LENDINGTREE, INC.
FORM 10-K
(Annual Report)
Filed 03/01/16 for the Period Ending 12/31/15
Address
Telephone
CIK
Symbol
SIC Code
11115 RUSHMORE DRIVE
CHARLOTTE, NC 28277
704-943-8942
0001434621
TREE
6163 - Loan Brokers
Industry Consumer Financial Services
Sector
Fiscal Year
Financial
12/31
http://www.edgar-online.com
© Copyright 2016, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.
Table of Contents
UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549__________________________________________________FORM 10-K__________________________________________________(Mark One)
ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934For the Fiscal Year Ended December 31, 2015oro
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934For the transition period from to Commission File No. 001-34063__________________________________________________LendingTree, Inc.(Exact
name
of
Registrant
as
specified
in
its
charter)
Delaware(State
or
other
jurisdiction
ofincorporation
or
organization)
26-2414818(I.R.S.
Employer
Identification
No.)11115 Rushmore Drive, Charlotte, North Carolina 28277(Address
of
principal
executive
offices)(704) 541-5351(Registrant's
telephone
number,
including
area
code)Securities registered pursuant to Section 12(b) of the Act:Title of Each ClassCommon
Stock,
$0.01
Par
Value
Name of each exchange on which registeredThe
NASDAQ
Stock
MarketSecurities registered pursuant to Section 12(g) of the Act:None________________________________________________________________________________________________________Indicate
by
check
mark
if
the
registrant
is
a
well-known
seasoned
issuer,
as
defined
in
Rule
405
of
the
Securities
Act.
Yes
o
No
ýIndicated
by
check
mark
if
the
registrant
is
not
required
to
file
reports
pursuant
to
Section
13
or
Section
15(d)
of
the
Act.
Yes
o
No
ýIndicate
by
check
mark
whether
the
Registrant
(1)
has
filed
all
reports
required
to
be
filed
by
Section
13
or
15(d)
of
the
Securities
Exchange
Act
of
1934
during
the
preceding12
months
(or
for
such
shorter
period
that
the
registrant
was
required
to
file
such
reports),
and
(2)
has
been
subject
to
such
filing
requirements
for
the
past
90
days.
Yes
ý
No
oIndicate
by
check
mark
whether
the
Registrant
has
submitted
electronically
and
posted
on
its
corporate
Web
site,
if
any,
every
Interactive
Data
File
required
to
be
submittedand
posted
pursuant
to
Rule
405
of
Regulation
S-T
(§232.405
of
this
chapter)
during
the
preceding
12
months
(or
for
such
shorter
period
that
the
Registrant
was
required
tosubmit
and
post
such
files).
Yes
ý
No
oIndicate
by
check
mark
if
disclosure
of
delinquent
filers
pursuant
to
Item
405
of
Regulation
S-K
(§229.405
of
this
chapter)
is
not
contained
herein,
and
will
not
be
contained,to
the
best
of
Registrant's
knowledge,
in
definitive
proxy
or
information
statements
incorporated
by
reference
in
Part
III
of
this
Form
10-K
or
any
amendment
to
this
Form
10-K.
oIndicate
by
check
mark
whether
the
Registrant
is
a
large
accelerated
filer,
an
accelerated
filer,
a
non-accelerated
filer
or
a
smaller
reporting
company.
See
the
definitions
of"large
accelerated
filer,"
"accelerated
filer"
and
"smaller
reporting
company"
in
Rule
12b-2
of
the
Exchange
Act.
Large
accelerated
filer
o
Accelerated
filer
ý
Non-accelerated
filer
o
(Do
not
check
if
a
smaller
reporting
company)
Smaller
reporting
company
oIndicate
by
check
mark
whether
the
Registrant
is
a
shell
company
(as
defined
in
Rule
12b-2
of
the
Act).
Yes
o
No
ýThe
aggregate
market
value
of
the
voting
common
stock
held
by
non-affiliates
of
the
Registrant
as
of
June
30,
2015
was
$529,203,778
.
For
the
purposes
of
the
foregoingcalculation
only,
all
directors
and
executive
officers
of
the
Registrant
and
third
parties
that
own
5%
or
more
of
the
voting
common
stock
are
assumed
to
be
affiliates
of
theRegistrant.As
of
February
19,
2016
,
there
were
11,876,144
shares
of
the
Registrant's
common
stock,
par
value
$.01
per
share,
outstanding.Documents Incorporated By Reference:Portions
of
the
Registrant's
proxy
statement
for
its
2016
Annual
Meeting
of
Stockholders
are
incorporated
by
reference
into
Part
III
herein.
Table of ContentsTABLE OF CONTENTS
Page
PART I
Item 1.
Business
3Item 1A.
Risk Factors
9Item 1B.
Unresolved Staff Comments
20Item 2.
Properties
20Item 3.
Legal Proceedings
20Item 4.
Mine Safety Disclosures
20
PART II
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
21Item 6.
Selected Financial Data
24Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
25Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
35Item 8.
Financial Statements and Supplementary Data
36Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
67Item 9A.
Controls and Procedures
67Item 9B.
Other Information
67
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
68Item 11.
Executive Compensation
68Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
68Item 13.
Certain Relationships and Related Transactions, and Director Independence
68Item 14.
Principal Accounting Fees and Services
68
PART IV
Item 15.
Exhibits, Financial Statement Schedules
69 Table of ContentsCAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATIONThis
annual
report
on
Form
10-K
for
the
fiscal
year
ended
December
31,
2015
(the
"Annual
Report")
contains
"forward-looking
statements"
within
themeaning
of
the
Securities
Act
of
1933,
as
amended,
and
the
Securities
Exchange
Act
of
1934,
as
amended
by
the
Private
Securities
Litigation
Reform
Act
of
1995.These
forward-looking
statements
include
statements
related
to
our
anticipated
financial
performance,
business
prospects
and
strategy;
anticipated
trends
andprospects
in
the
various
industries
in
which
our
businesses
operate;
new
products,
services
and
related
strategies;
and
other
similar
matters.
These
forward-lookingstatements
are
based
on
management's
current
expectations
and
assumptions
about
future
events,
which
are
inherently
subject
to
uncertainties,
risks
and
changes
incircumstances
that
are
difficult
to
predict.
The
use
of
words
such
as
"anticipates,"
"estimates,"
"expects,"
"projects,"
"intends,"
"plans"
and
"believes,"
amongothers,
generally
identify
forward-looking
statements.Actual
results
could
differ
materially
from
those
contained
in
the
forward-looking
statements.
Factors
currently
known
to
management
that
could
cause
actualresults
to
differ
materially
from
those
in
forward-looking
statements
include
those
matters
discussed
below,
including
in
Part
I.
Item
1A.
Risk
Factors.Other
unknown
or
unpredictable
factors
that
could
also
adversely
affect
our
business,
financial
condition
and
results
of
operations
may
arise
from
time
to
time.In
light
of
these
risks
and
uncertainties,
the
forward-looking
statements
discussed
in
this
report
may
not
prove
to
be
accurate.
Accordingly,
you
should
not
placeundue
reliance
on
these
forward-looking
statements,
which
only
reflect
the
views
of
LendingTree,
Inc.'s
management
as
of
the
date
of
this
report.
We
undertake
noobligation
to
update
or
revise
forward-looking
statements
to
reflect
changed
assumptions,
the
occurrence
of
unanticipated
events
or
changes
to
future
operatingresults
or
expectations,
except
as
required
by
law.PART IITEM 1. BusinessOur CompanyLendingTree,
Inc.
("LendingTree",
the
"Company",
"we"
or
"us")
operates
what
we
believe
to
be
the
leading
online
loan
marketplace
for
consumers
seekingloans
and
other
credit-based
offerings.
Our
online
marketplace
provides
consumers
with
access
to
product
offerings
from
over
400
active
lenders
(which
we
referto
as
"Network
Lenders"),
including
mortgage
loans,
home
equity,
reverse
mortgage,
auto
loans,
credit
cards,
personal
loans,
student
loans
and
small
businessloans
and
other
related
offerings.
In
addition,
we
offer
tools
and
resources,
including
free
credit
scores,
that
facilitate
comparison
shopping
for
these
loans
andother
credit-based
offerings.
We
seek
to
match
consumers
with
multiple
lenders,
who
can
provide
them
with
competing
quotes
for
the
product
they
are
seeking.
Byproviding
consumers
access
to
a
broad
array
of
credit-based
offerings
directly
from
multiple
lenders,
rather
than
just
multiple
quotes
from
the
same
lender
orindirectly
through
intermediaries,
we
believe
our
marketplace
is
differentiated
from
other
providers
operating
loan
comparison-shopping
marketplaces.Our
strategically
designed
and
executed
advertising
and
marketing
campaigns
(which
we
refer
to
as
performance
marketing)
promote
our
LendingTree
brandand
product
offerings
and
are
designed
to
attract
consumers
to
our
websites
and
toll-free
telephone
numbers.
Interested
consumers
complete
inquiry
forms,providing
detailed
information
about
themselves
and
the
loans
or
other
offerings
they
are
seeking.
We
refer
to
such
consumer
inquiries
as
loan
requests.
We
thenmatch
these
loan
requests
with
lenders
in
our
marketplace
that
are
seeking
to
serve
these
consumers'
needs.
We
generate
revenue
from
these
lenders,
generally
atthe
time
of
transmitting
a
loan
request
to
them,
in
the
form
of
a
match
fee.
In
certain
instances
outside
our
mortgage
business,
we
charge
other
kinds
of
fees,
suchas
closed
loan
or
closed
sale
fees.
In
addition
to
our
primary
loan
request
business,
LendingTree
also
has
click
and
call
products
for
which
lenders
pay
either
front-end
or
back-end
fees.We
are
continually
working
to
improve
the
consumer
experience.
We
have
made
investments
in
technologically-adept
personnel
and
we
use
in-market
real-time
testing
to
improve
our
digital
platforms.
Additionally,
we
work
with
our
lenders,
including
providing
training
and
other
resources,
to
improve
the
consumerexperience
throughout
the
loan
process.
Further,
we
have
been
building
and
improving
our
My
LendingTree
platform,
which
provides
a
relationship-basedconsumer
experience,
rather
than
just
a
transaction-based
experience.Corporate HistoryLendingTree,
Inc.,
is
the
parent
of
LendingTree,
LLC
and
several
companies
owned
by
LendingTree,
LLC.
LendingTree,
LLC,
formerly
known
asLendingTree,
Inc.,
was
incorporated
in
the
state
of
Delaware
in
June
1996
and
commenced
nationwide
operations
in
July
1998.
LendingTree,
Inc.,
was
acquired
byIAC/InterActiveCorp
("IAC")
in
2003
and
converted
to
a
Delaware
limited
liability
company
(LendingTree,
LLC)
in
December
2004.
LendingTree,
LLC
enteredthe
mortgage
origination
business
through
the
acquisition
of
Home
Loan
Center,
Inc.
in
2004.
On
August
20,
2008,
LendingTree,
LLC
(along
with
its
parentholding Table of Contentscompany
Tree.com,
Inc.)
was
spun
off
from
IAC/InterActiveCorp
into
a
separate
publicly-traded
company.
We
refer
to
the
separation
transaction
as
the
"spin-off"in
this
report.
Tree.com
was
incorporated
as
a
Delaware
corporation
in
April
2008
in
anticipation
of
the
spin-off.
The
Home
Loan
Center
business
was
sold
toDiscover
Financial
Services
in
2012.
Since
then,
the
Company
has
operated
as
a
pure
online
marketplace
and
does
not
originate
loans.
Effective
January
1,
2015,we
changed
our
corporate
name
from
Tree.com,
Inc.
to
LendingTree,
Inc.Evolution and Future Growth of Our BusinessAt
its
inception,
our
original
business
was
to
serve
consumers
seeking
home
mortgage
loans
by
matching
them
with
various
lenders.
We
launched
theLendingTree
brand
nationally
in
1998
and,
over
the
last
eighteen
years,
we
invested
significantly
in
this
brand
to
gain
widespread
consumer
recognition.More
recently,
we
have
actively
sought
to
expand
the
suite
of
loan
and
credit-based
offerings
we
provide
to
consumers,
in
order
to
both
leverage
theapplicability
of
the
LendingTree
brand
as
well
as
more
fully
serve
the
needs
of
consumers
and
lenders.
We
believe
that
consumers
with
existing
LendingTree-branded
associations
will
be
more
likely
to
utilize
our
other
service
offerings
than
those
of
other
providers
whose
brands
consumers
may
not
recognize.In
June
2014,
we
re-launched
My
LendingTree,
a
platform
that
offers
a
personalized
loan
comparison-shopping
experience,
by
providing
free
credit
scores
andcredit
score
analysis.
This
new
platform
enables
us
to
observe
consumers'
credit
profiles
and
then
identify
and
alert
them
to
loan
and
other
credit-based
offeringson
our
marketplace
that
may
be
more
favorable
than
the
loans
they
have
at
a
given
point
in
time.
This
is
designed
to
provide
consumers
with
measurable
savingsopportunities
over
their
lifetimes.By
expanding
our
portfolio
of
loan
and
credit-based
offerings,
we
are
growing
and
diversifying
our
business
and
sources
of
revenue.
We
intend
to
capitalizeon
our
expertise
in
performance
marketing,
product
development
and
technology,
and
to
leverage
the
widespread
recognition
of
the
LendingTree
brand
to
effectthis
strategy.ProductsWe
currently
report
our
revenues
in
two
product
categories:
(i)
mortgage
products
and
(ii)
non-mortgage
products.
Non-mortgage
products
include
auto
loans,credit
cards,
home
equity
loans,
personal
loans,
reverse
mortgages,
small
business
loans
and
student
loans.
Non-mortgage
products
also
include
home
improvementreferrals,
and
other
tools
and
resources,
including
credit
repair
and
debt
relief
services.Mortgage
and
non-mortgage
product
revenue
is
as
follows
(in thousands) : For the Year Ended December 31, 2015
2014
2013Mortgage
products$165,272
$134,137
123,091Non-mortgage
products88,944
33,213
16,149Total revenue$254,216
$167,350
$139,240LendingTree
does
not
charge
consumers
or
small
businesses
for
the
use
of
our
services.
Revenues
from
our
mortgage
products
are
mostly
derived
fromupfront
match
fees
paid
by
Network
Lenders
that
receive
a
loan
request,
and
in
some
cases
upfront
fees
for
clicks
or
call
transfers.
Because
a
given
loan
requestform
can
be
matched
with
more
than
one
Network
Lender,
up
to
five
match
fees
may
be
generated
from
a
single
consumer
loan
request
form.
Revenues
from
ournon-mortgage
products
are
derived
from
upfront
match
fees
paid
on
delivery
of
a
loan
request,
click
or
call
and
for
some
marketplaces
outside
mortgage,
otherkinds
of
fees,
such
as
closed
loan
fees.
For
our
credit
card
product,
we
send
click
traffic
to
issuers
and
are
paid
per
card
approval.
For
the
years
endedDecember
31,
2015
,
2014
and
2013
,
one
Network
Lender
accounted
for
12%
,
13%
and
12%
of
total
revenue,
respectively,
and
another
Network
Lenderaccounted
for
11%
,
11%
and
12%
of
total
revenue,
respectively.Mortgage ProductsOur
mortgage
products
category
includes
our
purchase
and
refinance
products.We
partner
with
lenders
throughout
the
United
States
to
provide
full
geographic
lending
coverage
and
to
offer
a
complete
suite
of
loan
offerings
on
ourmarketplace.
To
participate
on
our
marketplace,
lenders
are
required
to
enter
into
contracts
with
us
that
state
the
terms
and
conditions
for
such
participation,although
these
contracts
generally
may
be
terminated
for
convenience
by
either
party.
We
perform
certain
due
diligence
procedures
on
prospective
new
lenders,including
screening
against
a
national
anti-fraud
database
maintained
by
the
Mortgage
Asset
Research
Institute,
which
helps
manage
our
risk
exposure.
The
data
isutilized
to
determine
whether
a
lender
and
its
principals
are
eligible
to
participate
on
our
marketplace
and
have
not
been
convicted
of
and/or
penalized
forfraudulent
activity.4 Table of ContentsConsumers
seeking
mortgage
loans
through
our
loan
marketplace
can
receive
multiple
conditional
loan
offers
from
participating
lenders
in
response
to
a
singleloan
request
form.
We
refer
to
the
process
by
which
we
match
consumers
and
Network
Lenders
as
the
matching
process.
This
matching
process
consists
of
thefollowing
steps:(1)Loan Request.
Consumers
complete
a
single
loan
request
form
with
information
regarding
the
type
of
home
loan
product
they
are
seeking,
loanpreferences
and
other
data.
Consumers
also
consent
to
a
soft
inquiry
regarding
their
credit.(2)Loan Request Form Matching and Transmission.
Our
proprietary
systems
and
technology
match
a
given
consumer's
loan
request
form
data,
creditprofile
and
geographic
location
against
certain
pre-established
criteria
of
Network
Lenders,
which
may
be
modified
from
time
to
time.
Once
a
given
loanrequest
passes
through
the
matching
process,
the
loan
request
is
automatically
transmitted
to
up
to
five
participating
Network
Lenders.(3)Lender Evaluation and Response.
Network
Lenders
that
receive
a
loan
request
form
evaluate
the
information
contained
in
it
to
determine
whether
tomake
a
conditional
loan
offer.(4)Communication of a Conditional Offer.
All
matched
Network
Lenders
and
any
conditional
offers
are
presented
to
the
consumer
upon
completion
ofthe
loan
request
form.
Consumers
can
return
to
the
site
and
view
their
offer(s)
at
any
time
by
logging
in
to
their
My
LendingTree
account.
Additionally,matched
lenders
and
offers
are
also
sent
to
the
email
address
associated
with
the
consumer
request.(5)Loan Processing.
Consumers
may
then
elect
to
work
offline
with
relevant
Network
Lenders
to
provide
property
information
and
additional
informationbearing
on
their
creditworthiness.
If
a
Network
Lender
approves
a
consumer's
application,
it
may
then
underwrite
and
originate
a
loan.(6)Ongoing Consumer and Lender Support.
E-mail
and
telephone
support
are
provided
to
both
Network
Lenders
and
consumers.
This
support
isdesigned
to
provide
technical
assistance
and
increase
overall
satisfaction
of
Network
Lenders
and
consumers.We
also
offer
consumers
an
alternative
"short-form"
matching
process,
which
provides
them
with
lender
contact
information
rather
than
conditional
offersfrom
Network
Lenders.
This
short-form
process
typically
requires
consumers
to
submit
less
data
than
required
in
connection
with
the
matching
process
describedabove
and
does
not
involve
consumer
consent
to
an
inquiry
regarding
credit.In
January
2013,
we
expanded
our
mortgage
offerings
by
launching
LoanExplorer,
a
"rate
table"
loan
marketplace,
where
consumers
can
enter
their
loan
andcredit
profile
and
dynamically
view
real-time
rates
from
lenders
without
entering
their
contact
information.
Consumers
then
have
the
option
of
calling
lendersdirectly,
clicking
through
to
lenders'
websites
or
sending
data
requests
for
lenders
to
follow
up
with
them
directly.
We
developed
this
offering
through
internalproduct
development
efforts.Non-Mortgage ProductsLending Products .
Other
lending
products
on
our
online
marketplace
include
information,
tools
and
access
to
multiple
conditional
loan
offers
for
thefollowing:•Auto,
which
includes
our
auto
refinance
and
purchase
loan
products.
Auto
loans
enable
consumers
to
purchase
new
or
used
vehicles
or
refinance
anexisting
loan
secured
by
an
automobile.•Credit
cards,
which
include
offerings
from
most
major
card
issuers.
We
launched
this
offering
in
the
second
quarter
of
2013.
•Home
equity
loans
and
lines
of
credit,
which
enable
home
owners
to
borrow
against
the
equity
in
their
home,
as
measured
by
the
difference
between
themarket
value
of
the
home
and
any
existing
loans
secured
by
the
home.
Home
equity
loans
are
one-time
lump
sum
loans,
whereas
a
home
equity
line
ofcredit
reflects
a
line
of
revolving
credit
where
the
borrower
has
flexibility
to
draw
down
and
repay
the
line
over
time.•Personal
loans,
which
are
unsecured
obligations
generally
carrying
shorter
terms
and
smaller
loan
amounts
than
home
mortgages.
We
have
historicallyoperated
a
personal
loan
offering,
but
launched
an
enhanced
version
of
this
offering
in
the
third
quarter
of
2013.•Reverse
mortgage
loans,
which
are
a
loan
product
available
to
qualifying
homeowners
age
62
or
older.
We
launched
this
offering
in
the
first
quarter
of2013
through
internal
product
development
efforts.•Small
business
loans,
which
include
a
broad
array
of
financing
types,
including
but
not
limited
to
loans
secured
by
working
capital,
equipment,
real
estateand
other
forms
of
financing,
provided
to
small
and
medium-sized
businesses
in
amounts
generally
up
to
(although
sometimes
exceeding)
$1
million.
Welaunched
our
small
business
loan
marketplace
in
the
third
quarter
of
2014.5 Table of Contents•Student
loans,
which
includes
both
new
loans
to
finance
an
education
and
related
expenses,
as
well
as
refinancing
of
existing
loans.
We
launched
our
newstudent
loan
offering
in
the
second
quarter
of
2014
and
our
student
loan
refinancing
offering
commenced
in
the
fourth
quarter
of
2014.We
intend
to
continue
adding
new
lending
offerings
for
consumers,
small
businesses
and
lenders
on
our
online
marketplace,
in
order
to
grow
and
diversify
oursources
of
revenue.
We
may
develop
such
new
offerings
through
internal
product
development
efforts,
strategic
business
relationships
with
third
parties
and/oracquisitions.Other Products .
Other
products
also
includes
information,
tools
and
access
to
the
following:•Credit
repair,
through
which
consumers
can
obtain
assistance
improving
their
credit
profiles,
in
order
to
expand
and
improve
loan
and
other
financialproduct
opportunities
available
to
them.•Debt
relief
services,
through
which
consumers
can
obtain
assistance
negotiating
existing
loans.•Home
improvement
services,
through
which
consumers
have
the
opportunity
to
research
and
find
home
improvement
professional
services.•Personal
credit
data,
through
which
consumers
can
gain
insights
into
how
prospective
lenders
and
other
third
parties
view
their
credit
profiles.•Real
estate
brokerage
services,
through
which
consumers
are
matched
with
local
realtors
who
can
assist
them
in
their
home
purchase
or
sale
efforts.•Various
consumer
insurance
products,
including
home
and
automobile,
through
which
consumers
are
matched
with
insurance
lead
aggregators
to
obtaininsurance
offers.We
refer
to
the
various
purchasers
of
leads
from
our
other
marketplaces
as
lead
purchasers.
We
generate
revenue
through
the
insurance
products
and
realestate
brokerage
services
through
match
fees
paid
to
us
by
insurance
lead
aggregators
and
real
estate
brokers
participating
in
our
online
marketplace.
We
generaterevenue
from
credit
repair
and
debt
relief
services
either
through
a
fee
for
a
customer
referral
to
a
service
provider
partner
or
through
a
fee
at
the
time
a
consumerenrolls
in
a
program
with
one
of
our
partners.
Revenue
for
home
services
is
derived
primarily
through
matching
of
leads
to
both
local
contractors
and
other
homeservices
lead
aggregators.SeasonalityRevenue
in
our
lending
business
is
subject
to
cyclical
and
seasonal
trends.
Home
sales
(and
purchase
mortgages)
typically
rise
during
the
spring
and
summermonths
and
decline
during
the
fall
and
winter
months,
while
refinancing
and
home
equity
activity
is
principally
driven
by
mortgage
interest
rates
as
well
as
realestate
values.
However,
in
recent
periods
additional
factors
affecting
the
mortgage
and
real
estate
markets,
such
as
the
2008-2009
financial
crisis
and
ensuingrecession
have
impacted
customary
seasonal
trends.We
anticipate
revenue
in
our
newer
products
to
be
cyclical
as
well;
however,
we
have
limited
historical
data
to
predict
the
nature
and
magnitude
of
thiscyclicality.
Based
on
industry
data,
we
anticipate
that
as
our
personal
loan
product
matures
we
will
experience
less
consumer
demand
during
the
fourth
and
firstquarters
of
each
year.
Other
factors
affecting
our
businesses
include
macro
factors
such
as
credit
availability
in
the
market,
the
strength
of
the
economy
andemployment.CompetitionOur
lending
and
other
businesses
compete
with
other
online
marketing
companies,
including
online
intermediaries
that
operate
network-type
arrangements.We
also
face
competition
from
lenders
that
source
consumer
loan
originations
directly.
These
companies
typically
operate
consumer-branded
websites
and
attractconsumers
via
online
banner
ads,
keyword
placement
on
search
engines,
direct
mail,
television
ads,
retail
branches,
realtors,
brokers,
radio
and
other
sources,partnerships
with
affiliates
and
business
development
arrangements
with
others,
including
major
online
portals.Product DevelopmentWe
invest
in
the
continued
development
of
both
new
and
existing
products
to
enhance
the
experiences
of
consumers
and
lenders
as
they
interact
with
us.
Weincurred
product
development
costs
of
$16.8
million,
$11.1
million
and
$7.7
million
during
the
years
ended
December
31,
2015,
2014
and
2013,
respectively,
all
ofwhich
was
company
sponsored.6 Table of ContentsFinancial Information About Segments and Geographic AreasDuring
the
first
quarter
of
2015,
management
made
certain
changes
to
its
organizational
structure
that
impacted
its
previous
operating
segments.
As
a
result,management
concluded
it
had
one
reportable
segment
representing
our
Lending
activities.
Previously
reported
segment
results
have
been
revised
to
conform
to
ourreportable
segments
at
December
31,
2015.
See Note
17
—Segment
Information
to
the
consolidated
financial
statements
included
elsewhere
in
this
report.Additional
information
on
our
financial
performance
by
geographic
areas
can
be
found
in
Note
2—Significant
Accounting
Policies
to
the
consolidatedfinancial
statements
included
elsewhere
in
this
report.Regulation and Legal ComplianceOur
businesses
market
and
provide
services
in
heavily
regulated
industries
through
a
number
of
different
online
and
offline
channels
across
the
United
States.As
a
result,
we
are
subject
to
a
variety
of
statutes,
rules,
regulations,
policies
and
procedures
in
various
jurisdictions
in
the
United
States,
including:•Restrictions
on
the
amount
and
nature
of
fees
or
interest
that
may
be
charged
in
connection
with
a
loan,
such
as
state
usury
and
fee
restrictions;•Restrictions
on
the
manner
in
which
consumer
loans
are
marketed
and
originated,
including,
but
not
limited
to,
the
making
of
required
consumerdisclosures,
such
as
the
Federal
Trade
Commission's
Mortgage
Advertising
Practices
("MAP")
Rules,
federal
Truth-in-Lending
Act,
the
federal
EqualCredit
Opportunity
Act,
the
federal
Fair
Credit
Reporting
Act,
the
federal
Fair
Housing
Act,
the
federal
Real
Estate
Settlement
Procedures
Act("RESPA"),
and
similar
state
laws;•Restrictions
imposed
by
the
Dodd-Frank
Wall
Street
Reform
and
Consumer
Protection
Act
(the
"Dodd
Frank
Act")
and
current
or
future
rulespromulgated
thereunder,
including,
but
not
limited
to,
limitations
on
fees
charged
by
mortgage
lenders,
mortgage
broker
disclosures
and
rulespromulgated
by
the
Consumer
Financial
Protection
Bureau
("CFPB"),
which
was
created
under
the
Dodd-Frank
Act;•Restrictions
on
the
amount
and
nature
of
fees
that
may
be
charged
to
lenders
and
real
estate
professionals
for
providing
or
obtaining
consumer
loanrequests,
such
as
under
RESPA;•Restrictions
on
the
amount
and
nature
of
fees
that
may
be
charged
to
consumers
for
real
estate
brokerage
transactions,
including
any
incentives
andrebates
that
may
be
offered
to
consumers
by
our
businesses;•Federal
and
State
laws
relating
to
the
implementation
of
the
Secure
and
Fair
Enforcement
of
Mortgage
Licensing
Act
of
2008
(the
"SAFE
Act")
thatrequire
us
to
be
licensed
in
all
States
and
the
District
of
Columbia
(licensing
requirements
are
applicable
to
both
individuals
and/or
businesses
engaged
inthe
solicitation
of
or
the
brokering
of
residential
mortgage
loans
and/or
the
brokering
of
real
estate
transactions);•State
and
federal
restrictions
on
the
marketing
activities
conducted
by
telephone,
mail,
email,
mobile
device
or
the
internet,
including
the
TelemarketingSales
Rule
("TSR"),
the
Telephone
Consumer
Protection
Act
("TCPA"),
state
telemarketing
laws,
federal
and
state
privacy
laws,
the
CAN-SPAM
Act,and
the
Federal
Trade
Commission
Act
and
their
accompanying
regulations
and
guidelines;•State
laws
requiring
licensure
for
the
solicitation
of
or
brokering
of
consumer
loans
which
could
affect
us
in
our
personal
loan,
automobile
loan,
studentloan
or
other
non-mortgage
consumer
lending
businesses;•Restrictions
on
the
usage
and
storage
of
consumer
credit
information,
such
as
those
contained
in
the
federal
Fair
Credit
Reporting
Act
and
the
federalCredit
Repair
Organization
Act;
and•State
"Bird
Dog"
laws
which
restrict
the
amount
and
nature
of
fees,
if
any,
that
may
be
charged
to
consumers
for
automobile
direct
and
indirect
financing.Intellectual PropertyWe
believe
that
our
intellectual
property
rights
are
vital
to
our
success.
To
protect
our
intellectual
property
rights
in
our
brand,
technology,
products,improvements
and
inventions,
we
rely
on
a
combination
of
trademarks,
trade
secret,
patents
and
other
laws,
and
contractual
restrictions
on
disclosure,
includingconfidentiality
agreements
with
strategic
partners,
employees,
consultants
and
other
third
parties.
As
new
or
improved
proprietary
technologies
are
developed
orinventions
are
identified,
we
seek
patent
protection
in
the
United
States
and
abroad,
as
appropriate.
We
have
two
issued
U.S.
patents
relating
to
our
technologies,including
those
relating
to
the
method
and
network
for
coordinating
a
loan
over
the
internet,
which
expire
in
2018.
In
March
2014,
a
federal
jury
found
these
twopatents
invalid.
In
November
2014,
we
filed
a
notice
of
appeal
with
respect
to
the
jury
verdict.
See Note
12
—Contingencies—Intellectual
Property
Litigation—Zillow
in
the
notes
to
the
consolidated
financial
statements
included
elsewhere
in
this
report.7 Table of ContentsMany
of
our
services
are
offered
under
proprietary
trademarks
and
service
marks.
We
generally
apply
to
register
or
secure
by
contract
our
principaltrademarks
and
service
marks
as
they
are
developed
and
used.
We
have
44
trademarks
and
service
marks
registered
with
the
United
States
Patent
and
TrademarkOffice.
These
registrations
can
typically
be
renewed
at
10-year
intervals.We
reserve
and
register
domain
names
when
and
where
we
deem
appropriate
and
we
currently
have
approximately
1,249
registered
domain
names.
We
alsohave
agreements
with
third
parties
that
provide
for
the
licensing
of
patented
and
proprietary
technology
used
in
our
business.From
time
to
time,
we
may
be
subjected
to
legal
proceedings
and
claims,
or
threatened
legal
proceedings
or
claims,
including
allegations
of
infringement
ofthird-party
trademarks,
copyrights,
patents
and
other
intellectual
property
rights
of
third
parties.
In
addition,
the
use
of
litigation
may
be
necessary
for
us
to
enforceour
intellectual
property
rights,
protect
trade
secrets
or
to
determine
the
validity
and
scope
of
proprietary
rights
claimed
by
others.
Any
litigation
of
this
nature,regardless
of
outcome
or
merit,
could
result
in
substantial
costs
and
diversion
of
management
and
technical
resources,
any
of
which
could
adversely
affect
ourbusiness,
financial
condition
and
results
of
operations.
See Note
12
—Contingencies—Intellectual
Property
Litigation—Zillow
in
the
notes
to
the
consolidatedfinancial
statements
included
elsewhere
in
this
report.EmployeesAs
of
December
31,
2015
,
we
had
approximately
312
employees,
of
which
approximately
297
are
full-time
and
15
are
temporary
or
part-time.
None
of
ouremployees
are
represented
under
collective
bargaining
agreements
and
we
consider
our
relations
with
employees
and
independent
contractors
to
be
good.Additional InformationWebsite and Public FilingsWe
maintain
a
corporate
website
at
www.lendingtree.com and
an
investor
relations
website
at
investors.lendingtree.com .
None
of
the
information
on
ourwebsite
is
incorporated
by
reference
in
this
report,
or
in
any
other
filings
with,
or
in
any
information
furnished
or
submitted
to,
the
Securities
and
ExchangeCommission
(the
"SEC").We
make
available,
free
of
charge
through
our
website,
our
reports
on
Forms
10-K,
10-Q
and
8-K,
our
proxy
statement
for
the
annual
shareholders'
meetingand
beneficial
ownership
reports
on
Forms
3,
4
and
5
as
soon
as
reasonably
practicable
after
we
file
such
material
with,
or
furnish
such
material
to,
the
SEC.
Ourfilings
with
the
SEC
are
available
to
the
public
over
the
Internet
at
the
SEC's
website
at
www.sec.gov ,
or
at
the
SEC's
public
reference
room
located
at
100
FStreet,
N.E.,
Washington,
DC
20549.
Please
call
the
SEC
at
1-800-SEC-0330
for
further
information
on
the
operation
of
the
public
reference
room.Code of Business Conduct and EthicsOur
code
of
business
conduct
and
ethics,
which
applies
to
all
employees,
including
all
executive
officers
and
senior
financial
officers
and
directors,
is
postedon
our
website
at
investors.lendingtree.com/corporate-governance.cfm .
This
is
our
code
of
ethics
pursuant
to
Item
406
of
SEC
Regulation
S-K
and
the
rules
ofThe
NASDAQ
Stock
Market.
Any
amendments
to
or
waivers
of
the
code
of
business
conduct
and
ethics
that
are
of
the
type
described
in
Item
406(b)
and
(d)
ofRegulation
S-K
will
be
disclosed
on
our
website.8 Table of ContentsITEM 1A. Risk FactorsInvesting in our common stock involves a high degree of risk. Before making an investment decision, you should carefully consider the risks described below,together with all of the other information included in this annual report and the information incorporated by reference herein. If any of the risks described below,or incorporated by reference into this annual report actually occur, our business, financial condition or results of operations could suffer. In that case, the tradingprice of our common stock may decline and you may lose all or part of your investment. The risks and uncertainties we have described are not the only ones weface. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business, financial condition andresults of operations. Certain statements below are forward-looking statements. See the information included under the heading "Cautionary Statement RegardingForward-Looking Information."Risks Related to Our Business and IndustryAdverse conditions in the primary and secondary mortgage markets, as well as the general economy, could materially and adversely affect our business,financial condition and results of operations.Constraints
in
the
primary
and
secondary
mortgage
markets
have
in
the
past
had,
and
may
in
the
future
have,
an
adverse
effect
on
our
business,
financialcondition
and
results
of
operations.
Generally,
increases
in
interest
rates
adversely
affect
the
ability
of
our
Network
Lenders
to
close
loans,
and
adverse
economictrends
limit
the
ability
of
our
Network
Lenders
to
offer
home
loans
other
than
low-margin
conforming
loans.
Our
businesses
may
experience
a
decline
in
demandfor
their
offerings
due
to
decreased
consumer
demand
as
a
result
of
the
conditions
described
above,
now
or
in
the
future.
Conversely,
during
periods
with
decreasedinterest
rates,
Network
Lenders
have
less
incentive
to
use
our
marketplaces,
or
in
the
case
of
sudden
increases
in
consumer
demand,
our
Network
Lenders
may
lackthe
ability
to
support
sudden
increases
in
volume.We depend on relationships with Network Lenders and any adverse changes in these relationships could adversely affect our business, financial condition andresults of operations.Our
success
depends
in
significant
part
on
the
financial
strength
of
lenders
participating
on
our
marketplaces
and
continuing
relationships
with
such
lenders.Network
Lenders
could,
for
any
reason,
experience
financial
difficulties
and
cease
participating
on
our
lender
marketplace,
fail
to
pay
match
and/or
closing
feeswhen
due
and/or
drop
the
quality
of
their
services
to
consumers.
We
could
also
have
commercial
or
other
disputes
with
such
Network
Lenders
from
time
to
time.The
occurrence
of
one
or
more
of
these
events
with
a
significant
number
of
Network
Lenders
could,
alone
or
in
combination,
have
a
material
and
adverse
effect
onour
business,
financial
condition
and
results
of
operations.Failure to maintain brand recognition and attract and retain customers in a cost-effective manner could materially and adversely affect our business, financialcondition and results of operations.In
order
to
attract
visitors
to
our
websites,
convert
these
visitors
into
loan
requests
for
our
Network
Lenders
and
lead
purchasers
and
generate
repeat
visitsfrom
consumers,
our
businesses
must
promote
and
maintain
their
various
brands.
Brand
promotion
and
maintenance
requires
the
expenditure
of
considerablemoney
and
resources
for
online
and
offline
advertising,
marketing
and
related
efforts,
as
well
as
the
continued
provision
and
introduction
of
high-quality
productsand
services.Brand
recognition
is
a
key
differentiating
factor
among
providers
of
online
services.
We
believe
that
continuing
to
build
and
maintain
the
recognition
of
ourvarious
brands
is
critical
to
achieving
increased
demand
for
the
services
provided
by
our
businesses.
Accordingly,
we
have
spent,
and
expect
to
continue
to
spend,significant
amounts
on,
and
devote
significant
resources
to,
branding,
advertising
and
other
marketing
initiatives,
which
may
not
be
successful
or
cost-effective.The
failure
of
our
businesses
to
maintain
the
recognition
of
their
respective
brands
and
attract
and
retain
customers
in
a
cost-effective
manner
could
materially
andadversely
affect
our
business,
financial
condition
and
results
of
operations.Adverse
publicity
from
legal
proceedings
against
us
or
our
businesses,
including
governmental
proceedings
and
consumer
class
action
litigation,
or
from
thedisclosure
of
information
security
breaches,
could
negatively
impact
our
various
brands,
which
could
materially
and
adversely
affect
our
business,
financialcondition
and
results
of
operations.
In
addition,
the
actions
of
our
third-party
marketing
partners
who
engage
in
advertising
on
our
behalf
could
negatively
impactour
various
brands.We depend on search engines and other online sources to attract visitors to our websites, and if we are unable to attract these visitors and convert them intoloan requests for our Network Lenders and lead purchasers in a cost-effective manner, our business and financial results may be harmed.Our
success
depends
on
our
ability
to
attract
online
consumers
to
our
websites
and
convert
them
into
customers
in
a
cost-effective
manner.
We
depend,
in
part,on
search
engines
and
other
online
sources
for
our
website
traffic.
We
are
included
in
search
results
as
a
result
of
both
paid
search
listings,
where
we
purchasespecific
search
terms
that
result
in
the
inclusion
of
our
listing,9 Table of Contentsand
algorithmic
searches,
that
depend
upon
the
searchable
content
on
our
sites.
Search
engines
and
other
online
sources
revise
their
algorithms
from
time
to
time
inan
attempt
to
optimize
their
search
results.If
one
or
more
of
the
search
engines
or
other
online
sources
on
which
we
rely
for
website
traffic
were
to
modify
its
general
methodology
for
how
it
displaysour
websites,
resulting
in
fewer
consumers
clicking
through
to
our
websites,
our
business
could
suffer.
If
any
free
search
engine
on
which
we
rely
begins
chargingfees
for
listing
or
placement,
or
if
one
or
more
of
the
search
engines
or
other
online
sources
on
which
we
rely
for
purchased
listings,
modifies
or
terminates
itsrelationship
with
us,
our
expenses
could
rise,
we
could
lose
customers,
and
traffic
to
our
websites
could
decrease,
all
of
which
could
have
a
material
and
adverseeffect
on
our
business,
financial
condition
and
results
of
operations.We compete with a number of other online marketing companies, and we face the possibility of new competitors.We
currently
compete
with
a
number
of
other
online
marketing
companies
and
we
expect
that
competition
will
intensify.
Some
of
these
existing
competitorsmay
have
more
capital
or
complementary
products
or
services
than
we
do,
and
they
may
leverage
their
greater
capital
or
diversification
in
a
manner
that
adverselyaffects
our
competitive
position,
including
by
making
strategic
acquisitions.
In
addition,
new
competitors
may
enter
the
market
and
may
be
able
to
innovate
andbring
products
and
services
to
market
faster,
or
anticipate
and
meet
consumer
or
Network
Lender
demand
before
we
do.
Other
newcomers,
including
major
searchengines
and
content
aggregators,
may
be
able
to
leverage
their
existing
products
and
services
to
our
disadvantage.
We
may
be
forced
to
expend
significantresources
to
remain
competitive
with
current
and
potential
competitors.
If
any
of
our
competitors
are
more
successful
than
we
are
at
attracting
and
retainingcustomers
or
Network
Lenders,
our
business,
financial
condition
and
results
of
operations
could
be
materially
and
adversely
affected.Our success depends, in part, on the integrity of our systems and infrastructures. System interruption and the lack of integration and redundancy in thesesystems and infrastructures may have a material and adverse impact on our business, financial condition and results of operations.Our
success
depends,
in
part,
on
our
ability
to
maintain
the
integrity
of
our
systems
and
infrastructures,
including
websites,
information
and
related
systems,call
centers
and
distribution
and
fulfillment
facilities.
System
interruption
and
the
lack
of
integration
and
redundancy
in
our
information
systems
and
infrastructuresmay
materially
and
adversely
affect
our
ability
to
operate
websites,
process
and
fulfill
transactions,
respond
to
customer
inquiries
and
generally
maintain
cost-efficient
operations.
We
may
experience
occasional
system
interruptions
that
make
some
or
all
systems
or
data
unavailable
or
prevent
our
businesses
fromefficiently
providing
services
or
fulfilling
orders.
We
also
rely
on
affiliate
and
third-party
computer
systems,
broadband
and
other
communications
systems
andservice
providers
in
connection
with
the
provision
of
services
generally,
as
well
as
to
facilitate,
process
and
fulfill
transactions.
Any
interruptions,
outages
or
delaysin
our
systems
and
infrastructures,
our
businesses,
our
affiliates
and/or
third
parties,
or
deterioration
in
the
performance
of
these
systems
and
infrastructures,
couldimpair
the
ability
of
our
businesses
to
provide
services,
fulfill
orders
and/or
process
transactions.
Fire,
flood,
power
loss,
telecommunications
failure,
hurricanes,tornadoes,
earthquakes,
acts
of
war
or
terrorism,
acts
of
God,
unauthorized
intrusions
or
computer
viruses,
and
similar
events
or
disruptions
may
damage
orinterrupt
computer,
broadband
or
other
communications
systems
and
infrastructures
at
any
time.
