FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2021

NOTE 6—FINANCIAL INSTRUMENTS

Equity securities without readily determinable fair values

At both December 31, 2021 and 2020, the carrying value of the Company’s investments in equity securities without readily determinable fair values totaled $14.2 million, and is included in “Other non-current assets” in the accompanying consolidated balance sheet. The cumulative downward adjustments (including impairments) to the carrying value of equity securities without readily determinable fair values held as of December 31, 2021, since the adoption of ASU 2016-01 on January 1, 2018 through December 31, 2021, were $2.1 million. For both the years ended December 31, 2021 and 2020, there were no adjustments to the carrying value of equity securities without readily determinable fair values. For the year ended December 31, 2019, we recognized an impairment charge of $4.0 million which is included in “Other (expense) income, net” in the accompanying consolidated statement of operations.

Fair Value Measurements

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


	December 31, 2021
	Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total Fair Value Measurements

	(In thousands)
Assets:
Cash equivalents:
Money market funds	$	260,582	$	—	$	260,582
Time deposits	—		36,831		36,831
Short-term investments:
Time deposits	—		11,818		11,818
Total	$	260,582	$	48,649	$	309,231


	December 31, 2020
	Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total Fair Value Measurements

	(In thousands)
Assets:
Cash equivalents:
Money market funds	$	147,615	$	—	$	147,615
Time deposits	—		50,000		50,000


Total	$	147,615	$	50,000	$	197,615

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.


	December 31, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value

	(In thousands)
Current maturities of long-term debt, net (a)(b)(c)	$	(84,333)	$	(254,472)	$	—	$	—
Long-term debt, net (b)(c)	$	(3,829,421)	$	(4,725,403)	$	(3,840,930)	$	(6,267,976)

______________________

(a)The carrying value excludes the $15.6 million aggregate principal amount of the exchanged 2022 Exchangeable Notes as that amount is carried at fair value as described below.

(b)At December 31, 2021, the carrying value of current maturities of long-term debt, net includes unamortized debt issuance costs of $0.6 million. At December 31, 2021 and 2020, the carrying value of long-term debt, net includes unamortized original issue discount and debt issuance costs of $45.6 million and $51.6 million, respectively.

(c)At December 31, 2021, the fair value of the outstanding 2022 Exchangeable Notes, 2026 Exchangeable Notes, and 2030 Exchangeable Notes is $302.2 million, $932.6 million, and $1,017.7 million, respectively. At December 31, 2020, the fair value of the outstanding 2022 Exchangeable Notes, 2026 Exchangeable Notes, and 2030 Exchangeable Notes is $1,780.3 million, $1,052.1 million, and $1,113.9 million, respectively.

At December 31, 2021 and 2020, the fair value of long-term debt, net is estimated using observable market prices or indices for similar liabilities, which are Level 2 inputs.

Derivatives associated with the repurchase and exchanges of 2022 Exchangeable Notes

On September 22, 2021, we entered into privately negotiated agreements with a limited number of holders of the 2022 Exchangeable Notes to repurchase a portion of the outstanding 2022 Exchangeable Notes. The Company determined that the terms of the repurchase agreements included an embedded derivative, indexed to the value of the Company’s stock, that required bifurcation and separate accounting as a derivative liability under ASC Topic 815, Derivatives and Hedging. The Company measures embedded derivatives at their estimated fair value and recognizes changes in their estimated fair value in net income during the current reporting period.

At the inception of these agreements on September 22, 2021, the fair value of the embedded derivative was zero and the number of shares to be issued to holders of the 2022 Exchangeable Notes was not yet determinable. At September 30, 2021, under the terms of the agreements, the number of shares to be issued became fixed at 5.5 million. The corresponding loss of $14.5 million, related to the change in the fair value of the embedded derivative, which was driven by an increase in our stock price from September 22, 2021 to October 4, 2021, the settlement date of the transaction, was recorded within “other (expense) income, net” in the accompanying consolidated statement of operations.

During the year ended December 31, 2021, $18.6 million aggregate principal amount of the 2022 Exchangeable Notes were presented for exchange prior to maturity at the option of the noteholder, $3.0 million of which was settled during the year ended December 31, 2021 and $15.6 million of which will be settled in January 2022. In accordance with the 2022 Exchangeable Notes Indenture, the Company elected to settle these exchanges entirely in cash with the settlement amount determined by the volume weighted average price of Match Group common stock over a 40-day measurement period. At the time that the Company elected cash settlement, the embedded derivative for the conversion option of the 2022 Exchangeable Notes no longer qualified for the derivative scope exception for contracts indexed to an entity’s own equity. We recognized an obligation of $48.5 million in “accrued expenses and other current liabilities” to settle the conversion option as of the date of the exchanges, with an offset to paid-in capital. Subsequently, we recognized $9.7 million in gains, which is included in “other (expense) income, net” within the accompanying consolidated statement of

operations for the year ended December 31, 2021 related to the change in the fair value of the embedded derivative between the date we elected to settle in cash and the end of the 40-day measurement period, or December 31, 2021, if the measurement period extended past year-end.

For the exchanged 2022 Exchangeable Notes that were still outstanding at December 31, 2021 and were settled in January 2022, the following items were outstanding on the consolidated balance sheet at December 31, 2021:

•The fair value of the outstanding embedded derivative of $7.4 million, which is included as an asset within “other current assets;”

•the aggregate principal amount of $15.6 million for 2022 Exchangeable Notes presented for exchange, which is presented within “current maturities of long-term debt, net;” and

•an incremental $39.5 million liability recorded on the date of exchange, which is presented within “accrued expenses and other current liabilities.“

Additionally, when the Company elected to settle the exchanged 2022 Exchangeable Notes entirely in cash, a proportionate amount of note hedges were also exercised and were settled in cash based on the same 40-day measurement period to determine the settlement value. Similar to the exchanged 2022 Exchangeable Notes, the derivative scope exception for contracts indexed to an entity’s own equity no longer applied to the exercised note hedges as a result of the requirement to settle the securities in cash. We recognized an asset of $48.5 million related to the settlement of these note hedges, with an offset to paid-in capital. Subsequently, we recognized a loss of $9.7 million, which is included in “other (expense) income, net” in the accompanying consolidated statement of operations for the year ended December 31, 2021 related to the change in the related derivative fair value between the date we elected to settle in cash and the end of the 40-day measurement period, or December 31, 2021, if the measurement period extended past year-end. For the exercised note hedges that were settled in January 2022, the fair value of the outstanding note hedges at December 31, 2021 is $32.1 million, which is included as an asset within “other current assets” on the consolidated balance sheet.

At December 31, 2021, the net position of the various assets and liabilities associated with the unsettled exchanged 2022 Exchangeable Notes and the note hedges, described above, is a $15.6 million liability, representing the principal amount of the exchanged 2022 Exchangeable Notes, which was settled in January 2022.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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