Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 04, 2014 | |
Entity Information: | ' | ' |
Entity Registrant Name | 'Tree.com, Inc. | ' |
Entity Central Index Key | '0001434621 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 11,326,337 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Revenue | $41,306 | $37,343 | $123,486 | $102,829 |
Costs and expenses: | ' | ' | ' | ' |
Cost of revenue (exclusive of depreciation shown separately below) | 2,110 | 1,733 | 5,670 | 5,039 |
Selling and marketing expense | 27,168 | 24,832 | 83,581 | 68,473 |
General and administrative expense | 6,590 | 5,610 | 18,201 | 17,817 |
Product development | 1,658 | 1,217 | 5,416 | 3,914 |
Depreciation | 840 | 891 | 2,541 | 2,648 |
Amortization of intangibles | 41 | 33 | 96 | 119 |
Restructuring and severance | 7 | -70 | 232 | 76 |
Litigation settlements and contingencies | 2,338 | 2,875 | 10,430 | 6,812 |
Total costs and expenses | 40,752 | 37,121 | 126,167 | 104,898 |
Operating income (loss) | 554 | 222 | -2,681 | -2,069 |
Other income (expense): | ' | ' | ' | ' |
Interest expense | -1 | -4 | -1 | -18 |
Income (loss) before income taxes | 553 | 218 | -2,682 | -2,087 |
Income tax benefit | 2 | 98 | 86 | 97 |
Net income (loss) from continuing operations | 555 | 316 | -2,596 | -1,990 |
Gain from sale of discontinued operations, net of tax | 0 | 0 | 0 | 10,101 |
Loss from operations of discontinued operations, net of tax | -174 | -529 | -3,679 | -3,962 |
Income (loss) from discontinued operations | -174 | -529 | -3,679 | 6,139 |
Net income (loss) | $381 | ($213) | ($6,275) | $4,149 |
Weighted average shares outstanding: | ' | ' | ' | ' |
Basic | 11,182 | 11,017 | 11,180 | 11,039 |
Diluted | 11,836 | 11,720 | 11,180 | 11,039 |
Income (loss) per share from continuing operations: | ' | ' | ' | ' |
Basic (in dollars per share) | $0.05 | $0.03 | ($0.23) | ($0.18) |
Diluted (in dollars per share) | $0.05 | $0.03 | ($0.23) | ($0.18) |
Income (loss) per share from discontinued operations: | ' | ' | ' | ' |
Basic (in dollars per share) | ($0.02) | ($0.05) | ($0.33) | $0.56 |
Diluted (in dollars per share) | ($0.01) | ($0.05) | ($0.33) | $0.56 |
Income (loss) per share attributable to common shareholders: | ' | ' | ' | ' |
Basic (in dollars per share) | $0.03 | ($0.02) | ($0.56) | $0.38 |
Diluted (in dollars per share) | $0.03 | ($0.02) | ($0.56) | $0.38 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
ASSETS: | ' | ' |
Cash and cash equivalents | $83,631 | $91,667 |
Restricted cash and cash equivalents | 21,874 | 26,017 |
Accounts receivable (net of allowance of $430 and $408, respectively) | 13,816 | 12,850 |
Prepaid and other current assets | 1,620 | 1,689 |
Current assets of discontinued operations | 125 | 521 |
Total current assets | 121,066 | 132,744 |
Property and equipment (net of accumulated depreciation of $20,290 and $18,008, respectively) | 5,561 | 5,344 |
Goodwill | 3,632 | 3,632 |
Intangible assets, net | 11,588 | 10,684 |
Other non-current assets | 102 | 111 |
Non-current assets of discontinued operations | 100 | 129 |
Total assets | 142,049 | 152,644 |
LIABILITIES: | ' | ' |
Accounts payable, trade | 2,263 | 4,881 |
Accrued expenses and other current liabilities | 23,614 | 23,314 |
Current liabilities of discontinued operations | 31,782 | 32,004 |
Total current liabilities | 57,659 | 60,199 |
Other non-current liabilities | 0 | 334 |
Deferred income taxes | 4,847 | 4,849 |
Non-current liabilities of discontinued operations | 215 | 254 |
Total liabilities | 62,721 | 65,636 |
Commitments and contingencies | ' | ' |
SHAREHOLDERS' EQUITY: | ' | ' |
Preferred stock $.01 par value; 5,000,000 shares authorized; none issued or outstanding | 0 | 0 |
Common stock $.01 par value; 50,000,000 shares authorized; 12,793,114 and 12,619,835 shares issued, respectively, and 11,326,337 and 11,250,903 shares outstanding, respectively | 128 | 126 |
Additional paid-in capital | 908,288 | 907,148 |
Accumulated deficit | -813,808 | -807,533 |
Treasury stock 1,466,777 and 1,368,932 shares, respectively | -15,280 | -12,733 |
Total shareholders' equity | 79,328 | 87,008 |
Total liabilities and shareholders' equity | $142,049 | $152,644 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ' | ' |
Accounts receivable, allowance (in dollars) | $430 | $408 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | $20,290 | $18,008 |
Preferred stock, par value (in dollars per share) | $0.01 | $0.01 |
Preferred stock, authorized shares | 5,000,000 | 5,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, authorized shares | 50,000,000 | 50,000,000 |
Common stock, issued shares | 12,793,114 | 12,619,835 |
Common stock, outstanding shares | 11,326,337 | 11,250,903 |
Treasury stock, shares | 1,466,777 | 1,368,932 |
CONSOLIDATED_STATEMENT_OF_SHAR
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (USD $) | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Comprehensive Income (Loss) |
In Thousands, except Share data, unless otherwise specified | ||||||
Balance at Dec. 31, 2013 | $87,008 | $126 | $907,148 | ($807,533) | ($12,733) | ' |
Balance (in shares) at Dec. 31, 2013 | ' | 12,620,000 | ' | ' | 1,369,000 | ' |
Comprehensive loss: | ' | ' | ' | ' | ' | ' |
Net income (loss) | -6,275 | ' | ' | -6,275 | ' | -6,275 |
Comprehensive loss | ' | ' | ' | ' | ' | -6,275 |
Non-cash compensation | 4,859 | ' | 4,859 | ' | ' | ' |
Purchase of treasury stock (in shares) | 97,845 | ' | ' | ' | 98,000 | ' |
Purchase of treasury stock | -2,547 | ' | ' | ' | -2,547 | ' |