Any
of
these
events
could
cause
system
interruption,
delays
andloss
of
critical
data,
and
could
prevent
our
businesses
from
providing
services,
fulfilling
orders
and/or
processing
transactions.
While
our
businesses
have
backupsystems
for
certain
aspects
of
their
operations,
these
systems
are
not
fully
redundant
and
disaster
recovery
planning
is
not
sufficient
for
all
eventualities.
Inaddition,
we
may
not
have
adequate
insurance
coverage
to
compensate
for
losses
from
a
major
interruption.
If
any
of
these
events
were
to
occur,
it
could
materiallyand
adversely
affect
our
business,
financial
condition
and
results
of
operations.A breach of our network security or the misappropriation or misuse of personal consumer information may have a material and adverse impact on ourbusiness, financial condition and results of operations.Any
penetration
of
network
security
or
other
misappropriation
or
misuse
of
personal
consumer
information
maintained
by
us
or
our
third-party
marketingpartners
could
cause
interruptions
in
the
operations
of
our
businesses
and
subject
us
to
increased
costs,
litigation
and
other
liabilities.
Claims
could
also
be
madeagainst
us
or
our
third-party
marketing
partners
for
other
misuse
of
personal
information,
such
as
for
unauthorized
purposes
or
identity
theft,
which
could
result
inlitigation
and
financial
liabilities,
as
well
as
administrative
action
from
governmental
authorities.
Real
or
perceived
security
breaches
could
also
significantlydamage
our
reputation
with
consumers
and
third
parties
with
whom
we
do
business.We
may
be
required
to
expend
significant
capital
and
other
resources
to
protect
against
and
remedy
any
potential
or
existing
security
breaches
and
theirconsequences.
We
also
face
risks
associated
with
security
breaches
affecting
third
parties
with
whom
we
are
affiliated
or
otherwise
conduct
business
with
online.Consumers
are
generally
concerned
with
security
and
privacy
of
the
Internet,
and
any
publicized
security
problems
affecting
our
businesses
and/or
those
of
thirdparties
may
discourage
consumers
from
doing
business
with
us,
which
could
have
a
material
and
adverse
effect
on
our
business,
financial
condition
and
results
ofoperations.10 Table of ContentsLitigation and indemnification of secondary market purchasers could have a material and adverse effect on our business, financial condition, results ofoperations and liquidity.In
connection
with
the
sale
of
loans
to
secondary
market
purchasers,
Home
Loan
Center,
Inc.
("HLC")
may
be
liable
for
certain
indemnification,
repurchaseand
premium
repayment
obligations.
For
example,
in
connection
with
the
sale
of
loans
to
secondary
market
purchasers,
HLC
made
certain
representationsregarding
related
borrower
credit
information,
loan
documentation
and
collateral.
To
the
extent
that
these
representations
were
incorrect,
HLC
may
be
required
torepurchase
loans
or
indemnify
secondary
market
purchasers
for
losses
due
to
borrower
defaults.
HLC
also
agreed
to
repurchase
loans
or
indemnify
secondarymarket
purchasers
for
losses
due
to
early
payment
defaults
(
i.e.,
late
payments
during
a
limited
time
period
immediately
following
HLC's
origination
of
the
loan).Further,
HLC
agreed
to
repay
all
or
a
portion
of
the
initial
premiums
paid
by
secondary
market
purchasers
in
instances
where
the
borrower
prepays
the
loan
withina
specified
period
of
time.
HLC
has
made
payments
for
these
liabilities
in
the
past
and
expects
to
make
payments
for
these
liabilities
in
the
future.We
continue
to
be
liable
for
these
indemnification
obligations,
repurchase
obligations
and
premium
repayment
obligations
following
the
sale
of
substantiallyall
of
the
operating
assets
of
our
LendingTree
Loans
business.
We
have
in
the
past
and
intend
to
continue
to
negotiate
in
the
future
with
secondary
marketpurchasers
to
settle
any
existing
and
future
contingent
liabilities,
but
we
cannot
assure
you
we
will
be
able
to
do
so
on
terms
acceptable
to
us,
or
at
all.
Theoccurrence
of
indemnification
claims,
repurchase
obligations
or
premium
repayments
beyond
our
reserves
for
these
contingencies,
or
our
inability
to
settle
withsecondary
market
purchasers,
may
have
a
material
and
adverse
effect
on
our
business,
financial
condition
and
results
of
operations.Difficult market conditions have adversely affected the mortgage industry.Declines
in
the
housing
market
from
2006
through
early
2012,
as
measured
by
the
S&P/Case-Schiller
20-city
composite
home
price
index,
with
home
pricedeclines
and
increased
foreclosures,
unemployment
and
under-employment,
negatively
impacted
the
credit
performance
of
mortgage
loans
and
resulted
insignificant
write-downs
of
asset
values
by
financial
institutions,
including
government-sponsored
entities
as
well
as
major
commercial
and
investment
banks.These
write-downs,
initially
of
mortgage-backed
securities
but
subsequently
of
other
asset-backed
securities,
credit
default
swaps
and
other
derivative
and
cashsecurities,
in
turn,
caused
many
financial
institutions
to
seek
additional
capital,
merge
with
larger
and
stronger
institutions
and,
in
some
cases,
to
fail.Reflecting
concern
about
the
stability
of
the
housing
markets
generally
and
the
strength
of
counterparties,
many
lenders
and
institutional
investors
reduced
orceased
providing
funding
to
borrowers,
including
to
other
financial
institutions.
This
market
disruption
and
tightening
of
credit
led
to
an
increased
level
ofcommercial
and
consumer
delinquencies,
lack
of
consumer
confidence
and
increased
market
volatility.
The
resulting
economic
pressure
on
consumers
and
lack
ofconfidence
in
the
financial
markets
has
had
in
the
past
and
may
have
in
the
future,
an
adverse
effect
on
our
business,
financial
condition
and
results
of
operations.While
conditions
in
the
housing
markets
have
improved
since
2013,
the
failure
to
sustain
such
improvements
could
have
adverse
effects
on
us
and
ourNetwork
Lenders.
Further,
our
business
could
be
adversely
affected
by
the
actions
and
commercial
soundness
of
other
businesses
in
the
financial
services
sector.As
a
result,
defaults
by,
or
even
rumors
or
questions
about,
one
or
more
of
these
entities,
or
the
financial
services
industry
generally,
have
in
the
past,
and
may
inthe
future,
lead
to
market-wide
liquidity
problems
and
could
lead
to
disruptions
in
the
mortgage
industry.
Any
such
disruption
could
have
a
material
and
adverseeffect
on
our
business,
financial
condition
and
results
of
operations.Our recent revenue growth has been driven in significant part by personal loan offerings. If lenders participating on our marketplace decide to reduce theirofferings of personal loans or if such loans become unattractive to consumers because of higher interest rates demanded by lenders, then our results ofoperations and future growth prospects could be materially and adversely affected.We
re-launched
our
personal
loan
product
in
the
third
quarter
of
2013.
Revenue
from
personal
loan
offerings
substantially
increased
in
2015
compared
to
2014and
2014
compared
to
2013
and
was
responsible
for
a
significant
portion
of
the
$55.7
million
increase
in
non-mortgage
revenue
in
the
year
ended
December
31,2015
and
the
$17.1
million
increase
in
non-mortgage
revenue
in
the
year
ended
December
31,
2014.
Personal
loans
are
unsecured
obligations
and
generally
carryshorter
terms
and
smaller
loan
amounts
than
mortgages.
Because
they
are
unsecured,
they
are
generally
riskier
assets
for
lenders
than
mortgages
or
other
securedloans.
Consumer
demand
for
unsecured
loans
offered
on
our
marketplace
is
often
for
refinancing
of
higher
interest
credit
card
debt
or
for
a
lower
interestalternative
to
credit
card
debt
for
a
contemplated
larger
purchase
that
would
otherwise
be
purchased
with
a
credit
card.
Lenders
participating
on
our
marketplacemay
reduce
their
willingness
to
make
personal
loans
at
more
attractive
interest
rates
than
credit
card
debt
and
may
for
that
reason,
or
for
any
other
reason,
reducetheir
demand
for
personal
loan
requests
generated
from
our
personal
loan
marketplace.
Reasons
that
lenders
might
reduce
their
willingness
to
make
personal
loansat
attractive
interest
rates
may
include
regulatory
changes,
stricter
institutional
lending
criteria,
a
lack
of
adequate
funding
sources
or
capital
for
loan
originations,or
increased
borrower
default
levels,
which
may
occur
upon
adverse
changes
in
regional,
national
or
global
economic
conditions.
If
lenders
participating
on
ourmarketplace
decide
to
reduce
their
offerings
of
personal
loans
or11 Table of Contentsif
such
loans
become
unattractive
to
consumers
because
of
higher
interest
rates
demanded
by
lenders,
then
our
results
of
operations
and
future
growth
prospectscould
be
materially
and
adversely
affected.Network Lenders affiliated with our marketplaces are not precluded from offering products and services outside of our marketplaces.Because
our
businesses
do
not
have
exclusive
relationships
with
Network
Lenders,
consumers
may
obtain
loans
from
these
third-party
service
providerswithout
having
to
use
our
marketplaces.
Network
Lenders
can
offer
loans
directly
to
consumers
through
their
own
marketing
campaigns
or
other
traditionalmethods
of
distribution,
such
as
referral
arrangements,
physical
store-front
operations
or
broker
agreements.
Network
Lenders
may
also
offer
loans
and
services
toprospective
customers
online
directly,
through
one
or
more
online
competitors
of
our
businesses,
or
both.
If
a
significant
number
of
consumers
seek
loans
andservices
directly
from
Network
Lenders
as
opposed
to
through
our
marketplaces,
our
business,
financial
condition
and
results
of
operations
could
be
materially
andadversely
affected.Some of our lending services are new to the market and may fail to achieve or maintain customer acceptance and profitability.In
2013,
we
expanded
our
lending
offerings
by
launching
LoanExplorer,
a
"rate
table"
loan
marketplace,
and
loan
marketplaces
for
reverse
mortgages
andcredit
card
offerings,
and
we
also
re-launched
a
loan
marketplace
for
personal
loans.
In
2014,
we
launched
a
new
student
loan
offering
and
marketplace
for
studentloan
refinancings
and
small
business
loans.
We
do
not
have
as
much
experience
with
these
products
as
with
the
mortgage
marketplaces.
Accordingly,
these
newofferings
may
be
subject
to
greater
risks
than
our
more
mature
mortgage
marketplaces.The
success
of
these
and
other
new
products
we
may
offer
will
depend
on
a
number
of
factors,
including:•Implementing,
at
an
acceptable
cost,
product
features
offered
by
our
competitors
and/or
expected
by
consumers
and
lenders;•Market
acceptance
by
consumers
and
lenders;•Offerings
by
current
and
future
competitors;•Our
ability
to
attract
and
retain
management
and
other
skilled
personnel
for
these
businesses;•Our
ability
to
collect
amounts
owed
to
us
from
third
parties;•Our
ability
to
develop
successful
and
cost-effective
marketing
campaigns;
and•Our
ability
to
timely
adjust
marketing
expenditures
in
relation
to
changes
in
demand
for
the
underlying
products
and
services
offered
by
our
leadpurchasers.Our
results
of
operations
may
suffer
if
we
fail
to
successfully
anticipate
and
manage
these
issues
associated
with
new
products.If we are unable to continually enhance our products and services and adapt them to technological changes and consumer and lender and/or lead purchaserneeds, including the emergence of new computing devices and more sophisticated online services, we may lose market share and revenue and our businesscould suffer.We
need
to
anticipate,
develop
and
introduce
new
products,
services
and
applications
on
a
timely
and
cost-effective
basis
that
keep
pace
with
technologicaldevelopments
and
changing
consumer
and
customer
needs.
For
example,
the
number
of
individuals
who
access
the
internet
through
devices
other
than
a
personalcomputer,
such
as
tablets,
mobile
telephones,
televisions
and
set-top
box
devices
has
increased
significantly
and
this
trend
is
likely
to
continue.
Because
eachmanufacturer
or
distributor
may
establish
unique
technical
standards
for
its
devices,
our
websites
may
not
be
functional
or
viewable
on
these
devices.
Additionally,new
devices
and
new
platforms
are
continually
being
released.
Consumers
access
many
traditional
web
services
on
mobile
devices
through
applications,
or
apps.It
is
difficult
to
predict
the
problems
we
may
encounter
in
improving
our
websites'
functionality
with
these
alternative
devices
or
developing
apps
for
mobileplatforms.
If
we
fail
to
develop
our
websites
or
apps
to
respond
to
these
or
other
technological
developments
and
changing
consumer
and
customer
needs
costeffectively,
we
may
lose
market
share,
which
could
materially
and
adversely
affect
our
business,
financial
condition
and
results
of
operations.We may fail to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties.We
regard
our
intellectual
property
rights,
including
patents,
service
marks,
trademarks
and
domain
names,
copyrights,
trade
secrets
and
similar
intellectualproperty
(as
applicable),
as
critical
to
our
success.
Our
businesses
also
rely
heavily
upon
software
codes,
informational
databases
and
other
components
that
makeup
their
products
and
services.12 Table of ContentsWe
rely
on
a
combination
of
laws
and
contractual
restrictions
with
employees,
customers,
suppliers,
affiliates
and
others
to
establish
and
protect
theseproprietary
rights.
Despite
these
precautions,
it
may
be
possible
for
a
third
party
to
copy
or
otherwise
obtain
and
use
trade
secrets
or
copyrighted
intellectualproperty
without
authorization
which,
if
discovered,
might
require
legal
action
to
correct.
In
addition,
third
parties
may
independently
and
lawfully
developsubstantially
similar
intellectual
properties.We
have
generally
registered
and
continue
to
apply
to
register,
or
secure
by
contract
when
appropriate,
our
principal
trademarks
and
service
marks
as
they
aredeveloped
and
used,
and
reserve
and
register
domain
names
when
and
where
we
deem
appropriate.
We
generally
consider
the
protection
of
our
trademarks
to
beimportant
for
purposes
of
brand
maintenance
and
reputation.
While
we
vigorously
protect
our
trademarks,
service
marks
and
domain
names,
effective
trademarkprotection
may
not
be
available
or
may
not
be
sought
in
every
country
in
which
products
and
services
are
made
available,
and
contractual
disputes
may
affect
theuse
of
marks
governed
by
private
contract.
Similarly,
not
every
variation
of
a
domain
name
may
be
available
or
be
registered,
even
if
available.
Our
failure
toprotect
our
intellectual
property
rights
in
a
meaningful
manner
or
challenges
to
related
contractual
rights
could
result
in
erosion
of
brand
names
and
limit
ourability
to
control
marketing
on
or
through
the
Internet
using
our
various
domain
names
or
otherwise,
which
could
materially
and
adversely
affect
our
business,financial
condition
and
results
of
operations.We
have
been
granted
patents
and
we
have
patent
applications
pending
with
the
United
States
Patent
and
Trademark
Office
and
various
foreign
patentauthorities
for
various
proprietary
technologies
and
other
inventions.
The
status
of
any
patent
involves
complex
legal
and
factual
questions,
and
the
breadth
ofclaims
allowed
is
uncertain.
Accordingly,
any
patent
application
filed
may
not
result
in
a
patent
being
issued,
or
existing
or
future
patents
may
not
be
adjudicatedvalid
by
a
court
or
be
afforded
adequate
protection
against
competitors
with
similar
technology.
In
March
2014,
a
federal
jury
found
our
two
issued
patents
invalid.In
November
2014,
we
filed
a
notice
of
appeal
to
the
U.S.
Court
of
Appeals
for
the
Federal
Circuit.
The
appeal
is
now
fully
briefed.
See Note
12
—Contingencies—Intellectual
Property
Litigation—Zillow
in
the
notes
to
the
consolidated
financial
statements
included
elsewhere
in
this
report.
In
addition,
third
parties
maycreate
new
products
or
methods
that
achieve
similar
results
without
infringing
upon
patents
that
we
own.Likewise,
the
issuance
of
a
patent
to
us
does
not
mean
that
our
processes
or
inventions
will
be
found
not
to
infringe
upon
patents
or
other
rights
previouslyissued
to
third
parties.From
time
to
time,
in
the
ordinary
course
of
business
we
are
subjected
to
legal
proceedings,
claims
and
counterclaims,
or
threatened
legal
proceedings,
claimsor
counterclaims,
including
allegations
of
infringement
of
the
trademarks,
copyrights,
patents
and
other
intellectual
property
rights
of
third
parties.
In
addition,litigation
may
be
necessary
in
the
future
to
enforce
our
intellectual
property
rights,
protect
trade
secrets
or
to
determine
the
validity
and
scope
of
proprietary
rightsclaimed
by
others.
Any
litigation
of
this
nature,
regardless
of
outcome
or
merit,
could
result
in
substantial
costs
and
diversion
of
management
and
technicalresources,
any
of
which
could
materially
and
adversely
affect
our
business,
financial
condition
and
results
of
operations.
Patent
litigation
tends
to
be
particularlyprotracted
and
expensive.
In
2014,
we
participated
in
a
jury
trial
for
the
litigation
described
in
Note
12
—Contingencies—Intellectual
Property
Litigation—Zillowin
the
notes
to
the
consolidated
financial
statements
included
elsewhere
in
this
report.
The
legal
expenses
associated
with
this
jury
trial
were
material
andnegatively
affected
our
results
of
operations
for
2014.Our framework for managing risks may not be effective in mitigating our risk of loss.Our
risk
management
framework
seeks
to
mitigate
risk
and
appropriately
balance
risk
and
return.
We
have
established
processes
and
procedures
intended
toidentify,
measure,
monitor
and
report
the
types
of
risk
to
which
we
are
subject,
including
credit
risk,
market
risk,
liquidity
risk,
operational
risk,
legal
andcompliance
risk,
and
strategic
risk.
We
seek
to
monitor
and
control
our
risk
exposure
through
a
framework
of
policies,
procedures
and
reporting
requirements.There
may
be
risks
that
exist,
or
that
develop
in
the
future,
that
we
have
not
appropriately
anticipated,
identified
or
mitigated.
If
our
risk
management
frameworkdoes
not
effectively
identify
or
mitigate
our
risks,
we
could
suffer
unexpected
losses
and
could
be
materially
and
adversely
affected.Acquisitions or strategic investments that we pursue may not be successful and could disrupt our business and harm our financial condition.We
may
consider
or
undertake
strategic
acquisitions
of,
or
material
investments
in,
businesses,
products
or
technologies.
We
may
not
be
able
to
identifysuitable
acquisition
or
investment
candidates,
or
even
if
we
do
identify
suitable
candidates,
they
may
be
difficult
to
finance,
expensive
to
fund
and
there
is
noguarantee
that
we
can
obtain
any
necessary
regulatory
approvals
or
complete
such
transactions
on
terms
that
are
favorable
to
us.
To
the
extent
we
pay
the
purchaseprice
of
any
acquisition
or
investment
in
cash
or
through
borrowings
under
our
revolving
credit
facility,
it
would
reduce
our
cash
balances
and/or
result
inindebtedness
we
must
service,
which
may
have
a
material
and
adverse
effect
on
our
business
and
financial
condition.
If
the
purchase
price
is
paid
with
our
stock,
itwould
be
dilutive
to
our
stockholders.
In
addition,
we
may
assume
liabilities
associated
with
a
business
acquisition
or
investment,
including
unrecorded
liabilitiesthat
are
not
discovered
at
the
time
of
the
transaction,
and
the
repayment
of
those
liabilities
may
have
a
material
and
adverse
effect
on
our
financial
condition.
Theremay
also
be
litigation
or
other
claims
arising
in
connection
with
an
acquisition
itself.13 Table of ContentsWe
may
not
be
able
to
successfully
integrate
the
personnel,
operations,
businesses,
products
or
technologies
of
an
acquisition
or
investment.
Integration
maybe
particularly
challenging
if
we
enter
into
a
line
of
business
in
which
we
have
limited
experience
and
the
business
operates
in
a
difficult
legal,
regulatory
orcompetitive
environment.
We
may
find
that
we
do
not
have
adequate
operations
or
expertise
to
manage
the
new
business.
The
integration
of
any
acquisition
orinvestment
may
divert
management's
time
and
resources
from
our
core
business,
which
could
impair
our
relationships
with
our
current
employees,
customers
andstrategic
partners
and
disrupt
our
operations.
Acquisitions
and
investments
also
may
not
perform
to
our
expectations
for
various
reasons,
including
the
loss
of
keypersonnel
or
customers.
If
we
fail
to
integrate
acquisitions
or
investments
or
realize
the
expected
benefits,
we
may
lose
the
return
on
these
acquisitions
orinvestments
or
incur
additional
transaction
costs
and
our
business
and
financial
condition
may
be
harmed
as
a
result.We rely on the performance of highly skilled personnel and if we are unable to attract, retain and motivate well-qualified employees, our business could beharmed.We
believe
our
success
has
depended,
and
continues
to
depend,
on
the
efforts
and
talents
of
our
management
team
and
our
highly
skilled
employees,
includingour
software
engineers,
analysts,
marketing
professionals
and
sales
staff.
Our
future
success
depends
on
our
continuing
ability
to
attract,
develop,
motivate
andretain
highly
qualified
and
skilled
employees.
The
loss
of
any
of
our
senior
management
or
key
employees
could
materially
and
adversely
affect
our
ability
to
buildon
the
efforts
they
have
undertaken
and
to
execute
our
business
plan,
and
we
may
not
be
able
to
find
adequate
replacements.
We
cannot
ensure
that
we
will
be
ableto
retain
the
services
of
any
members
of
our
senior
management
or
other
key
employees.
If
we
do
not
succeed
in
attracting
well-qualified
employees
or
retainingand
motivating
existing
employees,
our
business
and
results
of
operations
could
be
harmed.Network Lenders and lead purchasers on our marketplaces may not provide competitive levels of service to consumers, which could materially and adverselyaffect our brands and businesses and their ability to attract consumers.The
ability
of
our
businesses
to
provide
consumers
with
a
high-quality
experience
depends,
in
part,
on
consumers
receiving
competitive
levels
of
convenience,customer
service,
price
and
responsiveness
from
Network
Lenders
and
lead
purchasers
participating
on
our
other
marketplaces
with
whom
they
are
matched.
Ifthese
providers
do
not
provide
consumers
with
competitive
levels
of
convenience,
customer
service,
price
and
responsiveness,
the
value
of
our
various
brands
maybe
harmed,
the
ability
of
our
businesses
to
attract
consumers
to
our
websites
may
be
limited
and
the
number
of
consumers
matched
through
our
marketplaces
maydecline,
which
could
have
a
material
and
adverse
effect
on
our
business,
financial
condition
and
results
of
operations.We have incurred significant operating losses in the past and we may not be able to generate sufficient revenue to be profitable over the long term.We
have
a
history
of
incurring
operating
losses,
including
for
the
years
ended
December
31,
2014
and
2013,
and
although
we
were
profitable
in
2015,
we
havean
accumulated
deficit
of
$750.1
million
at
December
31,
2015
.
If
we
fail
to
maintain
or
grow
our
revenue
and
manage
our
expenses,
we
may
incur
significantlosses
in
the
future
and
not
be
able
to
maintain
profitability.Our revolving credit facility contains financial covenants and other restrictions on our actions, and it could therefore limit our operational flexibility orotherwise adversely affect our financial condition. Failure to comply with the terms of such facility could impair our rights to the assets that have been pledgedas collateral under the facility.On
October
22,
2015,
our
wholly-owned
subsidiary
LendingTree,
LLC
entered
into
a
$125.0
million
five-year
senior
secured
revolving
credit
facility
whichmatures
on
October
22,
2020
(the
"Revolving
Credit
Facility").
The
proceeds
of
the
Revolving
Credit
Facility
can
be
used
to
finance
working
capital
needs,
capitalexpenditures,
and
general
corporate
purposes,
including
to
finance
permitted
acquisitions.
We
do
not
currently
have
any
borrowings
outstanding
under
theRevolving
Credit
Facility.The
Revolving
Credit
Facility
contains
certain
restrictive
covenants,
which
include
a
consolidated
debt
to
consolidated
EBITDA
ratio
and
a
consolidatedEBITDA
to
consolidated
interest
expense
ratio.
In
addition,
the
Revolving
Credit
Facility
contains
customary
affirmative
and
negative
covenants,
including,subject
to
certain
exceptions,
restrictions
on
our
ability
to,
among
other
things:•incur
additional
indebtedness;•grant
liens;•make
loans
and
investments;•enter
into
mergers
or
make
certain
fundamental
changes;•make
certain
restricted
payments,
including
dividends,
distributions,
stock
repurchases
or
redemptions;14 Table of Contents•sell
assets;•enter
into
transactions
with
affiliates;•enter
into
restrictive
transactions;•enter
into
sale
and
leaseback
transactions;•enter
into
hedging
transactions;
and•engage
in
certain
other
transactions
without
the
prior
consent
of
the
lenders.The
Revolving
Credit
Facility
requires
LendingTree,
LLC
to
pledge
as
collateral,
subject
to
certain
customary
exclusions,
100%
of
the
assets,
including
100%of
its
equity
in
all
of
its
subsidiaries.
The
obligations
under
this
facility
are
unconditionally
guaranteed
on
a
senior
basis
by
LendingTree,
Inc.
and
specificsubsidiaries
of
LendingTree,
LLC,
which
guarantees
are
secured
by
a
pledge
as
collateral,
subject
to
certain
customary
exclusions,
of
100%
of
each
suchguarantor's
assets,
including
100%
of
its
equity
in
all
of
its
subsidiaries.If
an
event
of
default
occurs
or
if
we
otherwise
fail
to
comply
with
any
of
the
negative
or
affirmative
covenants
of
the
Revolving
Credit
Facility,
the
lendersmay
declare
all
of
the
obligations
and
indebtedness
under
such
facility
due
and
payable.
In
such
a
scenario,
the
lenders
could
exercise
their
lien
on
the
pledgedcollateral,
which
would
have
a
material
adverse
effect
on
our
business,
operations,
financial
condition
and
liquidity.
For
additional
information
on
the
RevolvingCredit
Facility,
see Note
10
—Revolving
Credit
Facility,
in
the
notes
to
the
consolidated
financial
statements
included
elsewhere
in
this
report.If our goodwill or indefinite-lived intangible assets become impaired, we may be required to record a significant charge to earnings.Under
accounting
principles
generally
accepted
in
the
United
States
of
America
("GAAP"),
we
review
the
carrying
value
of
goodwill
and
indefinite-livedintangible
assets
on
an
annual
basis
as
of
October
1,
or
more
frequently
if
an
event
occurs
or
circumstances
change
that
would
more
likely
than
not
reduce
the
fairvalue
of
a
reporting
unit
below
its
carrying
value.
Factors
that
may
be
considered
a
change
in
circumstances,
indicating
that
the
carrying
value
of
our
goodwill
orindefinite-lived
intangible
assets
may
not
be
recoverable,
include
a
decline
in
stock
price
and
market
capitalization,
reduced
future
cash
flow
estimates
and
slowergrowth
rates
in
our
industry
or
our
customers'
industries.
We
may
be
required
to
record
a
significant
charge
in
our
financial
statements
during
a
period
in
whichany
impairment
of
our
goodwill
or
indefinite-lived
intangible
assets
is
determined,
negatively
impacting
our
results
of
operations.Risks Related to Compliance and RegulationFailure to comply with past, existing or new laws, rules and regulations, or to obtain and maintain required licenses, could materially and adversely affect ourbusiness, financial condition and results of operations.We
market
and
provide
services
in
heavily
regulated
industries
through
a
number
of
different
channels
across
the
United
States.
As
a
result,
our
businesseshave
been
and
remain
subject
to
a
variety
of
statutes,
rules,
regulations,
policies
and
procedures
in
various
jurisdictions
in
the
United
States,
which
are
subject
tochange
at
any
time.
The
failure
of
our
businesses
to
comply
with
past,
existing
or
new
laws,
rules
and
regulations,
or
to
obtain
and
maintain
required
licenses,could
result
in
administrative
fines
and/or
proceedings
against
us
or
our
businesses
by
governmental
agencies
and/or
litigation
by
consumers,
which
couldmaterially
and
adversely
affect
our
business,
financial
condition
and
results
of
operations
and
our
brand.Our
businesses
conduct
marketing
activities
via
the
telephone,
the
mail
and/or
through
online
marketing
channels,
which
general
marketing
activities
aregoverned
by
numerous
federal
and
state
regulations,
such
as
the
Telemarketing
Sales
Rule,
state
telemarketing
laws,
federal
and
state
privacy
laws,
the
CAN-SPAM
Act,
the
Telephone
Consumer
Protection
Act
and
the
Federal
Trade
Commission
Act
and
its
accompanying
regulations
and
guidelines,
among
others.Increased
regulation
by
the
U.S.
Federal
Trade
Commission
("FTC")
and
Federal
Communications
Commission
("FCC")
has
resulted
in
restrictions
on
telephonecalls
to
residential
and
wireless
telephone
subscribers.Additional
federal,
state
and
in
some
instances,
local,
laws
regulate
residential
lending
activities,
which
impacts
the
marketplace,
lenders
and
consumers.These
laws
generally
regulate
the
manner
in
which
lending
and
lending-related
activities
are
marketed
or
made
available,
including
advertising
and
other
consumerdisclosures,
payments
for
services
and
record
keeping
requirements;
these
laws
include
RESPA,
the
Fair
Credit
Reporting
Act,
the
Truth
in
Lending
Act,
the
EqualCredit
Opportunity
Act,
the
Fair
Housing
Act
and
various
state
laws.
State
laws
often
restrict
the
amount
of
interest
and
fees
that
may
be
charged
by
a
lender
ormortgage
broker,
or
otherwise
regulate
the
manner
in
which
lenders
or
mortgage
brokers
operate
or
advertise.Failure
to
comply
with
applicable
laws
and
regulatory
requirements
may
result
in,
among
other
things,
revocation
of
or
inability
to
renew
required
licenses
orregistrations,
loss
of
approval
status,
termination
of
contracts
without
compensation,15 Table of Contentsadministrative
enforcement
actions
and
fines,
private
lawsuits,
including
those
styled
as
class
actions,
cease
and
desist
orders
and
civil
and
criminal
liability.Most
states
require
licenses
to
solicit,
broker
or
make
loans
secured
by
residential
mortgages
and
other
consumer
loans
to
residents
of
those
states,
as
well
asto
operate
real
estate
referral
and
brokerage
services,
and
in
many
cases
require
the
licensure
or
registration
of
individual
employees
engaged
in
aspects
of
thesebusinesses.
In
2008,
Congress
mandated
that
all
states
adopt
certain
minimum
standards
for
the
licensing
of
individuals
involved
in
mortgage
lending
or
loanbrokering,
and
many
state
legislatures
and
state
agencies
have
adopted
or
are
in
the
process
of
adopting
and
implementing
additional
licensing,
continuingeducation
and
similar
requirements
on
mortgage
lenders,
brokers
and
their
employees.
Compliance
with
these
new
requirements
may
render
it
more
difficult
for
usand
our
Network
Lenders
to
operate
or
may
raise
our
internal
costs
or
the
costs
of
our
Network
Lenders,
which
may
be
passed
on
to
us
through
less
favorablecommercial
arrangements.
While
our
businesses
have
endeavored
to
comply
with
applicable
requirements,
the
application
of
these
requirements
to
personsoperating
online
is
not
always
clear.
Moreover,
any
of
the
licenses
or
rights
currently
held
by
our
businesses
or
our
employees
may
be
revoked
prior
to,
or
may
notbe
renewed
upon,
their
expiration.
In
addition,
our
businesses
or
our
employees
may
not
be
granted
new
licenses
or
rights
for
which
they
may
be
required
to
applyfrom
time
to
time
in
the
future.Likewise,
states
or
municipalities
may
adopt
statutes
or
regulations
making
it
unattractive,
impracticable
or
infeasible
for
our
businesses
to
continue
to
conductbusiness
in
such
jurisdictions.
The
withdrawal
from
any
jurisdiction
due
to
emerging
legal
requirements
could
materially
and
adversely
affect
our
business,financial
condition
and
results
of
operations.Our
businesses
are
also
subject
to
various
state,
federal
and/or
local
laws,
rules
and
regulations
that
regulate
the
amount
and
nature
of
fees
that
may
be
chargedfor
transactions
and
incentives,
such
as
rebates,
that
may
be
offered
to
consumers
by
our
businesses,
as
well
as
the
manner
in
which
these
businesses
may
offer,advertise
or
promote
transactions.
For
example,
RESPA
generally
prohibits
the
payment
or
receipt
of
referral
fees
and
fee
shares
or
splits
in
connection
withresidential
mortgage
loan
transactions,
subject
to
certain
exceptions.
The
applicability
of
referral
fee
and
fee
sharing
prohibitions
to
lenders
and
real
estateproviders,
including
online
networks,
may
have
the
effect
of
reducing
the
types
and
amounts
of
fees
that
may
be
charged
or
paid
in
connection
with
real
estate-secured
loan
offerings
or
activities,
including
mortgage
brokerage,
lending
and
real
estate
brokerage
services,
or
otherwise
limiting
our
and
our
Network
Lenders'ability
to
conduct
marketing
and
referral
activities.Various
federal,
state
and
in
some
instances,
local,
laws
also
prohibit
unfair
and
deceptive
sales
practices.
We
have
adopted
appropriate
policies
andprocedures
to
address
these
requirements
(such
as
appropriate
consumer
disclosures
and
call
scripting,
call
monitoring
and
other
quality
assurance
and
compliancemeasures),
but
it
is
not
possible
to
ensure
that
all
employees
comply
with
our
policies
and
procedures
at
all
times.Compliance
with
these
laws,
rules
and
regulations
is
a
significant
component
of
our
internal
costs,
and
new
laws,
rules
and
regulations
are
frequently
proposedand
adopted,
requiring
us
to
adopt
new
procedures
and
practices.
Changes
to
existing
laws,
rules
and
regulations
or
changes
to
interpretation
of
existing
laws,
rulesand
regulations
could
result
in
further
restriction
of
activities
incidental
to
our
business
and
could
have
a
material
and
adverse
effect
on
our
business,
results
ofoperation
and
financial
condition.Parties
through
which
our
businesses
conduct
business
similarly
may
be
subject
to
federal
and
state
regulation.
These
parties
typically
act
as
independentcontractors
and
not
as
agents
in
their
solicitations
and
transactions
with
consumers.
We
cannot
ensure
that
these
entities
will
comply
with
applicable
laws
andregulations
at
all
times.
Failure
on
the
part
of
a
lender,
secondary
market
purchaser,
website
operator
or
other
third
party
to
comply
with
these
laws
or
regulationscould
result
in,
among
other
things,
claims
of
vicarious
liability
or
a
negative
impact
on
our
reputation
and
business.Regulatory
authorities
and
private
plaintiffs
may
allege
that
we
failed
to
comply
with
applicable
laws,
rules
and
regulations
where
we
believe
we
havecomplied.
These
allegations
may
relate
to
past
conduct
and/or
past
business
operations,
such
as
our
discontinued
real
estate
brokerage
operation
(which
was
subjectto
various
state
and
local
laws,
rules
and
regulations).
Even
allegations
that
our
activities
have
not
complied
or
do
not
comply
with
all
applicable
laws
andregulations
may
have
a
material
and
adverse
effect
on
our
business,
financial
condition
and
results
of
operations.
The
alleged
violation
of
such
laws,
rules
orregulations
may
entitle
an
individual
plaintiff
to
seek
monetary
damages,
or
may
entitle
an
enforcing
government
agency
to
seek
significant
civil
or
criminalpenalties,
costs
and
attorneys'
fees.
Regardless
of
its
merit,
an
allegation
typically
requires
legal
fee
expenditures
to
defend
against.
We
have
in
the
past
and
may
inthe
future
decide
to
settle
allegations
of
non-compliance
with
laws,
rules
and
regulations
when
we
determine
that
the
cost
of
settlement
is
less
than
the
cost
and
riskof
continuing
to
defend
against
an
allegation.
Settlements
may
require
us
to
pay
monetary
fines
and
may
require
us
to
adopt
new
procedures
and
practices,
whichmay
render
it
more
difficult
to
operate
or
may
raise
our
internal
costs.
The
future
occurrence
of
one
or
more
of
these
events
could
have
a
material
and
adverseeffect
on
our
business,
financial
condition
and
results
of
operations.16 Table of ContentsThe collection, processing, storage, use and disclosure of personal data could give rise to liabilities as a result of governmental regulation, conflicting legalrequirements or differing views of personal privacy rights.In
the
processing
of
consumer
transactions,
our
businesses
receive,
transmit
and
store
a
large
volume
of
personally
identifiable
information
and
other
userdata.
The
collection,
sharing,
use,
disclosure
and
protection
of
this
information
are
governed
by
the
privacy
and
data
security
policies
maintained
by
us
and
ourbusinesses.
Moreover,
there
are
federal,
state
and
international
laws
regarding
privacy
and
the
storing,
sharing,
use,
disclosure
and
protection
of
personallyidentifiable
information
and
user
data.
Specifically,
personally
identifiable
information
is
increasingly
subject
to
legislation
and
regulations
in
numerousjurisdictions
around
the
world,
the
intent
of
which
is
to
protect
the
privacy
of
personal
information
that
is
collected,
processed
and
transmitted
in
or
from
thegoverning
jurisdiction.
We
could
be
materially
and
adversely
affected
if
legislation
or
regulations
are
expanded
to
require
changes
in
business
practices
or
privacypolicies,
or
if
governing
jurisdictions
interpret
or
implement
their
legislation
or
regulations
in
ways
that
negatively
affect
our
business,
financial
condition
andresults
of
operations.Our
failure,
and/or
the
failure
by
the
various
third-party
vendors
and
service
providers
with
whom
we
do
business,
to
comply
with
applicable
privacy
policiesor
federal,
state
or
similar
international
laws
and
regulations
or
any
compromise
of
security
that
results
in
the
unauthorized
release
of
personally
identifiableinformation
or
other
user
data
could
damage
the
reputation
of
these
businesses,
discourage
potential
users
from
our
products
and
services
and/or
result
in
finesand/or
proceedings
by
governmental
agencies
and/or
consumers,
one
or
all
of
which
could
materially
and
adversely
affect
our
business,
financial
condition
andresults
of
operations.Changes in the regulation of the Internet could negatively affect our business.Laws,
rules
and
regulations
governing
Internet
communications,
advertising
and
e-commerce
are
dynamic
and
the
extent
of
future
government
regulation
isuncertain.
Federal
and
state
regulations
govern
various
aspects
of
our
online
business,
including
intellectual
property
ownership
and
infringement,
trade
secrets,
thedistribution
of
electronic
communications,
marketing
and
advertising,
user
privacy
and
data
security,
search
engines
and
Internet
tracking
technologies.
Futuretaxation
on
the
use
of
the
Internet
or
e-commerce
transactions
could
also
be
imposed.
Existing
or
future
regulation
or
taxation
could
hinder
growth
in
or
negativelyimpact
the
use
of
the
Internet
generally,
including
the
viability
of
Internet
e-commerce,
which
could
reduce
our
revenue,
increase
our
operating
expenses
andexpose
us
to
significant
liabilities.The Dodd-Frank Wall Street Reform and Consumer Protection Act and related legislative and regulatory actions may have a significant impact on ourbusiness, results of operations and financial condition.In
July
2010,
the
President
signed
into
law
the
Dodd-Frank
Act,
which
contains
a
comprehensive
set
of
provisions
designed
to
govern
the
practices
andoversight
of
financial
institutions
and
other
participants
in
the
financial
markets.
The
Dodd-Frank
Act
requires
various
federal
agencies
to
adopt
a
broad
range
ofnew
rules
and
regulations,
many
of
which
have
not
yet
been
adopted
and
to
prepare
numerous
studies
and
reports
for
Congress,
which
could
result
in
additionallegislative
or
regulatory
action.
The
Dodd-Frank
Act,
as
well
as
other
legislative
and
regulatory
changes,
could
have
a
significant
impact
on
us
by,
for
example,requiring
us
to
change
our
business
practices,
limiting
our
ability
to
pursue
business
opportunities,
imposing
additional
costs
on
us,
limiting
fees
we
can
charge,impacting
the
value
of
our
assets,
or
otherwise
adversely
affecting
our
businesses.
Among
other
things,
the
Dodd-Frank
Act
established
the
Consumer
FinancialProtection
Bureau
to
regulate
consumer
financial
services
and
products,
including
credit,
savings
and
payment
products.
The
effect
of
the
Dodd-Frank
Act
on
ourbusiness
and
operations
has
been
and
could
continue
to
be
significant,
depending
upon
remaining
implementing
regulations,
the
actions
of
our
competitors
and
thebehavior
of
other
marketplace
participants.
In
addition,
we
have
been,
and
likely
will
continue
to
be,
required
to
invest
significant
management
time
and
resourcesto
address
the
various
provisions
of
the
Dodd-Frank
Act
and
the
numerous
regulations
that
are
required
to
be
issued
under
it.In
light
of
recent
conditions
in
the
U.S.
financial
markets
and
economy,
as
well
as
a
heightened
regulatory
and
Congressional
focus
on
consumer
lending,regulators
have
increased
their
scrutiny
of
the
financial
services
industry,
the
result
of
which
has
included
new
regulations
and
guidance.
We
are
unable
to
predictthe
long-term
impact
of
this
enhanced
scrutiny.
We
are
also
unable
to
predict
whether
any
additional
or
similar
changes
to
statutes
or
regulations,
including
theinterpretation
or
implementation
thereof,
will
occur
in
the
future.If Network Lenders fail to produce required documents for examination by, or other affiliated parties fail to make certain filings with, state regulators, we maybe subject to fines, forfeitures and the revocation of required licenses.Some
of
the
states
in
which
our
businesses
maintain
licenses
require
them
to
collect
various
loan
documents
from
Network
Lenders
and
produce
thesedocuments
for
examination
by
state
regulators.
While
Network
Lenders
are
contractually
obligated
to
provide
these
documents
upon
request,
these
measures
maybe
insufficient.
Failure
to
produce
required
documents
for
examination
could
result
in
fines,
as
well
as
the
revocation
of
our
licenses
to
operate
in
certain
states,which
could
have
a
material
and
adverse
effect
on
our
business,
financial
condition
and
results
of
operations.17 Table of ContentsRegulations
promulgated
by
some
states
may
impose
compliance
obligations
on
directors,
executive
officers,
large
customers
and
any
person
who
acquires
acertain
percentage
(for
example,
10%
or
more)
of
our
common
stock,
including
requiring
such
persons
to
periodically
file
financial
and
other
personal
and
businessinformation
with
state
regulators.
If
any
such
person
refuses
or
fails
to
comply
with
these
requirements,
we
may
be
unable
to
obtain
certain
licenses
and
existinglicensing
arrangements
may
be
jeopardized.
