FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS

Marketable Securities

At June 30, 2019 and December 31, 2018, the fair value of marketable securities are as follows:

	June 30, 2019		December 31, 2018
	(In thousands)
Marketable equity securities	$	161,749	$	419
Available-for-sale marketable debt securities	—		123,246
Total marketable securities	$	161,749	$	123,665

The Company has an investment in Pinterest, which became a publicly-traded company in the second quarter of 2019. With effect from Pinterest's initial public offering, the Company's investment has been accounted for as a marketable security. Prior to this, the Company accounted for its investment in Pinterest as an equity security without a readily determinable fair value.  For both the three and six months ended June 30, 2019, the Company recognized an unrealized gain of $29.8 million related to its investment in Pinterest, which is included in “Other income, net” in the accompanying consolidated statement of operations.

At December 31, 2018, current available-for-sale marketable debt securities were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Treasury discount notes	$	112,291	$	3	$	(3	)	$	112,291
Commercial paper	10,955		—		—			10,955
Total available-for-sale marketable debt securities	$	123,246	$	3	$	(3	)	$	123,246

The following table presents the proceeds from maturities of available-for-sale marketable debt securities:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(In thousands)
Proceeds from maturities of available-for-sale marketable debt securities	$	40,000	$	5,000	$	163,500	$	10,000

The specific-identification method is used to determine the cost of available-for-sale marketable debt securities sold and the amount of unrealized gains and losses reclassified out of accumulated other comprehensive income (loss) into earnings. There were no gross realized gains or losses from the maturities of available-for-sale marketable debt securities for the three and six months ended June 30, 2019 and 2018.

Equity securities without readily determinable fair values

At June 30, 2019 and December 31, 2018, the carrying values of the Company's investments in equity securities without readily determinable fair values totaled $102.0 million and $235.1 million, respectively, and are included in "Long-term investments" in the accompanying consolidated balance sheet. All gains and losses on equity securities without readily determinable fair values, realized and unrealized, are recognized in "other income, net" in the accompanying consolidated statement of operations.

The following table presents a summary of realized and unrealized gains and losses recorded in other income (expense), net, as adjustments to the carrying value of equity securities without readily determinable fair values held as of June 30, 2019 and 2018.

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(In thousands)
Upward adjustments (gross unrealized gains)	$	—		$	128,786		$	—		$	128,786
Downward adjustments including impairment (gross unrealized losses)	(500		)	(2,396		)	(650		)	(2,588		)
Total	$	(500	)	$	126,390		$	(650	)	$	126,198

The cumulative upward and downward adjustments (including impairments) to the carrying value of equity securities without readily determinable fair values held at June 30, 2019 were $0.2 million and $(2.7) million, respectively.

Realized and unrealized gains and losses for the Company's marketable equity securities and investments without readily determinable fair values for the three and six months ended June 30, 2019 and 2018 are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(In thousands)
Realized gains, net, for equity securities sold	$	2,066	$	27,275	$	2,144	$	27,172
Unrealized gains, net, on equity securities held	29,369		126,414		29,247		126,559
Total gains recognized, net, in other income, net	$	31,435	$	153,689	$	31,391	$	153,731

Fair Value Measurements

The Company categorizes its financial instruments measured at fair value into a fair value hierarchy that prioritizes the inputs used in pricing the asset or liability. The three levels of the fair value hierarchy are:

• Level 1: Observable inputs obtained from independent sources, such as quoted market prices for identical assets and liabilities in active markets.

• Level 2: Other inputs, which are observable directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets, quoted market prices for identical or similar assets or liabilities in markets that are not active and inputs that are derived principally from or corroborated by observable market data. The fair values of the Company's Level 2 financial assets are primarily obtained from observable market prices for identical underlying securities that may not be actively traded. Certain of these securities may have different market prices from multiple market data sources, in which case an average market price is used.

• Level 3: Unobservable inputs for which there is little or no market data and require the Company to develop its own assumptions, based on the best information available in the circumstances, about the assumptions market participants would use in pricing the assets or liabilities.

The following tables present the Company's financial instruments that are measured at fair value on a recurring basis:

	June 30, 2019
	Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total Fair Value Measurements
	(In thousands)
Assets:
Cash equivalents:
Money market funds	$	1,754,220	$	—	$	—		$	1,754,220
Treasury discount notes	—		711,877		—			711,877
Time deposits	—		145,036		—			145,036
Commercial paper	—		30,956		—			30,956
Marketable securities:
Marketable equity security	161,749		—		—			161,749
Total	$	1,915,969	$	887,869	$	—		$	2,803,838
Liabilities:
Contingent consideration arrangement	$	—	$	—	$	(29,803	)	$	(29,803	)

	December 31, 2018
	Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total Fair Value Measurements
	(In thousands)
Assets:
Cash equivalents:
Money market funds	$	880,815	$	—	$	—		$	880,815
Treasury discount notes	—		561,733		—			561,733
Commercial paper	—		162,417		—			162,417
Time deposits	—		90,036		—			90,036
Marketable securities:
Treasury discount notes	—		112,291		—			112,291
Commercial paper	—		10,955		—			10,955
Marketable equity security	419		—		—			419
Total	$	881,234	$	937,432	$	—		$	1,818,666
Liabilities:
Contingent consideration arrangements	$	—	$	—	$	(28,631	)	$	(28,631	)

The Company's financial instruments that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are its contingent consideration arrangements.

