,508			(51		)	39,686
Depreciation	402			8,887			4,844			—			14,133
Amortization of intangibles	—			10,259			6,192			—			16,451
Total operating costs and expenses	31,493			436,963			215,824			(3,002		)	681,278
Operating (loss) income	(31,493		)	120,641			11,805			—			100,953
Equity in earnings (losses) of unconsolidated affiliates	91,137			13,248			95			(105,092		)	(612		)
Interest expense	(12,948		)	(1,050		)	(11		)	—			(14,009		)
Other (expense) income , net	(8,311		)	8,771			3,653			—			4,113
Earnings from continuing operations before income taxes	38,385			141,610			15,542			(105,092		)	90,445
Income tax benefit (provision)	112,697			(44,658		)	(8,223		)	—			59,816
Earnings from continuing operations	151,082			96,952			7,319			(105,092		)	150,261
Earnings from discontinued operations, net of tax	175,730			—			5			(5		)	175,730
Net earnings	326,812			96,952			7,324			(105,097		)	325,991
Net loss attributable to noncontrolling interests	—			—			821			—			821
Net earnings attributable to IAC shareholders	$	326,812		$	96,952		$	8,145		$	(105,097	)	$	326,812
Comprehensive income (loss) attributable to IAC shareholders	$	289,950		$	93,955		$	(28,940	)	$	(65,015	)	$	289,950

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



	IAC			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Eliminations			IAC Consolidated
	(In thousands)
Revenue	$	—		$	545,940		$	212,022		$	(1,090	)	$	756,872
Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	578			138,715			110,192			(629		)	248,856
Selling and marketing expense	743			197,064			50,822			(347		)	248,282
General and administrative expense	23,334			39,824			12,933			(114		)	75,977
Product development expense	1,321			25,361			8,550			—			35,232
Depreciation	340			8,343			4,806			—			13,489
Amortization of intangibles	—			9,191			3,841			—			13,032
Total operating costs and expenses	26,316			418,498			191,144			(1,090		)	634,868
Operating (loss) income	(26,316		)	127,442			20,878			—			122,004
Equity in earnings (losses) of unconsolidated affiliates	95,701			17,684			(56		)	(116,582		)	(3,253		)
Interest expense	(6,520		)	(1,061		)	(42		)	—			(7,623		)
Other income (expense), net	20,882			(9,768		)	5,605			—			16,719
Earnings from continuing operations before income taxes	83,747			134,297			26,385			(116,582		)	127,847
Income tax benefit (provision)	9,279			(41,542		)	(3,863		)	—			(36,126		)
Earnings from continuing operations	93,026			92,755			22,522			(116,582		)	91,721
Earnings from discontinued operations, net of tax	3,914			—			3			(3		)	3,914
Net earnings	96,940			92,755			22,525			(116,585		)	95,635
Net loss attributable to noncontrolling interests	—			—			1,305			—			1,305
Net earnings attributable to IAC shareholders	$	96,940		$	92,755		$	23,830		$	(116,585	)	$	96,940
Comprehensive income attributable to IAC shareholders	$	122,502		$	93,189		$	36,262		$	(129,451	)	$	122,502

Statement of operations for the nine months ended September 30, 2014:



	IAC			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Eliminations			IAC Consolidated
	(In thousands)
Revenue	$	—		$	1,660,092		$	628,033		$	(9,332	)	$	2,278,793
Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	742			374,326			273,753			(2,335		)	646,486
Selling and marketing expense	1,534			675,025			177,972			(6,410		)	848,121
General and administrative expense	77,101			146,448			89,143			36			312,728
Product development expense	5,111			81,509			31,062			(623		)	117,059
Depreciation	1,043			27,671			15,494			—			44,208
Amortization of intangibles	—			28,919			12,917			—			41,836
Total operating costs and expenses	85,531			1,333,898			600,341			(9,332		)	2,010,438
Operating (loss) income	(85,531		)	326,194			27,692			—			268,355
Equity in earnings (losses) of unconsolidated affiliates	150,531			16,595			132			(176,655		)	(9,397		)
Interest expense	(38,918		)	(3,144		)	(57		)	—			(42,119		)
Other income (expense), net	11,077			(9,935		)	(59,952		)	—			(58,810		)
Earnings (loss) from continuing operations before income taxes	37,159			329,710			(32,185		)	(176,655		)	158,029
Income tax benefit (provision)	133,494			(114,388		)	(10,564		)	—			8,542
Earnings (loss) from continuing operations	170,653			215,322			(42,749		)	(176,655		)	166,571
Earnings (loss) from discontinued operations, net of tax	174,048			—			(35		)	35			174,048
Net earnings (loss)	344,701			215,322			(42,784		)	(176,620		)	340,619
Net loss attributable to noncontrolling interests	—			—			4,082			—			4,082
Net earnings (loss) attributable to IAC shareholders	$	344,701		$	215,322		$	(38,702	)	$	(176,620	)	$	344,701
Comprehensive income (loss) attributable to IAC shareholders	$	310,979		$	212,045		$	(74,704	)	$	(137,341	)	$	310,979