The
inability
to
obtain,
or
the
loss
of,
required
licenses
could
have
a
material
and
adverse
effect
on
our
business,financial
condition
and
results
of
operations.Risks Related to an Investment in our Common StockFluctuations in our operating results, quarter to quarter earnings and other factors may result in significant decreases in the price of our common stock.The
market
price
for
our
common
stock
has
been
volatile
since
our
spin-off.
In
addition,
the
trading
volume
in
our
common
stock
has
fluctuated
and
maycontinue
to
fluctuate,
causing
significant
price
variations
to
occur.
As
of
December
31,
2015,
since
our
spin-off,
the
price
per
share
of
our
common
stock
hasfluctuated
from
an
intra-day
low
of
$1.42
per
share
to
an
intra-day
high
of
$139.59
per
share.
If
the
market
price
of
our
shares
declines
significantly,
the
value
ofan
investment
in
our
common
stock
would
decline.
The
market
price
of
our
common
stock
may
fluctuate
or
decline
significantly
in
the
future.
Some
of
the
factorsthat
could
negatively
affect
the
price
of
our
common
stock
or
result
in
fluctuations
in
the
price
or
trading
volume
of
our
common
stock
include:•variations
in
our
quarterly
operating
results;•failure
to
meet
analysts'
earnings
estimates;•publication
of
research
reports
about
us,
our
Network
Lenders
or
our
industry
or
the
failure
of
securities
analysts
to
cover
our
common
shares
or
ourindustry;•additions
or
departures
of
key
management
personnel;•adverse
market
reaction
to
any
indebtedness
we
may
incur
or
preference
or
common
shares
we
may
issue
in
the
future;•changes
in
our
dividend
payment
policy
or
failure
to
execute
our
existing
policy;•actions
by
shareholders;•changes
in
market
valuations
of
other
companies
in
our
industry,
including
our
customers
and
competitors;•announcements
by
us
or
our
competitors
of
significant
contracts,
acquisitions,
dispositions,
strategic
partnerships,
joint
ventures
or
capital
commitments;•speculation
in
the
press
or
investment
community,
including
short
selling;
and•changes
or
proposed
changes
in
laws
or
regulations
affecting
our
industry
or
enforcement
of
these
laws
and
regulations,
or
announcements
relating
tothese
matters.Recently,
and
in
the
past,
the
stock
market
has
experienced
extreme
price
and
volume
fluctuations.
These
market
fluctuations
could
result
in
extreme
volatilityin
the
trading
price
of
our
common
stock,
which
could
cause
a
decline
in
the
value
of
your
investment
in
our
common
shares.
In
addition,
the
trading
price
of
ourcommon
stock
could
decline
for
reasons
unrelated
to
our
business
or
financial
results,
including
in
reaction
to
events
that
affect
other
companies
in
our
industryeven
if
those
events
do
not
directly
affect
us.
You
should
also
be
aware
that
price
volatility
may
be
greater
if
the
public
float
and
trading
volume
of
our
commonstock
are
low.
These
factors
may
result
in
short-term
or
long-term
negative
pressure
on
the
value
of
our
common
stock.If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volumecould decline.The
trading
market
for
internet
marketplace
operators
and
lead-generation
companies
depends,
in
part,
on
the
research
and
reports
that
securities
or
industryanalysts
publish
about
the
industry
and
specific
companies.
If
one
or
more
analysts
covering
us
currently
or
in
the
future
fail
to
publish
reports
on
us
regularly,demand
for
our
common
stock
could
decline,
which
could
cause
our
stock
price
and
trading
volume
to
decline.
If
one
or
more
recognized
securities
or
industryanalysts
that
cover
our
company
or
our
industry
in
the
future
downgrades
our
common
stock
or
publishes
inaccurate
or
unfavorable
research
about
our
business
orindustry,
our
stock
price
would
likely
decline.18 Table of ContentsTwo holders of our common stock own a substantial portion of our outstanding common stock, which concentrates voting control and limits your ability toinfluence corporate matters.As
of
February
19,
2016
,
Douglas
Lebda,
our
Chairman
and
Chief
Executive
Officer,
and
Liberty
Interactive
Corporation
beneficially
owned
approximately21%
and
23%
,
respectively,
of
our
outstanding
common
stock.
Liberty
Interactive
also
has
the
right
to
nominate
20%
of
the
total
number
of
directors
serving
onthe
board,
rounded
up.
Two
of
our
seven
directors,
Neal
Dermer
and
Craig
Troyer,
were
nominated
by
Liberty
Interactive.Therefore,
for
the
foreseeable
future,
Mr.
Lebda
and
Liberty
Interactive
will
each
have
influence
over
our
management
and
affairs
and
all
matters
requiringshareholder
approval,
including
the
election
or
removal
(with
or
without
cause)
of
directors
and
approval
of
any
significant
corporate
transaction,
such
as
a
mergeror
other
sale
of
us
or
our
assets.
The
interests
of
Mr.
Lebda
or
Liberty
Interactive
may
not
necessarily
align
with
the
interests
of
our
other
stockholders.
Mr.
Lebdaor
Liberty
Interactive
could
elect
to
sell
a
significant
interest
in
us
and
you
may
receive
less
than
the
then-current
fair
market
value
or
the
price
you
paid
for
yourshares
as
a
result
of
such
transaction.
This
concentrated
control
could
delay,
defer
or
prevent
a
change
of
control,
merger,
consolidation,
takeover
or
other
businesscombination
involving
us
that
other
stockholders
may
otherwise
support.
This
concentrated
control
could
also
discourage
a
potential
investor
from
acquiring
ourcommon
stock
and
might
harm
the
market
price
of
our
common
stock.Our management will have broad discretion as to the use of proceeds from the November 2015 equity offering.We
intend
to
use
the
proceeds
of
the
November
2015
equity
offering
for
general
corporate
purposes,
including
but
not
limited
to,
working
capital
and
potentialacquisitions.
We
have
not
designated
the
amount
of
net
proceeds
we
will
use
for
any
particular
purpose
and
our
management
will
retain
broad
discretion
to
allocatethe
net
proceeds
of
the
offering.
Moreover,
our
management
may
use
the
proceeds
for
corporate
purposes
that
may
not
increase
our
market
value
or
make
us
moreprofitable.
In
addition,
it
may
take
us
some
time
to
effectively
deploy
the
proceeds
from
the
equity
offering.
Until
the
proceeds
are
effectively
deployed,
our
returnon
equity
and
earnings
per
share
may
be
negatively
impacted.
Management's
failure
to
use
the
net
proceeds
of
the
equity
offering
effectively
could
have
an
adverseeffect
on
our
business,
financial
condition
and
results
of
operations.
For
additional
information
on
the
equity
offering,
see Note
7
—Shareholders'
Equity,
in
thenotes
to
the
consolidated
financial
statements
included
elsewhere
in
this
report.Future sales of common stock by our existing stockholders may cause our stock price to fall.The
market
price
of
our
common
stock
could
decline
as
a
result
of
sales
by
our
existing
stockholders
in
the
market,
or
the
perception
that
these
sales
couldoccur.
These
sales
might
also
make
it
more
difficult
for
us
to
sell
equity
securities
at
a
time
and
price
that
we
deem
appropriate.We
may
issue
additional
shares
of
our
common
stock
in
the
future
pursuant
to
current
or
future
equity
incentive
plans,
or
in
connection
with
futureacquisitions
or
financings.
If
we
were
to
raise
capital
in
the
future
by
selling
shares
of
our
common
stock,
or
securities
that
are
convertible
into
our
common
stockor
issuing
shares
of
our
common
stock
in
a
business
acquisition,
their
issuance
would
have
a
dilutive
effect
on
the
percentage
ownership
of
our
stockholders
and,depending
on
the
prices
at
which
such
shares
or
convertible
securities
are
sold
or
issued,
on
their
investment
in
our
common
stock
and,
therefore,
could
have
amaterial
adverse
effect
on
the
market
prices
of
our
common
stock.Under
a
registration
rights
agreement
with
Liberty
Interactive,
Liberty
Interactive
and
its
permitted
transferees
are
entitled
to
three
demand
registrations
rights(and
unlimited
piggyback
registration
rights)
in
respect
of
the
shares
of
our
common
stock
received
by
Liberty
Interactive
as
a
result
of
the
spin-off
and
othershares
of
our
common
stock
acquired
by
Liberty
Interactive
or
its
affiliates.
These
holders
will
also
be
permitted
to
exercise
their
registration
rights
in
connectionwith
certain
hedging
transactions
that
they
may
enter
into
in
respect
of
the
registrable
shares.
The
presence
of
additional
shares
of
our
common
stock
trading
in
thepublic
market,
as
a
result
of
the
exercise
of
such
registration
rights,
may
have
an
adverse
effect
on
the
market
price
of
our
securities.Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by stockholders toreplace or remove our management and affect the market price of our common stock.Provisions
in
our
certificate
of
incorporation
and
bylaws,
as
amended
and
restated,
may
have
the
effect
of
delaying
or
preventing
a
change
of
control
orchanges
in
our
management.
Our
amended
and
restated
articles
of
incorporation
and/or
amended
and
restated
bylaws
include
provisions
that:•Authorize
our
board
of
directors
to
issue,
without
further
action
by
our
stockholders,
up
to
five
million
shares
of
undesignated
preferred
stock,
sometimesreferred
to
as
"blank
check
preferred";•Prohibit
cumulative
voting
in
the
election
of
directors;19 Table of Contents•Provide
that
vacancies
on
our
board
of
directors
may
be
filled
only
by
the
affirmative
vote
of
a
majority
of
directors
then
in
office
or
by
the
soleremaining
director;•Provide
that
only
our
board
of
directors
may
change
the
size
of
our
board
of
directors;•Specify
that
special
meetings
of
our
stockholders
may
be
called
only
by
or
at
the
direction
of
our
board
of
directors
or
by
a
person
specifically
designatedwith
such
authority
by
the
board;
and•Prohibit
stockholders
from
taking
action
by
written
consent.The
provisions
described
above
may
frustrate
or
prevent
any
attempts
by
our
stockholders
to
replace
or
remove
our
current
management
by
making
it
moredifficult
for
stockholders
to
replace
members
of
our
board
of
directors,
which
is
responsible
for
appointing
our
management.
These
provisions
may
also
have
theeffect
of
delaying
or
preventing
a
change
of
control
of
our
company,
even
if
stockholders
support
such
a
change
of
control.We do not intend to pay any cash dividends on our common stock in the foreseeable future.We
have
not
declared
or
paid
a
cash
dividend
on
our
common
stock
during
the
three
most
recent
fiscal
years.
We
have
no
current
intention
to
declare
or
paycash
dividends
on
our
common
stock
in
the
foreseeable
future.
In
addition,
the
Revolving
Credit
Facility
contains
certain
restrictions
on
our
ability
to
paydividends.
See Note
10
—Revolving
Credit
Facility,
in
the
notes
to
the
consolidated
financial
statements
included
elsewhere
in
this
report.
The
declaration,payment
and
amount
of
future
cash
dividends,
if
any,
will
be
at
the
discretion
of
our
board
of
directors.
As
a
result,
capital
appreciation,
if
any,
of
our
commonstock
will
be
the
sole
source
of
gain
for
the
foreseeable
future
for
holders
of
our
common
stock.Our financial results fluctuate as a result of seasonality, which may make it difficult to predict our future performance and may adversely affect our commonstock price.Our
mortgage
products
business
is
historically
subject
to
seasonal
trends.
These
trends
reflect
the
general
patterns
of
the
mortgage
industry
and
housing
sales,which
typically
peak
in
the
spring
and
summer
seasons.
In
recent
periods,
broader
cyclical
trends
in
interest
rates,
as
well
as
the
mortgage
and
real
estate
markets,have
upset
the
customary
seasonal
trends.
However,
seasonal
trends
may
resume
and
our
quarterly
operating
results
may
fluctuate.
Our
non-mortgage
productsbusinesses
have
various
seasonality
trends
which
may
create
further
uncertainty
in
our
quarterly
operating
results
if
these
business
become
more
significantcomponents
of
our
total
revenue.
See "Item
1.
Business—Seasonality"
included
elsewhere
in
this
report
for
more
information.
Any
of
these
seasonal
trends,
or
thecombination
of
them,
may
negatively
impact
the
price
of
our
common
stock.ITEM 1B. Unresolved Staff CommentsNot
applicable.ITEM 2. PropertiesOur
principal
executive
offices
are
currently
located
in
approximately
37,800
square
feet
of
office
space
in
Charlotte,
North
Carolina
under
a
lease
that
expiresin
December
2020.
In
addition,
we
have
offices
located
in
approximately
6,100
square
feet
of
office
space
in
Burlingame,
California
under
a
lease
that
expires
inMarch
2017
and
approximately
13,000
square
feet
of
additional
office
space
in
Charlotte,
North
Carolina
under
a
lease
that
expires
in
August
2018.ITEM 3. Legal ProceedingsIn
the
ordinary
course
of
business,
we
are
party
to
litigation
involving
property,
contract,
intellectual
property
and
a
variety
of
other
claims.
The
amounts
thatmay
be
recovered
in
such
matters
may
be
subject
to
insurance
coverage.
See Note
12
— Contingencies
in
the
notes
to
the
consolidated
financial
statementsincluded
elsewhere
in
this
report
for
a
discussion
of
our
current
litigation.ITEM 4. Mine Safety DisclosuresNot
applicable.20 Table of ContentsPART IIITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesGeneral Market Information, Holders and DividendsOur
common
stock
is
quoted
on
the
NASDAQ
Global
Select
Market
under
the
ticker
symbol
"TREE".
The
table
below
sets
forth,
for
the
calendar
periodsindicated,
the
high
and
low
intraday
sales
prices
per
share
for
LendingTree
common
stock
as
reported
on
the
NASDAQ
Stock
Market.
The
stock
price
informationis
based
on
published
financial
sources.Year Ended December 31, 2015
High
LowFirst
Quarter
$58.00
$38.85Second
Quarter
78.78
54.32Third
Quarter
139.59
73.56Fourth
Quarter
131.83
85.18Year Ended December 31, 2014
High
LowFirst
Quarter
$35.05
$29.76Second
Quarter
31.66
22.94Third
Quarter
36.00
24.61Fourth
Quarter
48.84
33.72As
of
February
19,
2016
,
there
were
approximately
870
holders
of
record
of
our
common
stock
and
the
closing
price
of
the
common
stock
was
$63.69
.We
have
not
declared
a
cash
dividend
on
our
common
stock
during
the
three
most
recent
fiscal
years.
We
have
no
current
intention
to
declare
or
pay
cashdividends
on
our
common
stock
in
the
foreseeable
future.
The
declaration,
payment
and
amount
of
future
cash
dividends,
if
any,
will
be
at
the
discretion
of
ourboard
of
directors.
The
revolving
credit
facility
we
entered
into
on
October
22,
2015
contains
contractual
restrictions
on
our
ability
to
pay
dividends.
See Note
10—Revolving
Credit
Facility,
in
the
notes
to
the
consolidated
financial
statements
included
elsewhere
in
this
report
for
additional
information.Performance GraphThe performance graph shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or incorporated by reference into any filings under theSecurities Act or the Exchange Act, except as otherwise expressly set forth by specific reference in such filing.Set
forth
below
is
a
line
graph,
for
the
period
from
December
31,
2010
through
December
31,
2015,
comparing
the
cumulative
total
stockholder
return
of
$100invested
(assuming
that
all
dividends
were
reinvested)
in
(1)
our
common
stock,
(2)
the
cumulative
return
of
all
companies
listed
on
the
NASDAQ
CompositeIndex
and
(3)
the
cumulative
total
return
of
the
Research
Development
Group
("RDG")
Internet
index.
Returns
over
the
indicated
periods
should
not
be
consideredindicative
of
future
stock
prices
or
stockholder
returns.21 Table of ContentsUnregistered Sales of Equity Securities and Use of ProceedsDuring
the
year
ended
December
31,
2015
,
we
did
not
issue
or
sell
any
shares
of
our
common
stock
or
other
equity
securities
in
transactions
that
were
notregistered
under
the
Securities
Act.Issuer Purchases of Equity SecuritiesIn
January
2010,
our
board
of
directors
approved
and
we
announced
a
stock
repurchase
program
which
allowed
for
the
repurchase
of
up
to
$10.0
million
ofour
common
stock.
In
May
2014,
our
board
of
directors
authorized
and
we
announced
an
additional
$10.0
million
to
the
stock
repurchase
program.
AtDecember
31,
2015
,
approximately
$7.3
million
remained
authorized
for
share
repurchase
under
this
program.
Under
this
program,
we
can
repurchase
stock
in
theopen
market
or
through
privately-negotiated
transactions.
We
have
used
available
cash
to
finance
these
repurchases.
We
will
determine
the
timing
and
amount
ofany
additional
repurchases
based
on
our
evaluation
of
market
conditions,
applicable
SEC
guidelines
and
regulations,
and
other
factors.
This
program
may
besuspended
or
discontinued
at
any
time
at
the
discretion
of
our
board
of
directors.
No
shares
of
common
stock
were
repurchased
under
the
stock
repurchase
programduring
the
quarter
ended
December
31,
2015
.
In
January
2016,
our
board
of
directors
authorized
and
we
announced
an
additional
$50.0
million
to
the
stockrepurchase
program.
In
February
2016,
the
board
of
directors
further
authorized
and
we
announced
the
addition
of
up
to
$40.0
million
under
the
stock
repurchaseprogram.
Between
January
1,
2016
and
February
26,
2016,
573,370
shares
of
common
stock
were
repurchased
and
as
of
February
26,
2016,
approximately
$57.3million
remains
authorized
for
share
repurchase.Additionally,
the
LendingTree
Fourth
Amended
and
Restated
2008
Stock
and
Award
Incentive
Plan
allows
employees
to
forfeit
shares
of
our
common
stockto
satisfy
federal
and
state
withholding
obligations
upon
the
exercise
of
stock
options,
the
settlement
of
restricted
stock
unit
awards
and
the
vesting
of
restrictedstock
awards
granted
to
those
individuals
under
this
plan.
During
the
quarter
ended
December
31,
2015
,
12,395
shares
were
purchased
related
to
these
obligationsunder
the
LendingTree
Fourth
Amended
and
Restated
2008
Stock
and
Award
Incentive
Plan.
The
withholding
of
those
shares
does
not
affect
the
dollar
amount
ornumber
of
shares
that
may
be
purchased
under
the
stock
repurchase
program
described
above.22 Table of ContentsThe
following
table
provides
information
about
the
Company's
purchases
of
equity
securities
during
the
quarter
ended
December
31,
2015
.Period
Total Number ofShares Purchased (1)
Average PricePaid per Share
Total Number ofShares Purchased asPart of PubliclyAnnounced Plans orPrograms (2)
MaximumNumber/ApproximateDollar Value of Sharesthat May Yet bePurchased Under thePlans or Programs
(in thousands)10/1/15
-
10/31/15
—
$—
—
$7,27311/1/15
-
11/30/15
11,271
$119.85
—
$7,27312/1/15
-
12/31/15
1,124
$95.78
—
$7,273Total
12,395
$117.66
—
$7,273(1)During
October
2015,
November
2015
and
December
2015,
0
shares,
11,271
shares
and
1,124
shares,
respectively
(totaling
12,395
shares),
werepurchased
to
satisfy
federal
and
state
withholding
obligations
of
our
employees
upon
the
settlement
of
restricted
stock
unit
awards,
all
in
accordance
withour
Fourth
Amended
and
Restated
2008
Stock
and
Award
Incentive
Plan,
as
described
above.(2)See
the
narrative
disclosure
above
the
table
for
further
description
of
our
publicly
announced
stock
repurchase
program.23 Table of ContentsITEM 6. Selected Financial DataThe
summary
financial
data
presented
below
represents
portions
of
our
consolidated
financial
statements
and
are
not
complete.
The
following
financialinformation
should
be
read
in
conjunction
with
"Item
7.
Management's
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations"
and
ourconsolidated
financial
statements
and
notes
thereto
contained
in
"Item
8.
Financial
Statements
and
Supplementary
Data"
included
elsewhere
in
this
Annual
Report.Historical
results
are
not
necessarily
indicative
of
future
performance
or
results
of
operations. Year Ended December 31, 2015
2014
2013
2012 (1)
2011 (in thousands, except per share amounts)Results of Operations:
Revenue$254,216
$167,350
$139,240
$77,443
$54,617Income
(loss)
from
continuing
operations
(2)51,316
(487)
(673)
(2,249)
(49,710)Income
(loss)
from
discontinued
operations
(3)(3,269)
9,849
4,620
48,874
(9,793)Net
income
(loss)
and
comprehensive
income
(loss)$48,047
$9,362
$3,947
$46,625
$(59,503)
Weighted
average
shares
outstanding:
Basic11,516
11,188
11,035
10,695
10,377Diluted12,541
11,188
11,035
10,695
10,377Income
(loss)
per
share
from
continuing
operations:
Basic$4.46
$(0.04)
$(0.06)
$(0.21)
$(4.79)Diluted$4.09
$(0.04)
$(0.06)
$(0.21)
$(4.79)Income
(loss)
per
share
from
discontinued
operations:
Basic$(0.28)
$0.88
$0.42
$4.57
$(0.94)Diluted$(0.26)
$0.88
$0.42
$4.57
$(0.94)Net
income
(loss)
per
share:
Basic$4.17
$0.84
$0.36
$4.36
$(5.73)Diluted$3.83
$0.84
$0.36
$4.36
$(5.73)Cash
dividend
per
share$—
$—
$—
$1.00
$—
Financial Position:
Cash
and
cash
equivalents$206,975
$86,212
$91,667
$80,190
$45,541Total
assets$295,781
$139,891
$152,644
$143,171
$331,340Total
long-term
liabilities$612
$4,889
$5,437
$5,883
$5,544Total
shareholders'
equity$241,142
$96,366
$87,008
$82,922
$45,471(1)In
June
2012,
we
sold
substantially
all
of
the
operating
assets
of
our
LendingTree
Loans
business.
See ITEM
7.
Management's
Discussion
and
Analysis
ofFinancial
Condition
and
Results
of
Operations—Results
of
Operations
for
the
Years
Ended
December
31,
2015,
2014
and
2013—Discontinued
Operationsfor
more
information.(2)In
2015,
we
released
the
majority
of
the
valuation
allowance,
which,
along
with
federal
and
state
income
taxes,
resulted
in
a
total
tax
benefit
of
$23.0million
.
See Note
9
—Income
Taxes
in
the
notes
to
the
consolidated
financial
statements
included
elsewhere
in
this
report
for
additional
information.(3)See ITEM
7.
Management's
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations—Results
of
Operations
for
the
Years
EndedDecember
31,
2015,
2014
and
2013—Discontinued
Operations
for
a
discussion
of
discontinued
operations.24 Table of ContentsITEM 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe
following
Management's
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations
should
be
read
in
conjunction
with
our
consolidatedfinancial
statements
and
accompanying
notes
included
elsewhere
within
this
report.
This
discussion
includes
both
historical
information
and
forward-lookinginformation
that
involves
risks,
uncertainties
and
assumptions.
Our
actual
results
may
differ
materially
from
management's
expectations
as
a
result
of
variousfactors,
including
but
not
limited
to
those
discussed
in
the
sections
entitled
"Risk
Factors"
and
"Cautionary
Statement
Regarding
Forward-Looking
Information."Company OverviewLendingTree,
Inc.
is
the
parent
of
LendingTree,
LLC
and
several
companies
owned
by
LendingTree,
LLC.LendingTree
operates
what
we
believe
to
be
the
leading
online
loan
marketplace
for
consumers
seeking
loans
and
other
credit-based
offerings.
Our
onlinemarketplace
provides
consumers
with
access
to
product
offerings
from
our
Network
Lenders,
including
mortgage
loans,
home
equity,
reverse
mortgage,
auto
loans,credit
cards,
personal
loans,
student
loans
and
small
business
loans
and
other
related
offerings.
In
addition,
we
offer
tools
and
resources,
including
free
creditscores,
that
facilitate
comparison
shopping
for
these
loan
and
other
credit-based
offerings.
We
seek
to
match
consumers
with
multiple
lenders,
who
can
providethem
with
competing
quotes
for
the
product
they
are
seeking.
We
also
serve
as
a
valued
partner
to
lenders
seeking
an
efficient,
scalable
and
flexible
source
ofcustomer
acquisition
with
directly
measurable
benefits,
by
matching
the
consumer
inquiries
we
generate
with
these
lenders.In
June
2014,
we
re-launched
My
LendingTree,
a
platform
that
offers
a
personalized
loan
comparison-shopping
experience,
by
providing
free
credit
scores
andcredit
score
analysis.
This
new
platform
enables
us
to
observe
consumers'
credit
profiles
and
then
identify
and
alert
them
to
loan
and
other
credit-based
offeringson
our
marketplace
that
may
be
more
favorable
than
the
loans
they
may
have
at
a
given
point
in
time.
This
is
designed
to
provide
consumers
with
measurablesavings
opportunities
over
their
lifetimes.In
addition
to
operating
our
core
mortgage
business,
we
are
focused
on
growing
our
non-mortgage
lending
businesses
and
developing
new
product
offeringsand
enhancements
to
improve
the
experiences
that
consumers
and
lenders
have
as
they
interact
with
us.
By
expanding
our
portfolio
of
loan
and
credit-basedofferings,
we
are
growing
and
diversifying
our
business
and
sources
of
revenue.
We
intend
to
capitalize
on
our
expertise
in
performance
marketing,
productdevelopment
and
technology,
and
to
leverage
the
widespread
recognition
of
the
LendingTree
brand
to
effect
this
strategy.The
LendingTree
Loans
business
is
presented
as
discontinued
operations
in
the
accompanying
consolidated
balance
sheets,
consolidated
statements
ofoperations
and
comprehensive
income
and
consolidated
cash
flows
for
all
periods
presented.
Except
for
the
discussion
under
the
heading
"DiscontinuedOperations,"
the
analysis
within
Management's
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations
reflects
our
continuing
operations.Reportable and Operating SegmentsDuring
the
first
quarter
of
2015,
management
made
certain
changes
to
its
organizational
structure
that
impacted
its
previous
operating
segments.
As
a
result,management
concluded
it
had
one
reportable
segment
representing
our
Lending
activities.
Previously
reported
segment
results
have
been
revised
to
conform
to
ourreportable
segments
at
December
31,
2015.Recent Mortgage Interest Rate TrendsInterest
rate
and
market
risks
can
be
substantial
in
the
mortgage
lead
generation
business.
Short-term
fluctuations
in
mortgage
interest
rates
primarily
affectconsumer
demand
for
mortgage
refinancings,
while
long-term
fluctuations
in
mortgage
interest
rates,
coupled
with
the
U.S.
real
estate
market,
affect
consumerdemand
for
new
mortgages.
Consumer
demand,
in
turn,
affects
lender
demand
for
mortgage
leads
from
third-party
sources.
Typically,
a
decline
in
mortgageinterest
rates
will
lead
to
reduced
lender
demand,
as
there
are
more
consumers
in
the
marketplace
seeking
financing
and,
accordingly,
lenders
receive
more
organiclead
volume.
Conversely,
an
increase
in
mortgage
interest
rates
will
typically
lead
to
an
increase
in
lender
demand,
as
there
are
fewer
consumers
in
the
marketplaceand,
accordingly,
the
supply
of
organic
mortgage
lead
volume
decreases.
25 Table of ContentsAccording
to
Freddie
Mac,
mortgage
interest
rates
were
at
all
time
lows
in
December
2012.
In
2013,
rates
rose
gradually
through
the
first
five
months
of
theyear,
to
3.54%
in
May.
Thereafter,
rates
increased
more
significantly,
subsequently
peaking
at
4.49%
in
September
and
finished
the
year
at
4.46%.
Mortgageinterest
rates
generally
declined
as
2014
progressed,
to
an
average
of
3.86%
in
December
2014,
the
lowest
since
May
2013.
In
January
2015,
mortgage
interestrates
continued
to
decline,
reaching
a
monthly
average
of
3.67%,
after
which
the
mortgage
interest
rates
generally
increased
to
3.96%
by
the
end
of
2015.On
a
full-year
basis,
mortgage
interest
rates
declined
to
an
average
3.85%
in
2015,
as
compared
to
4.17%
and
3.98%
in
2014
and
2013,
respectively.Typically,
as
mortgage
interest
rates
rise,
there
are
fewer
consumers
in
the
marketplace
seeking
refinancings
and,
accordingly,
the
mix
of
mortgage
originationdollars
moves
towards
purchase
mortgages.
According
to
Mortgage
Bankers
Association
("MBA")
data,
total
refinance
origination
dollars
dropped
from
60%
oftotal
2013
mortgage
origination
dollars
to
43%
in
2014
and
increased
to
45%
in
2015,
as
a
result
of
an
increase
and
subsequent
decrease
in
average
mortgageinterest
rates.Looking
forward,
MBA
is
projecting
mortgage
interest
rates
to
climb
in
2016,
to
an
average
4.3%
on
30-year
fixed
rate
mortgages.
According
to
MBAprojections,
as
interest
rates
climb,
the
mix
of
mortgage
origination
dollars
will
continue
to
move
towards
purchase
mortgages
with
the
refinance
sharerepresenting
just
33%
for
2016.The U.S. Real Estate MarketThe
health
of
the
U.S.
real
estate
market
and
interest
rate
levels
are
the
primary
drivers
of
consumer
demand
for
new
mortgages.
Consumer
demand,
in
turn,affects
lender
demand
for
purchase
mortgage
leads
from
third-party
sources.
Typically,
a
strong
real
estate
market
will
lead
to
reduced
lender
demand
for
leads,
asthere
are
more
consumers
in
the
marketplace
seeking
financing
and,26 Table of Contentsaccordingly,
lenders
receive
more
organic
lead
volume.
Conversely,
a
weaker
real
estate
market
will
typically
lead
to
an
increase
in
lender
demand,
as
there
arefewer
consumers
in
the
marketplace
seeking
mortgages.
In
2013,
existing
home
sales
nationwide
increased
9%
over
2012,
according
to
the
National
Association
of
Realtors
("NAR"),
as
job
growth
improved
anddemand
drove
the
market,
despite
rising
mortgage
interest
rates.
In
fact,
existing
home
sales
for
all
of
2013
were
the
highest
since
2006
and
median
pricesmaintained
strong
growth,
up
11%
from
2012
to
$197
thousand,
partially
attributable
to
the
shrinking
share
of
distressed
home
sales.
Although
home
prices
as
ofDecember
2013
were
up,
they
were
still
approximately
20%
below
their
mid-2006
peaks.Despite
continued
indications
of
economic
recovery,
in
2014,
existing
home
sales
nationwide
declined
approximately
3%
over
2013,
according
to
the
NAR,likely
due
to
lessening
housing
affordability
and
higher
mortgage
interest
rates.
However,
sales
of
existing
homes
in
the
second
half
of
2014
were
up
6%
from
thefirst
half
of
the
year,
as
economic
growth
accelerated,
housing
inventory
increased
and
sales
prices
moderated.
This
momentum
continued
into
2015,
withnationwide
existing
home
sales
increasing
approximately
7%
over
2014,
equating
to
the
housing
market's
best
year
in
nearly
a
decade.In
2016,
the
NAR
expects
moderate
growth
in
existing
home
sales
compared
to
2015,
due
to
slower
economic
expansion
and
rising
mortgage
rates.Results of Operations for the Years ended December 31, 2015 , 2014 and 2013 Year Ended December 31,
2015 vs. 2014
2014 vs. 2013 201520142013
$Change%Change
$Change%Change (Dollars in thousands)Mortgage
products$165,272$134,137$123,091
$31,13523
%
$11,0469
%Non-mortgage
products88,94433,21316,149
55,731168
%
17,064106
%Revenue254,216167,350139,240
86,86652 %
28,11020 %Costs
and
expenses:
Cost
of
revenue
(exclusive
of
depreciation
shown
separately
below)9,3707,9036,542
1,46719
%
1,36121
%Selling
and
marketing
expense172,849112,70491,121
60,14553
%
21,58324
%General
and
administrative
expense30,03025,88324,658
4,14716
%
1,2255
%Product
development10,4857,4575,264
3,02841
%
2,19342
%Depreciation3,0083,2453,501
(237)(7)%
(256)(7)%Amortization
of
intangibles149136147
1310
%
(11)(7)%Restructuring
and
severance422373159
4913
%
214135
%Litigation
settlements
and
contingencies(611)10,6188,955
(11,229)(106)%
1,66319
%Total
costs
and
expenses225,702168,319140,347
57,38334 %
27,97220 %Operating income (loss)28,514(969)(1,107)
29,4833,043 %
13812 %Other
income
(expense),
net:
Interest
expense(171)(2)(19)
(169)8,450
%
1789
%Income (loss) before income taxes28,343(971)(1,126)
29,3143,019 %
15514 %Income
tax
benefit22,973484453
22,4894,646
%
317
%Net income (loss) from continuing operations51,316(487)(673)
51,80310,637 %
18628 %Discontinued
operations:
Gain
from
sale
of
discontinued
operations,
net
of
tax——9,561
——
%
(9,561)(100)%(Loss)
income
from
discontinued
operations,
net
of
tax(3,269)9,849(4,941)
(13,118)(133)%
14,790299
%(Loss) income from discontinued operations(3,269)9,8494,620
(13,118)(133)%
5,229113
%Net
income
and
comprehensive
income$48,047$9,362$3,947
$38,685413 %
$5,415137 %RevenueRevenue
increased
$86.9
million
in
2015
compared
to
2014
due
to
increases
in
our
non-mortgage
products
of
$55.7
million
and
in
our
mortgage
products
of$31.1
million.27 Table of ContentsOur
non-mortgage
products
include
the
following
non-mortgage
lending
products:
personal
loans,
home
equity,
reverse
mortgage,
credit
cards,
auto
loans,student
loans
and
small
business
loans.
Our
non-mortgage
products
also
include
home
improvement
referrals
and
education
enrollment
referrals.
The
increase
inrevenue
from
our
non-mortgage
products
in
2015
is
primarily
due
to
increases
in
revenue
from
our
personal
loans
product
and
our
credit
cards
product.
Revenuefrom
our
personal
loans
product
increased
$38.9
million
in
2015
compared
to
2014
due
to
growing
awareness
in
the
market
of
the
product,
an
increase
in
lenderson
our
exchange,
increases
in
revenue
earned
per
matched
consumer
and
increased
marketing
efforts.
Revenue
from
our
credit
cards
product
increased
$9.2
millionin
2015
compared
to
2014
due
to
increases
in
payouts
from
issuers
in
addition
to
increased
marketing
efforts.
Revenue
from
each
of
our
non-mortgage
lendingproducts
increased
in
2015
compared
to
2014.The
increase
in
revenue
from
our
mortgage
products
in
2015
compared
to
2014
is
primarily
due
to
an
increase
in
revenue
from
our
refinance
product.
Revenuefrom
our
refinance
product
increased
in
2015
compared
to
2014
due
to
increased
demand
of
both
new
and
existing
lenders
on
our
marketplace.
Additionally,mortgage
interest
rates
were
lower
in
2015
compared
to
2014,
causing
an
increase
in
sales
of
the
refinance
product.
The
number
of
consumers
matched
for
ourmortgage
products
increased
by
44%
in
2015
compared
to
2014,
while
our
average
revenue
earned
from
mortgage
lenders
per
matched
consumer
decreased
by14%
in
2015
compared
to
2014.Revenue
increased
$28.1
million
in
2014
compared
to
2013
due
to
increases
in
our
non-mortgage
products
of
$17.1
million
and
in
our
mortgage
products
of$11.0
million.The
increase
in
revenue
from
our
non-mortgage
products
in
2014
from
2013
was
primarily
due
to
increases
in
revenue
from
our
personal
loans
product,although
revenue
from
each
of
our
non-mortgage
lending
products
increased.
Revenue
from
our
personal
loans
product
increased
$11.0
million
in
2014
comparedto
2013.
Our
reverse
mortgage
product
was
introduced
in
the
first
quarter
of
2013,
our
credit
card
offering
was
introduced
in
the
second
quarter
of
2013
and
ourpersonal
loan
product
was
re-launched
in
the
third
quarter
of
2013.The
increase
in
our
mortgage
products
in
2014
compared
to
2013
was
primarily
due
to
an
increase
in
our
purchase
product,
partially
offset
by
a
modestdecrease
in
our
refinance
product.
The
number
of
consumers
matched
on
for
our
mortgage
products
increased
by
38%
in
2014
compared
to
2013,
while
ouraverage
revenue
earned
from
mortgage
lenders
per
matched
consumer
decreased
by
21%
in
2014
compared
to
2013.Cost of revenueCost
of
revenue
consists
primarily
of
costs
associated
with
compensation
and
other
employee-related
costs
(including
stock-based
compensation)
relating
tointernally-operated
customer
call
centers,
third-party
customer
call
center
fees,
credit
scoring
fees,
credit
card
fees
and
website
network
hosting
and
server
fees.Cost
of
revenue
increased
in
2015
from
2014,
primarily
due
to
increases
of
$1.1
million
in
compensation
and
benefits
as
a
result
of
increases
in
headcount
and$0.7
million
in
credit
card
fees,
partially
offset
by
a
$0.7
million
decrease
in
credit
scoring
fees.Cost
of
revenue
increased
in
2014
from
2013,
primarily
due
to
increases
of
$0.8
million
in
credit
scoring
fees,
$0.5
million
in
credit
card
fees
and
$0.2
millionin
third-party
call
center
fees,
partially
offset
by
a
$0.2
million
decrease
in
compensation
and
benefits.Cost
of
revenue
as
a
percentage
of
revenue
decreased
slightly
to
4%
in
2015
from
5%
in
2014
and
2013.Selling and marketing expenseSelling
and
marketing
expense
consists
primarily
of
advertising
and
promotional
expenditures,
fees
paid
for
consumer
inquiries
and
compensation
and
otheremployee-related
costs
(including
stock-based
compensation)
for
personnel
engaged
in
sales
or
marketing
functions.
Advertising
and
promotional
expendituresprimarily
include
online
marketing,
as
well
as
television,
print
and
radio
spending.
Advertising
production
costs
are
expensed
in
the
period
the
related
ad
is
firstrun.The
increases
in
selling
and
marketing
expense
in
2015
compared
to
2014
and
2014
compared
to
2013
were
primarily
due
to
increases
in
advertising
andpromotional
expense
of
$57.1
million
and
$21.5
million,
respectively,
as
discussed
below.
In
addition,
selling
and
marketing
expense
increased
in
2015
comparedto
2014
due
to
an
increase
in
compensation
and
benefits
of
$3.1
million
as
a
result
of
increases
in
headcount.28 Table of ContentsAdvertising
and
promotional
expense
is
the
largest
component
of
selling
and
marketing
expense,
and
is
comprised
of
the
following:
Year Ended December 31,
2015 vs. 2014
2014 vs. 2013 2015
2014
2013
$Change%Change
$Change%Change (Dollars in thousands)Online$127,294
$86,088
$64,777
$41,20648%
$21,31133
%Broadcast28,066
14,011
14,597
14,055100%
(586)(4)%Other3,863
2,056
1,306
1,80788%
75057
%Total advertising expense$159,223
$102,155
$80,680
$57,06856%
$21,47527
%We
increased
our
advertising
expenditures
in
2015
compared
to
2014
and
in
2014
compared
to
2013,
in
order
to
generate
additional
consumer
inquiries
tomeet
the
increased
demand
of
lenders
on
our
marketplace.We
will
continue
to
adjust
selling
and
marketing
expenditures
dynamically
in
relation
to
anticipated
revenue
opportunities.General and administrative expenseGeneral
and
administrative
expense
consists
primarily
of
compensation
and
other
employee-related
costs
(including
stock-based
compensation)
for
personnelengaged
in
finance,
legal,
tax,
corporate
information
technology,
human
resources
and
executive
management
functions,
as
well
as
facilities
and
infrastructurecosts
and
fees
for
professional
services.
General
and
administrative
expense
increased
in
2015
compared
to
2014,
primarily
due
to
increases
in
compensation
and
benefits
of
$2.0
million,
increases
inrecruiting
expenses
of
$0.5
million,
increases
in
computer
software
maintenance
of
$0.8
million,
increases
in
professional
fees
of
$0.8
million,
partially
offset
bydecreases
in
asset
impairments
of
$0.3
million.General
and
administrative
expense
as
a
percentage
of
revenue
decreased
to
12%
in
2015
compared
to
15%
in
2014.General
and
administrative
expense
increased
in
2014
compared
to
2013,
primarily
due
to
an
impairment
charge
on
long-lived
assets
of
$0.8
million
in
2014,increases
in
compensation
and
benefits
of
$0.3
million
and
increases
in
computer
software
maintenance
of
$0.3
million.
Additionally,
2013
included
a
one-timecontribution
of
$0.4
million
to
an
educational
trust,
and
a
compensation
charge
of
$0.9
million
related
to
a
discretionary
cash
bonus
payment
to
employee
stockoption
holders.General
and
administrative
expense
as
a
percentage
of
revenue
decreased
to
15%
in
2014
compared
to
18%
in
2013.Product developmentProduct
development
expense
consists
primarily
of
compensation
and
other
employee-related
costs
(including
stock-based
compensation)
that
are
notcapitalized,
for
personnel
engaged
in
the
design,
development,
testing
and
enhancement
of
technology.
Product
development
expense
increased
in
2015
compared
to
2014
and
in
2014
compared
to
2013,
as
we
continued
to
invest
in
internal
development
of
newand
enhanced
features,
functionality
and
business
opportunities
that
we
believe
will
enable
us
to
better
and
more
fully
serve
consumers
and
lenders.
Productdevelopment
expenses
are
comprised
primarily
of
compensation
and
other
employee-related
costs.
We
increased
headcount
in
2015
compared
to
2014
and
in
2014compared
to
2013,
in
order
to
support
planned
product
launches.Litigation settlements and contingenciesLitigation
settlements
and
contingencies
consists
of
expenses
related
to
actual
or
anticipated
litigation
settlements,
in
addition
to
legal
fees
incurred
inconnection
with
various
patent
litigation
claims
we
are
pursuing.
During
2014,
we
participated
in
a
jury
trial
for
the
Zillow
litigation
described
in
Note
12
—Contingencies
in
the
notes
to
the
consolidated
financial
statementsincluded
elsewhere
in
this
report.
The
legal
expenses
associated
with
this
jury
trial
and
post-trial
motions
increased
our
litigation
settlements
and
contingenciesexpense
for
2014.
In
addition,
in
October
2014,
the
court
awarded
NexTag's
attorney
fees
and
costs
totaling
$2.3
million,
which
were
recorded
as
litigation
expensein
2014.
We
appealed
the
award
of
NexTag's
attorney
fees
and
costs
in
November
2014
and,
in
June
2015,
we
reached
a
settlement
agreement
with
NexTag
for$1.1
million.
During
the
year
ended
December
31,
2015,
we
recorded
$0.6
million
in
income
primarily
due
to
an
adjustment
in
the
reserve
for
NexTag
attorneyfees
and
costs
associated
with
this
matter,
partially
offset
by
legal
fees.