Dividends | -16 | ' | -16 | ' | ' | ' |
Issuance of restricted stock awards (in shares) | ' | 43,000 | ' | ' | ' | ' |
Issuance of restricted stock awards | 0 | 1 | -1 | ' | ' | ' |
Net-share settlement of stock-based compensation, net of issuance of common stock upon restricted stock unit vesting and stock option exercise | -3,701 | 1 | -3,702 | ' | ' | ' |
Net-share settlement of stock-based compensation, net of issuance of common stock upon restricted stock unit vesting and stock option exercise (in shares) | ' | 130,000 | ' | ' | ' | ' |
Balance at Sep. 30, 2014 | $79,328 | $128 | $908,288 | ($813,808) | ($15,280) | ' |
Balance (in shares) at Sep. 30, 2014 | ' | 12,793,000 | ' | ' | 1,467,000 | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flows from operating activities attributable to continuing operations: | ' | ' |
Net income (loss) | ($6,275) | $4,149 |
Less: Loss (income) from discontinued operations | 3,679 | -6,139 |
Net income (loss) from continuing operations | -2,596 | -1,990 |
Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities attributable to continuing operations: | ' | ' |
Loss on disposal of fixed assets | 237 | 25 |
Amortization of intangibles | 96 | 119 |
Depreciation | 2,541 | 2,648 |
Non-cash compensation expense | 4,859 | 4,278 |
Deferred income taxes | -3 | -99 |
Bad debt expense | 130 | -2 |
Changes in current assets and liabilities: | ' | ' |
Accounts receivable | -1,356 | -5,201 |
Prepaid and other current assets | -505 | -656 |
Accounts payable, accrued expenses and other current liabilities | -2,846 | 5,300 |
Income taxes payable | 576 | -570 |
Other, net | -161 | -457 |
Net cash provided by operating activities attributable to continuing operations | 972 | 3,395 |
Cash flows from investing activities attributable to continuing operations: | ' | ' |
Capital expenditures | -2,997 | -2,054 |
Acquisition of intangible assets | -540 | 0 |
Decrease in restricted cash | 4,143 | 3,396 |
Net cash provided by investing activities attributable to continuing operations | 606 | 1,342 |
Cash 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 | -3,616 | -1,889 |
Purchase of treasury stock | -2,547 | -3,321 |
Dividends | -196 | 185 |
Net cash used in financing activities attributable to continuing operations | -6,359 | -5,025 |
Total cash used in continuing operations | -4,781 | -288 |
Net cash used in operating activities attributable to discontinued operations | -3,255 | -2,150 |
Net cash provided by investing activities attributable to discontinued operations | 0 | 10,000 |
Total cash provided by (used in) discontinued operations | -3,255 | 7,850 |
Net increase (decrease) in cash and cash equivalents | -8,036 | 7,562 |
Cash and cash equivalents at beginning of period | 91,667 | 80,190 |
Cash and cash equivalents at end of period | $83,631 | $87,752 |
ORGANIZATION
ORGANIZATION | 9 Months Ended |
Sep. 30, 2014 | |
ORGANIZATION | ' |
ORGANIZATION | ' |
ORGANIZATION | |
Company Overview | |
Tree.com, Inc. ("Tree.com" or the "Company") is the parent of LendingTree, LLC, which owns several brands and businesses that provide information, tools, advice, products and services for critical transactions in consumers' lives. The family of brands includes: LendingTree®, GetSmart®, LendingTree AutosSM, LendingTree EducationSM and LendingTree Home ProsSM. Together, these brands serve as an ally for consumers who are looking to comparison-shop for loans, education programs, home services providers and other services from multiple businesses and professionals that will compete for their business. | |
The consolidated financial statements include the accounts of Tree.com and all its wholly-owned entities. Intercompany transactions and accounts have been eliminated. | |
Certain amounts from the prior consolidated financial statements have been reclassified to conform to the presentation adopted in the current year. | |
Discontinued Operations | |
The businesses of RealEstate.com, REALTORS® (which represents the former Real Estate segment) and LendingTree Loans are presented as discontinued operations in the accompanying consolidated balance sheets, consolidated statements of operations and consolidated cash flows for all periods 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. | |
LendingTree Loans | |
On May 12, 2011, the Company entered into an asset purchase agreement with Discover Bank ("Discover"), a wholly-owned subsidiary of Discover Financial Services, as amended on February 7, 2012, for the sale of substantially all of the operating assets of its LendingTree Loans business. The sale was completed on June 6, 2012. | |
The asset purchase agreement, as amended, provided for a purchase price of approximately $55.9 million in cash for the assets, subject to certain conditions. Of this 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 paid and 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 related to assets Discover acquired. Of the purchase price paid, as of September 30, 2014, $16.1 million is being held in escrow pending resolution of certain actual and/or contingent liabilities that remain with the Company following the sale. The escrowed amount is recorded as restricted cash as of September 30, 2014. | |
Separate from the asset purchase agreement, Tree.com agreed to provide certain marketing-related services to Discover in connection with its mortgage origination business for approximately seventeen months following the closing, or such earlier point as the agreed-upon services are satisfactorily completed. The services were satisfactorily completed in the second quarter of 2013. Discover remains a network lender on the Company's mortgage exchange following completion of the services. | |