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



	IAC			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Eliminations			IAC Consolidated
	(In thousands)
Revenue	$	—		$	1,659,383		$	642,435		$	(3,286	)	$	2,298,532
Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	1,804			457,756			320,375			(2,408		)	777,527
Selling and marketing expense	1,884			584,005			153,216			(756		)	738,349
General and administrative expense	69,161			129,673			76,504			(122		)	275,216
Product development expense	3,087			74,148			27,166			—			104,401
Depreciation	1,051			29,878			13,612			—			44,541
Amortization of intangibles	—			30,640			14,607			—			45,247
Total operating costs and expenses	76,987			1,306,100			605,480			(3,286		)	1,985,281
Operating (loss) income	(76,987		)	353,283			36,955			—			313,251
Equity in earnings (losses) of unconsolidated affiliates	286,178			27,807			(279		)	(318,128		)	(4,422		)
Interest expense	(19,592		)	(3,204		)	(148		)	—			(22,944		)
Other (expense) income, net	(31,457		)	(37,286		)	87,116			—			18,373
Earnings from continuing operations before income taxes	158,142			340,600			123,644			(318,128		)	304,258
Income tax benefit (provision)	48,823			(116,053		)	(34,058		)	—			(101,288		)
Earnings from continuing operations	206,965			224,547			89,586			(318,128		)	202,970
Earnings from discontinued operations, net of tax	1,902			—			14			(14		)	1,902
Net earnings	208,867			224,547			89,600			(318,142		)	204,872
Net loss attributable to noncontrolling interests	—			—			3,995			—			3,995
Net earnings attributable to IAC shareholders	$	208,867		$	224,547		$	93,595		$	(318,142	)	$	208,867
Comprehensive income attributable to IAC shareholders	$	234,411		$	224,843		$	84,437		$	(309,280	)	$	234,411

Statement of cash flows for the nine months ended September 30, 2014:



	IAC			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Total Eliminations		IAC Consolidated
	(In thousands)
Net cash (used in) provided by operating activities attributable to continuing operations	$	(50,458	)	$	349,842		$	(4,723	)	$	—	$	294,661
Cash flows from investing activities attributable to continuing operations:
Acquisitions, net of cash acquired	—			(191,509		)	(52,973		)	—		(244,482		)
Capital expenditures	(2,375		)	(25,526		)	(11,132		)	—		(39,033		)
Proceeds from maturities and sales of marketable debt securities	998			—			—			—		998
Purchases of marketable debt securities	(110,886		)	—			—			—		(110,886		)
Proceeds from sales of long-term investments	—			—			11,107			—		11,107
Purchases of long-term investments	(3,000		)	(7,043		)	(7,660		)	—		(17,703		)
Other, net	—			10			807			—		817
Net cash used in investing activities attributable to continuing operations	(115,263		)	(224,068		)	(59,851		)	—		(399,182		)
Cash flows from financing activities attributable to continuing operations:
Dividends	(68,505		)	—			—			—		(68,505		)
Issuance of common stock, net of withholding taxes	(4,823		)	—			—			—		(4,823		)
Excess tax benefits from stock-based awards	31,041			—			10,279			—		41,320
Purchase of noncontrolling interests	—			(30,000		)	(328		)	—		(30,328		)
Funds returned from escrow for Meetic tender offer	—			—			12,354			—		12,354
Acquisition-related contingent consideration payment	—			—			(7,373		)	—		(7,373		)
Intercompany	101,656			(94,492		)	(7,164		)	—		—
Other, net	(382		)	(1,310		)	295			—		(1,397		)
Net cash provided by (used in) financing activities attributable to continuing operations	58,987			(125,802		)	8,063			—		(58,752		)
Total cash used in continuing operations	(106,734		)	(28		)	(56,511		)	—		(163,273		)
Total cash used in discontinued operations	(136		)	—			(35		)	—		(171		)
Effect of exchange rate changes on cash and cash equivalents	—			28			(5,316		)	—		(5,288		)
Net decrease in cash and cash equivalents	(106,870		)	—			(61,862		)	—		(168,732		)
Cash and cash equivalents at beginning of period	782,022			—			318,422			—		1,100,444
Cash and cash equivalents at end of period	$	675,152		$	—		$	256,560		$	—	$	931,712

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	)	$	401,921		$	(22,489	)	$	—	$	324,330
Cash flows from investing activities attributable to continuing operations:
Acquisitions, net of cash acquired	—			(6,584		)	(32,873		)	—		(39,457		)
Capital expenditures	(742		)	(52,742		)	(10,630		)	—		(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			(61,043		)	(41,815		)	—		(66,484		)
Cash flows from financing activities attributable to continuing operations:
Principal payment on long-term debt	(15,844		)	—			—			—		(15,844		)
Purchase of treasury stock	(168,376		)	—			—			—		(168,376		)
Dividends	(58,882		)	—			—			—		(58,882		)
Issuance of common stock, net of withholding taxes	6,456			—			—			—		6,456
Excess tax benefits from stock-based awards	26,430			—			—			—		26,430
Purchase of noncontrolling interests	—			—			(55,561		)	—		(55,561		)
Intercompany	178,663			(339,665		)	161,002			—		—
Other, net	(951		)	(1,225		)	(1,210		)	—		(3,386		)
Net cash (used in) provided by financing activities attributable to continuing operations	(32,504		)	(340,890		)	104,231			—		(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