During
the
years
ended
December
31,
2014
and
2013,
we
recorded
$10.6
million
and
$9.0million,
respectively,
in
expenses.
These
expenses
were
due
primarily
to
legal
fees
incurred
in
connection
with
this
patent
litigation.29 Table of ContentsIncome tax expense Year Ended December 31, 2015
2014
2013
(in thousands, except percentages)Income
tax
benefit$22,973
$484
$453Effective tax rate(81.1)%
(49.8)%
(40.2)%For
2015,
the
effective
tax
rate
varied
from
the
statutory
rate
primarily
due
to
the
reversal
of
the
federal
and
partial
reversal
of
the
state
valuation
allowance
setup
in
prior
years
against
our
deferred
tax
assets,
partially
offset
by
state
taxes.For
2014
and
2013,
the
effective
tax
rates
varied
from
the
statutory
rate
primarily
due
to
state
taxes.Discontinued OperationsOn
June
6,
2012,
we
sold
substantially
all
of
the
operating
assets
of
our
LendingTree
Loans
business
for
approximately
$55.9
million
in
cash
to
Discover.
Ofthe
total
purchase
price,
$8.0
million
was
paid
prior
to
the
closing,
$37.9
million
was
paid
upon
the
closing
and
the
contingent
amount
of
$10.0
million
was
paidand
recognized
as
a
gain
from
sale
of
discontinued
operations
in
the
second
quarter
of
2013.Discover
generally
did
not
assume
liabilities
of
the
LendingTree
Loans
business
that
arose
before
the
closing
date,
except
for
certain
liabilities
directly
relatedto
assets
Discover
acquired.
Of
the
purchase
price
paid,
as
of
December
31,
2015
,
$4.0
million
is
being
held
in
escrow
in
accordance
with
the
agreement
withDiscover
for
certain
loan
loss
obligations
that
remain
with
us
following
the
sale.During
2015
,
2014
and
2013
,
(loss)
income
from
discontinued
operations
of
$(3.3)
million
,
$9.8
million
and
$4.6
million
,
respectively,
was
primarilyattributable
to
the
LendingTree
Loans
business.
In
2013,
the
results
of
discontinued
operations
were
primarily
due
to
a
pre-tax
gain
of
$10.0
million
for
anadditional
purchase
price
payment
made
on
the
first
anniversary
of
the
sale
of
the
business,
offset
by
costs
relating
to
the
ongoing
wind-down
of
the
business.
In2014,
results
of
discontinued
operations
were
primarily
due
to
income
from
an
adjustment
in
the
loan
loss
reserve
as
a
result
of
a
settlement
with
one
ofLendingTree
Loans'
secondary
market
purchasers,
partially
offset
by
costs
relating
to
the
ongoing
wind-down
of
the
business.
In
2015,
loss
from
discontinuedoperations
was
primarily
due
to
litigation
settlements
and
contingencies
and
legal
fees
associated
with
ongoing
legal
proceedings.Adjusted Earnings Before Interest, Taxes, Depreciation and AmortizationWe
report
adjusted
EBITDA
as
a
supplemental
measure
to
GAAP.
This
measure
is
the
primary
metric
by
which
we
evaluate
the
performance
of
ourbusinesses,
on
which
our
marketing
expenditures
and
internal
budgets
are
based
and
by
which
management
and
many
employees
are
compensated.
We
believe
thatinvestors
should
have
access
to
the
same
set
of
tools
that
we
use
in
analyzing
our
results.
This
non-GAAP
measure
should
be
considered
in
addition
to
resultsprepared
in
accordance
with
GAAP,
but
should
not
be
considered
a
substitute
for
or
superior
to
GAAP
results.
We
provide
and
encourage
investors
to
examine
thereconciling
adjustments
between
the
GAAP
and
non-GAAP
measures
discussed
below.Definition of Adjusted EBITDAWe
report
Adjusted
EBITDA
as
operating
income
or
loss
(which
excludes
interest
expense
and
taxes)
adjusted
to
exclude
amortization
of
intangibles
anddepreciation,
and
to
further
exclude
(1)
non-cash
compensation
expense,
(2)
non-cash
impairment
charges,
(3)
gain/loss
on
disposal
of
assets,
(4)
restructuring
andseverance
expenses,
(5)
litigation
settlements
and
contingencies
and
legal
fees
for
certain
patent
litigation,
(6)
adjustments
for
acquisitions
or
dispositions
and(7)
one-time
items.
Adjusted
EBITDA
has
certain
limitations
in
that
it
does
not
take
into
account
the
impact
to
our
statement
of
operations
of
certain
expenses,including
depreciation,
non-cash
compensation
and
acquisition-related
accounting.
We
endeavor
to
compensate
for
the
limitations
of
the
non-GAAP
measurespresented
by
also
providing
the
comparable
GAAP
measures
with
equal
or
greater
prominence
and
descriptions
of
the
reconciling
items,
including
quantifyingsuch
items,
to
derive
the
non-GAAP
measures.
These
non-GAAP
measures
may
not
be
comparable
to
similarly
titled
measures
used
by
other
companies.
One-Time ItemsAdjusted
EBITDA
is
adjusted
for
one-time
items,
if
applicable.
Items
are
considered
one-time
in
nature
if
they
are
non-recurring,
infrequent
or
unusual
andhave
not
occurred
in
the
past
two
years
or
are
not
expected
to
recur
in
the
next
two
years,
in
accordance
with
SEC
rules.
For
the
periods
presented
in
this
report,there
are
no
adjustments
for
one-time
items,
except
for
$0.130 Table of Contentsmillion
related
to
an
estimated
settlement
for
unclaimed
property
in
2015,
$0.9
million
related
to
a
discretionary
cash
bonus
payment
to
employee
stock
optionholders
in
2013
and
a
one-time
contribution
of
$0.4
million
to
an
educational
trust
in
2013.Non-Cash Expenses that are Excluded from Adjusted EBITDANon-cash
compensation
expense
consists
principally
of
expense
associated
with
grants
of
restricted
stock,
restricted
stock
units
and
stock
options.
Theseexpenses
are
not
paid
in
cash,
and
we
include
the
related
shares
in
our
calculations
of
fully
diluted
shares
outstanding.
Upon
settlement
of
restricted
stock
units,exercise
of
certain
stock
options
or
vesting
of
restricted
stock
awards,
the
awards
may
be
settled,
on
a
net
basis,
with
us
remitting
the
required
tax
withholdingamount
from
our
current
funds.Amortization
of
intangibles
are
non-cash
expenses
relating
primarily
to
intangible
assets
acquired
through
acquisitions.
At
the
time
of
an
acquisition,
theintangible
assets
of
the
acquired
company,
such
as
purchase
agreements,
technology
and
customer
relationships,
are
valued
and
amortized
over
their
estimatedlives.The
following
table
is
a
reconciliation
of
Adjusted
EBITDA
to
net
income
(loss)
from
continuing
operations.
Year Ended December 31, 2015
2014
2013
(in thousands)Adjusted EBITDA$40,818
$21,827
$18,717Adjustments
to
reconcile
to
net
income
(loss)
from
continuing
operations:
Amortization
of
intangibles(149)
(136)
(147)Depreciation(3,008)
(3,245)
(3,501)Restructuring
and
severance(422)
(373)
(159)Loss
on
disposal
of
assets(748)
(282)
(165)Impairment
of
long-lived
assets—
(805)
—Non-cash
compensation(8,370)
(7,277)
(5,627)Estimated
settlement
for
unclaimed
property(134)
—
—Acquisition
expense(84)
(60)
—Discretionary
cash
bonus—
—
(920)Trust
contribution—
—
(350)Litigation
settlements
and
contingencies611
(10,618)
(8,955)Interest
expense(171)
(2)
(19)Income
tax
benefit22,973
484
453Net income (loss) from continuing operations$51,316
$(487)
$(673)Financial Position, Liquidity and Capital ResourcesGeneralAs
of
December
31,
2015
,
we
had
$207.0
million
of
cash
and
cash
equivalents
and
$6.5
million
of
restricted
cash
and
cash
equivalents,
compared
to
$86.2million
of
cash
and
cash
equivalents
and
$18.7
million
of
restricted
cash
and
cash
equivalents
as
of
December
31,
2014
.
In
February
2016,
$2.5
million
in
escrowfor
the
surety
bonds
was
released
due
to
a
reduction
in
collateral
requirements.In
November
2015,
the
Company
completed
an
equity
offering
of
852,500
shares
of
its
common
stock.
The
Company
received
net
proceeds
of
$91.5
million,after
deducting
approximately
$5.9
million
in
underwriting
discounts
and
$0.7
million
in
offering
expenses.
The
Company
expects
to
use
the
net
proceeds
of
theoffering
for
general
corporate
purposes,
including
but
not
limited
to,
working
capital
and
potential
acquisitions.We
expect
our
cash
and
cash
equivalents
and
cash
flows
from
operations
to
be
sufficient
to
fund
our
operating
needs
for
the
next
twelve
months
and
beyond.Our
revolving
credit
facility
described
below
is
an
additional
potential
source
of
liquidity.Senior Secured Revolving Credit FacilityOn
October
22,
2015,
we
established
a
$125.0
million
five-year
Senior
Secured
Revolving
Credit
Facility
which
matures
on
October
22,
2020
(the
"RevolvingCredit
Facility").
The
proceeds
of
the
Revolving
Credit
Facility
can
be
used
to
finance
working31 Table of Contentscapital
needs,
capital
expenditures
and
general
corporate
purposes,
including
to
finance
permitted
acquisitions.
As
of
February
19,
2016
,
we
do
not
have
anyborrowings
under
the
Revolving
Credit
Facility.For
additional
information
on
the
Revolving
Credit
Facility,
see Note
10
—Revolving
Credit
Facility
in
the
notes
to
the
consolidated
financial
statementsincluded
elsewhere
in
this
report.Cash Flows from Continuing OperationsOur
cash
flows
attributable
to
continuing
operations
are
as
follows: Year Ended December 31, 2015
2014
2013 (in thousands)Net
cash
provided
by
operating
activities$32,584
$9,075
$10,238Net
cash
provided
by
investing
activities4,901
2,704
647Net
cash
provided
by
(used
in)
financing
activities86,909
(7,651)
(5,983)Cash Flows from Operating ActivitiesOur
largest
source
of
cash
provided
by
our
operating
activities
is
revenues
generated
by
our
mortgage
and
non-mortgage
products.
Our
primary
uses
of
cashfrom
our
operating
activities
include
advertising
and
promotional
payments
and
fees
paid
for
consumer
inquiries.
In
addition,
our
uses
of
cash
from
operatingactivities
include
compensation
and
other
employee-related
costs,
other
general
corporate
expenditures,
litigation
settlements
and
contingencies,
and
income
taxes.Net
cash
provided
by
operating
activities
attributable
to
continuing
operations
increased
in
2015
from
2014
primarily
due
to
an
increase
in
revenue,
partiallyoffset
by
an
increase
in
cost
of
revenue
and
selling
and
marketing.
Additionally,
there
was
a
decrease
in
payments
related
to
litigation
settlements
andcontingencies
and
a
net
increase
in
cash
from
changes
in
working
capital
primarily
driven
by
changes
in
accounts
receivable
and
accounts
payable
and
othercurrent
liabilities
and
income
taxes
payable.Net
cash
provided
by
operating
activities
attributable
to
continuing
operations
decreased
in
2014
from
2013
primarily
due
to
negative
working
capitalprimarily
driven
by
changes
in
accounts
payable
and
other
current
liabilities.Cash Flows from Investing ActivitiesNet
cash
provided
by
investing
activities
attributable
to
continuing
operations
in
2015
of
$4.9
million
consisted
primarily
of
$12.2
million
in
the
release
ofrestricted
cash
previously
held
in
escrow
in
connection
with
the
sale
of
LendingTree
Loans,
offset
by
capital
expenditures
of
$7.2
million
primarily
related
tointernally
developed
software.Net
cash
provided
by
investing
activities
attributable
to
continuing
operations
in
2014
of
$2.7
million
consisted
primarily
of
capital
expenditures
of
$3.9million
and
$0.7
million
in
payments
made
to
acquire
a
business,
which
was
more
than
offset
by
a
decrease
in
restricted
cash
of
$7.3
million
.
In
2014,
we
reachedand
executed
a
settlement
with
the
disputing
party
on
the
earnout
related
to
an
acquisition,
upon
which
$2.0
million
of
cash
previously
held
in
escrow
was
released.Additionally,
in
2014,
we
reached
and
executed
a
settlement
with
one
of
our
LendingTree
Loans'
secondary
market
purchasers
related
to
loan
loss
obligations,upon
which
$2.0
million
of
cash
previously
held
in
escrow
was
released.
Finally,
in
2014,
we
reached
and
executed
a
settlement
with
another
secondary
marketpurchaser
related
to
loan
loss
obligations,
upon
which
$3.1
million
of
cash
previously
held
by
such
secondary
market
purchaser
was
paid
out.Net
cash
provided
by
investing
activities
attributable
to
continuing
operations
in
2013
of
$0.6
million
consisted
primarily
of
capital
expenditures
of
$2.8million
,
which
was
more
than
offset
by
a
decrease
in
restricted
cash
of
$3.4
million
.
The
decrease
in
restricted
cash
is
associated
with
a
reduction
in
the
collateralrequirement
for
certain
of
our
surety
bonds,
which
are
required
by
the
various
states
in
which
we
currently
operate
or
previously
operated.
As
a
result,
$4.0
millionof
cash
previously
held
in
escrow
was
released.Cash Flows from Financing ActivitiesNet
cash
provided
by
financing
activities
attributable
to
continuing
operations
in
2015
of
$86.9
million
consisted
primarily
of
net
proceeds
from
the
November2015
equity
offering
of
$91.5
million
and
$4.6
million
in
excess
tax
benefits
from
stock-based
award
activity,
offset
by
$7.6
million
in
withholding
taxes
paid
byus
upon
the
surrender
of
shares
to
satisfy
obligations
on
equity
awards,
$1.2
million
for
the
payment
of
debt
issuance
costs,
the
repurchase
of
our
stock
of
$0.2million
and
$0.1
million
in
dividend
payments.32 Table of ContentsNet
cash
used
in
financing
activities
attributable
to
continuing
operations
in
2014
of
$7.7
million
consisted
primarily
of
$4.8
million
in
withholding
taxes
paidby
us
upon
the
surrender
of
shares
to
satisfy
obligations
on
equity
awards
and
the
repurchase
of
our
stock
of
$2.6
million
.Net
cash
used
in
financing
activities
attributable
to
continuing
operations
in
2013
of
$6.0
million
consisted
primarily
of
$2.8
million
in
withholding
taxes
paidby
us
upon
the
surrender
of
shares
to
satisfy
obligations
on
equity
awards
and
the
repurchase
of
our
stock
of
$3.3
million.Off-Balance Sheet ArrangementsWe
have
no
off-balance
sheet
arrangements
other
than
our
operating
lease
obligations
and
funding
commitments
pursuant
to
our
surety
bonds.
See Note
11
—Commitments
to
the
consolidated
financial
statements
included
elsewhere
in
the
report
for
further
details.Summary of Contractual ObligationsThe
following
table
sets
forth
our
contractual
obligations
and
commercial
commitments
as
of
December
31,
2015
.
Payments Due By Period as of December 31, 2015Contractual Obligations (a)TotalLess Than1 Year1-3 Years3-5 YearsMore Than5 YearsOperating
lease
obligations
(b)$6,348$1,668$2,600$2,080$—Total contractual obligations$6,348$1,668$2,600$2,080$—(a)Excludes
potential
obligations
under
surety
and
litigation
bonds
and
the
indemnification
obligations,
repurchase
obligations
and
premium
repaymentobligations
for
which
our
HLC
subsidiary
continues
to
be
liable
following
the
sale
of
substantially
all
of
the
operating
assets
of
our
LendingTree
Loansbusiness
in
the
second
quarter
of
2012.(b)Our
operating
lease
obligations
are
associated
with
office
space
in
both
our
continuing
and
discontinued
operations.Critical Accounting Policies and EstimatesThe
following
disclosure
is
provided
to
supplement
the
description
of
our
accounting
policies
contained
in
Note
2
—Significant
Accounting
Policies
to
theconsolidated
financial
statements
included
elsewhere
in
this
report
in
regard
to
significant
areas
of
judgment.
This
disclosure
includes
accounting
policies
related
toboth
continuing
operations
and
discontinued
operations.
Management
is
required
to
make
certain
estimates
and
assumptions
during
the
preparation
of
theconsolidated
financial
statements
in
accordance
with
generally
accepted
accounting
principles.
These
estimates
and
assumptions
impact
the
reported
amount
ofassets
and
liabilities
and
disclosures
of
contingent
assets
and
liabilities
as
of
the
date
of
the
consolidated
financial
statements.
They
also
impact
the
reported
amountof
net
earnings
during
any
period.
Actual
results
could
differ
from
those
estimates.
Because
of
the
size
of
the
financial
statement
elements
to
which
they
relate,some
of
our
accounting
policies
and
estimates
have
a
more
significant
impact
on
our
consolidated
financial
statements
than
others.
A
discussion
of
some
of
ourmore
significant
accounting
policies
and
estimates
follows.Loan Loss ObligationsWe
make
estimates
as
to
our
exposure
related
to
our
obligation
to
repurchase
loans
previously
sold
to
investors
or
to
repay
premiums
paid
by
investors
inpurchasing
loans,
and
reserve
for
such
contingencies
accordingly.
Such
payments
to
investors
may
be
required
in
cases
where
underwriting
deficiencies,
borrowerfraud,
documentation
defects,
early
payment
defaults
and
early
loan
payoffs
occurred.Our
HLC
subsidiary
continues
to
be
liable
for
certain
indemnification
obligations,
repurchase
obligations
and
premium
repayment
obligations
following
thesale
of
substantially
all
of
the
operating
assets
of
our
LendingTree
Loans
business
on
June
6,
2012.
Approximately
$4.0
million
is
being
held
in
escrow
pendingresolution
of
certain
of
these
contingent
liabilities.
We
have
been
negotiating
with
certain
secondary
market
purchasers
to
settle
any
existing
and
future
contingentliabilities,
but
we
may
not
be
able
to
complete
such
negotiations
on
acceptable
terms,
or
at
all.
Because
we
do
not
service
the
loans
LendingTree
Loans
sold,
we
donot
maintain
nor
have
access
to
the
current
balances
and
loan
performance
data
with
respect
to
the
individual
loans
previously
sold
to
investors.
Accordingly,
weare
unable
to
determine,
with
precision,
our
maximum
exposure
for
breaches
of
the
representations
and
warranties
LendingTree
Loans
made
to
the
investors
thatpurchased
such
loans.We
estimate
the
liability
for
loan
losses
using
a
settlement
discount
framework.
This
approach
estimates
the
lifetime
losses
on
the
population
of
remainingloans
originated
and
sold
by
LendingTree
Loans
using
actual
defaults
for
loans
with
similar33 Table of Contentscharacteristics
and
projected
future
defaults.
It
also
considers
the
likelihood
of
claims
expected
due
to
alleged
breaches
of
representations
and
warranties
made
byLendingTree
Loans
and
the
percentage
of
those
claims
investors
estimate
LendingTree
Loans
may
agree
to
repurchase.
We
then
apply
a
settlement
discount
factorto
the
result
of
the
foregoing
to
reflect
publicly-
announced
bulk
settlements
for
similar
loan
types
and
vintages,
our
own
settlement
experience,
as
well
asLendingTree
Loans'
non-operating
status,
in
order
to
estimate
a
range
of
the
potential
obligation.
Changes
to
any
one
of
these
factors
could
significantly
impact
theestimate
of
the
liability
and
could
have
a
material
and
adverse
impact
on
our
results
of
operations
for
any
particular
period.We
have
considered
both
objective
and
subjective
factors
in
our
estimation
process,
but
given
current
general
industry
trends
in
mortgage
loans
as
well
ashousing
prices,
market
expectations
and
actual
losses
related
to
LendingTree
Loans'
obligations
could
vary
significantly
from
the
obligation
recorded
as
ofDecember
31,
2015
of
$8.1
million
or
the
range
of
remaining
loan
losses
of
$5.7
million
to
$10.3
million.
See Note
16
—Discontinued
Operations—LendingTreeLoans—Loan
Loss
Obligations
to
the
consolidated
financial
statements
included
elsewhere
in
this
report
for
additional
information
on
the
loan
loss
reserve.Income TaxesEstimates
of
deferred
income
taxes
and
the
significant
items
giving
rise
to
the
deferred
assets
and
liabilities
are
shown
in
Note
9
—Income
Taxes
to
theconsolidated
financial
statements
included
elsewhere
in
this
report,
and
reflect
management's
assessment
of
actual
future
taxes
to
be
paid
on
items
reflected
in
theconsolidated
financial
statements,
giving
consideration
to
both
timing
and
the
probability
of
realization.
Actual
income
taxes
could
vary
from
these
estimates
dueto
future
changes
in
income
tax
law,
state
income
tax
apportionment
or
the
outcome
of
any
review
of
our
tax
returns
by
the
IRS,
as
well
as
actual
operating
resultsthat
may
vary
significantly
from
anticipated
results.We
also
recognize
liabilities
for
uncertain
tax
positions
based
on
the
two-step
process
prescribed
by
the
accounting
guidance
for
uncertainty
in
income
taxes.The
first
step
is
to
evaluate
the
tax
position
for
recognition
by
determining
if
the
weight
of
available
evidence
indicates
it
is
more
likely
than
not
that
the
positionwill
be
sustained
on
audit,
including
resolution
of
related
appeals
or
litigation
processes,
if
any.
The
second
step
is
to
measure
the
tax
benefit
as
the
largest
amountthat
is
more
than
50%
likely
of
being
realized
upon
ultimate
settlement.
This
measurement
step
is
inherently
difficult
and
requires
subjective
estimations
of
suchamounts
to
determine
the
probability
of
various
possible
outcomes.
We
consider
many
factors
when
evaluating
and
estimating
our
tax
positions
and
tax
benefits,which
may
require
periodic
adjustments
and
which
may
not
accurately
anticipate
actual
outcomes.A
valuation
allowance
is
provided
on
deferred
tax
assets
if
it
is
determined
that
it
is
"more likely than not" that
the
deferred
tax
asset
will
not
be
realized.In
the
fourth
quarter
of
2015,
we
concluded,
based
upon
all
available
evidence,
it
was
more
likely
than
not
we
would
have
sufficient
future
taxable
income
torealize
the
majority
of
our
net
deferred
tax
assets.
As
a
result,
we
released
the
majority
of
the
valuation
allowance
in
2015.
We
significantly
improved
ouroperating
performance
in
2015,
emerged
from
cumulative
losses
in
recent
years
to
a
cumulative
profit
position
and
project
taxable
income
in
future
years.
Whilewe
believe
the
assumptions
included
in
our
projections
of
future
taxable
income
are
reasonable,
if
the
actual
results
vary
from
expected
results
due
to
unforeseenchanges
in
the
economy
or
mortgage
industry,
or
other
factors,
we
may
need
to
make
future
adjustments
to
the
valuation
allowance
for
all,
or
a
portion,
of
the
netdeferred
tax
assets.
At
December
31,
2015,
we
recorded
a
partial
valuation
allowance
of
$2.3
million
primarily
related
to
state
net
operating
losses,
which
we
donot
expect
to
be
able
to
utilize
prior
to
expiration.
At
December
31,
2014,
we
had
recorded
a
full
valuation
allowance
of
$40.1
million
against
our
deferred
taxassets.Stock-Based CompensationThe
forms
of
stock-based
awards
granted
to
our
employees
are
principally
restricted
stock
units
("RSUs"),
restricted
stock
and
stock
options.
The
value
ofRSU
and
restricted
stock
awards
is
measured
at
their
grant
dates
as
the
fair
value
of
common
stock
and
amortized
ratably
as
non-cash
compensation
expense
overthe
vesting
term.
The
value
of
stock
options
issued,
as
discussed
in
Note
8
—Stock-Based
Compensation
to
the
consolidated
financial
statements
includedelsewhere
in
this
report,
is
estimated
using
a
Black-Scholes
option
pricing
model.
If
an
award
is
modified,
we
determine
if
the
modification
requires
a
newcalculation
of
fair
value
or
change
in
the
vesting
term
of
the
award.As
of
December
31,
2015
,
there
was
approximately
$8.2
million
,
$7.5
million
and
$1.0
million
of
unrecognized
compensation
cost,
net
of
estimatedforfeitures,
related
to
stock
options,
RSUs
and
restricted
stock,
respectively.
These
costs
are
expected
to
be
recognized
over
a
weighted-average
period
ofapproximately
2.0
years
for
stock
options,
2.0
years
for
RSUs
and
1.0
year
for
restricted
stock.Recoverability of Long-Lived AssetsWe
review
the
carrying
value
of
all
long-lived
assets,
primarily
property
and
equipment,
and
definite-lived
intangible
assets
for
impairment
whenever
eventsor
changes
in
circumstances
indicate
that
the
carrying
value
of
an
asset
may
be
impaired.34 Table of ContentsImpairment
is
considered
to
have
occurred
whenever
the
carrying
value
of
a
long-lived
asset
cannot
be
recovered
from
cash
flows
that
are
expected
to
result
fromthe
use
and
eventual
disposition
of
the
asset.
This
recoverability
test
requires
us
to
make
assumptions
and
judgments
related
to
factors
used
in
a
calculation
ofundiscounted
cash
flows,
including,
but
not
limited
to,
management’s
expectations
for
future
operations
and
projected
cash
flows.
The
key
assumptions
used
in
thiscalculation
include
Adjusted
EBITDA,
the
remaining
useful
lives
of
the
primary
cash
flow
generating
asset
in
the
asset
group
and,
to
a
lesser
extent,
the
deductionof
capital
expenditures
and
taxes
paid
in
cash
to
arrive
at
net
cash
flows.During
the
fourth
quarter
of
2014,
we
lost
key
customers
and
experienced
a
decline
in
revenue
for
a
certain
product
included
within
the
Education
business.Accordingly,
in
early
2015,
we
amended
our
strategic
course
for
this
product,
resulting
in
a
reduction
in
anticipated
future
cash
flows.
At
December
31,
2014,
wereviewed
the
long-lived
assets
associated
with
this
product
for
recoverability,
resulting
in
an
impairment
charge
to
customer
lists
and
internally
developed
softwareof
approximately
$0.8
million.
The
fair
value
of
the
long-lived
assets
was
determined
using
a
discounted
cash
flow
model.
The
impairment
charge
is
included
ingeneral
and
administrative
expense
on
the
accompanying
consolidated
statement
of
operations
and
comprehensive
income.The
value
of
long-lived
assets
subject
to
assessment
for
impairment
is
$10.3
million
at
December
31,
2015
.New Accounting PronouncementsSee Note
2
—Significant
Accounting
Policies
to
the
consolidated
financial
statements
included
elsewhere
in
this
report
for
a
description
of
recent
accountingpronouncements.ITEM 7A. Quantitative and Qualitative Disclosures about Market RiskOther
than
our
Revolving
Credit
Facility,
which
currently
has
no
borrowings
outstanding,
we
do
not
have
any
financial
instruments
that
are
exposed
tosignificant
market
risk.
We
maintain
our
cash
and
cash
equivalents
in
short-term,
highly
liquid
money
market
investments.
A
hypothetical
100-basis
increase
ordecrease
in
market
interest
rates
would
not
have
a
material
impact
on
the
fair
value
of
our
cash
equivalents
securities,
or
our
earnings
on
such
cash
equivalents,
butwould
have
an
effect
on
the
interest
paid
on
borrowings
under
the
Revolving
Credit
Facility,
if
any.Fluctuations
in
interest
rates
affect
consumer
demand
for
new
mortgages
and
the
level
of
refinancing
activity
which,
in
turn,
affects
lender
demand
formortgage
leads.
Typically,
a
decline
in
mortgage
interest
rates
will
lead
to
reduced
lender
demand
for
leads
from
third-party
sources,
as
there
are
more
consumersin
the
marketplace
seeking
refinancings
and,
accordingly,
lenders
receive
more
organic
lead
volume.
Conversely,
an
increase
in
mortgage
interest
rates
willtypically
lead
to
an
increase
in
lender
demand
for
third-party
leads,
as
there
are
fewer
consumers
in
the
marketplace
and,
accordingly,
the
supply
of
organicmortgage
lead
volume
decreases.35 Table of ContentsITEM 8. Financial Statements and Supplementary DataINDEX TO FINANCIAL STATEMENTS PageNumberLENDINGTREE,
INC.
AND
SUBSIDIARIES:Report of Independent Registered Public Accounting Firm37
CONSOLIDATED
FINANCIAL
STATEMENTS:
Consolidated Statements of Operations and Comprehensive Income38
Consolidated Balance Sheets39
Consolidated Statements of Shareholders' Equity40
Consolidated Statements of Cash Flows41
Notes to Consolidated Financial Statements4236 Table of ContentsReport of Independent Registered Public Accounting FirmTo
the
Board
of
Directors
and
Shareholders
of
LendingTree,
Inc.In
our
opinion,
the
accompanying
consolidated
balance
sheets
and
the
related
consolidated
statements
of
operations
and
comprehensive
income,
shareholders’equity
and
cash
flows
present
fairly,
in
all
material
respects,
the
financial
position
of
LendingTree,
Inc.
and
its
subsidiaries
at
December
31,
2015
and
December31,
2014,
and
the
results
of
their
operations
and
their
cash
flows
for
each
of
the
three
years
in
the
period
ended
December
31,
2015
in
conformity
with
accountingprinciples
generally
accepted
in
the
United
States
of
America.
Also
in
our
opinion,
the
Company
maintained,
in
all
material
respects,
effective
internal
control
overfinancial
reporting
as
of
December
31,
2015,
based
on
criteria
established
in
Internal Control - Integrated Framework (2013)
issued
by
the
Committee
ofSponsoring
Organizations
of
the
Treadway
Commission
(COSO).
The
Company's
management
is
responsible
for
these
financial
statements,
for
maintainingeffective
internal
control
over
financial
reporting
and
for
its
assessment
of
the
effectiveness
of
internal
control
over
financial
reporting,
included
in
Management'sReport
on
Internal
Control
over
Financial
Reporting
appearing
under
item
9A.
Our
responsibility
is
to
express
opinions
on
these
financial
statements
and
on
theCompany's
internal
control
over
financial
reporting
based
on
our
integrated
audits.
We
conducted
our
audits
in
accordance
with
the
standards
of
the
PublicCompany
Accounting
Oversight
Board
(United
States).
Those
standards
require
that
we
plan
and
perform
the
audits
to
obtain
reasonable
assurance
about
whetherthe
financial
statements
are
free
of
material
misstatement
and
whether
effective
internal
control
over
financial
reporting
was
maintained
in
all
material
respects.Our
audits
of
the
financial
statements
included
examining,
on
a
test
basis,
evidence
supporting
the
amounts
and
disclosures
in
the
financial
statements,
assessingthe
accounting
principles
used
and
significant
estimates
made
by
management,
and
evaluating
the
overall
financial
statement
presentation.
Our
audit
of
internalcontrol
over
financial
reporting
included
obtaining
an
understanding
of
internal
control
over
financial
reporting,
assessing
the
risk
that
a
material
weakness
exists,and
testing
and
evaluating
the
design
and
operating
effectiveness
of
internal
control
based
on
the
assessed
risk.
Our
audits
also
included
performing
such
otherprocedures
as
we
considered
necessary
in
the
circumstances.
We
believe
that
our
audits
provide
a
reasonable
basis
for
our
opinions.A
company’s
internal
control
over
financial
reporting
is
a
process
designed
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
andthe
preparation
of
financial
statements
for
external
purposes
in
accordance
with
generally
accepted
accounting
principles.
A
company’s
internal
control
overfinancial
reporting
includes
those
policies
and
procedures
that
(i)
pertain
to
the
maintenance
of
records
that,
in
reasonable
detail,
accurately
and
fairly
reflect
thetransactions
and
dispositions
of
the
assets
of
the
company;
(ii)
provide
reasonable
assurance
that
transactions
are
recorded
as
necessary
to
permit
preparation
offinancial
statements
in
accordance
with
generally
accepted
accounting
principles,
and
that
receipts
and
expenditures
of
the
company
are
being
made
only
inaccordance
with
authorizations
of
management
and
directors
of
the
company;
and
(iii)
provide
reasonable
assurance
regarding
prevention
or
timely
detection
ofunauthorized
acquisition,
use,
or
disposition
of
the
company’s
assets
that
could
have
a
material
effect
on
the
financial
statements.Because
of
its
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements.
Also,
projections
of
any
evaluation
ofeffectiveness
to
future
periods
are
subject
to
the
risk
that
controls
may
become
inadequate
because
of
changes
in
conditions,
or
that
the
degree
of
compliance
withthe
policies
or
procedures
may
deteriorate./s/
PricewaterhouseCoopers
LLPCharlotte,
North
CarolinaMarch
1,
201637 Table of ContentsLENDINGTREE, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Year Ended December 31, 2015
2014
2013 (in thousands, except per share amounts)Revenue$254,216$167,350
$139,240Costs
and
expenses:
Cost
of
revenue
(exclusive of depreciation shown separately below)9,3707,903
6,542Selling
and
marketing
expense172,849112,704
91,121General
and
administrative
expense30,03025,883
24,658Product
development10,4857,457
5,264Depreciation3,0083,245
3,501Amortization
of
intangibles149136
147Restructuring
and
severance422373
159Litigation
settlements
and
contingencies(611)10,618
8,955Total costs and expenses225,702168,319
140,347Operating income (loss)28,514(969)
(1,107)Other
income
(expense),
net:
Interest
expense(171)(2)
(19)Income (loss) before income taxes28,343(971)
(1,126)Income
tax
benefit22,973484
453Net income (loss) from continuing operations51,316(487)
(673)Discontinued
operations:
Gain
from
sale
of
discontinued
operations,
net
of
tax——
9,561(Loss)
income
from
discontinued
operations,
net
of
tax(3,269)9,849
(4,941)(Loss) income from discontinued operations(3,269)9,849
4,620Net income and comprehensive income$48,047$9,362
$3,947
Weighted average shares outstanding:
Basic11,51611,188
11,035Diluted12,54111,188
11,035Income (loss) per share from continuing operations:
Basic$4.46$(0.04)
$(0.06)Diluted$4.09$(0.04)
$(0.06)(Loss) income per share from discontinued operations:
Basic$(0.28)$0.88
$0.42Diluted$(0.26)$0.88
$0.42 Net income per share:
Basic$4.17$0.84
$0.36Diluted$3.83$0.84
$0.36The
accompanying
notes
to
consolidated
financial
statements
are
an
integral
part
of
these
statements.38 Table of ContentsLENDINGTREE, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSDecember 31, 2015December 31, 2014 (in thousands, except par valueand share amounts)ASSETS:
Cash
and
cash
equivalents$206,975$86,212Restricted
cash
and
cash
equivalents6,54118,716Accounts
receivable
(net
of
allowance
of
$606
and
$349,
respectively)29,87313,611Prepaid
and
other
current
assets2,085931Current
assets
of
discontinued
operations110189Total current assets245,584119,659Property
and
equipment,
net9,4155,257Goodwill3,6323,632Intangible
assets,
net10,99211,141Deferred
income
tax
assets20,977
—Other
non-current
assets1,039102Non-current
assets
of
discontinued
operations4,142100Total assets$295,781$139,891LIABILITIES:
Accounts
payable,
trade$5,741$1,060Accrued
expenses
and
other
current
liabilities34,88525,521Current
liabilities
of
discontinued
operations
(Note
16)13,40112,055Total current liabilities54,02738,636Other
non-current
liabilities586—Deferred
income
tax
liabilities—4,738Non-current
liabilities
of
discontinued
operations26151Total liabilities54,63943,525Commitments
and
contingencies
(Notes
11
and
12)SHAREHOLDERS' EQUITY:
Preferred
stock
$.01
par
value;
5,000,000
shares
authorized;
none
issued
or
outstanding——Common
stock
$.01
par
value;
50,000,000
shares
authorized;
13,865,620
and
12,854,517
shares
issued,respectively,
and
12,392,093
and
11,386,240
shares
outstanding,
respectively139129Additional
paid-in
capital1,006,688909,751Accumulated
deficit(750,124)(798,171)Treasury
stock
1,473,527
and
1,468,277
shares,
respectively(15,561)(15,343)Total shareholders' equity241,14296,366Total liabilities and shareholders' equity$295,781$139,891
The
accompanying
notes
to
consolidated
financial
statements
are
an
integral
part
of
these
statements.39 Table of ContentsLENDINGTREE, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Common Stock
Treasury Stock Total
Numberof Shares
Amount
AdditionalPaid-inCapital
AccumulatedDeficit
Numberof Shares
Amount (in thousands)Balance as of December 31, 2012$82,92212,195$122$903,692$(811,480)1,188$(9,412)Net
income
and
comprehensive
income3,947
—
—
—
3,947
—
—Non-cash
compensation5,629——5,629———Purchase
of
treasury
stock(3,321)————181(3,321)Dividends637——637———Issuance
of
common
stock
for
stockoptions,
restricted
stock
awards
andrestricted
stock
units,
net
of
withholdingtaxes(2,806)4254(2,810)———Balance as of December 31, 2013$87,00812,620$126$907,148$(807,533)1,369$(12,733)Net
income
and
comprehensive
income9,362
—
—
—
9,362
—
—Non-cash
compensation7,446——7,446———Purchase
of
treasury
stock(2,610)————99(2,610)Dividends(28)——(28)———Issuance
of
common
stock
for
stockoptions,
restricted
stock
awards
andrestricted
stock
units,
net
of
withholdingtaxes(4,812)2353(4,815)———Balance as of December 31, 2014$96,36612,855$129$909,751$(798,171)1,468$(15,343)Net
income
and
comprehensive
income48,047
—
—
—
48,047
—
—Non-cash
compensation8,508——8,508———Purchase
of
treasury
stock(218)————6(218)Dividends(11)——(11)———Issuance
of
common
stock
for
stockoptions,
restricted
stock
awards
andrestricted
stock
units,
net
of
withholdingtaxes(7,613)1581(7,614)———Tax
benefit
from
stock-based
awardactivity4,601
—
—
4,601
—
—
—Proceeds
from
equity
offering,
net
ofoffering
costs91,462
853
9
91,453
—
—
—Balance as of December 31, 2015$241,14213,866$139$1,006,688$(750,124)1,474$(15,561)
The
accompanying
notes
to
consolidated
financial
statements
are
an
integral
part
of
these
statements.40 Table of ContentsLENDINGTREE, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
201520142013
(in thousands)Cash
flows
from
operating
activities
attributable
to
continuing
operations:
Net income and comprehensive income$48,047$9,362$3,947Less:
Loss
(income)
from
discontinued
operations,
net
of
tax3,269(9,849)(4,620)Income
(loss)
from
continuing
operations51,316(487)(673)Adjustments
to
reconcile
income
(loss)
from
continuing
operations
to
net
cash
provided
by
operating
activities
attributable
tocontinuing
operations:
Loss
on
disposal
of
fixed
assets748282165Impairment
of
long-lived
assets—805—Amortization
of
intangibles149136147Depreciation3,0083,2453,501Non-cash
compensation
expense8,5087,4465,627Deferred
income
taxes(29,969)10664Excess
tax
benefit
from
stock-based
award
activity(4,601)——Bad
debt
expense337206248Amortization
of
debt
issuance
costs47——Changes
in
current
assets
and
liabilities:
Accounts
receivable(16,598)(1,228)(3,614)Prepaid
and
other
current
assets(874)(84)(170)Accounts
payable,
accrued
expenses
and
other
current
liabilities13,689(1,935)6,157Income
taxes
payable6,247740(610)Other,
net577(157)(604)Net cash provided by operating activities attributable to continuing operations32,5849,07510,238Cash
flows
from
investing
activities
attributable
to
continuing
operations:
Capital
expenditures(7,237)(3,856)(2,750)Acquisition
of
a
business(37)(740)—Decrease
in
restricted
cash12,1757,3003,397Net cash provided by investing activities attributable to continuing operations4,9012,704647Cash
flows
from
financing
activities
attributable
to
continuing
operations:
Payments
related
to
net-share
settlement
of
stock
-based
compensation,
net
of
proceeds
from
exercise
of
stock
options(7,612)(4,812)(2,806)Proceeds
from
equity
offering,
net
of
offering
costs91,484——Payment
of
debt
issuance
costs(1,215)——Excess
tax
benefit
from
stock-based
award
activity4,601——Purchase
of
treasury
stock(218)(2,610)(3,321)Dividends(131)(229)144Net cash provided by (used in) financing activities attributable to continuing operations86,909(7,651)(5,983)Total cash provided by continuing operations124,3944,1284,902Discontinued
operations:Net
cash
used
in
operating
activities
attributable
to
discontinued
operations(3,631)(9,583)(3,425)Net
cash
provided
by
investing
activities
attributable
to
discontinued
operations——10,000Total cash (used in) provided by discontinued operations(3,631)(9,583)6,575Net increase (decrease) in cash and cash equivalents120,763(5,455)11,477Cash
and
cash
equivalents
at
beginning
of
period86,21291,66780,190Cash and cash equivalents at end of period$206,975$86,212$91,667Supplemental cash flow information:Interest
paid$60$2$19Income
tax
payments7033654Income
tax
refunds(96)(779)(4)
The
accompanying
notes
to
consolidated
financial
statements
are
an
integral
part
of
these
statements.41 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 1—ORGANIZATIONCompany OverviewLendingTree,
Inc.
("LendingTree"
or
the
"Company"),
formerly
known
as
Tree.com,
Inc.,
is
the
parent
of
LendingTree,
LLC
and
several
companies
owned
byLendingTree,
LLC.LendingTree
operates
what
it
believes
to
be
the
leading
online
marketplace
for
consumers
seeking
a
broad
array
of
loan
types
and
other
credit-based
offerings.The
Company
offers
consumers
tools
and
resources,
including
free
credit
scores,
that
help
them
to
comparison-shop
for
mortgage
loans,
home
equity,
reversemortgage,
auto
loans,
credit
cards,
personal
loans,
student
loans
and
small
business
loans
and
other
related
offerings.
The
Company
primarily
seeks
to
match
in-market
consumers
with
multiple
lenders
on
its
marketplace
who
can
provide
them
with
competing
quotes
for
the
loans
or
credit-based
offerings
they
are
seeking.The
Company
also
serves
as
a
valued
partner
to
lenders
seeking
an
efficient,
scalable
and
flexible
source
of
customer
acquisition
with
directly
measurable
benefits,by
matching
the
consumer
loan
inquiries
it
generates
with
these
lenders.The
consolidated
financial
statements
include
the
accounts
of
LendingTree
and
all
its
wholly-owned
entities.