Basis of Presentation | |
The accompanying unaudited interim consolidated financial statements as of September 30, 2014 and for the three and nine months ended September 30, 2014 and 2013, respectively, have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). In the opinion of management, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited financial statements, and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the Company's financial position for the periods presented. The results for the three and nine months ended September 30, 2014 are not necessarily indicative of the results to be expected for the year ending December 31, 2014, or any other period. The accompanying consolidated balance sheet as of December 31, 2013 was derived from audited financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2013 (the "2013 Annual Report"). These consolidated financial statements do not include all of the information and footnotes required by GAAP for annual financial statements. Accordingly, they should be read in conjunction with the audited financial statements and notes thereto included in the 2013 Annual Report. |
SIGNIFICANT_ACCOUNTING_POLICIE
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
SIGNIFICANT ACCOUNTING POLICIES | ' |
SIGNIFICANT ACCOUNTING POLICIES | |
Accounting Estimates | |
Management 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 the consolidated 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; the recoverability of long-lived assets, goodwill and intangible assets; the determination of income taxes payable and deferred income taxes, including related valuation allowances; restructuring reserves; contingent consideration related to business combinations; various other allowances, reserves and accruals; and assumptions related to the determination of stock-based compensation. | |
Certain Risks and Concentrations | |
Tree.com's business is subject to certain risks and concentrations including dependence on third-party technology providers, exposure to risks associated with online commerce security and credit card fraud. | |
Financial instruments, which potentially subject the Company to concentration of credit risk at September 30, 2014, consist primarily of cash and cash equivalents and accounts receivable, as disclosed in the consolidated balance sheet. Cash and cash equivalents are in excess of Federal Deposit Insurance Corporation insurance limits, but are maintained with quality financial institutions of high credit. The Company generally requires certain network lenders to maintain 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 network. | |
Lenders participating on the Company's lender network can offer their products directly to consumers through brokers, mass marketing campaigns or through other traditional methods of credit distribution. These lenders can also offer their products online, either directly to prospective borrowers, through one or more online competitors, or both. If a significant number of potential consumers are able to obtain loans from participating lenders without utilizing the Company's service, its ability to generate revenue may be limited. Because the Company does not have exclusive relationships with the lenders whose loan offerings are offered 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. | |
Litigation Settlements and Contingencies | |
Litigation settlements and contingencies consists of expenses related to actual or anticipated litigation settlements, in addition to legal fees incurred in connection with various patent litigation claims the Company pursues against others. | |
Recent Accounting Pronouncements | |
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09 related to revenue recognition. This ASU was initiated as a joint project between the FASB and the International Accounting Standards Board ("IASB") to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and international financial reporting standards ("IFRS"). This guidance will supersede the existing revenue recognition requirements in Accounting Standards Codification ("ASC") Topic 605, Revenue Recognition and is effective for annual reporting periods beginning after December 15, 2016. Early adoption is not permitted and the ASU can be applied (i) retrospectively to each prior period presented or (ii) retrospectively with 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 on its consolidated financial statements. | |
There are no recently issued accounting pronouncements that were adopted during the nine months ended September 30, 2014. |
RESTRICTED_CASH_RESTRICTED_CAS
RESTRICTED CASH RESTRICTED CASH | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Cash and Cash Equivalents [Abstract] | ' | |||||||
RESTRICTED CASH | ' | |||||||
RESTRICTED CASH | ||||||||
Restricted cash and cash equivalents consists of the following (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Cash in escrow for surety bonds | $ | 2,453 | $ | 2,453 | ||||
Cash in escrow for corporate purchasing card program | 100 | 400 | ||||||
Cash in escrow for sale of LendingTree Loans (a) | 16,106 | 18,117 | ||||||
Cash in escrow for earnout related to an acquisition (b) | — | 1,956 | ||||||
Cash restricted for loan loss obligations | 3,164 | 3,051 | ||||||
Other | 51 | 40 | ||||||