	Contingent Consideration Arrangements
	Three Months Ended June 30,
	2019			2018
	(In thousands)
Balance at April 1	$	(28,186	)	$	(1,965	)
Total net (losses) gains:
Included in earnings:
Fair value adjustments	(1,617		)	(54		)
Included in other comprehensive income	—			109
Balance at June 30	$	(29,803	)	$	(1,910	)

	Contingent Consideration Arrangements
	Six Months Ended June 30,
	2019			2018
	(In thousands)
Balance at January 1	$	(28,631	)	$	(2,647	)
Total net losses:
Included in earnings:
Fair value adjustments	(3,146		)	(210		)
Included in other comprehensive loss	(14		)	(1		)
Settlements	1,988			948
Balance at June 30	$	(29,803	)	$	(1,910	)

Contingent Consideration Arrangements

At June 30, 2019, the Company has one outstanding contingent consideration arrangement related to a business acquisition. The arrangement has a total maximum contingent payment of $45.0 million. At June 30, 2019, the gross fair value of this arrangement, before unamortized discount, is $44.0 million. During the first quarter of 2019, the Company paid $2.0 million to settle a contingent consideration arrangement that was outstanding at December 31, 2018.

Generally, our contingent consideration arrangements are based upon financial performance and/or operating metric targets. The Company generally determines the fair value of the contingent consideration arrangements by using probability-weighted analyses to determine the amounts of the gross liability, and, because the arrangements are initially long-term in nature, applying a discount rate that appropriately captures the risks associated with the obligation to determine the net amount reflected in the consolidated financial statements. The fair value of the contingent consideration arrangement at June 30, 2019 reflects a discount rate of 25%. The fair values of the contingent consideration arrangements at December 31, 2018 reflect discount rates ranging from 12% to 25%.

The fair value of contingent consideration arrangements is sensitive to changes in the expected achievement of the applicable targets and changes in discount rates. The Company remeasures the fair value of the contingent consideration arrangements each reporting period, including the accretion of the discount, if applicable, and changes are recognized in "General and administrative expense" in the accompanying consolidated statement of operations. The contingent consideration arrangement liability at June 30, 2019 and December 31, 2018 includes a current portion of $12.6 million and $2.0 million, respectively, and a non-current portion of $17.2 million and $26.6 million, respectively. The current and non-current portions of the contingent consideration liability are included in “Accrued expenses and other current liabilities” and “Other long-term liabilities,” respectively, in the accompanying consolidated balance sheet.

Assets measured at fair value on a nonrecurring basis

The Company's non-financial assets, such as goodwill, intangible assets and property and equipment, are adjusted to fair value only when an impairment is recognized. The Company's financial assets, comprising equity securities without readily determinable fair values, are adjusted to fair value when observable price changes are identified or an impairment is recognized. Such fair value measurements are based predominantly on Level 3 inputs.

Financial instruments measured at fair value only for disclosure purposes

The following table presents the carrying value and the fair value of financial instruments measured at fair value only for disclosure purposes:

	June 30, 2019						December 31, 2018
	Carrying Value			Fair Value			Carrying Value			Fair Value
	(In thousands)
Current portion of long-term debt	$	(13,750	)	$	(13,681	)	$	(13,750	)	$	(12,753	)
Long-term debt, net(a)	(3,138,531		)	(3,914,422		)	(2,245,548		)	(2,460,204		)

_____________________

^(a)  At June 30, 2019 and December 31, 2018, the carrying value of long-term debt, net includes unamortized original issue discount and debt issuance costs of $429.1 million and $88.9 million, respectively.

At June 30, 2019 and December 31, 2018, the fair value of long-term debt is estimated using observable market prices or indices for similar liabilities, which are Level 2 inputs. At December 31, 2018, the Company considered the outstanding borrowings under the MTCH's $500 million revolving credit facility ("MTCH Credit Facility"), which has a variable interest rate, to have a fair value equal to its carrying value. The outstanding borrowings under the MTCH Credit Facility were repaid with a portion of the net proceeds from MTCH's $350 million aggregate principal amount of its 5.625% Senior Notes issued on February 15, 2019. See "Note 5—Long-term Debt" for additional information on the repayment of the MTCH Credit Facility.