Intercompany
transactions
and
accounts
havebeen
eliminated.Certain
amounts
from
the
prior
consolidated
financial
statements
have
been
reclassified
to
conform
to
the
presentation
adopted
in
the
current
year.Spin-OffOn
August
20,
2008,
LendingTree
was
spun
off
from
its
parent
company,
IAC/InterActiveCorp
("IAC"),
into
a
separate
publicly-traded
company.
Inconnection
with
the
spin-off,
LendingTree
was
incorporated
as
a
Delaware
corporation
in
April
2008.Discontinued OperationsThe
businesses
of
RealEstate.com,
REALTORS®
(which
represent
the
former
Real
Estate
segment)
and
LendingTree
Loans
are
presented
as
discontinuedoperations
in
the
accompanying
consolidated
balance
sheets,
consolidated
statements
of
operations
and
comprehensive
income
and
consolidated
cash
flows
for
allperiods
presented.
The
notes
accompanying
these
consolidated
financial
statements
reflect
the
Company's
continuing
operations
and,
unless
otherwise
noted,exclude
information
related
to
the
discontinued
operations.
See Note
16
— Discontinued
Operations
for
additional
information.Basis of PresentationThe
accompanying
consolidated
financial
statements
have
been
prepared
in
accordance
with
accounting
principles
generally
accepted
in
the
United
States
ofAmerica
("GAAP")
and
pursuant
to
the
rules
and
regulations
of
the
U.S.
Securities
and
Exchange
Commission
("SEC").NOTE 2—SIGNIFICANT ACCOUNTING POLICIESRevenue RecognitionThe
Company
derives
its
revenue
primarily
from
match
fees,
which
are
earned
through
the
delivery
of
qualified
request
forms
that
originated
through
one
ofits
websites
or
affiliates.
The
Company
recognizes
revenue
when
persuasive
evidence
of
an
arrangement
exists,
delivery
has
occurred,
the
fee
is
fixed
ordeterminable
and
collectability
is
reasonably
assured.
Delivery
is
deemed
to
have
occurred
at
the
time
a
qualified
request
form
is
delivered
to
the
customer,provided
that
no
significant
obligations
remain.The
Company
also
derives
revenues
from
lenders
for
closing
fees
on
certain
auto,
business
and
personal
loan
products
and
student
loans
when
a
transaction
isclosed
with
the
consumer.
Closed
loan
fees
and
closed
sale
fees
are
recognized
at
the
time
the
lender
reports
the
closed
loan
or
closed
sale
to
the
Company,
whichcould
be
several
months
after
the
original
request
form
is
transmitted.
For
the
Company's
credit
card
product,
the
Company
sends
traffic
to
issuers
and
is
paid
percard
approval.42 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSCash and Cash EquivalentsCash
and
cash
equivalents
include
cash
and
short-term,
highly
liquid
money
market
investments
with
original
maturities
of
three
months
or
less.Restricted CashCash
escrowed
or
contractually
restricted
for
a
specific
purpose
is
designated
as
restricted
cash.Accounts ReceivableAccounts
receivable
are
stated
at
amounts
due
from
customers,
net
of
an
allowance
for
doubtful
accounts.The
Company
determines
its
allowance
for
doubtful
accounts
by
considering
a
number
of
factors,
including
the
length
of
time
accounts
receivable
are
pastdue,
previous
loss
history
and
the
specific
customer's
current
ability
to
pay
its
obligation.
Accounts
receivable
are
considered
past
due
when
they
are
outstandinglonger
than
the
contractual
payment
terms.
Accounts
receivable
are
written
off
when
management
deems
them
uncollectible.A
reconciliation
of
the
beginning
and
ending
balances
of
the
allowance
for
doubtful
accounts
is
as
follows
(in thousands) : Year Ended December 31, 2015
2014
2013Balance, beginning of the period$349
$408
$503Charges
to
earnings337
206
248Write-off
of
uncollectible
accounts
receivable(80)
(265)
(343)Balance, end of the period$606
$349
$408Loan Loss Obligations (Discontinued Operations)The
Company's
Home
Loan
Center,
Inc.
("HLC")
subsidiary,
which
during
its
period
of
active
operation
primarily
conducted
business
as
LendingTree
Loans,sold
loans
it
originated
to
investors
on
a
servicing-released
basis
and
the
risk
of
loss
or
default
by
the
borrower
was
generally
transferred
to
the
investor.
However,LendingTree
Loans
was
required
by
these
investors
to
make
certain
representations
relating
to
credit
information,
loan
documentation
and
collateral.
To
the
extentLendingTree
Loans
did
not
comply
with
such
representations
or
there
are
early
payment
defaults,
LendingTree
Loans
may
be
required
to
repurchase
loans
orindemnify
the
investors
for
any
losses
from
borrower
defaults.
LendingTree
Loans
maintains
a
liability
for
the
estimated
exposure
relating
to
such
contingentobligations
and
changes
to
the
estimate
are
recorded
in
income
from
discontinued
operations
in
the
periods
they
occur.The
Company
estimates
the
liability
for
loan
losses
using
a
settlement
discount
framework.
This
approach
estimates
the
lifetime
losses
on
the
population
ofremaining
loans
originated
and
sold
by
LendingTree
Loans
using
actual
defaults
for
loans
with
similar
characteristics
and
projected
future
defaults.
It
alsoconsiders
the
likelihood
of
claims
expected
due
to
alleged
breaches
of
representations
and
warranties
made
by
LendingTree
Loans
and
the
percentage
of
thoseclaims
investors
estimate
LendingTree
Loans
may
agree
to
repurchase.
The
Company
then
applies
a
settlement
discount
factor
to
the
result
of
the
foregoing
toreflect
publicly
announced
bulk
settlements
for
similar
loan
types
and
vintages,
the
Company's
own
settlement
experience,
as
well
as
LendingTree
Loans'
non-operating
status,
in
order
to
estimate
a
range
of
potential
liability.
Changes
to
any
one
of
these
factors
could
significantly
impact
the
estimate
of
the
liability
andcould
have
a
material
impact
on
the
Company's
results
of
operations
for
any
particular
period.
See Note
16
—Discontinued
Operations—LendingTree
Loans—Loan
Loss
Obligations
for
additional
information
on
the
loan
loss
reserve.Segment ReportingDuring
the
first
quarter
of
2015,
management
made
certain
changes
to
its
organizational
structure
that
impacted
its
previous
operating
segments.
As
a
result,management
concluded
it
had
one
reportable
segment
representing
its
Lending
activities.
Previously
reported
results
for
the
years
ended
2014
and
2013
have
beenrevised
to
conform
to
its
single
reportable
segment
at
December
31,
2015.43 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSProperty and EquipmentProperty
and
equipment,
including
internally-developed
software
and
significant
improvements,
are
recorded
at
cost
less
accumulated
depreciation.
Due
to
therapid
advancements
in
technology
and
evolution
of
company
products,
all
internally-developed
software
is
written-off
at
the
end
of
its
useful
life.
Repairs
andmaintenance
and
any
gains
or
losses
on
dispositions
are
recognized
as
incurred
in
current
operations.Depreciation
is
recorded
on
a
straight-line
basis
to
allocate
the
cost
of
depreciable
assets
to
operations
over
their
estimated
service
lives.
The
following
tablepresents
the
estimated
useful
lives
for
each
asset
category:Asset CategoryEstimated Useful LivesComputer
equipment
and
capitalized
software1
to
5
yearsLeasehold
improvementsLesser
of
asset
life
or
life
of
leaseFurniture
and
other
equipment3
to
7
yearsSoftware Development CostsSoftware
development
costs
primarily
include
internal
and
external
labor
expenses
incurred
to
develop
the
software
that
powers
the
Company's
websites.Certain
costs
incurred
during
the
application
development
stage
are
capitalized
based
on
specific
activities
tracked,
while
costs
incurred
during
the
preliminaryproject
stage
and
post-implementation/operation
stage
are
expensed
as
incurred.
Capitalized
software
development
costs
are
amortized
over
an
estimated
useful
lifeof
one
to
three
years
.Goodwill and Indefinite-Lived Intangible AssetsGoodwill
acquired
in
business
combinations
is
assigned
to
the
reporting
units
that
are
expected
to
benefit
from
the
combination
as
of
the
acquisition
date.Goodwill
and
indefinite-lived
intangible
assets,
primarily
the
Company's
trade
names
and
trademarks,
are
not
amortized.
Rather,
these
assets
are
tested
annually
forimpairment
as
of
October
1,
or
more
frequently
upon
the
occurrence
of
certain
events
or
substantive
changes
in
circumstances.As
part
of
its
annual
impairment
testing
of
goodwill
and
indefinite-lived
intangible
assets,
in
each
instance,
the
Company
may
elect
to
assess
qualitativefactors
as
a
basis
for
determining
whether
it
is
necessary
to
perform
the
traditional
quantitative
impairment
testing.
If
the
Company’s
assessment
of
thesequalitative
factors
indicates
that
it
is
not
more
likely
than
not
that
the
fair
value
of
the
reporting
unit
or
indefinite-lived
intangible
asset
is
less
than
its
carryingvalue,
then
no
further
testing
is
required.
Otherwise,
the
goodwill
reporting
unit
or
long-lived
intangible
assets,
as
applicable,
must
be
quantitatively
tested
forimpairment.The
quantitative
test
for
goodwill
impairment
is
determined
using
a
two-step
process.
The
first
step
is
to
compare
the
fair
value
of
a
reporting
unit
with
itscarrying
amount,
including
goodwill.
In
performing
the
first
step,
the
Company
determines
the
fair
value
of
its
reporting
units
by
using
a
market
approach
and
adiscounted
cash
flow
("DCF")
analysis.
Determining
fair
value
using
a
DCF
analysis
requires
the
exercise
of
significant
judgments,
including
judgments
aboutappropriate
discount
rates,
perpetual
growth
rates
and
the
amount
and
timing
of
expected
future
cash
flows.
If
the
fair
value
of
a
reporting
unit
exceeds
its
carryingamount,
goodwill
of
the
reporting
unit
is
not
impaired
and
the
second
step
of
the
impairment
test
is
not
required.
If
the
carrying
amount
of
a
reporting
unit
exceedsits
fair
value,
the
second
step
of
the
goodwill
impairment
test
is
required
to
be
performed
to
measure
the
amount
of
impairment,
if
any.
The
second
step
of
thegoodwill
impairment
test
compares
the
implied
fair
value
of
the
reporting
unit's
goodwill
with
the
carrying
amount
of
that
goodwill.
The
implied
fair
value
ofgoodwill
is
determined
in
the
same
manner
as
the
amount
of
goodwill
recognized
in
a
business
combination.
If
the
carrying
amount
of
the
reporting
unit's
goodwillexceeds
the
implied
fair
value
of
that
goodwill,
an
impairment
loss
is
recognized
in
an
amount
equal
to
that
excess.The
quantitative
impairment
test
for
indefinite-lived
intangible
assets
involves
a
comparison
of
the
estimated
fair
value
of
the
intangible
asset
with
its
carryingvalue.
If
the
carrying
value
of
the
indefinite-lived
intangible
asset
exceeds
its
estimated
fair
value,
an
impairment
loss
is
recognized
in
an
amount
equal
to
thatexcess.
The
estimates
of
fair
value
of
indefinite-lived
intangible
assets
are
determined
using
a
DCF
valuation
analysis
that
employs
a
relief-from-royaltymethodology
in
estimating
the
fair
value
of
trade
names
and
trademarks.
Significant
judgments
inherent
in
this
analysis
include
the
determination
of
royalty
rates,discount
rates,
perpetual
growth
rates
and
the
amount
and
timing
of
future
revenues.For
the
October
1,
2015
annual
impairment
tests
of
goodwill
and
indefinite-lived
intangible
assets,
the
Company
elected
to
perform
qualitative
assessments
asa
precursor
to
the
traditional
quantitative
tests.
Results
of
the
October
1,
2015
annual
impairment
tests
indicated
that
it
is
not
more
likely
than
not
that
the
fair
valueof
the
goodwill
and
the
indefinite-lived
intangible
assets
were
each
less
than
their
respective
carrying
values.
Accordingly,
no
further
testing
was
required.44 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFor
the
October
1,
2014
annual
impairment
test
of
goodwill,
the
fair
value
was
estimated
using
a
DCF
analysis
and
a
market
comparable
method,
with
eachmethod
being
equally
weighted
in
the
calculation.
Results
of
the
October
1,
2014
annual
impairment
test
for
goodwill
and
the
indefinite-lived
intangible
assetsindicated
that
no
impairments
had
occurred.Long-Lived Assets and Intangible Assets with Definite LivesLong-lived
assets
include
property
and
equipment
and
intangible
assets
with
definite
lives.
Amortization
of
definite-lived
intangible
assets
is
recorded
on
astraight-line
basis
over
their
estimated
lives.Long-lived
assets
are
tested
for
recoverability
whenever
events
or
changes
in
circumstances
indicate
that
their
carrying
amounts
may
not
be
recoverable.
Thecarrying
amount
of
a
long-lived
asset
is
not
recoverable
if
it
exceeds
the
sum
of
the
undiscounted
cash
flows
expected
to
result
from
the
use
and
eventualdisposition
of
the
asset.
If
the
carrying
amount
is
deemed
to
not
be
recoverable,
an
impairment
loss
is
recorded
as
the
amount
by
which
the
carrying
amount
of
thelong-lived
asset
exceeds
its
fair
value.At
December
31,
2015
,
the
Company
performed
its
annual
review
of
impairment
triggering
events
for
long-lived
assets
and
determined
that
a
triggering
eventhad
not
occurred.During
the
fourth
quarter
of
2014,
the
Company
lost
key
customers
and
experienced
a
decline
in
revenue
for
a
certain
product
included
within
the
Educationbusiness.
Accordingly,
in
early
2015,
the
Company
amended
its
strategic
course
for
this
product,
resulting
in
a
reduction
in
anticipated
future
cash
flows.
AtDecember
31,
2014,
the
Company
reviewed
the
long-lived
assets
associated
with
this
product
for
recoverability,
resulting
in
an
impairment
charge
to
customer
listsand
internally
developed
software
of
approximately
$0.8
million
.
The
fair
value
of
the
long-lived
assets
was
determined
using
a
discounted
cash
flow
model.
Theimpairment
charge
is
included
in
general
and
administrative
expense
on
the
accompanying
consolidated
statement
of
operations
and
comprehensive
income.Fair Value MeasurementsThe
Company
categorizes
its
assets
and
liabilities
measured
at
fair
value
into
a
fair
value
hierarchy
that
prioritizes
the
assumptions
used
in
pricing
the
asset
orliability
into
the
following
three
levels:•Level 1 :
Observable
inputs,
such
as
quoted
prices
for
identical
assets
and
liabilities
in
active
markets
obtained
from
independent
sources.•Level 2 :
Other
inputs
that
are
observable
directly
or
indirectly,
such
as
quoted
prices
for
similar
assets
or
liabilities
in
active
markets,
quoted
prices
foridentical
or
similar
assets
or
liabilities
in
markets
that
are
not
active
and
inputs
that
are
derived
principally
from
or
corroborated
by
observable
marketdata.•Level 3 :
Unobservable
inputs
for
which
there
is
little
or
no
market
data
and
which
require
the
Company
to
develop
its
own
assumptions,
based
on
thebest
information
available
under
the
circumstances,
about
the
assumptions
market
participants
would
use
in
pricing
the
asset
or
liability.The
Company's
non-financial
assets,
such
as
goodwill,
intangible
assets
and
property
and
equipment
are
measured
at
fair
value
when
there
is
an
indicator
ofimpairment
and
recorded
at
fair
value
only
when
an
impairment
charge
is
recognized.
Such
fair
value
measurements
are
based
predominantly
on
Level
3
inputs.
Asof
December
31,
2015
and
2014
,
the
carrying
value
of
all
of
the
Company's
financial
instruments
are
equal
to
the
fair
value.Cost of RevenueCost
of
revenue
consists
primarily
of
expenses
associated
with
compensation
and
other
employee-related
costs
(including
stock-based
compensation)
relatedto
internally-operated
call
centers,
third-party
customer
call
center
fees,
credit
scoring
fees,
credit
card
fees
and
website
network
hosting
and
server
fees.Product DevelopmentProduct
development
expense
consists
primarily
of
compensation
and
other
employee-related
costs
(including
stock-based
compensation)
that
are
notcapitalized,
for
personnel
engaged
in
the
design,
development,
testing
and
enhancement
of
technology
that
are
not
capitalized.45 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSAdvertisingAdvertising
costs
are
expensed
in
the
period
incurred
(except
for
production
costs
which
are
initially
capitalized
and
then
recognized
as
expense
when
theadvertisement
first
runs)
and
principally
represent
offline
costs,
including
television,
print
and
radio
advertising,
and
online
advertising
costs,
including
fees
paid
tosearch
engines
and
distribution
partners.
Advertising
expense
was
$159.2
million
,
$102.2
million
and
$80.7
million
for
the
years
ended
December
31,
2015
,
2014and
2013
,
respectively,
and
is
included
in
selling
and
marketing
expense
on
the
consolidated
statements
of
operations
and
comprehensive
income.Income TaxesIncome
taxes
are
accounted
for
under
the
liability
method,
and
deferred
tax
assets
and
liabilities
are
recognized
for
the
future
tax
consequences
attributable
todifferences
between
the
financial
statement
carrying
amounts
of
existing
assets
and
liabilities
and
their
respective
tax
bases.
In
estimating
future
tax
consequences,all
expected
future
events
are
considered.
Deferred
tax
assets
and
liabilities
are
measured
using
enacted
tax
rates
in
effect
for
the
year
in
which
those
temporarydifferences
are
expected
to
be
recovered
or
settled.
A
valuation
allowance
is
provided
on
deferred
tax
assets
if
it
is
determined
that
it
is
more
likely
than
not
thatthe
deferred
tax
asset
will
not
be
realized.
Interest
is
recorded
on
potential
tax
contingencies
as
a
component
of
income
tax
expense
and
recorded
net
of
anyapplicable
related
income
tax
benefit.
For
the
year
ended
December
31,
2015,
the
Company
followed
the
incremental
or
"with"
and
"without"
approach
tointraperiod
tax
allocation
for
determination
of
the
amount
of
tax
benefit
to
allocate
to
continuing
operations
as
prescribed
in
ASC
740-20-45-7
with
the
exceptionof
the
allocation
of
the
release
of
the
valuation
allowance
for
deferred
tax
assets
which
is
governed
by
ASC
740-10-45-20.
During
2014
and
2013
,
the
Companyreported
losses
from
continuing
operations
and
income
from
discontinued
operations.
As
a
result,
the
Company
followed
the
accounting
guidance
prescribed
inASC
740-20-45-7,
which
provides
an
exception
to
the
"with"
and
"without"
approach
to
intraperiod
tax
allocation
for
determination
of
the
amount
of
tax
benefit
toallocate
to
continuing
operations
in
such
circumstances.In
accordance
with
the
accounting
standard
for
uncertainty
in
income
taxes,
liabilities
for
uncertain
tax
positions
are
recognized
based
on
the
two-step
processprescribed
by
the
accounting
standards.
The
first
step
is
to
evaluate
the
tax
position
for
recognition
by
determining
if
the
weight
of
available
evidence
indicates
it
ismore
likely
than
not
that
the
position
will
be
sustained
on
audit,
including
resolution
of
related
appeals
or
litigation
processes,
if
any.
The
second
step
is
to
measurethe
tax
benefit
as
the
largest
amount
that
is
more
than
50%
likely
of
being
realized
upon
ultimate
settlement.The
Company
uses
the
tax
law
ordering
approach
to
determine
the
potential
utilization
of
windfall
benefits.
These
tax
benefits
are
credited
to
additional
paid-in
capital
when
they
reduce
current
taxable
income
consistent
with
the
tax
law
ordering
approach.Stock-Based CompensationThe
forms
of
stock-based
awards
granted
to
LendingTree
employees
are
principally
restricted
stock
units
("RSUs"),
stock
options
and
restricted
stock.
RSUsare
awards
in
the
form
of
units,
denominated
in
a
hypothetical
equivalent
number
of
shares
of
LendingTree
common
stock
and
with
the
value
of
each
award
equalto
the
fair
value
of
LendingTree
common
stock
at
the
date
of
grant.
RSUs
may
be
settled
in
cash,
stock
or
both,
as
determined
by
the
Company's
CompensationCommittee
at
the
time
of
grant.
The
Company
does
not
have
a
history
of
settling
these
awards
in
cash.
Each
stock-based
award
is
subject
to
service-based
vesting,where
a
specific
period
of
continued
employment
must
pass
before
an
award
vests.
The
Compensation
Committee
can
modify
the
vesting
provisions
of
an
award.Certain
restricted
stock
awards
also
include
performance-based
vesting,
where
certain
performance
targets
set
at
the
time
of
grant
must
be
achieved
before
anaward
vests.LendingTree
recognizes
as
expense
non-cash
compensation
for
all
stock-based
awards
for
which
vesting
is
considered
probable.
The
amount
of
non-cashcompensation
is
reduced
by
estimated
forfeitures,
as
the
amount
recorded
to
the
consolidated
statement
of
operations
and
comprehensive
income
is
based
onawards
ultimately
expected
to
vest.
The
forfeiture
rate
is
estimated
at
the
grant
date,
based
on
historical
experience
and
revised,
if
necessary,
in
subsequent
periodsif
the
actual
forfeiture
rate
differs
from
the
estimated
rate.For
service-based
awards,
non-cash
compensation
is
measured
at
fair
value
on
the
grant
date
and
expensed
ratably
over
the
vesting
term.
The
fair
value
ofeach
stock
option
award
is
estimated
using
the
Black-Scholes
option
pricing
model,
while
the
fair
value
of
an
RSU
or
restricted
stock
award
is
measured
as
theclosing
common
stock
price
at
the
time
of
grant.
For
certain
performance-based
awards,
the
fair
value
is
measured
on
the
grant
date
as
the
fair
value
of
theCompany's
common
stock
awarded
and
recognized
as
non-cash
compensation,
using
a
graded
vesting
attribution
model
that
considers
the
probability
of
the
targetsbeing
achieved.Tax
benefits
resulting
from
tax
deductions
in
excess
of
the
non-cash
compensation
recognized
in
the
consolidated
statement
of
operations
and
comprehensiveincome
are
reported
as
a
component
of
financing
cash
flows.
In
2015,
$4.6
million
of
tax
benefits
in
excess
of
non-cash
compensation
recognized
in
theconsolidated
statement
of
shareholders'
equity
is
reported
as
a
component46 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSof
financing
cash
flows.
In
2014
and
2013,
while
there
were
excess
tax
benefits
from
non-cash
compensation,
the
tax
benefits
are
not
reflected
in
the
consolidatedstatement
of
shareholders'
equity
because
the
Company
did
not
recognize
a
current
tax
benefit.Litigation Settlements and ContingenciesLitigation
settlements
and
contingencies
consists
of
expenses
related
to
actual
or
anticipated
litigation
settlements,
in
addition
to
legal
fees
incurred
inconnection
with
various
patent
litigation
claims
the
Company
pursues
against
others.The
Company
is
involved
in
legal
proceedings
on
an
ongoing
basis.
If
the
Company
believes
that
a
loss
arising
from
such
matters
is
probable
and
can
bereasonably
estimated,
the
estimated
liability
is
accrued
in
the
consolidated
financial
statements.
If
only
a
range
of
estimated
losses
can
be
determined,
an
amountwithin
the
range
is
accrued
that,
in
the
Company's
judgment,
reflects
the
most
likely
outcome;
if
none
of
the
estimates
within
that
range
is
a
better
estimate
thanany
other
amount,
the
low
end
of
the
range
is
accrued.
For
those
proceedings
in
which
an
unfavorable
outcome
is
reasonably
possible
but
not
probable,
an
estimateof
the
reasonably
possible
loss
or
range
of
losses
or
a
conclusion
that
an
estimate
of
the
reasonably
possible
loss
or
range
of
losses
arising
directly
from
theproceeding
(i.e.,
monetary
damages
or
amounts
paid
in
judgment
or
settlement)
are
not
material
is
disclosed.
Legal
expenses
associated
with
these
matters
arerecognized
as
incurred.Accounting EstimatesManagement
is
required
to
make
certain
estimates
and
assumptions
during
the
preparation
of
the
consolidated
financial
statements
in
accordance
with
GAAP.These
estimates
and
assumptions
impact
the
reported
amount
of
assets
and
liabilities
and
disclosures
of
contingent
assets
and
liabilities
as
of
the
date
of
theconsolidated
financial
statements.
They
also
impact
the
reported
amount
of
net
earnings
during
any
period.
Actual
results
could
differ
from
those
estimates.Significant
estimates
underlying
the
accompanying
consolidated
financial
statements,
including
discontinued
operations,
include:
loan
loss
obligations;
therecoverability
of
long-lived
assets,
goodwill
and
intangible
assets;
the
determination
of
income
taxes
payable
and
deferred
income
taxes,
including
relatedvaluation
allowances;
contingent
consideration
related
to
business
combinations;
litigation
accruals;
various
other
allowances,
reserves
and
accruals;
andassumptions
related
to
the
determination
of
stock-based
compensation.Certain Risks and ConcentrationsLendingTree's
business
is
subject
to
certain
risks
and
concentrations
including
dependence
on
third-party
technology
providers,
exposure
to
risks
associatedwith
online
commerce
security
and
credit
card
fraud.Financial
instruments,
which
potentially
subject
the
Company
to
concentration
of
credit
risk
at
December
31,
2015
,
consist
primarily
of
cash
and
cashequivalents
and
accounts
receivable,
as
disclosed
in
the
consolidated
balance
sheet.
Cash
and
cash
equivalents
are
in
excess
of
Federal
Deposit
InsuranceCorporation
insurance
limits,
but
are
maintained
with
quality
financial
institutions
of
high
credit.
The
Company
generally
requires
certain
network
lenders
tomaintain
security
deposits
with
the
Company,
which
in
the
event
of
non-payment,
would
be
applied
against
any
accounts
receivable
outstanding.Due
to
the
nature
of
the
mortgage
lending
industry,
interest
rate
increases
may
negatively
impact
future
revenue
from
the
Company's
lender
marketplace.For
the
years
ended
December
31,
2015
,
2014
and
2013
,
one
marketplace
lender
accounted
for
revenue
representing
12%
,
13%
and
12%
of
total
revenue,respectively,
and
another
marketplace
lender
accounted
for
11%
,
11%
and
12%
of
total
revenue,
respectively.Lenders
participating
on
the
Company's
marketplace
can
offer
their
products
directly
to
consumers
through
brokers,
mass
marketing
campaigns
or
throughother
traditional
methods
of
credit
distribution.
These
lenders
can
also
offer
their
products
online,
either
directly
to
prospective
borrowers,
through
one
or
moreonline
competitors,
or
both.
If
a
significant
number
of
potential
consumers
are
able
to
obtain
loans
from
participating
lenders
without
utilizing
the
Company'sservice,
its
ability
to
generate
revenue
may
be
limited.
Because
the
Company
does
not
have
exclusive
relationships
with
the
lenders
whose
loan
offerings
areoffered
on
its
online
marketplace,
consumers
may
obtain
offers
and
loans
from
these
lenders
without
using
its
service.The
Company
maintains
operations
solely
in
the
United
States.47 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSRecent Accounting PronouncementsIn
November
2015,
the
Financial
Accounting
Standards
Board
("FASB")
issued
Accounting
Standards
Update
("ASU")
2015-17
related
to
balance
sheetclassification
of
deferred
tax
assets
and
liabilities.
This
ASU
requires
that
all
deferred
tax
assets
and
liabilities,
along
with
any
related
valuation
allowance,
beclassified
as
noncurrent
on
the
balance
sheet.
This
ASU
is
effective
for
annual
and
interim
reporting
periods
beginning
after
December
15,
2016,
with
earlyadoption
permitted.
The
guidance
may
be
applied
either
prospectively,
for
all
deferred
tax
assets
and
liabilities,
or
retrospectively.
The
Company
early
adopted
thisASU
on
a
prospective
basis,
therefore,
prior
periods
were
not
retrospectively
adjusted.
See Note
9
—Income
Taxes
for
the
impact
of
this
ASU.In
April
2015,
the
FASB
issued
ASU
2015-05
related
to
cloud
computing
arrangements.
This
ASU
sets
forth
guidance
on
accounting
for
fees
paid
in
a
cloudcomputing
arrangement
and
specifically
outlines
how
to
determine
whether
a
cloud
computing
arrangement
contains
a
software
license
or
is
solely
a
servicecontract.
This
ASU
was
effective
for
annual
and
interim
reporting
periods
beginning
after
December
15,
2015
and
permits
early
adoption.
The
Company
earlyadopted
this
ASU
and
it
did
not
have
a
significant
impact
on
its
consolidated
financial
statements.In
April
2015,
the
FASB
issued
ASU
2015-03
related
to
the
simplification
of
the
presentation
of
debt
issuance
costs.
This
ASU
was
intended
to
simplify
thepresentation
of
debt
issuance
costs,
by
requiring
debt
issuance
costs
related
to
a
recognized
debt
liability
to
be
presented
on
the
balance
sheet
as
a
direct
deductionfrom
that
debt
liability.
Given
the
lack
of
clear
guidance
related
to
accounting
for
debt
issuance
costs
associated
with
line-of-credit
arrangements,
in
August
2015,the
FASB
issued
ASU
2015-15,
which
provided
clarification
in
that
the
SEC
would
not
object
to
an
entity
presenting
debt
issuance
costs
as
an
asset
andsubsequently
amortizing
the
deferred
debt
issuance
costs
ratably
over
the
term
of
the
line-of-credit
arrangement,
regardless
of
whether
there
are
borrowings
on
theline-of-credit
arrangement.
These
ASUs
are
effective
for
annual
and
interim
reporting
periods
beginning
after
December
15,
2015,
with
early
adoption
permitted.These
ASUs
must
be
applied
retrospectively.
The
Company
early
adopted
these
ASUs
and
they
did
not
have
a
significant
impact
on
its
consolidated
financialstatements.
See Note
10
—Revolving
Credit
Facility
for
additional
information
on
the
disclosure
of
the
debt
issuance
costs.In
May
2014,
the
FASB
issued
ASU
2014-09
related
to
revenue
recognition.
This
ASU
was
initiated
as
a
joint
project
between
the
FASB
and
InternationalAccounting
Standards
Board
("IASB")
to
clarify
the
principles
for
recognizing
revenue
and
to
develop
a
common
revenue
standard
for
GAAP
and
internationalfinancial
reporting
standards
("IFRS").
This
guidance
will
supersede
the
existing
revenue
recognition
requirements
in
Accounting
Standards
Codification
("ASC")Topic
605,
Revenue
Recognition
and
was
set
to
be
effective
for
annual
reporting
periods
beginning
after
December
15,
2016.
However,
in
July
2015,
the
FASBdeferred
the
effective
date
by
one
year,
such
that
the
standard
will
be
effective
for
annual
reporting
periods
beginning
after
December
15,
2017.
Early
adoption
ispermitted
as
of
the
original
effective
date
of
December
15,
2016.
The
ASU
can
be
applied
(i)
retrospectively
to
each
prior
period
presented
or
(ii)
retrospectivelywith
the
cumulative
effect
of
initially
adopting
the
ASU
recognized
at
the
date
of
initial
application.
The
Company
is
evaluating
the
impact
this
ASU
will
have
onits
consolidated
financial
statements
and
whether
to
early
adopt.NOTE 3—RESTRICTED CASHRestricted
cash
and
cash
equivalents
consists
of
the
following
(in thousands) :
December 31, 2015
December 31, 2014Cash
in
escrow
for
surety
bonds
(a)$2,453
$2,453Cash
in
escrow
for
corporate
purchasing
card
program—
100Cash
in
escrow
from
sale
of
LendingTree
Loans
(b)4,028
16,106Other60
57Total restricted cash and cash equivalents$6,541
$18,716(a)See Note
11
—Commitments
for
a
discussion
of
surety
bonds.
In
February
2016,
all
funds
were
released
from
restriction
due
to
a
reduction
in
collateralrequirements.(b)HLC,
a
subsidiary
of
the
Company,
continues
to
be
liable
for
certain
indemnification
obligations,
repurchase
obligations
and
premium
repaymentobligations
following
the
sale
of
substantially
all
of
the
operating
assets
of
its
LendingTree
Loans
business
in
the
second
quarter
of
2012.
As
a
result
of
asettlement
agreement
in
2014
with
a
secondary
market
purchaser
of
loans,
$12.1
million
of
cash
held
in
escrow
was
released
in
December
2015.48 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 4—PROPERTY AND EQUIPMENTThe
balance
of
property
and
equipment,
net
is
as
follows
(in thousands) :
December 31, 2015
December 31, 2014Computer
equipment
and
capitalized
software$10,192
$16,080Leasehold
improvements2,096
2,096Furniture
and
other
equipment455
1,030Projects
in
progress3,612
861Total gross property and equipment16,355
20,067Accumulated
depreciation(6,940)
(14,810)Total property and equipment, net$9,415
$5,257Unamortized
capitalized
software
development
costs,
in
service
or
under
development,
are
$8.0
million
and
$4.5
million
at
December
31,
2015
and
2014
,respectively.
Capitalized
software
development
depreciation
expense
was
$2.6
million
,
$2.8
million
and
$3.0
million
for
the
years
ended
December
31,
2015
,2014
and
2013
,
respectively.During
2014,
the
Company
recorded
an
impairment
charge
in
its
Education
business
of
approximately
$0.4
million
to
internally
developed
software.
SeeNote
2—Significant
Accounting
Policies
for
a
discussion
of
the
impairment.NOTE 5—GOODWILL AND INTANGIBLE ASSETSThe
balance
of
goodwill
and
intangible
assets,
net
is
as
follows
(in thousands) :
December 31, 2015
December 31, 2014Goodwill$486,720
$486,720Accumulated
impairment
losses(483,088)
(483,088)Net goodwill$3,632
$3,632
Intangible
assets
with
indefinite
lives$10,142
$10,142Intangible
assets
with
definite
lives,
net850
999Total intangible assets, net$10,992
$11,141Goodwill and Indefinite-Lived Intangible AssetsThe
Company's
goodwill
is
associated
with
its
one
reportable
segment,
lending.
There
were
no
changes
in
the
carrying
amount
of
goodwill
during
the
yearsended
December
31,
2015
and
2014
.
Results
of
the
annual
impairment
test
as
of
October
1,
2015
indicated
that
no
impairment
had
occurred.Intangible
assets
with
indefinite
lives
relate
to
the
Company's
trademarks.
Results
of
the
annual
impairment
test
as
of
October
1,
2015
indicated
that
noimpairment
had
occurred.Intangible Assets with Definite LivesIntangible
assets
with
definite
lives
relate
to
the
following
(dollars in thousands) :
Weighted AverageAmortization Life
Cost
AccumulatedAmortization
NetCustomer
lists10.0 years
$1,000
$(150)
$850Other2.2 years
1,087
(1,087)
—Balance at December 31, 2015
$2,087
$(1,237)
$85049 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Weighted AverageAmortization Life
Cost
AccumulatedAmortization
NetCustomer
lists10.0 years
$1,049
$(50)
$999Other2.2 years
1,087
(1,087)
—Balance at December 31, 2014
$2,136
$(1,137)
$999Amortization
of
intangible
assets
with
definite
lives
is
computed
on
a
straight-line
basis
and,
based
on
balances
as
of
December
31,
2015
,
future
amortizationis
estimated
to
be
as
follows
(in thousands) : Amortization ExpenseYear
ending
December
31,
2016$100Year
ending
December
31,
2017100Year
ending
December
31,
2018100Year
ending
December
31,
2019100Year
ending
December
31,
2020100Thereafter350Total intangible assets with definite lives, net$850On
June
30,
2014,
the
Company
acquired
certain
intangible
assets
to
be
used
in
its
home
services
business
for
$0.6
million
paid
on
the
acquisition
date,
pluscontingent
consideration
of
$0
to
$0.8
million
.
During
the
fourth
quarter
of
2014,
the
Company
finalized
the
purchase
price
of
$1.0
million
,
which
included
anestimated
contingent
consideration
of
$0.4
million
.
The
entire
purchase
price
was
allocated
to
the
customer
lists
acquired,
which
is
being
amortized
on
a
straight-line
basis
over
a
useful
life
of
10
years
.
Additionally,
during
the
nine
months
following
the
acquisition,
performance
against
the
conditions
of
the
earn-out
reducedthe
total
contingent
consideration
to
$0.2
million
,
which
was
fully
paid
as
of
December
31,
2015.During
2014,
the
Company
recorded
an
impairment
charge
in
its
Education
business
of
approximately
$0.4
million
to
customer
lists.
See Note
2—SignificantAccounting
Policies
for
a
discussion
of
the
impairment.NOTE 6—ACCRUED EXPENSES AND OTHER CURRENT LIABILITIESAccrued
expenses
and
other
current
liabilities
consist
of
the
following
(in thousands) :
December 31, 2015
December 31, 2014Accrued
litigation
liabilities$636
$2,786Accrued
advertising
expense20,841
11,170Accrued
compensation
and
benefits4,464
2,666Accrued
professional
fees711
337Customer
deposits
and
escrows4,471
4,560Other3,762
4,002Total accrued expenses and other current liabilities$34,885
$25,52150 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 7 —SHAREHOLDERS' EQUITYBasic
and
diluted
income
(loss)
per
share
was
determined
based
on
the
following
share
data
(in thousands) : Year Ended December 31, 2015
2014
2013Weighted average basic common shares11,516
11,188
11,035Effect
of
stock
options866
—
—Effect
of
dilutive
share
awards159
—
—Weighted average diluted common shares12,541
11,188
11,035For
the
years
ended
December
31,
2014
and
2013
,
the
Company
had
losses
from
continuing
operations
and,
as
a
result,
no
potentially
dilutive
securities
wereincluded
in
the
denominator
for
computing
diluted
loss
per
share,
because
the
impact
would
have
been
anti-dilutive.
Accordingly,
the
weighted
average
basicshares
outstanding
were
used
to
compute
loss
per
share
amounts
for
these
periods.
For
the
years
ended
December
31,
2014
and
2013
,
approximately
0.7
million
,and
0.7
million
shares,
respectively,
related
to
potentially
dilutive
securities
were
excluded
from
the
calculation
of
diluted
loss
per
share,
because
their
inclusionwould
have
been
anti-dilutive.See Note
8
—Stock-Based
Compensation
for
a
full
description
of
outstanding
equity
awards.Common Stock RepurchasesIn
January
2010,
the
board
of
directors
authorized
and
the
Company
announced
the
repurchase
of
up
to
$10.0
million
of
LendingTree's
common
stock.
In
May2014,
the
board
of
directors
authorized
and
the
Company
announced
the
repurchase
of
up
to
an
additional
$10.0
million
of
LendingTree's
common
stock.
Duringthe
years
ended
December
31,
2015
,
2014
and
2013
,
the
Company
purchased
5,250
,
99,345
and
180,453
shares,
respectively,
of
its
common
stock
for
aggregateconsideration
of
$0.2
million
,
$2.6
million
and
$3.3
million
,
respectively.
At
December
31,
2015
,
approximately
$7.3
million
remains
authorized
for
sharerepurchase.See Note
19
—Subsequent
Events
for
additional
information
about
the
repurchase
of
the
Company's
common
stock.Equity OfferingIn
November
2015,
the
Company
completed
an
equity
offering
of
852,500
shares
of
its
common
stock.
The
common
stock
was
issued
at
a
price
of
$115.00
pershare.
The
Company
received
net
proceeds
of
$91.5
million
,
after
deducting
approximately
$5.9
million
in
underwriting
discounts
and
$0.7
million
in
offeringexpenses.
The
Company
expects
to
use
the
net
proceeds
of
the
offering
for
general
corporate
purposes,
including
but
not
limited
to,
working
capital
and
potentialacquisitions.NOTE 8 —STOCK-BASED COMPENSATIONThe
Company
currently
has
one
active
plan,
the
Fourth
Amended
and
Restated
LendingTree
2008
Stock
and
Annual
Incentive
Plan
(the
"Equity
AwardPlan"),
under
which
future
awards
may
be
granted,
which
currently
covers
outstanding
stock
options
to
acquire
shares
of
the
Company's
common
stock,
restrictedstock
and
RSUs,
and
provides
for
the
future
grants
of
these
and
other
equity
awards.
Under
the
Equity
Award
Plan,
the
Company
is
authorized
to
grant
stockoptions,
restricted
stock,
RSUs
and
other
equity-based
awards
for
up
to
4.35
million
shares
of
LendingTree
common
stock
to
employees,
non-employeeconsultants,
officers
and
directors.
This
Equity
Award
Plan
also
governs
certain
equity
awards
of
IAC
that
were
converted
into
equity
awards
of
LendingTree
inconnection
with
the
spin-off.The
Equity
Award
Plan
has
a
stated
term
of
ten
years
and
provides
that
the
exercise
price
of
stock
options
granted
will
not
be
less
than
the
market
price
of
thecommon
stock
on
the
grant
date.
The
Equity
Award
Plan
itself
does
not
specify
grant
dates
or
vesting
schedules,
as
those
determinations
are
delegated
to
theCompensation
Committee
of
the
board
of
directors.
Each
grant
agreement
reflects
the
vesting
schedule
for
that
particular
grant,
as
determined
by
the
CompensationCommittee.
The
Compensation
Committee
has
the
authority
to
modify
the
vesting
provisions
of
an
award.51 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNon-cash
compensation
related
to
equity
awards
is
included
in
the
following
line
items
in
the
accompanying
consolidated
statements
of
operations
andcomprehensive
income
(in thousands) :
Year Ended December 31,
2015
2014
2013Cost
of
revenue$95
$32
$13Selling
and
marketing
expense1,597
901
931General
and
administrative
expense5,120
5,148
3,841Product
development1,558
1,196
842Restructuring
and
severance138
169
—Total non-cash compensation$8,508
$7,446
$5,627For
the
year
ended
December
31,
2015,
the
Company
recognized
$3.0
million
of
income
tax
benefit
related
to
non-cash
compensation.
For
the
years
endedDecember
31,
2014
and
2013
,
the
Company
recognized
no
income
tax
benefit
related
to
non-cash
compensation
due
to
its
net
operating
losses
and
valuationallowance.
As
of
December
31,
2015
,
there
was
approximately
$8.2
million
,
$7.5
million
and
$1.0
million
of
unrecognized
compensation
cost,
net
of
estimatedforfeitures,
related
to
stock
options,
RSUs
and
restricted
stock,
respectively.
These
costs
are
expected
to
be
recognized
over
a
weighted-average
period
ofapproximately
2.0
years
for
stock
options,
2.0
years
for
RSUs
and
1.0
year
for
restricted
stock.Stock OptionsA
summary
of
the
changes
in
outstanding
stock
options
is
as
follows:
Number of Options
WeightedAverageExercisePrice
WeightedAverageRemainingContractualTerm
AggregateIntrinsicValue (a)
(per option)
(in years)
(in thousands)Outstanding at December 31, 20142,136,679
$18.16
Granted46,406
68.62
Exercised(136,125)
17.61
Forfeited(127,439)
26.84
Expired(1,339)
7.88
Outstanding at December 31, 20151,918,182
$18.85
5.92
$135,324Options exercisable932,941
$8.51
3.44
$75,350(a)The
aggregate
intrinsic
value
represents
the
total
pre-tax
intrinsic
value
(the
difference
between
the
Company's
closing
stock
price
of
$89.28
on
the
lasttrading
day
of
2015
and
the
exercise
price,
multiplied
by
the
number
of
shares
covered
by
in-the-money
options)
that
would
have
been
received
by
theoption
holders
had
all
option
holders
exercised
their
options
on
December
31,
2015
.