Total restricted cash and cash equivalents | $ | 21,874 | $ | 26,017 | ||||
(a) | Home Loan Center, Inc. ("HLC"), a subsidiary of the Company, continues to be liable for certain indemnification obligations, repurchase obligations and premium repayment obligations following the sale of substantially all of the operating assets of its LendingTree Loans business in the second quarter of 2012. During the second quarter of 2014, the Company reached and executed a settlement with one of its secondary market purchasers related to these contingent liabilities, upon which $2.0 million of cash previously held in escrow was released to the Company. This settlement had no impact on the results of operations for the three and nine months ended September 30, 2014. | |||||||
(b) | During the first quarter of 2014, the Company reached and executed a settlement with the disputing party on the earnout related to an acquisition completed prior to the spinoff from IAC/InterActiveCorp in August 2008, upon which $2.0 million of cash previously held in escrow was released, of which $1.0 million was paid out to the disputing party. This settlement had no impact on the results of operations for the three and nine months ended September 30, 2014. |
GOODWILL_AND_INTANGIBLE_ASSETS
GOODWILL AND INTANGIBLE ASSETS | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||
GOODWILL AND INTANGIBLE ASSETS | ' | |||||||||||
GOODWILL AND INTANGIBLE ASSETS | ||||||||||||
The balance of goodwill and intangible assets, net is as follows (in thousands): | ||||||||||||
September 30, | December 31, | |||||||||||
2014 | 2013 | |||||||||||
Goodwill | $ | 486,720 | $ | 486,720 | ||||||||
Accumulated impairment losses | (483,088 | ) | (483,088 | ) | ||||||||
Net goodwill | $ | 3,632 | $ | 3,632 | ||||||||
Intangible assets with indefinite lives | $ | 10,142 | $ | 10,142 | ||||||||
Intangible assets with definite lives, net | 1,446 | 542 | ||||||||||
Total intangible assets, net | $ | 11,588 | $ | 10,684 | ||||||||
Goodwill and Indefinite-Lived Intangible Assets | ||||||||||||
The Company's goodwill is associated with its one reportable segment, lending. Intangible assets with indefinite lives relate to the Company's trademarks. | ||||||||||||
Intangible Assets with Definite Lives | ||||||||||||
On 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, plus contingent consideration of $0 to $0.8 million. As of November 7, 2014, the Company has determined a preliminarily purchase price of $1.0 million, which includes an estimated contingent consideration of $0.4 million. The entire $1.0 million purchase price was allocated to the customer lists acquired, which will be amortized straight-line over a useful life of 10 years. | ||||||||||||
Intangible assets with definite lives relate to the following (in thousands): | ||||||||||||
Cost | Accumulated | Net | ||||||||||
Amortization | ||||||||||||
Purchase agreements | $ | 236 | $ | (236 | ) | $ | — | |||||
Technology | 25,194 | (25,194 | ) | — | ||||||||
Customer lists | 7,682 | (6,236 | ) | 1,446 | ||||||||
Other | 1,517 | (1,517 | ) | — | ||||||||
Balance at September 30, 2014 | $ | 34,629 | $ | (33,183 | ) | $ | 1,446 | |||||
Cost | Accumulated | Net | ||||||||||
Amortization | ||||||||||||
Purchase agreements | $ | 236 | $ | (212 | ) | $ | 24 | |||||
Technology | 25,194 | (25,194 | ) | — | ||||||||
Customer lists | 6,682 | (6,166 | ) | 516 | ||||||||
Other | 1,517 | (1,515 | ) | 2 | ||||||||
Balance at December 31, 2013 | $ | 33,629 | $ | (33,087 | ) | $ | 542 | |||||
Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on balances as of September 30, 2014, future amortization is estimated to be as follows (in thousands): | ||||||||||||
Amortization Expense | ||||||||||||
Remainder of current year | $ | 36 | ||||||||||
Year ending December 31, 2015 | 115 | |||||||||||
Year ending December 31, 2016 | 98 | |||||||||||
Year ending December 31, 2017 | 111 | |||||||||||
Year ending December 31, 2018 | 115 | |||||||||||
Thereafter | 971 | |||||||||||
Total intangible assets with definite lives, net | $ | 1,446 | ||||||||||
ACCRUED_EXPENSES_AND_OTHER_CUR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Payables and Accruals [Abstract] | ' | |||||||
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ' | |||||||
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||||||||
Accrued expenses and other current liabilities consist of the following (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Accrued litigation liabilities | $ | 2,686 | $ | 500 | ||||
Accrued advertising expense | 9,257 | 8,837 | ||||||
Accrued compensation and benefits | 2,411 | 3,378 | ||||||
Accrued professional fees | 494 | 1,806 | ||||||
Accrued restructuring costs | 251 | 284 | ||||||
Customer deposits and escrows | 4,615 | 4,279 | ||||||
Deferred rent | 227 | 245 | ||||||
Other | 3,673 | 3,985 | ||||||
Total accrued expenses and other current liabilities | $ | 23,614 | $ | 23,314 | ||||
SHAREHOLDERS_EQUITY
SHAREHOLDERS' EQUITY | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||
Earnings Per Share | ' | |||||||||||
SHAREHOLDERS' EQUITY | ||||||||||||
Basic and diluted loss per share was determined based on the following share data (in thousands): | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||
Weighted average basic common shares | 11,182 | 11,017 | 11,180 | 11,039 | ||||||||
Effect of stock options | 471 | 419 | — | — | ||||||||
Effect of dilutive share awards | 183 | 284 | — | — | ||||||||