The
intrinsic
value
changes
based
on
the
market
value
of
theCompany's
common
stock.Upon
exercise,
the
intrinsic
value
represents
the
pre-tax
difference
between
the
Company's
closing
stock
price
on
the
exercise
date
and
the
exercise
price,multiplied
by
the
number
of
stock
options
exercised.
During
the
years
ended
December
31,
2015
,
2014
and
2013
,
the
total
intrinsic
value
of
stock
options
thatwere
exercised
was
$5.9
million
,
$0.2
million
and
$0.4
million
,
respectively.
Cash
received
from
stock
option
exercises
and
the
related
actual
tax
benefit
realizedwere
$2.4
million
and
$0.3
million
,
respectively,
for
the
year
ended
December
31,
2015
.During
the
years
ended
December
31,
2015
and
2014
,
the
Company
granted
stock
options
with
a
weighted
average
grant
date
fair
value
per
share
of
$27.60and
$11.22
,
respectively,
of
which
the
vesting
periods
include
(a)
three
years
from
the
grant
date,
(b)
25%
and
75%
over
a
period
of
2.5
years
and
3.5
years
,respectively,
(c)
25%
and
75%
over
a
period
of
1.67
years
and
2.67
years
,
respectively,
(d)
six
months
from
the
grant
date,
(e)
one
year
from
the
grant
date
and
(f)two
years
from
the
grant
date.52 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFor
purposes
of
determining
stock-based
compensation
expense,
the
weighted
average
grant
date
fair
value
per
share
of
the
stock
options
was
estimated
usingthe
Black-Scholes
option
pricing
model,
which
requires
the
use
of
various
key
assumptions.
The
weighted
average
assumptions
used
are
as
follows:
Year Ended December 31,
20152014Expected
term
(1)5.21
-
6.23
years5.75
-
6.63
yearsExpected
dividend
(2)——Expected
volatility
(3)38%
-
48%36%
-
64%Risk-free
interest
rate
(4)1.65%
-
2.01%1.81%
-
2.13%(1)The
expected
term
of
stock
options
granted
was
calculated
using
the
'Simplified
Method',
which
utilizes
the
midpoint
between
the
weighted
averagetime
of
vesting
and
the
end
of
the
contractual
term.
This
method
was
utilized
for
the
stock
options
due
to
a
lack
of
historical
exercise
behavior
by
theCompany's
employees.(2)For
all
stock
options
granted
during
the
years
ended
December
31,
2015
and
2014
,
no
dividends
are
expected
to
be
paid
over
the
contractual
term
ofthe
stock
options,
resulting
in
a
zero
expected
dividend
rate.(3)The
expected
volatility
rate
is
based
on
the
historical
volatility
of
the
Company's
common
stock
or
a
blended
rate
which
includes
the
historicalvolatility
of
the
Company's
common
stock
and
that
of
a
peer
group.(4)The
risk-free
interest
rate
is
specific
to
the
date
of
grant.
The
risk-free
interest
rate
is
based
on
U.S.
Treasury
yields
for
notes
with
comparableexpected
terms
as
the
awards,
in
effect
at
the
grant
date.As
of
December
31,
2015
,
the
non-vested
options
are
expected
to
vest
over
a
weighted-average
period
of
approximately
2.0
years
.
During
the
years
endedDecember
31,
2015
,
2014
and
2013
,
the
total
fair
value
of
options
vested
was
$0.8
million
,
$0.4
million
and
$3.2
million
,
respectively.Restricted Stock UnitsA
summary
of
the
changes
in
outstanding
nonvested
RSUs
is
as
follows: RSUs Number ofUnits
WeightedAverage GrantDate FairValue
(per unit)Nonvested at December 31, 2014351,801
$22.83Granted
(a)101,955
69.35Vested(187,052)
20.83Forfeited(29,327)
32.92Nonvested at December 31, 2015237,377
$43.13(a)The
grant
date
fair
value
per
share
of
the
RSUs
is
calculated
as
the
closing
market
price
of
LendingTree's
common
stock
at
the
time
of
the
grant.The
total
fair
value
of
RSUs
that
vested
during
the
years
ended
December
31,
2015
,
2014
and
2013
was
$11.0
million
,
$11.0
million
and
$7.5
million
,respectively.53 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSRestricted StockA
summary
of
the
changes
in
outstanding
nonvested
restricted
stock
is
as
follows: Restricted Stock Number ofShares
WeightedAverage GrantDate FairValue
(per share)Nonvested at December 31, 2014123,057
$23.41Granted
(a)—
—Vested(54,295)
23.18Forfeited—
—Nonvested at December 31, 201568,762
$23.60(a)The
grant
date
fair
value
per
share
of
the
restricted
stock
is
calculated
as
the
closing
market
price
of
LendingTree's
common
stock
at
the
time
of
grant.The
total
fair
value
of
restricted
stock
that
vested
during
the
years
ended
December
31,
2015
,
2014
and
2013
was
$4.1
million
,
$1.5
million
and
$3.2
million
,respectively.NOTE 9 —INCOME TAXESIncome Tax ProvisionThe
components
of
the
income
tax
benefit
are
as
follows
(in thousands) : Year Ended December 31, 2015
2014
2013Current
income
tax
expense
(benefit):
Federal$5,847
$(371)
$(425)State1,149
(219)
(92)Current income tax expense (benefit)6,996
(590)
(517)Deferred
income
tax
(benefit)
provision:
Federal(19,676)
63
63State(10,293)
43
1Deferred income tax (benefit) provision(29,969)
106
64Income tax benefit$(22,973)
$(484)
$(453)A
reconciliation
of
the
income
tax
benefit
to
the
amounts
computed
by
applying
the
statutory
federal
income
tax
rate
to
income
(loss)
from
continuingoperations
before
income
taxes
is
shown
as
follows
(in thousands) : Year Ended December 31, 2015
2014
2013Income
tax
expense
(benefit)
at
the
federal
statutory
rate
of
35%$9,920
$(340)
$(394)State
income
taxes,
net
of
effect
of
federal
tax
benefit1,480
(143)
(60)Non-deductible
non-cash
compensation
expense351
——Release
of
valuation
allowance(34,409)
——Other,
net(315)
(1)
1Income tax benefit$(22,973)
$(484)
$(453)54 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDeferred Income TaxesThe
tax
effects
of
cumulative
temporary
differences
that
give
rise
to
significant
portions
of
the
deferred
tax
assets
and
deferred
tax
liabilities
are
as
follows
(inthousands) : December 31, 2015
2014Deferred
tax
assets:
Provision
for
accrued
expenses$7,247
$7,265Net
operating
loss
carryforwards
(a)15,036
23,370Non-cash
compensation
expense4,321
3,010Goodwill1,825
1,825Other1,544
1,296Total
gross
deferred
tax
assets29,973
36,766Less:
valuation
allowance
(b)(2,341)
(40,121)Total deferred tax assets, net of the valuation allowance27,632
(3,355)Deferred
tax
liabilities:
Intangible
and
other
assets(2,060)
(1,258)Other(453)
(237)Total gross deferred tax liabilities(2,513)
(1,495)Net deferred taxes$25,119
$(4,850)(a)At
December
31,
2015
,
the
Company
had
pre-tax
consolidated
federal
net
operating
losses
("NOLs")
of
$32.2
million
.
The
federal
NOLs
will
expirebetween
2030
and
2034.
The
Company's
NOLs
will
be
available
to
offset
taxable
income
(until
such
NOLs
are
either
used
or
expire)
subject
to
theInternal
Revenue
Code
Section
382
annual
limitation.
The
amount
of
tax
deductions
in
excess
of
previously
recorded
windfall
tax
benefits
associated
withnon-cash
compensation
included
in
federal
net
operating
loss
carryforwards
but
not
reflected
in
deferred
tax
assets
for
the
year
ended
December
31,
2015was
$8.2
million
.
Upon
realization
of
the
federal
net
operating
losses,
the
Company
will
recognize
a
windfall
tax
benefit
as
an
increase
to
additional
paid-in
capital.
In
addition,
the
Company
has
state
NOLs
of
approximately
$287.3
million
at
December
31,
2015
that
will
expire
at
various
times
between
2015and
2034.(b)The
valuation
allowance
is
related
to
items
for
which
it
is
"more likely than not" that
the
tax
benefit
will
not
be
realized.Deferred
income
taxes
are
presented
in
the
accompanying
consolidated
balance
sheets
as
follows
(in thousands) : December 31, 2015
2014Deferred
income
tax
assets$20,977
$—Non-current
assets
of
discontinued
operations4,142
—Accrued
expenses
and
other
current
liabilities—
(112)Deferred
income
tax
liabilities—
(4,738)Net deferred taxes$25,119
$(4,850)Valuation AllowanceA
valuation
allowance
is
provided
on
deferred
tax
assets
if
it
is
determined
that
it
is
"more likely than not" that
the
deferred
tax
asset
will
not
be
realized.
As
ofeach
reporting
date,
management
considers
both
positive
and
negative
evidence
regarding
the
likelihood
of
future
realization
of
the
deferred
tax
assets.In
the
fourth
quarter
of
2015
the
Company
concluded,
based
upon
all
available
evidence,
it
was
more
likely
than
not
it
would
have
sufficient
future
taxableincome
to
realize
the
majority
of
its
net
deferred
tax
assets.
As
a
result,
the
Company
released
the
majority
of
the
valuation
allowance
in
2015.
The
Companysignificantly
improved
its
operating
performance
in
2015,
emerged
from
cumulative
losses
in
recent
years
due
to
a
cumulative
profit
position
and
projects
taxableincome
in
future
years.
While
the55 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSCompany
believes
the
assumptions
included
in
its
projections
of
future
taxable
income
are
reasonable,
if
the
actual
results
vary
from
expected
results
due
tounforeseen
changes
in
the
economy
or
mortgage
industry,
or
other
factors,
the
Company
may
need
to
make
future
adjustments
to
the
valuation
allowance
for
all,
ora
portion,
of
the
net
deferred
tax
assets.
At
December
31,
2015,
the
Company
recorded
a
partial
valuation
allowance
of
$2.3
million
primarily
related
to
state
netoperating
losses,
which
the
Company
does
not
expect
to
be
able
to
utilize
prior
to
expiration.
At
December
31,
2014,
the
Company
had
recorded
a
full
valuationallowance
of
$40.1
million
against
its
deferred
tax
assets.A
reconciliation
of
the
beginning
and
ending
balances
of
the
deferred
tax
valuation
allowance
is
as
follows
(in thousands) : Year Ended December 31, 2015
2014
2013Balance, beginning of the period$40,121
$49,674
$54,961Charges
to
earnings
(a)(37,780)
(3,707)(5,287)Out
of
period
adjustment
(b)—
(5,846)
—Balance, end of the period$2,341
$40,121
$49,674(a)
During
2015,
the
amount
is
primarily
related
to
the
Company's
release
of
the
valuation
allowance,
current
year
utilization
of
net
operating
losscarryforwards,
the
write-off
of
certain
state
net
operating
losses
that
expire
in
2015
and
state
net
operating
losses
not
expected
to
be
utilized
in
futureyears
due
to
changes
in
ownership
limitations.(b)
Out
of
period
adjustment
in
the
valuation
allowance
is
offset
by
an
out
of
period
adjustment
to
the
deferred
tax
assets,
thus
the
adjustment
is
limited
todisclosure.
The
error
related
primarily
to
the
calculation
of
the
federal
benefit
of
the
state
operating
loss
carryforwards.Unrecognized Tax BenefitsA
reconciliation
of
the
beginning
and
ending
amounts
of
unrecognized
tax
benefits,
excluding
interest
and
penalties,
is
as
follows
(in thousands) : Year Ended December 31, 2015
2014Balance, beginning of the period$23
$36Additions
based
on
tax
positions
of
prior
years—
—Lapse
of
statute
of
limitations(4)
(13)Balance, end of the period$19
$23Interest
and,
if
applicable,
penalties
are
recognized
related
to
unrecognized
tax
benefits
in
income
tax
expense.
For
the
year
ended
December
31,
2015,
theCompany
incurred
interest
and
penalties
on
unrecognized
tax
benefits
of
$131,000
which
was
included
in
income
tax
expense.
Interest
and
penalties
onunrecognized
tax
benefits
included
in
income
tax
expense
for
each
of
the
years
ended
December
31,
2014
and
2013
are
immaterial.
As
of
December
31,
2015
and2014
,
the
accrual
for
interest
and
penalties
was
$138,000
and
$8,000
,
respectively.As
of
December
31,
2015
and
2014
,
the
accrual
for
unrecognized
tax
benefits,
including
interest,
was
$152,000
and
$25,000
,
respectively,
none
of
whichwould
benefit
the
effective
tax
rate
if
recognized.Tax AuditsLendingTree
is
subject
to
audits
by
federal,
state
and
local
authorities
in
the
area
of
income
tax.
These
audits
include
questioning
the
timing
and
the
amountof
deductions
and
the
allocation
of
income
among
various
tax
jurisdictions.
Income
taxes
payable
include
amounts
considered
sufficient
to
pay
assessments
thatmay
result
from
examination
of
prior
year
returns;
however,
any
amounts
paid
upon
resolution
of
issues
raised
may
differ
from
the
amount
provided.
Differencesbetween
the
reserves
for
tax
contingencies
and
the
amounts
owed
by
the
Company
are
recorded
in
the
period
they
become
known.
As
of
December
31,
2015,
theCompany
is
subject
to
a
federal
income
tax
examination
for
the
tax
years
2012
through
2014.
In
addition,
the
Company
is
subject
to
state
and
local
taxexaminations
for
the
tax
years
2012
through
2014.56 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 10 —REVOLVING CREDIT FACILITYSenior Secured Revolving Credit FacilityOn
October
22,
2015,
the
Company's
wholly-owned
subsidiary,
LendingTree,
LLC,
entered
into
a
$125.0
million
five
-year
senior
secured
revolving
creditfacility
which
matures
on
October
22,
2020
(the
“Revolving
Credit
Facility”).
The
proceeds
of
the
Revolving
Credit
Facility
can
be
used
to
finance
working
capitalneeds,
capital
expenditures
and
general
corporate
purposes,
including
to
finance
permitted
acquisitions.
As
of
December
31,
2015
,
the
Company
does
not
have
anyborrowings
outstanding
under
the
Revolving
Credit
Facility.Up
to
$10.0
million
of
the
Revolving
Credit
Facility
will
be
available
for
short-term
loans,
referred
to
as
swingline
loans.
Additionally,
up
to
$10.0
million
ofthe
Revolving
Credit
Facility
will
be
available
for
the
issuance
of
letters
of
credit.
Under
certain
conditions,
the
Company
will
be
permitted
to
add
one
or
moreterm
loans
and/or
increase
revolving
commitments
under
the
Revolving
Credit
Facility
up
to
an
aggregate
amount
of
$50.0
million
.The
Company’s
borrowings
under
the
Revolving
Credit
Facility
bear
interest
at
annual
rates
that,
at
the
Company’s
option,
will
be
either:•a
base
rate
generally
defined
as
the
sum
of
(i)
the
greater
of
(a)
the
prime
rate
of
SunTrust
Bank
,
(b)
the
federal
funds
effective
rate
plus
0.5%
and
(c)
theLIBO
rate
(defined
below)
on
a
daily
basis
applicable
for
an
interest
period
of
one
month
plus
1.0%
and
(ii)
an
applicable
percentage
of
1.0%
to
2.0%based
on
the
funded
debt
to
consolidated
EBITDA
ratio;
or•a
LIBO
rate
generally
defined
as
the
sum
of
(i)
the
rate
for
Eurodollar
deposits
in
the
applicable
currency
and
(ii)
an
applicable
percentage
of
2.0%
to3.0%
based
on
the
funded
debt
to
consolidated
EBITDA
ratio.All
swingline
loans
bear
interest
at
the
base
rate
defined
above.
Interest
on
the
Company’s
borrowings
are
payable
quarterly
in
arrears
for
base
rate
loans
andon
the
last
day
of
each
interest
rate
period
(but
not
less
often
than
three
months)
for
LIBO
rate
loans.The
Revolving
Credit
Facility
contains
certain
restrictive
financial
covenants,
which
include
a
funded
debt
to
consolidated
EBITDA
ratio
and
a
consolidatedEBITDA
to
interest
expense
ratio.
In
addition,
the
Revolving
Credit
Facility
contains
customary
affirmative
and
negative
covenants
in
addition
to
events
of
defaultfor
a
transaction
of
this
type
that,
among
other
things,
restrict
additional
indebtedness,
liens,
mergers
or
certain
fundamental
changes,
asset
dispositions,
dividends,stock
repurchases
and
other
restricted
payments,
transactions
with
affiliates,
sale-leaseback
transactions,
hedging
transactions,
loans
and
investments
and
othermatters
customarily
restricted
in
such
agreements.
The
Company
was
in
compliance
with
all
covenants
at
December
31,
2015.The
Revolving
Credit
Facility
requires
LendingTree,
LLC
to
pledge
as
collateral,
subject
to
certain
customary
exclusions,
100%
of
its
assets,
including
100%of
its
equity
in
all
of
its
subsidiaries.
The
obligations
under
this
facility
are
unconditionally
guaranteed
on
a
senior
basis
by
LendingTree,
Inc.
and
specificsubsidiaries
of
LendingTree,
LLC,
which
guaranties
are
secured
by
a
pledge
as
collateral,
subject
to
certain
customary
exclusions,
of
100%
of
each
of
suchguarantor's
assets,
including
100%
of
its
equity
in
all
of
its
subsidiaries.The
Company
is
required
to
pay
an
unused
commitment
fee
quarterly
in
arrears
on
the
difference
between
committed
amounts
and
amounts
actually
borrowedunder
the
Revolving
Credit
Facility
equal
to
an
applicable
percentage
of
0.25%
to
0.5%
per
annum
based
on
a
funded
debt
to
consolidated
EBITDA
ratio.
TheCompany
is
required
to
pay
a
letter
of
credit
participation
fee
and
a
letter
of
credit
fronting
fee
quarterly
in
arrears.
The
letter
of
credit
participation
fee
is
basedupon
the
aggregate
face
amount
of
outstanding
letters
of
credit
at
an
applicable
percentage
of
2.0%
to
3.0%
based
on
the
funded
debt
to
consolidated
EBITDAratio.
The
letter
of
credit
fronting
fee
is
0.125%
per
annum
on
the
face
amount
of
each
letter
of
credit.The
Company
incurred
debt
issuance
costs
of
$1.2
million
for
the
Revolving
Credit
Facility,
which
is
included
in
prepaid
and
other
current
assets
and
othernon-current
assets
in
the
Company's
consolidated
balance
sheet
and
is
being
amortized
to
interest
expense
over
the
life
of
the
Revolving
Credit
Facility
of
fiveyears
.57 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 11 —COMMITMENTSOperating LeasesThe
Company
leases
office
space
used
in
connection
with
its
operations
under
various
operating
leases,
which
contain
escalation
clauses.
The
Company'soperating
leases
relate
to
its
office
space
in
Charlotte,
North
Carolina
and
Burlingame,
California.Future
minimum
payments
as
of
December
31,
2015
under
operating
lease
agreements
having
an
initial
or
remaining
non-cancelable
lease
term
in
excess
ofone
year
are
as
follows
(in thousands) :Year ending December 31,
Amount2016
$1,5432017
1,3742018
1,2272019
1,0252020
1,055Total
$6,224Rental
expense
for
all
operating
leases,
except
those
with
terms
of
a
month
or
less
that
were
not
renewed,
charged
to
continuing
operations
was
$1.2
million
,$1.1
million
and
$1.3
million
,
net
of
$0
,
$0
and
$18,000
sublease
rental
income,
for
each
of
the
years
ended
December
31,
2015
,
2014
and
2013
,
respectively,and
a
majority
of
which
is
included
in
general
and
administrative
expense
in
the
consolidated
statements
of
operations
and
comprehensive
income.BondsThe
Company
has
funding
commitments
that
could
potentially
require
performance
in
the
event
of
demands
by
third
parties
or
contingent
events,
as
follows(in thousands) : Commitments Due By Period Total
Less Than1 year
1-3 years
3-5 years
More Than5 yearsSurety
bonds
(a)$7,023
$4,583
$2,440
$—
$—Litigation
bonds
(b)2,540
2,540
—
—
—Total$9,563
$7,123
$2,440
$—
$—(a)
State
laws
and
regulations
generally
require
businesses
which
engage
in
mortgage
brokering
activity
to
maintain
a
mortgage
broker
or
similar
license.
Mortgagebrokering
activity
is
generally
defined
to
include,
among
other
things,
receiving
valuable
consideration
for
offering
assistance
to
a
buyer
in
obtaining
aresidential
mortgage
or
soliciting
financial
and
mortgage
information
from
the
public
and
providing
that
information
to
an
originator
of
residential
mortgageloans.
All
states
require
that
the
Company
maintain
surety
bonds
for
potential
claims.(b)
Bonds
required
for
certain
legal
matters.
In
addition,
the
Company
has
$3.0
million
of
litigation
bonds
for
discontinued
operations.NOTE 12 —CONTINGENCIESOverviewLendingTree
is
involved
in
legal
proceedings
on
an
ongoing
basis.
In
assessing
the
materiality
of
a
legal
proceeding,
the
Company
evaluates,
among
otherfactors,
the
amount
of
monetary
damages
claimed,
as
well
as
the
potential
impact
of
non-monetary
remedies
sought
by
plaintiffs
(e.g.,
injunctive
relief)
that
mayrequire
it
to
change
its
business
practices
in
a
manner
that
could
have
a
material
and
adverse
impact
on
the
business.
With
respect
to
the
matters
disclosed
in
thisNote
12
,
unless
otherwise
indicated,
the
Company
is
unable
to
estimate
the
possible
loss
or
range
of
losses
that
could
potentially
result
from
the
application
ofsuch
non-monetary
remedies.As
of
December
31,
2015
and
2014
,
the
Company
has
a
litigation
settlement
accrual
of
$0.6
million
and
$2.8
million
,
respectively,
in
continuing
operationsand
$3.6
million
and
$2.9
million
,
respectively,
in
discontinued
operations.
The
litigation58 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSsettlement
accrual
relates
to
litigation
matters
that
were
either
settled
or
a
firm
offer
for
settlement
was
extended,
thereby
establishing
an
accrual
amount
that
isboth
probable
and
reasonably
estimable.Specific MattersIntellectual Property LitigationZillowLendingTree v. Zillow, Inc., et al. Civil Action No. 3:10-cv-439 .
On
September
8,
2010,
the
Company
filed
an
action
for
patent
infringement
in
the
U.S.District
Court
for
the
Western
District
of
North
Carolina
against
Zillow,
Inc.,
Nextag,
Inc.,
Quinstreet,
Inc.,
Quinstreet
Media,
Inc.
and
Adchemy,
Inc.
Thecomplaint
was
amended
to
include
Leadpoint,
Inc.
d/b/a
Securerights
on
September
24,
2010.
The
complaint
alleged
that
each
of
the
defendants
infringe
one
orboth
of
the
Company's
patents—U.S.
Patent
No.
6,385,594,
entitled
"Method
and
Computer
Network
for
Co-Ordinating
a
Loan
over
the
Internet,"
and
U.S.
PatentNo.
6,611,816,
entitled
"Method
and
Computer
Network
for
Co-Ordinating
a
Loan
over
the
Internet."
The
defendants
in
this
action
asserted
various
defenses
andcounterclaims
against
the
Company,
including
the
assertion
by
certain
of
the
defendants
of
counterclaims
alleging
illegal
monopolization
via
the
Company'smaintenance
of
the
asserted
patents.
Defendant
NexTag
asserted
defenses
of
laches
and
equitable
estoppel.
In
July
2011,
the
Company
reached
a
settlementagreement
with
Leadpoint,
Inc.,
pursuant
to
which
all
claims
against
Leadpoint,
Inc.
and
all
counterclaims
against
the
Company
by
Leadpoint,
Inc.
were
dismissed.In
November
2012,
the
Company
reached
a
settlement
agreement
with
Quinstreet,
Inc.
and
Quinstreet
Media,
Inc.
(collectively,
the
"Quinstreet
Parties"),
pursuantto
which
all
claims
against
the
Quinstreet
Parties
and
all
counterclaims
against
the
Company
by
the
Quinstreet
Parties
were
dismissed.
After
an
unsuccessfulattempt
to
reach
settlement
through
mediation
with
the
remaining
parties,
this
matter
went
to
trial
beginning
in
February
2014,
and
on
March
12,
2014,
the
juryreturned
a
verdict.
The
jury
found
that
the
defendants
Zillow,
Inc.,
Adchemy,
Inc.,
and
NexTag,
Inc.
did
not
infringe
the
two
patents
referenced
above
anddetermined
that
those
patents
are
invalid
due
to
an
inventorship
defect,
and
the
court
found
that
NexTag
was
entitled
to
defenses
of
laches
and
equitable
estoppel.The
jury
found
in
the
Company’s
favor
on
the
defendants'
counterclaims
alleging
inequitable
conduct
and
antitrust
violations.
Judgment
was
entered
on
March
31,2014.
After
the
court
entered
judgment,
on
May
27,
2014,
the
Company
reached
a
settlement
agreement
with
defendant
Adchemy,
Inc.,
including
an
agreement
todismiss
and
withdraw
all
claims,
counterclaims,
and
motions
between
the
Company
and
Adchemy,
Inc.
As
a
result,
a
joint
and
voluntary
dismissal
was
filed
June12,
2014
with
respect
to
claims
between
the
Company
and
Adchemy.
The
parties
filed
various
post-trial
motions;
in
particular,
defendants
collectively
sought
up
to$9.7
million
in
fees
and
costs.
On
October
9,
2014,
the
court
denied
the
Company's
post-trial
motion
for
judgment
as
a
matter
of
law
and
denied
Zillow's
post-trialmotions
for
sanctions
and
attorneys'
fees.
The
court
also
denied
in
part
and
granted
in
part
NexTag's
post-trial
motion
for
attorneys'
fees,
awarding
NexTag
aportion
of
its
attorneys'
fees
and
costs
totaling
$2.3
million
,
plus
interest.
The
trial
and
post-trial
motion
process
is
now
complete.In
November
2014,
the
Company
filed
a
notice
of
appeal
to
the
U.S.
Court
of
Appeals
for
the
Federal
Circuit
with
respect
to
the
jury
verdict
concerningZillow,
Inc.
and
Nextag,
Inc.
and
the
award
of
attorneys'
fees.
In
March
2015,
the
U.S.
Court
of
Appeals
for
the
Federal
Circuit
granted
the
Company's
motion
tostay
appellate
briefing
pending
an
en banc review
by
such
court
of
the
laches
defense
in
an
unrelated
patent
infringement
matter
and
ruled
in
favor
of
Zillow,
Inc.on
an
immaterial
amount
of
costs
related
to
the
trial
process.
In
June
2015,
the
Company
reached
a
settlement
agreement
for
$1.1
million
with
defendant
NexTagpursuant
to
which
the
Company
dismissed
its
appeal
of
the
jury
verdict
and
the
award
of
attorney's
fees
concerning
NexTag,
and
NexTag
dismissed
its
cross-appeal
and
claims
relating
to
the
jury
verdict
and
the
award
of
attorneys'
fees.
In
July
2015,
the
stay
was
lifted
on
the
Company's
appeal
with
respect
to
the
juryverdict
concerning
Zillow,
Inc.
As
of
February
2016,
the
appeal
was
fully
briefed.Next Advisor, Inc.Next Advisor, Inc. v. LendingTree, Inc. and LendingTree, LLC, No. 15-cvs-20775 (N.C. Super. Ct.).
On
November
6,
2015,
the
plaintiff
filed
this
actionagainst
LendingTree,
Inc.
and
LendingTree,
LLC
(together
“LendingTree”).
The
plaintiff
generally
alleges
that
LendingTree
breached
a
non-disclosure
agreementand
misappropriated
trade
secrets
in
the
context
of
a
potential
business
acquisition
of
the
plaintiff
by
LendingTree.
Based
upon
these
allegations,
the
plaintiffasserts
claims
for
breach
of
contract,
misappropriation
of
trade
secrets,
and
violation
of
the
North
Carolina
Unfair
and
Deceptive
Trade
Practices
Act.
The
plaintiffseeks
damages,
attorneys’
fees
and
injunctive
relief.On
December
16,
2015,
LendingTree
filed
its
answer
to
the
plaintiff’s
complaint,
denying
the
material
allegations
and
asserting
numerous
defenses
thereto.
Discovery
is
ongoing
in
this
matter.
LendingTree
believes
that
the
plaintiff’s
allegations
lack
merit
and
intends
to
vigorously
defend
this
action.59 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSLegal MattersMassachusetts Division of BanksOn
February
11,
2011,
the
Massachusetts
Division
of
Banks
(the
"Division")
delivered
a
Report
of
Examination/Inspection
to
LendingTree,
LLC,
whichidentified
various
alleged
violations
of
Massachusetts
and
federal
laws,
including
the
alleged
insufficient
delivery
by
LendingTree,
LLC
of
various
disclosures
toits
customers.
On
October
14,
2011,
the
Division
provided
a
proposed
Consent
Agreement
and
Order
to
settle
the
Division's
allegations,
which
the
Division
hadshared
with
other
state
mortgage
lending
regulators.
Thirty-four
of
such
state
mortgage
lending
regulators
(the
"Joining
Regulators")
indicated
that
if
LendingTree,LLC
would
enter
into
the
Consent
Agreement
and
Order,
they
would
agree
not
to
pursue
any
analogous
allegations
that
they
otherwise
might
assert.
None
of
theJoining
Regulators
have
asserted
any
such
allegations.
The
proposed
Consent
Agreement
and
Order
calls
for
a
fine
to
be
allocated
among
the
Division
and
the
Joining
Regulators
and
for
LendingTree,
LLC
toadopt
various
new
procedures
and
practices.
The
Company
has
commenced
negotiations
toward
an
acceptable
Consent
Agreement
and
Order.
It
does
not
believeits
mortgage
marketplace
business
violated
any
federal
or
state
mortgage
lending
laws;
nor
does
it
believe
that
any
past
operations
of
the
mortgage
business
haveresulted
in
a
material
violation
of
any
such
laws.
Should
the
Division
or
any
Joining
Regulator
bring
any
actions
relating
to
the
matters
alleged
in
theFebruary
2011
Report
of
Examination/Inspection,
the
Company
intends
to
defend
against
such
actions
vigorously.
The
range
of
possible
loss
is
estimated
to
bebetween
$0.5
million
and
$6.5
million
,
and
a
reserve
of
$0.5
million
has
been
established
for
this
matter
in
the
accompanying
consolidated
balance
sheet
as
ofDecember
31,
2015
.Litigation Related to Discontinued OperationsDijkstraLijkel Dijkstra v. Harry Carenbauer, Home Loan Center, Inc. et al., No. 5:11-cv-152-JPB (U.S. Dist. Ct., N.D.WV).
In
November
2008,
the
plaintiffs
filed
aputative
class
action
in
Circuit
Court
of
Ohio
County,
West
Virginia
against
Harry
Carenbauer,
HLC,
HLC
Escrow,
Inc.
et
al.
The
complaint
alleges
that
HLCengaged
in
the
unauthorized
practice
of
law
in
West
Virginia
by
permitting
persons
who
were
neither
admitted
to
the
practice
of
law
in
West
Virginia
nor
under
thedirect
supervision
of
a
lawyer
admitted
to
the
practice
of
law
in
West
Virginia
to
close
mortgage
loans.
The
plaintiffs
assert
claims
for
declaratory
judgment,contempt,
injunctive
relief,
conversion,
unjust
enrichment,
breach
of
fiduciary
duty,
intentional
misrepresentation
or
fraud,
negligent
misrepresentation,
violationof
the
West
Virginia
Consumer
Credit
and
Protection
Act
("CCPA"),
violation
of
the
West
Virginia
Lender,
Broker
&
Services
Act,
civil
conspiracy,
outrage
andnegligence.
The
claims
against
all
defendants
other
than
Mr.
Carenbauer,
HLC
and
HLC
Escrow,
Inc.
have
been
dismissed.
The
case
was
removed
to
federal
courtin
October
2011.
On
January
3,
2013,
the
court
granted
a
conditional
class
certification
only
with
respect
to
the
declaratory
judgment,
contempt,
unjust
enrichmentand
CCPA
claims.
The
conditional
class
included
consumers
with
mortgage
loans
in
effect
any
time
after
November
8,
2007
who
obtained
such
loans
throughHLC,
and
whose
loans
were
closed
by
persons
not
admitted
to
the
practice
of
law
in
West
Virginia
or
by
persons
not
under
the
direct
supervision
of
a
lawyeradmitted
to
the
practice
of
law
in
West
Virginia.
In
February
2014,
the
court
granted
and
denied
certain
of
each
party's
motions
for
summary
judgment.
Withrespect
to
the
Class
Claims,
the
court
granted
plaintiff's
motions
for
summary
judgment
with
respect
to
declaratory
judgment,
unjust
enrichment
and
violation
ofthe
CCPA.
The
court
granted
HLC's
motion
for
summary
judgment
with
respect
to
contempt.
In
addition,
the
court
denied
HLC's
motion
to
decertify
the
class.With
respect
to
the
claims
applicable
to
the
named
plaintiff
only
(the
"Individual
Claims"),
HLC's
motions
for
summary
judgment
were
granted
with
respect
toconversion,
breach
of
fiduciary
duty,
intentional
misrepresentation,
negligent
misrepresentation
and
outrage.
HLC
and
the
plaintiff
settled
the
remaining
IndividualClaims
in
June
2014.In
July
2014,
the
court
awarded
damages
to
plaintiffs
in
the
amount
of
$2.8
million
(the
"Class
Damages
Award").
HLC
filed
a
notice
of
appeal
in
August2014
and
in
September
2014,
plaintiffs
filed
a
motion
to
dismiss
the
appeal.
In
December
2014,
the
U.S.
Court
of
Appeals
for
the
Fourth
Circuit
determined
thatthe
district
court's
order
was
not
yet
final,
and
accordingly,
HLC's
appeal
was
dismissed.
In
July
2015,
the
district
court
ordered
that
the
Class
Damages
Award
beallocated
such
that
two-thirds
of
the
Class
Damages
Award
would
be
paid
to
the
class
members
and
one-third
of
the
Class
Damages
Award
would
be
paid
to
theplaintiffs'
attorneys.
In
addition,
the
court
ordered
that
HLC
reimburse
the
class
for
attorneys'
fees
by
making
an
incremental
payment
of
$389,500
attorneys'
feeaward
be
paid
by
HLC
to
the
plaintiffs'
attorneys.
The
judge
also
awarded
prejudgment
interest
to
plaintiffs.
On
July
30,
2015,
the
district
court
judge
entered
afinal
judgment
order
in
this
matter.
On
August
27,
2015,
HLC
filed
its
notice
of
appeal
to
the
U.S.
Court
of
Appeals
for
the
Fourth
Circuit
with
respect
to
the
finaljudgment,
the
order
granting
attorneys'
fees,
and
the
orders
on
class
damages,
the
pretrial
conference,
motions
and
class
certifications.
In
January
2015,
the
partiesreached
a
verbal
settlement
agreement
with
respect
to
such
matters,
subject
to
agreement
of
non-monetary
terms
of
settlement,
execution
of
a
mutually
agreeablewritten
settlement
agreement,
approval
of
such
settlement
by
the
district
court
judge
and60 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSfulfillment
of
certain
class
notice
and
administration
requirements.
A
reserve
of
$3.2
million
has
been
established
for
this
matter
in
the
accompanying
consolidatedbalance
sheet
as
of
December
31,
2015
,
of
which
some
or
all
may
be
covered
by
insurance.Residential Funding CompanyResidential Funding Company, LLC v Home Loan Center, Inc., No. 13-cv-3451 (U.S. Dist. Ct., Minn.).
On
or
about
December
16,
2013,
Home
Loan
Center,Inc.
was
served
in
the
above
captioned
matter.
Generally,
Residential
Funding
Company,
LLC
("RFC")
seeks
damages
for
breach
of
contract
and
indemnificationfor
certain
residential
mortgage
loans
as
well
as
residential
mortgage-backed
securitizations
("RMBS")
containing
mortgage
loans.
RFC
asserts
that,
beginning
in2008,
RFC
faced
massive
repurchase
demands
and
lawsuits
from
purchasers
or
insurers
of
the
loans
and
RMBS
that
RFC
had
sold.
RFC
filed
for
bankruptcyprotection
in
May
2012.
Plaintiff
alleges
that,
after
RFC
filed
for
Chapter
11
protection,
hundreds
of
proofs
of
claim
were
filed,
many
of
which
mirrored
thelitigation
filed
against
RFC
prior
to
its
bankruptcy.In
December
2013,
the
United
States
Bankruptcy
Court
for
the
Southern
District
of
New
York
entered
an
Order
confirming
the
Second
Amended
JointChapter
11
Plan
Proposed
by
Residential
Capital,
LLC
et
al.
and
the
Official
Committee
of
Unsecured
Creditors.
Plaintiff
then
began
filing
substantially
similarcomplaints
against
approximately
80
of
the
loan
originators
from
whom
RFC
had
purchased
loans,
including
Home
Loan
Center,
in
federal
and
state
courts
inMinnesota
and
New
York.
In
each
case,
Plaintiff
claims
that
the
defendant
is
liable
for
a
portion
of
the
global
settlement
in
RFC’s
bankruptcy.Plaintiff
asserts
two
claims
against
HLC:
(1)
breach
of
contract
based
on
HLC’s
alleged
breach
of
representations
and
warranties
concerning
the
quality
andcharacteristics
of
the
mortgage
loans
it
sold
to
RFC
(Count
One);
and
(2)
contractual
indemnification
for
alleged
liabilities,
losses,
and
damages
incurred
by
RFCarising
out
of
purported
defects
in
loans
that
RFC
purchased
from
HSBC
and
sold
to
third
parties
(Count
Two).
Plaintiff
alleges
that
the
“types
of
defects”contained
in
the
loans
it
purchased
from
HLC
included
“income
misrepresentation,
employment
misrepresentation,
appraisal
misrepresentations
or
inaccuracies,undisclosed
debt,
and
missing
or
inaccurate
documents.”HLC
filed
a
Motion
to
Dismiss
under
Rule
12(b)(6)
of
the
Federal
Rules
of
Civil
Procedure
or,
in
the
alternative,
a
Motion
for
More
Definite
Statement
underRule
12(e).
On
June
25,
2015
the
judge
denied
HLC's
motion.On
July
9,
2015,
HLC
filed
its
answer
to
RFC’s
complaint,
denying
the
material
allegations
of
the
complaint
and
asserting
numerous
defenses
thereto.
Discovery
is
ongoing
in
this
matter.
HLC
intends
to
vigorously
defend
this
action.Lehman Brothers Holdings, Inc. Demand LetterLehman Brothers Holdings Inc. v. 1 st Advantage Mortgage, LLC et al., Case No. 08-13555 (SCC) (Bankr. S.D.N.Y.).
In
February
2016,
Lehman
BrothersHoldings
Inc.
(“LBHI”)
filed
an
Adversary
Complaint
against
Home
Loan
Center
and
approximately
149
other
defendants
(the
“Complaint”).
The
Complaintgenerally
seeks
(1)
a
declaratory
judgment
that
the
settlements
entered
by
LBHI
with
Fannie
Mae
and
Freddie
Mac
as
part
of
LBHI’s
bankruptcy
proceedings
gaverise
to
LBHI’s
contractual
indemnification
claims
against
defendants
alleged
in
the
Complaint;
(2)
indemnification
from
HLC
and
the
other
defendants
for
lossesallegedly
incurred
by
LBHI
in
respect
of
defective
mortgage
loans
sold
by
defendants
to
LBHI
or
its
affiliates;
and
(3)
interest,
attorneys’
fees
and
costs
incurredby
LBHI
in
the
litigation.
HLC
intends
to
defend
this
action
vigorously.
HLC
had
previously
received
a
demand
letter
(the
“Letter”)
from
LBHI
in
December2014
with
respect
to
64
loans
(the
“Loans”)
that
LBHI
alleged
were
sold
by
HLC
to
Lehman
Brothers
Bank
FSB
(“LBB”)
between
2004
and
2008
pursuant
to
aloan
purchase
agreement
(the
“LPA”)
between
HLC
and
LBB.
The
Letter
generally
sought
indemnification
from
HLC
in
accordance
with
the
LPA
for
certainclaims
that
LBHI
alleged
it
allowed
in
its
bankruptcy
with
respect
to
the
Loans.
HLC
and
LBHI
are
currently
engaged
in
negotiations
with
respect
to
thesematters.
A
reserve
of
$0.5
million
with
respect
to
the
Loans
is
included
in
the
accompanying
consolidated
balance
sheet
as
of
December
31,
2015
.NOTE 13—RELATED PARTY TRANSACTIONSDuring
2015,
the
Company
made
$0.7
million
in
payments
to
a
marketing
partner
through
the
normal
course
of
business.
One
of
the
Company's
board
ofdirectors
also
serves
as
a
director
to
the
marketing
partner.During
2013,
the
Company
made
a
contribution
of
$0.4
million
to
an
educational
trust.
The
Company's
Chairman
and
Chief
Executive
Officer
is
the
trustee.However,
he
does
not
receive
compensation
as
trustee
and
neither
he
nor
any
of
his
family
members
are
entitled
to
distributions
from
the
trust.61 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 14—BENEFIT PLANSThe
Company
operates
a
retirement
savings
plan
for
its
employees
in
the
United
States
that
is
qualified
under
Section
401(k)
of
the
Internal
Revenue
Code.Employees
are
eligible
to
enroll
in
the
plan
upon
date
of
hire.
Participating
employees
may
contribute
up
to
50%
of
their
pre-tax
earnings,
but
not
more
thanstatutory
limits
(generally
$18,000
,
$17,500
and
$17,500
for
2015
,
2014
and
2013
,
respectively).
The
company
match
contribution
is
fifty
cents
for
each
dollar
aparticipant
contributes
to
the
plan,
with
a
maximum
contribution
of
6%
of
a
participant's
eligible
earnings.
Matching
contributions
are
invested
in
the
same
manneras
each
participant's
voluntary
contributions
in
the
investment
options
provided
under
the
plan.
LendingTree
stock
is
not
included
in
the
available
investmentoptions
or
the
plan
assets.