Weighted average diluted common shares | 11,836 | 11,720 | 11,180 | 11,039 | ||||||||
For the nine months ended September 30, 2014 and 2013, the Company had losses from continuing operations and, as a result, no potentially dilutive securities were included in the denominator for computing diluted loss per share, because the impact would have been anti-dilutive. Accordingly, the weighted average basic shares outstanding were used to compute loss per share amounts for these periods. For the nine months ended September 30, 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 inclusion would have been anti-dilutive. For the three months ended September 30, 2014, approximately 0.1 million shares related to potentially dilutive securities were excluded from the calculation of diluted earnings per share, because their inclusion would have been anti-dilutive. No anti-dilutive shares were excluded for the three months ended September 30, 2013. | ||||||||||||
Common Stock Repurchases | ||||||||||||
On January 11, 2010, the board of directors authorized the repurchase of up to $10.0 million of Tree.com's common stock. On May 7, 2014, the board of directors authorized the repurchase of up to an additional $10.0 million of Tree.com's common stock. During the three and nine months ended September 30, 2014, the Company purchased 38,645 and 97,845 shares, respectively, of its common stock pursuant to this stock repurchase program. At September 30, 2014, approximately $7.6 million remains authorized for share repurchase. |
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||||
STOCK-BASED COMPENSATION | ||||||||||||||||
Non-cash compensation related to equity awards is included in the following line items in the accompanying consolidated statements of operations (in thousands): | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Cost of revenue | $ | 11 | $ | 4 | $ | 24 | $ | 9 | ||||||||
Selling and marketing expense | 205 | 242 | 664 | 765 | ||||||||||||
General and administrative expense | 1,292 | 976 | 3,281 | 2,885 | ||||||||||||
Product development | 278 | 190 | 854 | 619 | ||||||||||||
Restructuring and severance | — | — | 36 | — | ||||||||||||
Total non-cash compensation | $ | 1,786 | $ | 1,412 | $ | 4,859 | $ | 4,278 | ||||||||
Stock Options | ||||||||||||||||
A summary of changes in outstanding stock options is as follows: | ||||||||||||||||
Number of Options | Weighted | Weighted | Aggregate | |||||||||||||
Average | Average | Intrinsic | ||||||||||||||
Exercise | Remaining | Value(a) | ||||||||||||||
Price | Contractual | |||||||||||||||
Term | ||||||||||||||||
(per option) | (in years) | (in thousands) | ||||||||||||||
Options outstanding at January 1, 2014 | 1,038,999 | $ | 8.98 | |||||||||||||
Granted (b) | 1,106,265 | 26.72 | ||||||||||||||
Exercised | (4,620 | ) | 12.07 | |||||||||||||
Forfeited | — | — | ||||||||||||||
Expired | (675 | ) | 13.42 | |||||||||||||
Options outstanding at September 30, 2014 | 2,139,969 | 18.14 | 6.68 | $ | 37,974 | |||||||||||
Options exercisable at September 30, 2014 | 983,703 | $ | 9.04 | 3.87 | $ | 26,409 | ||||||||||
(a) | The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $35.89 on the last trading day of the quarter ended September 30, 2014 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2014. The intrinsic value changes based on the market value of the Company's common stock. | |||||||||||||||
(b) | During the first nine months ended September 30, 2014, the Company granted stock options (a) to certain executives with weighted average grant date fair values per share ranging from $10.68 to $17.13, of which some vest over a period of three years from the grant date and others vest 25% and 75% over a period of 2.5 years and 3.5 years, respectively, and (b) to non-employee members of the board of directors with a weighted average grant date fair value per share of $13.08 that vest over a period of two years from the grant date. | |||||||||||||||
For purposes of determining stock-based compensation expense, the weighted average grant date fair value per share of the stock options was estimated using the Black-Scholes option pricing model, which requires the use of various key assumptions. The weighted average assumptions used are as follows: | ||||||||||||||||
Expected term (1) | 5.75 - 6.63 years | |||||||||||||||
Expected dividend (2) | — | |||||||||||||||
Expected volatility (3) | 36% - 54% | |||||||||||||||
Risk-free interest rate (4) | 1.85% - 2.13% | |||||||||||||||
-1 | The expected term of stock options granted was calculated using the 'Simplified Method', which utilizes the midpoint between the weighted average time 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 the Company's employees. | |||||||||||||||
-2 | For all stock options granted in 2014, no dividends are expected to be paid over the contractual term of the 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 historical volatility 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 comparable expected terms as the awards, in effect at the grant date. | |||||||||||||||
Restricted Stock Units and Restricted Stock | ||||||||||||||||
A summary of the changes in outstanding nonvested restricted stock units ("RSUs") and restricted stock is as follows: | ||||||||||||||||
RSUs | RSUs | |||||||||||||||
Performance Condition | ||||||||||||||||
Number of Units | Weighted | Number of Units | Weighted | |||||||||||||
Average | Average | |||||||||||||||
Grant Date | Grant Date | |||||||||||||||
Fair Value | Fair Value | |||||||||||||||