Funds
contributed
to
the
plan
vest
according
to
the
participant's
years
of
service,
with
less
than
three
years
of
service
vesting
at
0%
,
andthree
years
or
more
of
service
vesting
at
100%
.
Matching
contributions
were
approximately
$0.5
million
,
$0.5
million
and
$0.2
million
for
the
years
endedDecember
31,
2015
,
2014
and
2013
,
respectively.NOTE 15—RESTRUCTURING EXPENSEAccrued
restructuring
costs
primarily
relate
to
lease
obligations
for
call
center
leases
exited
in
2010,
which
were
completed
in
2015.
Restructuring
expenseand
payments
against
liabilities
are
as
follows
(in thousands) : ContinuingLeaseObligationsBalance at December 31, 2012$906Restructuring
expense56Payments(500)Balance at December 31, 2013$462Restructuring
expense13Payments(297)Balance at December 31, 2014$178Restructuring
income(29)Payments(149)Balance at December 31, 2015$—NOTE 16 —DISCONTINUED OPERATIONSThe
revenue
and
net
(loss)
income
that
are
reported
as
discontinued
operations
in
the
accompanying
consolidated
statements
of
operations
and
comprehensiveincome
are
as
follows
(in thousands) : Year Ended December 31, 2015
2014
2013Revenue$6
$14,256
$(1,520)
(Loss)
income
before
income
taxes
(a)$(5,047)
$10,392
$(4,887)Income
tax
benefit
(expense)1,778
(543)
(54)Gain
from
sale
of
discontinued
operations,
net
of
tax—
—
9,561Net (loss) income$(3,269)
$9,849
$4,620(a)Income
before
income
taxes
for
the
year
ended
December
31,
2014
includes
income
from
a
reduction
in
the
loan
loss
reserve
of
$14.1
million
.
Seeadditional
information
in
"Loan
Loss
Obligations"
below.LendingTree LoansOn
June
6,
2012,
the
Company
sold
substantially
all
of
the
operating
assets
of
its
LendingTree
Loans
business
for
$55.9
million
in
cash
to
a
wholly-ownedsubsidiary
of
Discover
Financial
Services
("Discover").
Of
the
total
purchase
price,
$8.0
million
was
paid
prior
to
the
closing,
$37.9
million
was
paid
upon
theclosing
and
the
contingent
amount
of
$10.0
million
was
paid
and
recognized
as
a
gain
from
sale
of
discontinued
operations
in
2013.62 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDiscover
generally
did
not
assume
liabilities
of
the
LendingTree
Loans
business
that
arose
before
the
closing
date,
except
for
certain
liabilities
directly
relatedto
assets
Discover
acquired.
Of
the
purchase
price
paid,
as
of
December
31,
2015,
$4.0
million
is
being
held
in
escrow
in
accordance
with
the
agreement
withDiscover
for
certain
loan
loss
obligations
that
remain
with
the
Company
following
the
sale.
As
a
result
of
a
settlement
agreement
in
2014
with
a
secondary
marketpurchaser
of
loans,
$12.1
million
was
released
from
escrow
in
December
2015.
The
escrowed
amount
is
recorded
as
restricted
cash
at
December
31,
2015.Separate
from
the
asset
purchase
agreement,
LendingTree
agreed
to
provide
certain
marketing-related
services
to
Discover
in
connection
with
its
mortgageorigination
business
for
approximately
seventeen
months
following
the
closing,
or
such
earlier
point
as
the
agreed-upon
services
are
satisfactorily
completed.
Theservices
were
satisfactorily
completed
in
2013.Discover
participated
as
a
marketplace
lender
from
closing
of
the
transaction
through
July
2015.The
Company
agreed
to
indemnify
Discover
for
a
breach
or
inaccuracy
of
any
representation,
warranty
or
covenant
made
by
it
in
the
asset
purchaseagreement,
for
any
liability
of
LendingTree
Loans
that
was
not
assumed,
for
any
claims
by
its
stockholders
against
Discover
and
for
its
failure
to
comply
with
anyapplicable
bulk
sales
law,
subject
to
certain
limitations.
Discover
submitted
a
claim
for
indemnification
relating
to
the
sale
prior
to
the
closing
of
certain
loans
thatwere
listed
in
the
asset
purchase
agreement
as
to
be
conveyed
to
Discover
at
closing.
In
May
2013,
this
indemnification
claim
and
other
miscellaneous
items
weresettled
by
agreeing
to
credit
Discover
for
$1.3
million
in
future
services.
A
majority
of
these
credits
were
applied
against
services
during
the
year
endedDecember
31,
2013.
The
remaining
credits
were
exhausted
in
2014.Significant Assets and Liabilities of LendingTree LoansUpon
closing
of
the
sale
of
substantially
all
of
the
operating
assets
of
the
LendingTree
Loans
business
on
June
6,
2012,
LendingTree
Loans
ceased
to
originateconsumer
loans.
The
remaining
operations
are
being
wound
down.
These
wind-down
activities
have
included,
among
other
things,
selling
the
balance
of
loans
heldfor
sale
to
investors,
paying
off
and
then
terminating
the
warehouse
lines
of
credit
and
settling
derivative
obligations,
all
of
which
have
been
completed.
Liabilityfor
losses
on
previously
sold
loans
will
remain
with
LendingTree
Loans
and
are
discussed
below.Loan Loss ObligationsLendingTree
Loans
sold
loans
it
originated
to
investors
on
a
servicing-released
basis,
so
the
risk
of
loss
or
default
by
the
borrower
was
generally
transferred
tothe
investor.
However,
LendingTree
Loans
was
required
by
these
investors
to
make
certain
representations
and
warranties
relating
to
credit
information,
loandocumentation
and
collateral.
These
representations
and
warranties
may
extend
through
the
contractual
life
of
the
loan.
Subsequent
to
the
loan
sale,
if
underwritingdeficiencies,
borrower
fraud
or
documentation
defects
are
discovered
in
individual
loans,
LendingTree
Loans
may
be
obligated
to
repurchase
the
respective
loan
orindemnify
the
investors
for
any
losses
from
borrower
defaults
if
such
deficiency
or
defect
cannot
be
cured
within
the
specified
period
following
discovery.
In
thecase
of
early
loan
payoffs
and
early
defaults
on
certain
loans,
LendingTree
Loans
may
be
required
to
repay
all
or
a
portion
of
the
premium
initially
paid
by
theinvestor.HLC,
a
subsidiary
of
the
Company,
continues
to
be
liable
for
these
indemnification
obligations,
repurchase
obligations
and
premium
repayment
obligationsfollowing
the
sale
of
substantially
all
of
the
operating
assets
of
its
LendingTree
Loans
business
in
the
second
quarter
of
2012.
As
of
December
31,
2015
,approximately
$4.0
million
is
being
held
in
escrow
pending
resolution
of
certain
of
these
contingent
liabilities.Prior
to
the
sale
of
substantially
all
of
the
operating
assets
of
LendingTree
Loans
in
June
2012,
it
originated
approximately
234,000
loans
with
an
originalissue
balance
of
$38.9
billion
.During
the
fourth
quarter
of
2015,
LendingTree
Loans
completed
a
settlement
agreement
for
$0.6
million
with
one
of
the
investors
to
which
it
had
sold
loans.This
investor
accounted
for
approximately
10%
of
the
total
number
of
loans
sold
and
12%
of
the
original
issue
balance.
This
settlement
related
to
all
existing
andfuture
losses
on
loans
sold
to
this
investor.During
the
fourth
quarter
of
2014,
LendingTree
Loans
completed
a
settlement
agreement
for
$5.4
million
with
the
largest
investor
to
which
it
had
sold
loans.This
investor
accounted
for
approximately
40%
of
both
the
total
number
of
loans
sold
and
the
original
issue
balance.
This
settlement
related
to
all
existing
andfuture
losses
on
loans
sold
to
this
investor.
The
settlement
was
paid
in
the
fourth
quarter
of
2014
with
restricted
cash
of
$3.1
million
and
cash
on
hand
of
$2.3million
.
The
settlement
with
this
investor
in
the
fourth
quarter
of
2014
and
the
impact
this
settlement
had
on
the
estimate
of
the
remaining
loan
loss
obligationsresulted
in
income
of
$14.1
million
,
which
was
included
in
income
from
discontinued
operations
in
the
accompanying
consolidated
statements
of
operations
andcomprehensive
income
during
2014.
The
adjustment
to
the
loan
loss
reserve
did
not
result
in
tax
expense
recognition
due
to
the
Company's
full
valuationallowance
against
its
deferred
tax
assets.In
the
second
quarter
of
2014,
LendingTree
Loans
completed
settlements
with
two
buyers
of
previously
purchased
loans.63 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe
Company
has
been
negotiating
with
certain
of
the
remaining
secondary
market
purchasers
to
settle
any
existing
and
future
contingent
liabilities,
but
itmay
not
be
able
to
complete
such
negotiations
on
acceptable
terms,
or
at
all.
Because
LendingTree
Loans
does
not
service
the
loans
it
sold,
it
does
not
maintain
norgenerally
have
access
to
the
current
balances
and
loan
performance
data
with
respect
to
the
individual
loans
previously
sold
to
investors.
Accordingly,
LendingTreeLoans
is
unable
to
determine,
with
precision,
its
maximum
exposure
for
breaches
of
the
representations
and
warranties
it
made
to
the
investors
that
purchased
suchloans.During
the
fourth
quarter
of
2013,
the
Company
revised
its
estimation
process
for
evaluating
the
adequacy
of
the
reserve
for
loan
losses
to
use
a
settlementdiscount
framework.
This
model
estimates
lifetime
losses
on
the
population
of
remaining
loans
originated
and
sold
by
LendingTree
Loans
using
actual
defaults
forloans
with
similar
characteristics
and
projected
future
defaults.
It
also
considers
the
likelihood
of
claims
expected
due
to
alleged
breaches
of
representations
andwarranties
made
by
LendingTree
Loans
and
the
percentage
of
those
claims
investors
estimate
LendingTree
Loans
may
agree
to
repurchase.
A
settlement
discountfactor
is
then
applied
to
the
result
of
the
foregoing
to
reflect
publicly-announced
bulk
settlements
for
similar
loan
types
and
vintages,
as
well
as
LendingTreeLoans'
non-operating
status,
in
order
to
estimate
a
range
of
potential
obligation.The
estimated
range
of
remaining
loan
losses
using
this
settlement
discount
framework
was
determined
to
be
$5.7
million
to
$10.3
million
at
December
31,2015
.
The
reserve
balance
recorded
as
of
December
31,
2015
was
$8.1
million
.
Management
has
considered
both
objective
and
subjective
factors
in
theestimation
process,
but
given
current
general
industry
trends
in
mortgage
loans
as
well
as
housing
prices
and
market
expectations,
actual
losses
related
toLendingTree
Loans'
obligations
could
vary
significantly
from
the
obligation
recorded
as
of
the
balance
sheet
date
or
the
range
estimated
above.Additionally,
LendingTree
has
guaranteed
certain
loans
sold
to
two
investors
in
the
event
that
LendingTree
Loans
is
unable
to
satisfy
its
repurchase
andwarranty
obligations
related
to
such
loans.Based
on
historical
experience,
it
is
anticipated
that
LendingTree
Loans
will
continue
to
receive
repurchase
requests
and
incur
losses
on
loans
sold
in
prioryears.The
activity
related
to
loss
reserves
on
previously
sold
loans
is
as
follows
(in thousands) : Year Ended December 31, 2015
2014
2013Loan loss reserve, beginning of period$8,750
$28,543
$27,182Provision
adjustments
(a)—
(14,144)
1,531Charge-offs
to
reserves(623)
(5,649)
(170)Loan loss reserve, end of period$8,127
$8,750
$28,543(a)As
discussed
above,
during
2014,
LendingTree
Loans
completed
a
settlement
agreement
with
the
largest
investor
to
which
it
had
sold
loans,
resulting
inan
adjustment
to
the
provision.The
liability
for
losses
on
previously
sold
loans
is
presented
as
current
liabilities
of
discontinued
operations
in
the
accompanying
consolidated
balance
sheetsas
of
December
31,
2015
and
2014
.NOTE 17 —SEGMENT INFORMATIONDuring
2015,
management
made
certain
changes
to
its
organizational
structure
that
impacted
its
previous
operating
segments.
As
a
result,
managementconcluded
it
had
one
reportable
segment
representing
the
Company's
Lending
activities.
Previously
reported
segment
results
have
been
revised
to
conform
to
theCompany's
one
reportable
segment
at
December
31,
2015.Mortgage
and
non-mortgage
product
revenue
is
as
follows
(in thousands) : Year Ended December 31, 2015
2014
2013Mortgage
products$165,272
$134,137
123,091Non-mortgage
products88,944
33,213
16,149Total revenue$254,216
$167,350
$139,24064 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 18—QUARTERLY FINANCIAL INFORMATION (UNAUDITED)The
following
tables
set
forth
summary
financial
information
for
the
years
ended
December
31,
2015
and
2014: Q1
Q2
Q3
Q4
(in thousands, except per share amounts)2015
Revenue$50,935
$55,136
$69,804
$78,341Operating
income5,718
6,775
7,773
8,248Income
from
continuing
operations5,413
6,439
7,383
32,081(Loss)
income
from
discontinued
operations(226)
(1,717)
(1,295)
(31)Net
income
and
comprehensive
income$5,187
$4,722
$6,088
$32,050Income
per
share
from
continuing
operations:
Basic$0.48
$0.57
$0.65
$2.69Diluted$0.44
$0.52
$0.59
$2.47(Loss)
income
per
share
from
discontinued
operations:
Basic$(0.02)
$(0.15)
$(0.11)
$—Diluted$(0.02)
$(0.14)
$(0.10)
$—Net
income
per
share:
Basic$0.46
$0.41
$0.53
$2.69Diluted$0.43
$0.38
$0.49
$2.47 Q1
Q2
Q3
Q4
(in thousands, except per share amounts)2014
Revenue$40,036
$42,144
$41,306
$43,864Operating
(loss)
income(5,835)
2,600
554
1,712(Loss)
income
from
continuing
operations(5,834)
2,683
555
2,109(Loss)
income
from
discontinued
operations(574)
(2,931)
(174)
13,528Net
(loss)
income
and
comprehensive
(loss)
income$(6,408)
$(248)
$381
$15,637(Loss)
income
per
share
from
continuing
operations:
Basic$(0.52)
$0.24
$0.05
$0.19Diluted$(0.52)
$0.23
$0.05
$0.18(Loss)
income
per
share
from
discontinued
operations:
Basic$(0.05)
$(0.26)
$(0.02)
$1.21Diluted$(0.05)
$(0.25)
$(0.01)
$1.12Net
(loss)
income
per
share:
Basic$(0.58)
$(0.02)
$0.03
$1.39Diluted$(0.58)
$(0.02)
$0.03
$1.30NOTE 19 —SUBSEQUENT EVENTSCommon Stock Repurchase ProgramIn
January
2016,
the
board
of
directors
authorized
and
the
Company
announced
the
addition
of
up
to
$50.0
million
under
the
stock
repurchase
program.Between
January
1,
2016
and
February
26,
2016,
the
Company
purchased
573,370
shares
of
its
common
stock
for
aggregate
consideration
of
$40.0
million
.65 LENDINGTREE, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSIn
February
2016,
the
board
of
directors
further
authorized
and
the
Company
announced
the
addition
of
up
to
$40.0
million
under
the
stock
repurchaseprogram.
As
of
February
26,
2016,
approximately
$57.3
million
remains
authorized
for
share
repurchase.Revolving Credit FacilityOn
February
25,
2016,
the
Company
and
its
subsidiary,
LendingTree,
LLC,
entered
into
the
first
amendment
to
credit
agreement
which
amends
the
RevolvingCredit
Facility
to
increase
the
amount
of
permitted
restricted
payments
under
the
agreement.
See Note
10
—Revolving
Credit
Facility
for
a
description
of
theRevolving
Credit
Facility.66 Table of ContentsITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial DisclosureNot
applicable.ITEM 9A. Controls and ProceduresEvaluation of Disclosure Controls and ProceduresAs
required
by
Rule
13a-15(b)
of
the
Securities
Exchange
Act
of
1934
(the
"Exchange
Act"),
management,
with
the
participation
of
our
principal
executiveofficer
(Chief
Executive
Officer)
and
our
principal
financial
officer
(Chief
Financial
Officer),
evaluated,
as
of
the
end
of
the
period
covered
by
this
report,
theeffectiveness
of
our
disclosure
controls
and
procedures
as
defined
in
Exchange
Act
Rule
13a-15(e).
Management
necessarily
applied
its
judgment
in
assessing
thecosts
and
benefits
of
such
controls
procedures,
which
by
their
nature
can
provide
only
reasonable
assurance
regarding
management's
control
objectives.Management
does
not
expect
that
our
disclosure
controls
and
procedures
will
prevent
or
detect
all
errors
and
fraud.
A
control
system,
irrespective
of
how
well
it
isdesigned
and
operated,
can
only
provide
reasonable
assurance
and
cannot
guarantee
that
it
will
succeed
in
its
stated
objectives.Based
upon
that
evaluation,
our
Chief
Executive
Officer
and
Chief
Financial
Officer
concluded
that,
as
of
December
31,
2015
,
our
disclosure
controls
andprocedures
were
effective
to
provide
reasonable
assurance
that
the
information
required
to
be
disclosed
by
us
in
the
reports
we
file
or
submit
under
the
ExchangeAct
is
recorded,
processed,
summarized
and
reported
within
the
time
periods
specified
in
the
SEC's
rules
and
forms,
and
that
such
information
is
accumulated
andcommunicated
to
our
management,
including
our
Chief
Executive
Officer
and
Chief
Financial
Officer,
as
appropriate
to
allow
timely
decisions
regarding
requireddisclosure.Management's Report on Internal Control over Financial ReportingManagement
is
responsible
for
establishing
and
maintaining
adequate
internal
control
over
financial
reporting,
as
defined
in
Rule
13a-15(f)
under
theExchange
Act.
Our
internal
control
over
financial
reporting
is
a
process
designed
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reportingand
the
preparation
of
financial
statements
for
external
purposes
in
accordance
with
GAAP.
Our
internal
control
over
financial
reporting
includes
those
policiesand
procedures
that:
(1)
pertain
to
the
maintenance
of
records
that
in
reasonable
detail
accurately
and
fairly
reflect
our
transactions
and
dispositions
of
our
assets;(2)
provide
reasonable
assurance
that
transactions
are
recorded
as
necessary
to
permit
preparation
of
financial
statements
in
accordance
with
GAAP
and
that
ourreceipts
and
expenditures
are
being
made
only
in
accordance
with
authorizations
of
our
management
and
our
directors;
and
(3)
provide
reasonable
assuranceregarding
prevention
or
timely
detection
of
unauthorized
acquisition,
use
or
disposition
of
our
assets
that
could
have
a
material
effect
on
the
financial
statements.Because
of
its
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements.
Also,
projections
of
any
evaluation
ofeffectiveness
to
future
periods
are
subject
to
the
risk
that
controls
may
become
inadequate
because
of
changes
in
conditions,
or
that
the
degree
of
compliance
withthe
policies
or
procedures
may
deteriorate.Management,
with
the
participation
of
our
Chief
Executive
Officer
and
Chief
Financial
Officer,
assessed
the
effectiveness
of
our
internal
control
overfinancial
reporting
as
of
December
31,
2015
.
In
making
this
assessment,
our
management
used
the
criteria
for
effective
internal
control
over
financial
reportingdescribed
in
"Internal
Control-Integrated
Framework"
(2013)
issued
by
the
Committee
of
Sponsoring
Organizations
of
the
Treadway
Commission
("COSO").Based
on
our
evaluation
under
the
framework
in
the
Internal
Control-Integrated
Framework,
issued
by
the
COSO,
management
has
concluded
that
our
internalcontrol
over
financial
reporting
was
effective
as
of
December
31,
2015
.
The
effectiveness
of
our
internal
control
over
financial
reporting
as
of
December
31,
2015has
been
audited
by
PricewaterhouseCoopers
LLP,
an
independent
registered
public
accounting
firm,
as
stated
in
their
report
appearing
under
"Item
8.
FinancialStatements
and
Supplementary
Data"
included
elsewhere
in
this
annual
report.Changes in Internal Control over Financial ReportingThere
was
no
change
in
our
internal
control
over
financial
reporting
(as
defined
in
the
Exchange
Act,
Rules
13a-15(f))
that
occurred
during
the
quarter
endedDecember
31,
2015
that
has
materially
affected,
or
is
reasonably
likely
to
materially
affect,
our
internal
control
over
financial
reporting.ITEM 9B. Other InformationOn
February
25,
2016,
the
Company
and
its
subsidiary,
LendingTree,
LLC,
entered
into
the
first
amendment
to
credit
agreement
which
amends
the
RevolvingCredit
Facility
to
increase
the
amount
of
permitted
restricted
payments
under
the
agreement.
See Note
10—Revolving
Credit
Facility,
in
Part
I,
Item
I,
FinancialStatements for
a
description
of
the
Revolving
Credit
Facility.67 Table of ContentsPART IIIAs
set
forth
below,
the
information
required
by
Part
III
(Items
10,
11,
12,
13
and
14)
is
incorporated
herein
by
reference
to
the
Company's
definitive
proxystatement
to
be
used
in
connection
with
its
2016
Annual
Meeting
of
Stockholders
and
which
will
be
filed
with
the
Securities
and
Exchange
Commission
not
laterthan
120
days
after
the
end
of
the
Company's
fiscal
year
ended
December
31,
2015
(the
"
2016
Proxy
Statement"),
in
accordance
with
General
Instruction
G(3)
ofForm
10-K.ITEM 10. Directors, Executive Officers and Corporate GovernanceThe
information
required
by
Item
10
will
be
contained
in,
and
is
hereby
incorporated
by
reference
to,
the
2016
Proxy
Statement.ITEM 11. Executive CompensationThe
information
required
by
Item
11
will
be
contained
in,
and
is
hereby
incorporated
by
reference
to,
the
2016
Proxy
Statement.ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe
information
required
by
Item
12
will
be
contained
in,
and
is
hereby
incorporated
by
reference
to,
the
2016
Proxy
Statement.ITEM 13. Certain Relationships and Related Transactions, and Director IndependenceThe
information
required
by
Item
13
will
be
contained
in,
and
is
hereby
incorporated
by
reference
to,
the
2016
Proxy
Statement.ITEM 14. Principal Accounting Fees and ServicesThe
information
required
by
Item
14
will
be
contained
in,
and
is
hereby
incorporated
by
reference
to,
the
2016
Proxy
Statement.68 Table of ContentsPART IVITEM 15. Exhibits, Financial Statement Schedules( a) List of documents filed as part of this report:(1) Consolidated Financial Statements of LendingTree, Inc.Report
of
Independent
Registered
Public
Accounting
Firm:
PricewaterhouseCoopers
LLP.Consolidated
Statements
of
Operations
and
Comprehensive
Income
for
the
Years
Ended
December
31,
2015
,
2014
and
2013
.Consolidated
Balance
Sheets
as
of
December
31,
2015
and
2014
.Consolidated
Statements
of
Shareholders'
Equity
for
the
Years
Ended
December
31,
2015
,
2014
and
2013
.Consolidated
Statements
of
Cash
Flows
for
the
Years
Ended
December
31,
2015
,
2014
and
2013
.Notes
to
Consolidated
Financial
Statements.(2) Consolidated Financial Statement Schedules of LendingTree, Inc.All
financial
statements
and
schedules
have
been
omitted
since
the
required
information
is
included
in
the
consolidated
financial
statements
or
the
notesthereto,
or
is
not
applicable
or
required.(3) ExhibitsThe
documents
set
forth
below,
numbered
in
accordance
with
Item
601
of
Regulation
S-K,
are
filed
herewith
or
incorporated
herein
by
reference
to
thelocation
indicated
below.ExhibitNumberDescriptionLocation2.1Separation
and
Distribution
Agreement
among
IAC/InterActiveCorp,HSN,
Inc.,
Interval
Leisure
Group,
Inc.,
Ticketmaster
and
Tree.com,
Inc.,dated
August
20,
2008.Exhibit
10.1
to
the
Registrant's
Registration
Statement
on
Form
S-1(No.
333-152700),
filed
August
1,
20082.2Tax
Sharing
Agreement
among
IAC/InterActiveCorp,
HSN,
Inc.,
IntervalLeisure
Group,
Inc.,
Ticketmaster
and
Tree.com,
Inc.,
dated
August
20,2008.Exhibit
10.2
to
the
Registrant's
Current
Report
on
Form
8-K
(No.
001-34063)
filed
August
25,
20082.3Employee
Matters
Agreement
among
IAC/InterActiveCorp,
HSN,
Inc.,Interval
Leisure
Group,
Inc.,
Ticketmaster
and
Tree.com,
Inc.,
datedAugust
20,
2008.Exhibit
10.3
to
the
Registrant's
Current
Report
on
Form
8-K
(No.
001-34063)
filed
August
25,
20082.4Transition
Services
Agreement
among
IAC/InterActiveCorp,
HSN,
Inc.,Interval
Leisure
Group,
Inc.,
Ticketmaster
and
Tree.com,
Inc.,
datedAugust
20,
2008.Exhibit
10.4
to
the
Registrant's
Current
Report
on
Form
8-K
(No.
001-34063)
filed
August
25,
20082.5Spinco
Assignment
and
Assumption
Agreement
amongIAC/InterActiveCorp,
Tree.com,
Inc.,
Liberty
Media
Corporation
andLiberty
USA
Holdings,
LLC,
dated
August
20,
2008.Exhibit
10.6
to
the
Registrant's
Current
Report
on
Form
8-K
(No.
001-34063)
filed
August
25,
20082.6Asset
Purchase
Agreement
among
Home
Loan
Center,
Inc.,
FirstResidential
Mortgage
Network,
Inc.
dba
SurePoint
Lending,
and
theshareholders
of
First
Residential
Mortgage
Network
named
therein,
datedNovember
15,
2010.Exhibit
2.1
to
Registrant's
Current
Report
on
Form
8-K
(No.
001-34063)
filed
November
16,
20102.7First
Amendment
to
Asset
Purchase
Agreement
among
HLC,
SurePointand
the
shareholders
party
thereto,
dated
March
14,
2011.Exhibit
2.1
to
the
Registrant's
Current
Report
on
Form
8-K
filedMarch
21,
20112.8Second
Amendment
to
Asset
Purchase
Agreement
among
HLC,SurePoint
and
the
shareholders
party
thereto,
dated
March
15,
2011.Exhibit
2.2
to
the
Registrant's
Current
Report
on
Form
8-K
filedMarch
21,
201169 ExhibitNumberDescriptionLocation2.9Asset
Purchase
Agreement
among
Tree.com,
Inc.,
Home
Loan
Center,Inc.,
LendingTree,
LLC,
HLC
Escrow,
Inc.
and
Discover
Bank,
datedMay
12,
2011**Exhibit
2.1
to
the
Registrant's
Current
Report
on
Form
8-K
filed
May16,
20112.10Asset
Purchase
Agreement
among
LendingTree,
LLC,
RealEstate.com,Inc.
and
Market
Leader,
Inc.,
dated
September
15,
2011**Exhibit
2.1
to
the
Registrant's
Current
Report
on
Form
8-K
filedSeptember
21,
20112.11Amendment
to
Asset
Purchase
Agreement
among
Home
Loan
Center,Inc.,
HLC
Escrow,
Inc.,
LendingTree,
LLC,
Tree.com,
Inc.,
DiscoverBank
and
Discover
Financial
Services,
dated
February
7,
2012**Exhibit
2.1
to
the
Registrant's
Current
Report
on
Form
8-K
filedFebruary
8,
20123.1Amended
and
Restated
Certificate
of
Incorporation
of
LendingTree,
Inc.Exhibit
3.1
to
the
Registrant's
Current
Report
on
Form
8-K
(No.
001-34063)
filed
August
25,
20083.2Third
Amended
and
Restated
By-laws
of
LendingTree,
Inc.Exhibit
3.2
to
the
Registrant's
Current
Report
on
Form
8-K
filedDecember
31,
20144.1Amended
and
Restated
Restricted
Share
Grant
and
Shareholders'Agreement,
among
Forest
Merger
Corp.,
LendingTree,
Inc.,InterActiveCorp
and
the
Grantees
named
therein,
dated
July
7,
2003*Exhibit
10.8
to
the
Registrant's
Registration
Statement
on
Form
S-1(No.
333-152700),
filed
August
1,
20084.2Registration
Rights
Agreement
among
Tree.com,
Inc.,
Liberty
MediaCorporation
and
Liberty
USA
Holdings,
LLC,
dated
August
20,
2008.Exhibit
10.5
to
the
Registrant's
Current
Report
on
Form
8-K
(No.
001-34063)
filed
August
25,
200810.1Letter
Agreement
between
Tree.com,
Inc.
and
Alexander
Mandel,
datedJuly
27,
2012*Exhibit
10.1
to
the
Registrant's
Quarterly
Report
on
Form
10-Q
filedNovember
14,
201210.2Change
in
Control
Letter
between
Tree.com,
Inc.
and
Alexander
Mandel,dated
July
27,
2012*Exhibit
10.2
to
Registrant's
Quarterly
Report
on
Form
10-Q
filedNovember
14,
201210.3Amended
Employment
Offer
and
Change
in
Control
Letter
and
Releaseby
and
between
Alexander
Mandel
and
LendingTree,
Inc.,
dated
July
2,2015
*Exhibit
10.1
to
the
Registrant's
Quarterly
Report
on
Form
10-Q
filedOctober
26,
201510.4Letter
Agreement
between
Tree.com,
Inc.
and
Carla
Shumate,
datedDecember
11,
2012*Exhibit
10.1
to
the
Registrant's
Annual
Report
on
Form
10-K
filedApril
1,
201310.5Letter
Agreement
between
LendingTree,
Inc.
and
Carla
Shumate,
datedMarch
11,
2015*Exhibit
10.1
to
the
Registrant's
Quarterly
Report
on
Form
10-Q
filedApril
30,
201510.6Letter
Agreement
between
LendingTree,
Inc.
and
Carla
Shumate,
datedDecember
31,
2015*†10.7Employment
Agreement
between
Tree.com,
Inc.
and
Douglas
Lebda,dated
January
9,
2014*Exhibit
10.1
to
the
Registrant's
Quarterly
Report
on
Form
10-Q
filedMay
7,
201410.8Restricted
Share
Grant
and
Stockholder's
Agreement
amongIAC/InterActiveCorp,
LendingTree
Holdings
Corp.
and
Douglas
R.Lebda,
dated
August
15,
2008,
together
with
Exhibit
A
thereto,
Amendedand
Restated
Certificate
of
Incorporation
of
LendingTree
Holdings
Corp.*Exhibits
99.2
and
99.3
to
the
Registrant's
Current
Report
on
Form
8-K(No.
001-34063)
filed
August
20,
200810.9Amendment
No.
1
to
the
Restricted
Share
Grant
and
Stockholder'sAgreement
between
Tree.com,
Inc.,
LendingTree
Holdings
Corp.
andDouglas
R.
Lebda,
dated
August
30,
2010*Exhibit
10.4
to
the
Registrant's
Quarterly
Report
on
Form
10-Q
(No.001-34063)
filed
November
12,
201010.10Amendment
No.
1
to
the
Stock
Option
Award
Agreement
betweenDouglas
R.
Lebda
and
Tree.com,
Inc.,
dated
May
10,
2010*Exhibit
10.15
to
the
Registrant's
Quarterly
Report
on
Form
10-Q
(No.001-34063)
filed
May
12,
201010.11Employment
Agreement
between
Tree.com,
Inc.
and
Gabriel
Dalporto,dated
January
9,
2014*Exhibit
10.2
to
the
Registrant's
Quarterly
Report
on
Form
10-Q
filedMay
7,
201410.12Employment
Agreement
between
LendingTree,
Inc.
and
GabrielDalporto,
dated
March
11,
2015*Exhibit
10.6
to
the
Registrant's
Annual
Report
on
Form
10-K
filedMarch
16,
201570 ExhibitNumberDescriptionLocation10.13Letter
Agreement
between
LendingTree,
Inc.
and
Nikul
Patel,
datedDecember
31,
2015*†10.14Fourth
Amended
and
Restated
Tree.com,
Inc.
2008
Stock
and
AnnualIncentive
Plan*Exhibit
10.1
to
the
Registrant's
Quarterly
Report
on
Form
10-Q
filedAugust
7,
201410.15Deferred
Compensation
Plan
for
Non-Employee
Directors*Exhibit
10.15
to
the
Registrant's
Registration
Statement
on
Form
S-1(No.
333-152700),
filed
August
1,
200810.162011
Deferred
Compensation
Plan
for
Non-Employee
Directors*Exhibit
10.2
to
the
Registrant's
Quarterly
Report
on
Form
10-Q
filedApril
30,
201510.17Form
of
Notice
of
Restricted
Stock
Unit
Award*Exhibit
10.86(b)
to
the
Registrant's
Post-Effective
Amendment
to
itsRegistration
Statement
on
Form
S-1
(No.
333-152700),
filed
July
13,201210.18Form
of
Notice
of
Restricted
Stock
Unit
Award*Exhibit
10.3
to
the
Registrant's
Quarterly
Report
on
From
10-Q
filedMay
7,
201410.19Form
of
Restricted
Stock
Award*Exhibit
10.86(c)
to
the
Registrant's
Post-Effective
Amendment
to
itsRegistration
Statement
on
Form
S-1
(No.
333-152700),
filed
July
13,201210.20Form
of
Notice
of
Restricted
Stock
Award*Exhibit
10.4
to
the
Registrant's
Quarterly
Report
on
Form
10-Q
filedMay
7,
201410.21Standard
Terms
and
Conditions
to
Restricted
Stock
Award
Letters
ofTree.com
BU
Holding
Company,
Inc.*Exhibit
10.2
to
the
Registrant's
Current
Report
on
Form
8-K
filedFebruary
3,
201110.22Form
of
Amendment
to
Restricted
Stock
Awards
for
Douglas
R.
Lebda*Exhibit
10.4
to
the
Registrant's
Quarterly
Report
on
Form
10-Q
filedMay
12,
201010.23Form
of
Notice
of
Stock
Option
Award
Granted
Under
the
2008
Stockand
Annual
Incentive
Plan*Exhibit
10.6
to
the
Registrant's
Current
Report
on
Form
8-K
(No.
001-34063)
filed
March
27,
200910.24Form
of
Notice
of
Stock
Option
Award
Granted
Under
the
Amended
andRestated
2008
Stock
and
Annual
Incentive
Plan*Exhibit
10.86(d)
to
the
Registrant's
Post-Effective
Amendment
to
itsRegistration
Statement
on
Form
S-1
(No.
333-152700),
filed
July
13,201210.25Form
of
Notice
of
Stock
Option
Award
Granted
Under
the
SecondAmended
and
Restated
2008
Stock
and
Annual
Incentive
Plan*Exhibit
10.13
to
the
Registrant's
Quarterly
Report
on
Form
10-Q
(No.001-34063)
filed
May
12,
201010.26Form
of
Notice
of
Stock
Option
Award
Granted
Under
the
2008
Stockand
Annual
Incentive
Plan*Exhibit
10.5
to
the
Registrant's
Quarterly
Report
on
Form
10-Q
filedMay
7,
201410.27Stock
Purchase
Agreement
between
Tree.com,
Inc.
and
Douglas
R.Lebda,
dated
February
8,
2009*Exhibit
10.1
to
the
Registrant's
Current
Report
on
Form
8-K
(No.
001-34063)
filed
February
11,
200910.28Amendment
No.
1
to
Stock
Purchase
Agreement
between
Tree.com,
Inc.and
Douglas
R.
Lebda,
dated
May
10,
2010*Exhibit
10.2
to
the
Registrant's
Quarterly
Report
on
Form
10-Q
(No.001-34063)
filed
May
12,
201010.29Credit
Agreement
by
and
among
LendingTree,
LLC,
LendingTree,
Inc.and
SunTrust
Bank,
dated
October
22,
2015Exhibit
99.1
to
the
Registrant's
Quarterly
Report
on
Form
10-Q
filedOctober
26,
201510.30First
Amendment
to
Credit
Agreement
by
and
among
LendingTree,
LLC,LendingTree,
Inc.
and
SunTrust
Bank,
dated
February
25,
2016†21.1Subsidiaries
of
LendingTree,
Inc.†71 ExhibitNumberDescriptionLocation23.1Consent
of
independent
registered
public
accounting
firm.†24.1Power
of
Attorney
(included
on
signature
page
of
this
Annual
Report
onForm
10-K)†31.1Certification
of
the
Chief
Executive
Officer
pursuant
to
Rule
13a-14(a)
orRule
15d-14(a)
of
the
Securities
Exchange
Act
of
1934
as
adoptedpursuant
to
Section
302
of
the
Sarbanes-Oxley
Act
of
2002†31.2Certification
of
the
Chief
Financial
Officer
pursuant
to
Rule
13a-14(a)
orRule
15d-14(a)
of
the
Securities
Exchange
Act
of
1934
as
adoptedpursuant
to
Section
302
of
the
Sarbanes-Oxley
Act
of
2002†32.1Certification
of
the
Chief
Executive
Officer
pursuant
to
18
U.S.C.Section
1350
as
adopted
pursuant
to
Section
906
of
the
Sarbanes-OxleyAct
of
2002††32.2Certification
of
the
Chief
Financial
Officer
pursuant
to
18
U.S.C.Section
1350
as
adopted
pursuant
to
Section
906
of
the
Sarbanes-OxleyAct
of
2002††101.CALXBRL
Taxonomy
Extension
Calculation
Linkbase
Document†††101.DEFXBRL
Taxonomy
Extension
Definition
Linkbase
Document†††101.INSXBRL
Instance
Document†††101.LABXBRL
Taxonomy
Extension
Label
Linkbase
Document†††101.PREXBRL
Taxonomy
Extension
Presentation
Linkbase
Document†††101.SCHXBRL
Taxonomy
Extension
Schema
Document†††___________________________________________________________________________†
Filed
herewith††
This
certification
is
being
furnished
solely
to
accompany
this
report
pursuant
to
18
U.S.C.
1350,
and
is
not
being
filed
for
purposes
of
Section
18
of
theExchange
Act
and
is
not
to
be
incorporated
by
reference
into
any
filing
of
the
registrant,
whether
made
before
or
after
the
date
hereof,
regardless
of
any
generalincorporation
language
in
such
filing.†††
Furnished
herewith.
Pursuant
to
Rule
406T
of
Regulation
S-T,
the
Interactive
Data
Files
on
Exhibit
101
hereto
are
deemed
not
filed
or
part
of
a
registrationstatement
or
prospectus
for
purposes
of
Sections
11
or
12
of
the
Securities
Act
are
deemed
not
filed
for
purposes
of
Section
18
of
the
Exchange
Act
and
otherwiseare
not
subject
to
liability
under
those
sections.*
Management
contract
or
compensation
plan
or
arrangement.**
Certain
schedules
to
this
Exhibit
have
been
omitted
in
accordance
with
Regulation
S-K
Item
601(b)(2).
The
Company
agrees
to
furnish
supplementally
a
copyof
all
omitted
schedules
to
the
SEC
upon
its
request.72 Table of ContentsSIGNATURESPursuant
to
the
requirements
of
Section
13
or
15(d)
of
the
Securities
Exchange
Act
of
1934,
the
Registrant
has
duly
caused
this
report
to
be
signed
on
itsbehalf
by
the
undersigned,
thereunto
duly
authorized.Date:
March
1,
2016
LendingTree,
Inc.
By:/s/ DOUGLAS R. LEBDA
Douglas
R.
Lebda
Chairman and Chief Executive Officer________________________________________________________________________________________________________________________KNOW
ALL
PERSONS
BY
THESE
PRESENTS,
that
each
individual
whose
signature
appears
below
constitutes
and
appoints
Katharine
Pierce
as
his
or
hertrue
and
lawful
attorney
and
agent,
with
full
power
of
substitution
and
resubstitution,
for
him
or
her
and
in
his
or
her
name,
place
and
stead,
in
any
and
allcapacities,
to
sign
any
and
all
amendments
to
the
Registrant's
Annual
Report
on
Form
10-K
for
the
fiscal
year
ended
December
31,
2015
,
and
to
file
the
same
withall
exhibits
thereto,
and
all
other
documents
in
connection
therewith,
with
the
Securities
and
Exchange
Commission,
granting
unto
said
attorney
and
agent
fullpower
and
authority
to
do
and
perform
each
and
every
act
and
thing
requisite
and
necessary
to
be
done,
as
fully
to
all
intents
and
purposes
as
he
or
she
might
orcould
do
in
person,
hereby
ratifying
and
confirming
all
that
said
attorney
and
agent
may
lawfully
do
or
cause
to
be
done
by
virtue
hereof.Pursuant
to
the
requirements
of
the
Securities
Exchange
Act
of
1934,
this
report
has
been
signed
below
by
the
following
persons
on
behalf
of
the
Registrantand
in
the
capacities
indicated
and
on
the
dates
indicated.Signature
Title
Date
/s/ DOUGLAS R. LEBDA
Chairman,
Chief
Executive
Officer
and
Director(Principal Executive Officer)
March
1,
2016Douglas
R.
Lebda
/s/ GABRIEL DALPORTO
Chief
Financial
Officer(Principal Financial Officer)
March
1,
2016Gabriel
Dalporto
/s/ CARLA SHUMATE
Senior
Vice
President
and
Chief
Accounting
Officer(Principal Accounting Officer)
March
1,
2016Carla
Shumate
/s/ NEAL DERMER
Director
March
1,
2016Neal
Dermer
/s/ ROBIN HENDERSON
Director
March
1,
2016Robin
Henderson
/s/ PETER HORAN
Director
March
1,
2016Peter
Horan
/s/ STEVEN OZONIAN
Director
March
1,
2016Steven
Ozonian
/s/ SARAS SARASVATHY
Director
March
1,
2016Saras
Sarasvathy
/s/ CRAIG TROYER
Director
March
1,
2016Craig
Troyer
73 EXHIBIT 10.6December
31,
2015
Carla
Shumate
Dear
Carla,
This
letter
reflects
our
mutual
agreement
to
amend
the
terms
of
both
the
severance
letter
agreement
dated
March
11,
2015
(the
“
Severance
Letter
”)
and
the
changeof
control
letter
agreement
dated
March
11,
2015
(the
“
CC
Letter
”),
as
set
forth
herein.
Capitalized
terms
used
herein
and
not
defined
have
the
same
meaning
asset
forth
in
the
Severance
Letter
and
CC
Letter,
as
applicable.1.The
following
paragraph
is
added
as
a
new
second
paragraph
to
the
Severance
Letter.You
must
execute
(and
not
revoke)
such
waiver
and
release
document
within
forty-five
(45)
days
following
the
effective
date
of
termination
of
youremployment
by
the
Company
other
than
for
Cause
or
unacceptable
performance
or
else
your
eligibility
to
receive
the
benefits
described
in
this
lettershall
immediately
become
null
and
void.