(per unit) | (per unit) | |||||||||||||||
Nonvested at January 1, 2014 | 599,122 | $ | 14.15 | — | $ | — | ||||||||||
Granted | 128,760 | 32 | 500 | 33.59 | ||||||||||||
Vested | (244,080 | ) | 13.25 | — | — | |||||||||||
Forfeited | (47,624 | ) | 15.83 | — | — | |||||||||||
Nonvested at September 30, 2014 | 436,178 | $ | 19.79 | 500 | $ | 33.59 | ||||||||||
Restricted Stock | Restricted Stock | |||||||||||||||
Market Condition | ||||||||||||||||
Number of | Weighted | Number of | Weighted | |||||||||||||
Shares | Average | Shares | Average | |||||||||||||
Grant Date | Grant Date | |||||||||||||||
Fair Value | Fair Value | |||||||||||||||
(per share) | (per share) | |||||||||||||||
Nonvested at January 1, 2014 | 119,500 | $ | 22.47 | 62,500 | $ | 13.93 | ||||||||||
Granted | 43,389 | 25.14 | — | — | ||||||||||||
Vested | (20,833 | ) | 17.49 | (62,500 | ) | 13.93 | ||||||||||
Forfeited | — | — | — | — | ||||||||||||
Nonvested at September 30, 2014 | 142,056 | $ | 24.02 | — | $ | — | ||||||||||
INCOME_TAXES
INCOME TAXES | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Income Tax Disclosure [Abstract] | ' | |||||||||||||||
INCOME TAXES | ' | |||||||||||||||
INCOME TAXES | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Income tax benefit (provision) | $ | 2 | $ | 98 | $ | 86 | $ | 97 | ||||||||
Effective tax rate | 0.4 | % | 45 | % | 3.2 | % | 4.6 | % | ||||||||
For the three and nine months ended September 30, 2014, the effective tax rates varied from the statutory rate primarily due to the existence of a valuation allowance that has been provided to offset the Company's net deferred tax asset, after excluding deferred tax liabilities related to indefinite-lived intangible assets that are not anticipated to provide a source of taxable income in the foreseeable future. The effective tax rate for the nine months ended September 30, 2014 was also impacted by state tax refunds. | ||||||||||||||||
For the three and nine months ended September 30, 2013, the effective income tax rates varied from the statutory rate primarily due to the existence of a valuation allowance that was provided to offset the Company's net deferred tax asset, after excluding deferred tax liabilities related to indefinite-lived intangible assets. The deferred tax liability for indefinite-lived intangible assets was adjusted for a change to the North Carolina income tax rate enacted during the three months ended September 30, 2013. The effect of a change in tax rates on deferred tax balances is not apportioned among interim periods, but is recognized discretely in the period in which the change occurs. As such, all of the impact of the rate change was recorded during the three months ended September 30, 2013, resulting in a higher effective tax rate. | ||||||||||||||||
Valuation Allowance | ||||||||||||||||
There have been no changes to the Company's valuation allowance assessment for the three and nine months ended September 30, 2014. |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
CONTINGENCIES | ' |
CONTINGENCIES | |
Overview | |
Tree.com is involved in legal proceedings on an ongoing basis. In assessing the materiality of a legal proceeding, the Company evaluates, among other factors, the amount of monetary damages claimed, as well as the potential impact of non-monetary remedies sought by plaintiffs (e.g., injunctive relief) that may require it to change its business practices in ways that could have a material adverse impact on the business. With respect to the matters disclosed in this footnote, unless otherwise indicated, the Company is unable to estimate the possible loss or range of losses that could potentially result from the application of such non-monetary remedies. | |
As of September 30, 2014 and December 31, 2013, the Company had a litigation settlement accrual for its continuing operations of $2.7 million and $0.5 million, respectively. The litigation settlement accrual relates to litigation matters that were either settled or a firm offer for settlement was extended, thereby establishing an accrual amount that is both probable and reasonably estimable. | |
Specific Matters | |
Intellectual Property Litigation | |
Zillow | |
LendingTree 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 US District Court for the Western District of North Carolina against Zillow, Inc., Nextag, Inc., Quinstreet, Inc., Quinstreet Media, Inc. and Adchemy, Inc. The complaint was amended to include Leadpoint, Inc. d/b/a Securerights on September 24, 2010. The complaint alleged that each of the defendants infringe one or both 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. Patent No. 6,611,816, entitled "Method and Computer Network for Co-Ordinating a Loan over the Internet." The defendants in this action asserted various defenses and counterclaims against the Company, including the assertion by certain of the defendants of counterclaims alleging illegal monopolization via our maintenance of the asserted patents. Defendant NexTag asserted a defense of laches. In July 2011, the Company reached a settlement agreement 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"), pursuant to which all claims against the Quinstreet Parties and all counterclaims against the Company by the Quinstreet Parties were dismissed. After an unsuccessful attempt to reach settlement through mediation with the remaining parties, this matter went to trial beginning in February 2014, and on March 12, 2014, the jury returned a verdict. The jury found that the defendants Zillow, Inc., Adchemy, Inc., and NexTag, Inc. did not infringe the two patents referenced above and determined that those patents are invalid due to an inventorship defect, and the court found that NexTag was entitled to a defense of laches. 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 to dismiss and withdraw all claims, counterclaims, and motions between the Company and Adchemy, Inc. As a result, a joint and voluntary dismissal was filed June 12, 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-trial motions 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's fees from January 10, 2014 to present. Following such order, a loss of $2.2 million is probable with respect to the court's partial award of attorneys' fees to NexTag and a reserve has been established for this matter in the accompanying consolidated balance sheet as of September 30, 2014. The trial and post-trial motion process is now complete. The Company anticipates renewing its previously filed notice of appeal with respect to the jury verdict concerning Zillow, Inc. and Nextag, Inc. | |
Internet Patents Corp. | |
Internet Patents Corporation f/k/a InsWeb v. Tree.com, Inc., No. C-12-6505 (U.S. Dist. Ct., N.D. Cal.). In December 2012, the plaintiff filed a patent infringement lawsuit against the Company seeking a judgment that it had infringed a patent held by the plaintiff. Process was formally served with respect to this matter in April 2013. The plaintiff sought injunctive relief, damages, costs, expenses, pre- and post-judgment interest, punitive damages and attorneys' fees. The plaintiff alleged that the Company infringed upon U.S. Patent No. 7,707,505, entitled "Dynamic Tabs for a Graphical User Interface". On October 25, 2013, the court dismissed the suit based on the finding that the plaintiff's claims failed as a matter of law because the asserted patent is invalid for lack of patent-eligible subject matter. The plaintiff filed a notice of appeal on November 7, 2013. In December 2013, the Company's case was consolidated with three other pending appeals involving the asserted patents. The plaintiff filed its opening appellate brief in January 2014, and the Company filed a joint appellate response brief in April 2014. A hearing on the consolidated appeals was held in August 2014 and the judgment is currently pending. The Company believes the plaintiff's allegations lack merit and intends to defend against this action vigorously. | |
Money Suite | |
The Money Suite Company v. LendingTree, LLC, No. 1:13-ev-986 (U.S. Dist. Ct, D Del.). In June 2013, the plaintiff filed a patent infringement lawsuit against the Company seeking a judgment that it infringed a patent held by plaintiff. The plaintiff alleges that LendingTree infringes U.S. Patent No. 6,684,189 for "an apparatus and method using front-end network gateways and search criteria for efficient quoting at a remote location". The plaintiff seeks damages (including pre- and post- judgment interest thereon), costs and attorneys' fees. In December 2013, the court stayed this case pending review of the patent by the United States Patent and Trademark Office. In September 2014, LendingTree, together with defendants in related matters, requested that the stay be lifted and filed a motion to dismiss the case. The Company believes the plaintiff's allegations lack merit and intends to defend against this action vigorously. | |
Other Litigation | |
Boschma | |
Boschma v. Home Loan Center, Inc., No. SACV7-613 (U.S. Dist. Ct., C.D. Cal.). On May 25, 2007, the plaintiffs filed a putative class action against HLC in the U.S. District Court for the Central District of California. The plaintiffs allege that HLC sold them an option "ARM" (adjustable-rate mortgage) loan but failed to disclose in a clear and conspicuous manner, among other things, that the interest rate was not fixed, that negative amortization could occur and that the loan had a prepayment penalty. Based upon these factual allegations, the plaintiffs asserted violations of the federal Truth in Lending Act, violations of the Unfair Competition Law, breach of contract, and breach of the covenant of good faith and fair dealing. The plaintiffs purport to represent a class of all individuals who, between June 1, 2003 and May 31, 2007, obtained option ARM loans through HLC on their primary residences located in California, and seek rescission, damages, attorneys' fees and injunctive relief. The plaintiffs have not yet filed a motion for class certification, but have filed a total of eight complaints in connection with this lawsuit. Each of the first seven complaints has been dismissed by the federal and state courts. The plaintiffs filed the eighth complaint (a "Second Amended Complaint") in Orange County (California) Superior Court on March 4, 2010 alleging only the fraud and Unfair Competition Law claims. As with each of the seven previous versions of plaintiffs' complaint, the Second Amended Complaint was dismissed in April 2010. The plaintiffs appealed the dismissal and on August 10, 2011, the appellate court reversed the trial court's dismissal and directed the trial court to overrule the demurrer. The case was remanded to superior court. During 2013, the parties agreed to a $450,000 settlement, which was approved in 2013. A nominal payment into the settlement fund was made in late 2013. The Company expects administration of the settlement to be completed by the fourth quarter of 2014. In July 2014, the settlement fund was fully funded. The impact of the settlement was not material. | |