If
such
waiver
and
release
document
becomes
effective
on
a
timely
basis
by
its
own
terms,
then
the
firstseverance
pay
installment
(in
an
amount
equal
to
two
months
of
your
annual
base
salary)
will
be
paid
to
you
on
the
60
th
day
after
termination
of
youremployment
and,
for
the
ten
months
thereafter,
you
will
receive
pro-rata
installments
of
the
severance
pay
in
accordance
with
the
Company’sregularly
scheduled
pay
dates
for
its
employees.
It
is
intended
that
any
amounts
payable
hereunder
shall
comply
with
or
be
exempt
from
Section409A
of
the
Internal
Revenue
Code
of
1986
(“Section
409A”)
(including
under
Treasury
Regulation
§§
1.409A-1(b)(4)
(“short-term
deferrals”)
and(b)(9)
(“separation
pay
plans,”
including
the
exceptions
under
subparagraph
(iii)
and
subparagraph
(v)(D))
and
other
applicable
provisions
ofTreasury
Regulation
§§
1.409A-1
through
A-6).
For
purposes
of
Section
409A,
each
of
the
payments
that
may
be
made
under
this
letter
shall
bedeemed
to
be
a
separate
payment.
You
and
the
Company
agree
to
negotiate
in
good
faith
to
make
amendments
to
this
letter,
as
the
parties
mutuallyagree
are
necessary
or
desirable
to
avoid
the
imposition
of
taxes,
penalties
or
interest
under
Section
409A.
Neither
you
nor
the
Company
shall
havethe
right
to
accelerate
or
defer
the
delivery
of
any
such
payments
or
benefits
except
(i)
where
payment
may
be
made
within
a
certain
period
of
time,the
timing
of
payment
within
such
period
will
be
in
the
sole
discretion
of
the
Company,
and
(ii)
to
the
extent
specifically
permitted
or
required
bySection
409A.
To
the
extent
any
nonqualified
deferred
compensation
payment
to
you
could
be
paid
in
one
or
more
of
your
taxable
years
dependingupon
you
completing
certain
employment-related
actions,
then
any
such
payments
will
commence
or
occur
in
the
later
taxable
year
to
the
extentrequired
by
Section
409A.
With
respect
to
the
time
of
payments
of
any
amounts
under
the
letter
that
are
“deferred
compensation”
subject
to
Section409A,
references
in
this
letter
to
“termination
of
employment”
(and
substantially
similar
phrases)
shall
mean
“separation
from
service”
within
themeaning
of
Section
409A.
Notwithstanding
anything
in
this
letter
to
the
contrary,
if
you
are
considered
a
“specified
employee”
under
Section
409Aupon
your
separation
from
service
and
if
payment
of
any
amounts
on
account
of
your
separation
from
service
under
this
letter
is
required
to
bedelayed
for
a
period
of
six
months
after
separation
from
service
in
order
to
avoid
taxation
under
Section
409A,
payment
of
such
amounts
shall
bedelayed
as
required
by
Section
409A,
and
the
accumulated
amounts
shall
be
paid
in
a
lump
sum
payment,
without
interest,
within
five
business
daysafter
the
end
of
the
six-month
delay
period.
If
you
die
during
the
six-month
delay
period
prior
to
the
payment
of
benefits,
the
amounts
withheld
onaccount
of
Section
409A
shall
be
paid
to
the
personal
representative
of
your
estate
within
60
days
after
the
date
of
your
death.
While
it
is
intendedthat
all
payments
and
benefits
provided
to
you
under
this
letter
or
otherwise
will
be
exempt
from
or
comply
with
Section
409A,
the
Company
makesno
representation
or
covenant
to
ensure
that
such
payments
and
benefits
are
exempt
from
or
compliant
with
Section
409A.
The
Company
will
haveno
liability
to
you
or
any
other
party
if
a
payment
or
benefit
under
this
letter
or
otherwise
is
challenged
by
any
taxing
authority
or
is
ultimatelydetermined
not
to
be
so
exempt
or
compliant.
You
further
understand
and
agree
that
you
will
be
entirely
responsible
for
any
and
all
taxes
imposed
onyou
as
a
result
of
this
letter.2.The
following
paragraph
is
added
as
a
new
second-to-last
paragraph
to
the
CC
Letter
(and
before
the
Definitions
and
Restrictive
Covenants
sections). You
must
execute
(and
not
revoke)
such
general
release
of
claims
within
forty-five
(45)
days
following
the
effective
date
of
a
qualifying
terminationof
your
employment
or
else
your
eligibility
to
receive
the
benefits
described
in
this
letter
shall
immediately
become
null
and
void.
If
such
generalrelease
of
claims
becomes
effective
on
a
timely
basis
by
its
own
terms,
then
the
severance
payment
will
be
paid
to
you
on
the
60
th
day
aftertermination
of
your
employment.
It
is
intended
that
any
amounts
payable
hereunder
shall
comply
with
or
be
exempt
from
Section
409A
of
theInternal
Revenue
Code
of
1986
(“Section
409A”)
(including
under
Treasury
Regulation
§§
1.409A-1(b)(4)
(“short-term
deferrals”)
and
(b)(9)(“separation
pay
plans,”
including
the
exceptions
under
subparagraph
(iii)
and
subparagraph
(v)(D))
and
other
applicable
provisions
of
TreasuryRegulation
§§
1.409A-1
through
A-6).
For
purposes
of
Section
409A,
each
of
the
payments
that
may
be
made
under
this
letter
shall
be
deemed
to
bea
separate
payment.
You
and
the
Company
agree
to
negotiate
in
good
faith
to
make
amendments
to
this
letter,
as
the
parties
mutually
agree
arenecessary
or
desirable
to
avoid
the
imposition
of
taxes,
penalties
or
interest
under
Section
409A.
Neither
you
nor
the
Company
shall
have
the
right
toaccelerate
or
defer
the
delivery
of
any
such
payments
or
benefits
except
(i)
where
payment
may
be
made
within
a
certain
period
of
time,
the
timing
ofpayment
within
such
period
will
be
in
the
sole
discretion
of
the
Company,
and
(ii)
to
the
extent
specifically
permitted
or
required
by
Section
409A.To
the
extent
any
nonqualified
deferred
compensation
payment
to
you
could
be
paid
in
one
or
more
of
your
taxable
years
depending
upon
youcompleting
certain
employment-related
actions,
then
any
such
payments
will
commence
or
occur
in
the
later
taxable
year
to
the
extent
required
bySection
409A.
With
respect
to
the
time
of
payments
of
any
amounts
under
the
letter
that
are
“deferred
compensation”
subject
to
Section
409A,references
in
this
letter
to
“termination
of
employment”
(and
substantially
similar
phrases)
shall
mean
“separation
from
service”
within
the
meaningof
Section
409A.
Notwithstanding
anything
in
this
letter
to
the
contrary,
if
you
are
considered
a
“specified
employee”
under
Section
409A
upon
yourseparation
from
service
and
if
payment
of
any
amounts
on
account
of
your
separation
from
service
under
this
letter
is
required
to
be
delayed
for
aperiod
of
six
months
after
separation
from
service
in
order
to
avoid
taxation
under
Section
409A,
payment
of
such
amounts
shall
be
delayed
asrequired
by
Section
409A,
and
the
accumulated
amounts
shall
be
paid
in
a
lump
sum
payment,
without
interest,
within
five
business
days
after
theend
of
the
six-month
delay
period.
If
you
die
during
the
six-month
delay
period
prior
to
the
payment
of
benefits,
the
amounts
withheld
on
account
ofSection
409A
shall
be
paid
to
the
personal
representative
of
your
estate
within
60
days
after
the
date
of
your
death.
While
it
is
intended
that
allpayments
and
benefits
provided
to
you
under
this
letter
or
otherwise
will
be
exempt
from
or
comply
with
Section
409A,
the
Company
makes
norepresentation
or
covenant
to
ensure
that
such
payments
and
benefits
are
exempt
from
or
compliant
with
Section
409A.
The
Company
will
have
noliability
to
you
or
any
other
party
if
a
payment
or
benefit
under
this
letter
or
otherwise
is
challenged
by
any
taxing
authority
or
is
ultimatelydetermined
not
to
be
so
exempt
or
compliant.
You
further
understand
and
agree
that
you
will
be
entirely
responsible
for
any
and
all
taxes
imposed
onyou
as
a
result
of
this
letter.3.The
following
sentences
are
added
on
to
the
end
of
the
Good
Reason
definition
in
the
CC
Letter.In
order
to
resign
your
employment
for
Good
Reason,
you
must
notify
the
Company
in
writing
within
fifteen
(15)
days
of
the
initial
existence
of
anyevent
falling
under
clauses
(i)
through
(iii)
and
such
notice
shall
describe
in
detail
the
facts
and
circumstances
explaining
why
you
believe
a
GoodReason
event
has
occurred.
The
Company
shall
then
have
sixty
(60)
days
following
its
receipt
of
such
notice
to
cure
or
remedy
such
alleged
GoodReason
event
such
that
Good
Reason
will
not
be
deemed
to
exist
for
such
event.
If
the
event
remains
uncured
or
is
not
remedied
by
the
Companywithin
such
sixty
(60)
day
period
and
if
your
employment
has
not
otherwise
been
terminated,
then
a
termination
of
your
employment
for
GoodReason
shall
automatically
occur
on
the
first
business
day
following
the
end
of
such
sixty
(60)
day
cure/remedy
period.
Except
as
set
forth
in
this
letter,
the
Severance
Letter
and
the
CC
Letter
each
remain
in
full
force
and
effect
as
is.
Sincerely,
/s/
Claudette
Parham
Claudette
Parham
Chief
People
Officer
Agreed and accepted :
/s/
Carla
Shumate
December
31,
2015Carla
Shumate
Date EXHIBIT 10.13December
31,
2015
Nikul
Patel
Dear
Nikul,
This
letter
reflects
our
mutual
agreement
to
amend
the
terms
of
both
the
severance
letter
agreement
dated
April
7,
2014
(the
“
Severance
Letter
”)
and
the
changeof
control
letter
agreement
dated
April
7,
2014
(the
“
CC
Letter
”),
as
set
forth
herein.
Capitalized
terms
used
herein
and
not
defined
have
the
same
meaning
as
setforth
in
the
Severance
Letter
and
CC
Letter,
as
applicable.1.The
following
paragraph
is
added
as
a
new
second
paragraph
to
the
Severance
Letter.You
must
execute
(and
not
revoke)
such
waiver
and
release
document
within
forty-five
(45)
days
following
the
effective
date
of
termination
of
youremployment
by
the
Company
other
than
for
Cause
or
unacceptable
performance
or
else
your
eligibility
to
receive
the
benefits
described
in
this
lettershall
immediately
become
null
and
void.
If
such
waiver
and
release
document
becomes
effective
on
a
timely
basis
by
its
own
terms,
then
the
firstseverance
pay
installment
(in
an
amount
equal
to
two
months
of
your
annual
base
salary)
will
be
paid
to
you
on
the
60
th
day
after
termination
of
youremployment
and,
for
the
ten
months
thereafter,
you
will
receive
pro-rata
installments
of
the
severance
pay
in
accordance
with
the
Company’sregularly
scheduled
pay
dates
for
its
employees.
It
is
intended
that
any
amounts
payable
hereunder
shall
comply
with
or
be
exempt
from
Section409A
of
the
Internal
Revenue
Code
of
1986
(“Section
409A”)
(including
under
Treasury
Regulation
§§
1.409A-1(b)(4)
(“short-term
deferrals”)
and(b)(9)
(“separation
pay
plans,”
including
the
exceptions
under
subparagraph
(iii)
and
subparagraph
(v)(D))
and
other
applicable
provisions
ofTreasury
Regulation
§§
1.409A-1
through
A-6).
For
purposes
of
Section
409A,
each
of
the
payments
that
may
be
made
under
this
letter
shall
bedeemed
to
be
a
separate
payment.
You
and
the
Company
agree
to
negotiate
in
good
faith
to
make
amendments
to
this
letter,
as
the
parties
mutuallyagree
are
necessary
or
desirable
to
avoid
the
imposition
of
taxes,
penalties
or
interest
under
Section
409A.
Neither
you
nor
the
Company
shall
havethe
right
to
accelerate
or
defer
the
delivery
of
any
such
payments
or
benefits
except
(i)
where
payment
may
be
made
within
a
certain
period
of
time,the
timing
of
payment
within
such
period
will
be
in
the
sole
discretion
of
the
Company,
and
(ii)
to
the
extent
specifically
permitted
or
required
bySection
409A.
To
the
extent
any
nonqualified
deferred
compensation
payment
to
you
could
be
paid
in
one
or
more
of
your
taxable
years
dependingupon
you
completing
certain
employment-related
actions,
then
any
such
payments
will
commence
or
occur
in
the
later
taxable
year
to
the
extentrequired
by
Section
409A.
With
respect
to
the
time
of
payments
of
any
amounts
under
the
letter
that
are
“deferred
compensation”
subject
to
Section409A,
references
in
this
letter
to
“termination
of
employment”
(and
substantially
similar
phrases)
shall
mean
“separation
from
service”
within
themeaning
of
Section
409A.
Notwithstanding
anything
in
this
letter
to
the
contrary,
if
you
are
considered
a
“specified
employee”
under
Section
409Aupon
your
separation
from
service
and
if
payment
of
any
amounts
on
account
of
your
separation
from
service
under
this
letter
is
required
to
bedelayed
for
a
period
of
six
months
after
separation
from
service
in
order
to
avoid
taxation
under
Section
409A,
payment
of
such
amounts
shall
bedelayed
as
required
by
Section
409A,
and
the
accumulated
amounts
shall
be
paid
in
a
lump
sum
payment,
without
interest,
within
five
business
daysafter
the
end
of
the
six-month
delay
period.
If
you
die
during
the
six-month
delay
period
prior
to
the
payment
of
benefits,
the
amounts
withheld
onaccount
of
Section
409A
shall
be
paid
to
the
personal
representative
of
your
estate
within
60
days
after
the
date
of
your
death.
While
it
is
intendedthat
all
payments
and
benefits
provided
to
you
under
this
letter
or
otherwise
will
be
exempt
from
or
comply
with
Section
409A,
the
Company
makesno
representation
or
covenant
to
ensure
that
such
payments
and
benefits
are
exempt
from
or
compliant
with
Section
409A.
The
Company
will
haveno
liability
to
you
or
any
other
party
if
a
payment
or
benefit
under
this
letter
or
otherwise
is
challenged
by
any
taxing
authority
or
is
ultimatelydetermined
not
to
be
so
exempt
or
compliant.
You
further
understand
and
agree
that
you
will
be
entirely
responsible
for
any
and
all
taxes
imposed
onyou
as
a
result
of
this
letter.2.The
following
paragraph
is
added
as
a
new
second-to-last
paragraph
to
the
CC
Letter
(and
before
the
Definitions
and
Restrictive
Covenants
sections). You
must
execute
(and
not
revoke)
such
general
release
of
claims
within
forty-five
(45)
days
following
the
effective
date
of
a
qualifying
terminationof
your
employment
or
else
your
eligibility
to
receive
the
benefits
described
in
this
letter
shall
immediately
become
null
and
void.
If
such
generalrelease
of
claims
becomes
effective
on
a
timely
basis
by
its
own
terms,
then
the
severance
payment
will
be
paid
to
you
on
the
60
th
day
aftertermination
of
your
employment.
It
is
intended
that
any
amounts
payable
hereunder
shall
comply
with
or
be
exempt
from
Section
409A
of
theInternal
Revenue
Code
of
1986
(“Section
409A”)
(including
under
Treasury
Regulation
§§
1.409A-1(b)(4)
(“short-term
deferrals”)
and
(b)(9)(“separation
pay
plans,”
including
the
exceptions
under
subparagraph
(iii)
and
subparagraph
(v)(D))
and
other
applicable
provisions
of
TreasuryRegulation
§§
1.409A-1
through
A-6).
For
purposes
of
Section
409A,
each
of
the
payments
that
may
be
made
under
this
letter
shall
be
deemed
to
bea
separate
payment.
You
and
the
Company
agree
to
negotiate
in
good
faith
to
make
amendments
to
this
letter,
as
the
parties
mutually
agree
arenecessary
or
desirable
to
avoid
the
imposition
of
taxes,
penalties
or
interest
under
Section
409A.
Neither
you
nor
the
Company
shall
have
the
right
toaccelerate
or
defer
the
delivery
of
any
such
payments
or
benefits
except
(i)
where
payment
may
be
made
within
a
certain
period
of
time,
the
timing
ofpayment
within
such
period
will
be
in
the
sole
discretion
of
the
Company,
and
(ii)
to
the
extent
specifically
permitted
or
required
by
Section
409A.To
the
extent
any
nonqualified
deferred
compensation
payment
to
you
could
be
paid
in
one
or
more
of
your
taxable
years
depending
upon
youcompleting
certain
employment-related
actions,
then
any
such
payments
will
commence
or
occur
in
the
later
taxable
year
to
the
extent
required
bySection
409A.
With
respect
to
the
time
of
payments
of
any
amounts
under
the
letter
that
are
“deferred
compensation”
subject
to
Section
409A,references
in
this
letter
to
“termination
of
employment”
(and
substantially
similar
phrases)
shall
mean
“separation
from
service”
within
the
meaningof
Section
409A.
Notwithstanding
anything
in
this
letter
to
the
contrary,
if
you
are
considered
a
“specified
employee”
under
Section
409A
upon
yourseparation
from
service
and
if
payment
of
any
amounts
on
account
of
your
separation
from
service
under
this
letter
is
required
to
be
delayed
for
aperiod
of
six
months
after
separation
from
service
in
order
to
avoid
taxation
under
Section
409A,
payment
of
such
amounts
shall
be
delayed
asrequired
by
Section
409A,
and
the
accumulated
amounts
shall
be
paid
in
a
lump
sum
payment,
without
interest,
within
five
business
days
after
theend
of
the
six-month
delay
period.
If
you
die
during
the
six-month
delay
period
prior
to
the
payment
of
benefits,
the
amounts
withheld
on
account
ofSection
409A
shall
be
paid
to
the
personal
representative
of
your
estate
within
60
days
after
the
date
of
your
death.
While
it
is
intended
that
allpayments
and
benefits
provided
to
you
under
this
letter
or
otherwise
will
be
exempt
from
or
comply
with
Section
409A,
the
Company
makes
norepresentation
or
covenant
to
ensure
that
such
payments
and
benefits
are
exempt
from
or
compliant
with
Section
409A.
The
Company
will
have
noliability
to
you
or
any
other
party
if
a
payment
or
benefit
under
this
letter
or
otherwise
is
challenged
by
any
taxing
authority
or
is
ultimatelydetermined
not
to
be
so
exempt
or
compliant.
You
further
understand
and
agree
that
you
will
be
entirely
responsible
for
any
and
all
taxes
imposed
onyou
as
a
result
of
this
letter.3.The
following
sentences
are
added
on
to
the
end
of
the
Good
Reason
definition
in
the
CC
Letter.In
order
to
resign
your
employment
for
Good
Reason,
you
must
notify
the
Company
in
writing
within
fifteen
(15)
days
of
the
initial
existence
of
anyevent
falling
under
clauses
(i)
through
(iii)
and
such
notice
shall
describe
in
detail
the
facts
and
circumstances
explaining
why
you
believe
a
GoodReason
event
has
occurred.
The
Company
shall
then
have
sixty
(60)
days
following
its
receipt
of
such
notice
to
cure
or
remedy
such
alleged
GoodReason
event
such
that
Good
Reason
will
not
be
deemed
to
exist
for
such
event.
If
the
event
remains
uncured
or
is
not
remedied
by
the
Companywithin
such
sixty
(60)
day
period
and
if
your
employment
has
not
otherwise
been
terminated,
then
a
termination
of
your
employment
for
GoodReason
shall
automatically
occur
on
the
first
business
day
following
the
end
of
such
sixty
(60)
day
cure/remedy
period.
Except
as
set
forth
in
this
letter,
the
Severance
Letter
and
the
CC
Letter
each
remain
in
full
force
and
effect
as
is.
Sincerely,
/s/
Claudette
Parham
Claudette
Parham
Chief
People
Officer
Agreed and accepted :
/s/
Nikul
Patel
December
31,
2015Nikul
Patel
Date EXHIBIT 10.30
FIRST AMENDMENT TO CREDIT AGREEMENTTHIS
FIRST
AMENDMENT
TO
CREDIT
AGREEMENT
(this
“
Agreement
”)
is
made
and
entered
into
as
of
February
25,
2016,
by
and
amongLENDINGTREE,
LLC,
a
Delaware
limited
liability
company
(the
“
Borrower
”),
LENDINGTREE,
INC.,
a
Delaware
corporation
(“
Parent
”),
the
other
LoanParties
(as
defined
in
the
Credit
Agreement
referred
to
below),
the
Lenders
(as
defined
below)
party
hereto,
and
SUNTRUST
BANK,
as
the
administrative
agentfor
itself
and
on
behalf
of
the
Lenders
(in
such
capacity,
the
“
Administrative
Agent
”).W
I
T
N
E
S
S
E
T
H
:WHEREAS,
the
Borrower,
Parent,
the
financial
institutions
from
time
to
time
party
thereto
(the
“
Lenders
”),
and
the
Administrative
Agent
have
executedand
delivered
that
certain
Credit
Agreement
dated
as
of
October
22,
2015
(as
the
same
may
be
amended,
restated,
supplemented,
or
otherwise
modified
from
timeto
time,
the
“
Credit
Agreement
”);
andWHEREAS,
the
Borrower
has
requested
that
the
Lenders
agree
to
amend
certain
provisions
of
the
Credit
Agreement
as
set
forth
herein,
and
theAdministrative
Agent
and
the
Lenders
party
hereto
have
agreed
to
such
amendments,
in
each
case
subject
to
the
terms
and
conditions
hereof.NOW,
THEREFORE,
for
and
in
consideration
of
the
above
premises
and
other
good
and
valuable
consideration,
the
receipt
and
sufficiency
of
which
ishereby
acknowledged
by
the
parties
hereto,
each
of
the
parties
hereto
hereby
covenants
and
agrees
as
follows:SECTION
1.
Definitions
.
Unless
otherwise
specifically
defined
herein,
each
term
used
herein
(and
in
the
recitals
above)
which
isdefined
in
the
Credit
Agreement
shall
have
the
meaning
assigned
to
such
term
in
the
Credit
Agreement.
Each
reference
to
“hereof,”
“hereunder,”
“herein,”
and“hereby”
and
each
other
similar
reference
and
each
reference
to
“this
Agreement”
and
each
other
similar
reference
contained
in
the
Credit
Agreement
shall
fromand
after
the
date
hereof
refer
to
the
Credit
Agreement
as
amended
hereby.SECTION
2.
Amendments
to
Credit
Agreement
.(a)
Amendments
to
Section
1.1
.
The
following
new
definitions
are
hereby
added
to
Section
1.1
of
the
Credit
Agreement
in
appropriatealphabetical
order:“
Specified
Cash
Contribution
”
shall
mean
capital
contributions
to
Parent
made
in
cash
or
the
net
cash
proceeds
from
Permitted
CapitalStock
Issuances
actually
received
by
Parent.“
Specified
Cash
Contribution
Amount
”
shall
mean
the
aggregate
amount
of
Specified
Cash
Contributions
made
after
the
ClosingDate.“
Permitted
Capital
Stock
Issuance
”
shall
mean
any
sale
or
issuance
of
any
Qualified
Capital
Stock
of
Parent
to
the
extent
permittedhereunder.“
Qualified
Capital
Stock
”
shall
mean
any
Capital
Stock
that
is
not
Disqualified
Capital
Stock.(b)
Amendments
to
Section
7.5(f)
.
Section
7.5(f)
of
the
Credit
Agreement
is
amended
and
restated
in
its
entirety
so
that
it
reads
as
follows:(f)
other
Restricted
Payments
made
by
Parent
or
any
Subsidiary
of
Parent
so
long
as
(i)
the
aggregate
amount
of
Restricted
Paymentsmade
pursuant
to
this
clause
(f)
since
the
Closing
Date
does
not
exceed
the
sum
of
(A)
$50,000,000,
plus
(B)
50%
of
cumulative
Excess
CashFlow
for
the
period
commencing
on
January
1,
2016,
and
ending
on
the
first
day
of
the
most
recent
Fiscal
Year
beginning
before
such
RestrictedPayment
is
made,
plus
(C)
the
Specified
Cash
Contribution
Amount,
(ii)
no
Default
or
Event
of
Default
shall
have
occurred
and
be
continuing
atthe
time
such
Restricted
Payment
is
made,
(iii)
the
Consolidated
Leverage
Ratio
is
less
than
or
equal
to
2.75
to
1.00,
calculated
on
a
Pro
FormaBasis
as
of
the
last
day
of
the
most
recently
ended
Fiscal
Quarter
for
which
financial
statements
are
required to
have
been
delivered
pursuant
to
Section
5.1(a)
or
(b)
,
and
(iv)
after
giving
effect
to
such
Restricted
Payment,
the
Loan
Parties
shall
haveLiquidity
of
at
least
$20,000,000.SECTION
3.
Conditions
Precedent
.
This
Agreement
shall
become
effective
only
upon
satisfaction
or
waiver
of
the
followingconditions
precedent
except
as
otherwise
agreed
between
the
Borrower,
Parent,
and
the
Administrative
Agent:(a)
the
Administrative
Agent’s
receipt
of
this
Agreement
duly
executed
by
each
of
(i)
the
Loan
Parties,
(ii)
the
Required
Lenders,
and
(iii)
theAdministrative
Agent;
and(b)
the
Borrower
shall
have
paid
all
fees,
costs
and
expenses
owed
by
the
Borrower
to
the
Administrative
Agent
or
any
of
its
Affiliates,
withoutlimitation,
reasonable
fees,
charges
and
disbursements
of
counsel
for
the
Administrative
Agent.SECTION
4.
Miscellaneous
Terms
.(a)
Loan
Document
.
For
avoidance
of
doubt,
the
Loan
Parties,
the
Lenders
party
hereto,
and
the
Administrative
Agent
each
herebyacknowledges
and
agrees
that
this
Agreement
is
a
Loan
Document.(b)
Effect
of
Agreement
.
Except
as
set
forth
expressly
hereinabove,
all
terms
of
the
Credit
Agreement
and
the
other
Loan
Documents
shall
beand
remain
in
full
force
and
effect,
and
shall
constitute
the
legal,
valid,
binding,
and
enforceable
obligations
of
the
Loan
Parties.(c)
No
Novation
or
Mutual
Departure
.
The
Loan
Parties
expressly
acknowledge
and
agree
that
(i)
there
has
not
been,
and
this
Agreement
doesnot
constitute
or
establish,
a
novation
with
respect
to
the
Credit
Agreement
or
any
of
the
other
Loan
Documents,
or
a
mutual
departure
from
the
strict
terms,provisions,
and
conditions
thereof,
other
than
with
respect
to
the
amendments
contained
in
Section
2
above
and
(ii)
nothing
in
this
Agreement
shall
affect
or
limitthe
Administrative
Agent’s
or
any
Lender’s
right
to
demand
payment
of
liabilities
owing
from
any
Loan
Party
to
the
Administrative
Agent
or
the
Lender
under,
orto
demand
strict
performance
of
the
terms,
provisions,
and
conditions
of,
the
Credit
Agreement
and
the
other
Loan
Documents,
to
exercise
any
and
all
rights,powers,
and
remedies
under
the
Credit
Agreement
or
the
other
Loan
Documents
or
at
law
or
in
equity,
or
to
do
any
and
all
of
the
foregoing,
immediately
at
anytime
after
the
occurrence
of
a
Default
or
an
Event
of
Default
under
the
Credit
Agreement
or
the
other
Loan
Documents.(d)
Ratification
.
Each
Loan
Party
hereby
(i)
restates,
ratifies,
and
reaffirms
all
of
its
obligations
and
covenants
set
forth
in
the
Credit
Agreementand
the
other
Loan
Documents
to
which
it
is
a
party
effective
as
of
the
date
hereof
and
(ii)
restates
and
renews
each
and
every
representation
and
warrantyheretofore
made
by
it
in
the
Credit
Agreement
and
the
other
Loan
Documents
as
fully
as
if
made
on
the
date
hereof
and
with
specific
reference
to
this
Agreementand
any
other
Loan
Documents
executed
or
delivered
in
connection
herewith
(except
with
respect
to
representations
and
warranties
made
as
of
an
expressed
date,in
which
case
such
representations
and
warranties
shall
be
true
and
correct
as
of
such
date).(e)
No
Default
.
To
induce
Lenders
to
enter
into
this
Agreement,
Borrower
hereby
acknowledges
and
agrees
that,
as
of
the
date
hereof,
and
aftergiving
effect
to
the
terms
hereof,
there
exists
(i)
no
Default
or
Event
of
Default
and
(ii)
no
right
of
offset,
defense,
counterclaim,
claim,
or
objection
in
favor
ofBorrower
or
arising
out
of
or
with
respect
to
any
of
the
Loans
or
other
obligations
of
Borrower
owed
to
Lenders
under
the
Credit
Agreement
or
any
other
LoanDocument.(f)
Counterparts
.
This
Agreement
may
be
executed
in
any
number
of
counterparts
and
by
different
parties
hereto
in
separate
counterparts,
eachof
which
when
so
executed
and
delivered
shall
be
deemed
to
be
an
original
and
all
of
which
counterparts,
taken
together,
shall
constitute
but
one
and
the
sameinstrument.(g)
Fax
or
Other
Transmission
.
Delivery
by
one
or
more
parties
hereto
of
an
executed
counterpart
of
this
Agreement
via
facsimile,
telecopy,
orother
electronic
method
of
transmission
pursuant
to
which
the
signature
of
such
party
can
be
seen
(including,
without
limitation,
Adobe
Corporation’s
PortableDocument
Format)
shall
have
the
same
force
and
effect
as
the
delivery
of
an
original
executed
counterpart
of
this
Agreement.
Any
party
delivering
an
executedcounterpart
of
this
Agreement
by
facsimile
or
other
electronic
method
of
transmission
shall
also
deliver
an
original
executed
counterpart,
but
the
failure
to
do
soshall
not
affect
the
validity,
enforceability,
or
binding
effect
of
this
Agreement.(h)
Recitals
Incorporated
Herein
.
The
preamble
and
the
recitals
to
this
Agreement
are
hereby
incorporated
herein
by
this
reference.(i)
Section
References
.
Section
titles
and
references
used
in
this
Agreement
shall
be
without
substantive
meaning
or
content
of
any
kindwhatsoever
and
are
not
a
part
of
the
agreements
among
the
parties
hereto
evidenced
hereby. (j)
Further
Assurances
.
The
Loan
Parties
agree
to
take,
at
the
Loan
Parties’
expense,
such
further
actions
as
the
Administrative
Agent
shallreasonably
request
from
time
to
time
to
evidence
the
amendments
set
forth
herein
and
the
transactions
contemplated
hereby.(k)
Governing
Law
.
This
Agreement
shall
be
governed
by
and
construed
and
interpreted
in
accordance
with
the
internal
laws
of
the
State
ofNew
York
but
excluding
any
principles
of
conflicts
of
law
or
other
rule
of
law
that
would
cause
the
application
of
the
law
of
any
jurisdiction
other
than
the
laws
ofthe
State
of
New
York.(l)
Severability
.
Any
provision
of
this
Agreement
which
is
prohibited
or
unenforceable
shall
be
ineffective
to
the
extent
of
such
prohibition
orunenforceability
without
invalidating
the
remaining
provisions
hereof
in
that
jurisdiction
or
affecting
the
validity
or
enforceability
of
such
provision
in
any
otherjurisdiction.(m)
Reaffirmation
.
Each
Guarantor
(i)
consents
to
the
execution
and
delivery
of
this
Agreement,
(ii)
reaffirms
all
of
its
obligations
andcovenants
under
the
Loan
Documents
to
which
it
is
a
party,
and
(iii)
agrees
that
none
of
its
respective
obligations
and
covenants
shall
be
reduced
or
limited
by
theexecution
and
delivery
of
this
Agreement.[SIGNATURES
ON
FOLLOWING
PAGES] IN
WITNESS
WHEREOF,
each
of
the
parties
hereto
has
caused
this
Agreement
to
be
duly
executed
by
its
duly
authorized
officer
as
of
the
day
and
yearfirst
above
written.BORROWER :LENDINGTREE, LLCBy:
Name:
Title:
PARENT AND GUARANTOR :LENDINGTREE, INC.By:
Name:
Title:
GUARANTORS :HOME LOAN CENTER, INC.By:
Name:
Title:
TREE.COM BU HOLDING COMPANY, INC.By:
Name:
Title:
DEGREETREE, INC. (for
itself
and
as
successor
to
Tree
Home
Services,
Inc.)By:
Name:
Title:
ADMINISTRATIVE
AGENT
AND
LENDERS
:
SUNTRUST BANK ,
as
the
Administrative
Agent
and
a
LenderBy:
Name:Title: BANK OF AMERICA, N.A. ,as
a
LenderBy:
Name:Title: ROYAL BANK OF CANADA ,as
a
LenderBy:
Name:Title: FIFTH THIRD BANK ,as
a
LenderBy:
Name:Title: JPMORGAN CHASE BANK, N.A. ,as
a
LenderBy:
Name:Title: Citizens Bank ,as
a
LenderBy:
Name:Title: Exhibit 21.1SUBSIDIARIES OF LENDINGTREE, INC.NameJurisdiction ofFormationLendingTree,
LLCDETree
BU
Holding
Company,
Inc.DEDegreeTree,
Inc.DEHome
Loan
Center,
Inc.CAHLC
Escrow,
Inc.CALT
Real
Estate,
Inc.DE Exhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe
hereby
consent
to
the
incorporation
by
reference
in
the
Registration
Statement
on
Form
S-3
(No.
333-207718)
and
on
Form
S‑8
(No.
333-197952
and
No.
333-182670)
of
LendingTree,
Inc.
of
our
report
dated
March
1,
2016
relating
to
the
financial
statements
and
the
effectiveness
of
internal
control
over
financialreporting,
which
appears
in
this
Form
10‑K./s/
PricewaterhouseCoopers
LLPCharlotte,
North
CarolinaMarch
1,
2016 Exhibit 31.1CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICERPURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a) OF THESECURITIES EXCHANGE ACT OF 1934,AS ADOPTED PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I,
Douglas
R.
Lebda,
certify
that:1.
I
have
reviewed
this
annual
report
on
Form
10-K
for
the
period
ended
December
31,
2015
of
LendingTree,
Inc.;2.Based
on
my
knowledge,
this
report
does
not
contain
any
untrue
statement
of
a
material
fact
or
omit
to
state
a
material
fact
necessary
to
make
thestatements
made,
in
light
of
the
circumstances
under
which
such
statements
were
made,
not
misleading
with
respect
to
the
period
covered
by
this
report;3.Based
on
my
knowledge,
the
financial
statements,
and
other
financial
information
included
in
this
report,
fairly
present
in
all
material
respects
thefinancial
condition,
results
of
operations
and
cash
flows
of
the
registrant
as
of,
and
for,
the
periods
presented
in
this
report;4.The
registrant's
other
certifying
officer(s)
and
I
are
responsible
for
establishing
and
maintaining
disclosure
controls
and
procedures
(as
defined
inExchange
Act
Rules
13a-15(e)
and
15d-15(e))
and
internal
control
over
financial
reporting
(as
defined
in
Exchange
Act
Rules
13a-15(f)
and
15d-15(f))for
the
registrant
and
have:a)Designed
such
disclosure
controls
and
procedures,
or
caused
such
disclosure
controls
and
procedures
to
be
designed
under
our
supervision,
toensure
that
material
information
relating
to
the
registrant,
including
its
consolidated
subsidiaries,
is
made
known
to
us
by
others
within
thoseentities,
particularly
during
the
period
in
which
this
report
is
being
prepared;b)Designed
such
internal
control
over
financial
reporting,
or
caused
such
internal
control
over
financial
reporting
to
be
designed
under
oursupervision,
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation
of
financial
statements
forexternal
purposes
in
accordance
with
generally
accepted
accounting
principles;c)Evaluated
the
effectiveness
of
the
registrant's
disclosure
controls
and
procedures
and
presented
in
this
report
our
conclusions
about
theeffectiveness
of
the
disclosure
controls
and
procedures,
as
of
the
end
of
the
period
covered
by
this
report
based
on
such
evaluation;
andd)Disclosed
in
this
report
any
change
in
the
registrant's
internal
control
over
financial
reporting
that
occurred
during
the
registrant's
most
recentfiscal
quarter
(the
registrant's
fourth
fiscal
quarter
in
the
case
of
an
annual
report)
that
has
materially
affected,
or
is
reasonably
likely
tomaterially
affect,
the
registrant's
internal
control
over
financial
reporting;
and5.The
registrant's
other
certifying
officer(s)
and
I
have
disclosed,
based
on
our
most
recent
evaluation
of
internal
control
over
financial
reporting,
to
theregistrant's
auditors
and
the
audit
committee
of
the
registrant's
board
of
directors
(or
persons
performing
the
equivalent
functions):a)All
significant
deficiencies
and
material
weaknesses
in
the
design
or
operation
of
internal
control
over
financial
reporting
which
are
reasonablylikely
to
adversely
affect
the
registrant's
ability
to
record,
process,
summarize
and
report
financial
information;
andb)Any
fraud,
whether
or
not
material,
that
involves
management
or
other
employees
who
have
a
significant
role
in
the
registrant's
internal
controlover
financial
reporting.Dated:
March
1,
2016 /s/ DOUGLAS R. LEBDA
Douglas
R.
Lebda
Chairman and Chief Executive Officer(principal executive officer) Exhibit 31.2CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICERPURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a) OF THESECURITIES EXCHANGE ACT OF 1934,AS ADOPTED PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I,
Gabriel
Dalporto,
certify
that:1.I
have
reviewed
this
annual
report
on
Form
10-K
for
the
period
ended
December
31,
2015
of
LendingTree,
Inc.;2.Based
on
my
knowledge,
this
report
does
not
contain
any
untrue
statement
of
a
material
fact
or
omit
to
state
a
material
fact
necessary
to
make
thestatements
made,
in
light
of
the
circumstances
under
which
such
statements
were
made,
not
misleading
with
respect
to
the
period
covered
by
this
report;3.Based
on
my
knowledge,
the
financial
statements,
and
other
financial
information
included
in
this
report,
fairly
present
in
all
material
respects
thefinancial
condition,
results
of
operations
and
cash
flows
of
the
registrant
as
of,
and
for,
the
periods
presented
in
this
report;4.The
registrant's
other
certifying
officer(s)
and
I
are
responsible
for
establishing
and
maintaining
disclosure
controls
and
procedures
(as
defined
inExchange
Act
Rules
13a-15(e)
and
15d-15(e))
and
internal
control
over
financial
reporting
(as
defined
in
Exchange
Act
Rules
13a-15(f)
and
15d-15(f))for
the
registrant
and
have:a)Designed
such
disclosure
controls
and
procedures,
or
caused
such
disclosure
controls
and
procedures
to
be
designed
under
our
supervision,
toensure
that
material
information
relating
to
the
registrant,
including
its
consolidated
subsidiaries,
is
made
known
to
us
by
others
within
thoseentities,
particularly
during
the
period
in
which
this
report
is
being
prepared;b)Designed
such
internal
control
over
financial
reporting,
or
caused
such
internal
control
over
financial
reporting
to
be
designed
under
oursupervision,
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation
of
financial
statements
forexternal
purposes
in
accordance
with
generally
accepted
accounting
principles;c)Evaluated
the
effectiveness
of
the
registrant's
disclosure
controls
and
procedures
and
presented
in
this
report
our
conclusions
about
theeffectiveness
of
the
disclosure
controls
and
procedures,
as
of
the
end
of
the
period
covered
by
this
report
based
on
such
evaluation;
andd)Disclosed
in
this
report
any
change
in
the
registrant's
internal
control
over
financial
reporting
that
occurred
during
the
registrant's
most
recentfiscal
quarter
(the
registrant's
fourth
fiscal
quarter
in
the
case
of
an
annual
report)
that
has
materially
affected,
or
is
reasonably
likely
tomaterially
affect,
the
registrant's
internal
control
over
financial
reporting;
and5.The
registrant's
other
certifying
officer(s)
and
I
have
disclosed,
based
on
our
most
recent
evaluation
of
internal
control
over
financial
reporting,
to
theregistrant's
auditors
and
the
audit
committee
of
the
registrant's
board
of
directors
(or
persons
performing
the
equivalent
functions):a)All
significant
deficiencies
and
material
weaknesses
in
the
design
or
operation
of
internal
control
over
financial
reporting
which
are
reasonablylikely
to
adversely
affect
the
registrant's
ability
to
record,
process,
summarize
and
report
financial
information;
andb)Any
fraud,
whether
or
not
material,
that
involves
management
or
other
employees
who
have
a
significant
role
in
the
registrant's
internal
controlover
financial
reporting.Dated:
March
1,
2016 /s/ GABRIEL DALPORTO
Gabriel
Dalporto
Chief Financial Officer(principal financial officer) Exhibit 32.1CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICERPURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002I,
Douglas
R.
Lebda,
certify,
pursuant
to
18
U.S.C.
Section
1350,
as
adopted
pursuant
to
Section
906
of
the
Sarbanes-Oxley
Act
of
2002,
that
to
myknowledge:(1)the
Annual
Report
on
Form
10-K
for
the
fiscal
year
ended
December
31,
2015
of
LendingTree,
Inc.
(the
"Report")
which
this
statement
accompanies
fullycomplies
with
the
requirements
of
Section
13(a)
or
15(d)
of
the
Securities
Exchange
Act
of
1934
(15
U.S.C.
78m
or
78o(d));
and(2)the
information
contained
in
the
Report
fairly
presents,
in
all
material
respects,
the
financial
condition
and
results
of
operations
of
LendingTree,
Inc.
Dated:March
1,
2016
/s/ DOUGLAS R. LEBDA
Douglas
R.
Lebda
Chairman and Chief Executive Officer(principal executive officer) Exhibit 32.2CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICERPURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002I,
Gabriel
Dalporto,
certify,
pursuant
to
18
U.S.C.
Section
1350,
as
adopted
pursuant
to
Section
906
of
the
Sarbanes-Oxley
Act
of
2002,
that
to
my
knowledge:(1)the
Annual
Report
on
Form
10-K
for
the
fiscal
year
ended
December
31,
2015
of
LendingTree,
Inc.
(the
"Report")
which
this
statement
accompanies
fullycomplies
with
the
requirements
of
Section
13(a)
or
15(d)
of
the
Securities
Exchange
Act
of
1934
(15
U.S.C.
78m
or
78o(d));
and(2)the
information
contained
in
the
Report
fairly
presents,
in
all
material
respects,
the
financial
condition
and
results
of
operations
of
LendingTree,
Inc.
Dated:March
1,
2016
/s/ GABRIEL DALPORTO
Gabriel
Dalporto
Chief Financial Officer(principal financial officer)