Dijkstra | |
Lijkel Dijkstra v. Harry Carenbauer, Home Loan Center, Inc. et al., No. 5:11-cv-152-JPB (U.S. Dist. Ct., N.D.WV). On November 7, 2008, the plaintiffs filed a putative class action in Circuit Court of Ohio County, West Virginia against Harry Carenbauer, HLC, HLC Escrow, Inc. et al. The complaint alleges that HLC engaged 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 the direct 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, violation of the West Virginia Consumer Credit and Protection Act ("CCPA"), violation of the West Virginia Lender, Broker & Services Act, civil conspiracy, outrage and negligence. The claims against all defendants other than Mr. Carenbauer, HLC and HLC Escrow, Inc. have been dismissed. The case was removed to federal court in October 2011. On January 3, 2013, the court granted a conditional class certification only with respect to the declaratory judgment, contempt, unjust enrichment and CCPA claims. The conditional class included consumers with mortgage loans in effect any time after November 8, 2007 who obtained such loans through HLC, 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 lawyer admitted to the practice of law in West Virginia. On February 26, 2014, the court granted and denied certain of each party's motions for summary judgment. With respect to the Class Claims, the court granted plaintiff's motions for summary judgment with respect to declaratory judgment, unjust enrichment and violation of the 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 to conversion, breach of fiduciary duty, intentional misrepresentation, negligent misrepresentation and outrage. HLC and the plaintiff settled the remaining Individual Claims in June 2014. | |
In July 2014, the court awarded damages to plaintiffs in the amount of $2.8 million. A reserve of $2.8 million has been established for this matter in the accompanying consolidated balance sheet as of September 30, 2014, of which some or all may be covered by insurance. HLC filed a notice of appeal in August 2014 and in September 2014, Plaintiffs filed a motion to dismiss the appeal. | |
Massachusetts Division of Banks | |
On February 11, 2011, the Massachusetts Division of Banks (the "Division") delivered a Report of Examination/Inspection to LendingTree, which identified various alleged violations of Massachusetts and federal laws, including the alleged insufficient delivery by LendingTree of various disclosures to its customers. On October 14, 2011, the Division provided a proposed Consent Agreement and Order to settle the Division's allegations, which the Division had shared with other state mortgage lending regulators. Thirty-four of such state mortgage lending regulators (the "Joining Regulators") indicated that if LendingTree would enter into the Consent Agreement and Order, they would agree not to pursue any analogous allegations that they otherwise might assert. As of November 7, 2014, none of the Joining 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 to adopt various new procedures and practices. The Company has commenced negotiations toward an acceptable Consent Agreement and Order. It does not believe its mortgage exchange business violated any federal or state mortgage lending laws; nor does it believe that any past operations of the mortgage business have resulted in a material violation of any such laws. Should the Division or any Joining Regulator bring any actions relating to the matters alleged in the February 2011 Report of Examination/Inspection, the Company intends to defend against such actions vigorously. The range of possible loss is estimated to be between $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 of September 30, 2014. | |
Federal Trade Commission | |
In July 2014, the Company received a Non-Public Civil Investigative Demand ("CID") from the Federal Trade Commission ("FTC"). The CID was issued pursuant to a January 2014 resolution of the FTC authorizing an investigation "to determine whether unnamed corporations have engaged or are engaging in deceptive or unfair acts or practices in or affecting commerce in the advertising, marketing, sale or servicing of loans and related products in violation of Section 5 of the FTC Act of 1914, as amended. This investigation is also to determine whether various unnamed loan brokers, lenders, loan services and other marketers of loans have engaged or are engaging in acts or practices in violation of the Consumer Credit Protection Act 15 U.S.C. Sec 1601 et seq." No specific wrongdoing by the Company is alleged, nor are any specific fines or penalties discussed in the CID. However, the CID indicates that the investigation is to determine whether an action by the FTC to obtain redress for injury to consumers would be in the public interest. The Company is cooperating with the FTC and responding to their information requests. |
SEGMENT_INFORMATION
SEGMENT INFORMATION | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
SEGMENT INFORMATION | ' | |||||||||||||||
SEGMENT INFORMATION | ||||||||||||||||
The Company has one reportable segment, its lending operating segment. Its additional operating segments—auto, education and home services—are included in the "Other" category in the reconciliation of segment information below. | ||||||||||||||||
The expenses presented below for the lending segment and the operating segments shown in the Other category include allocations of certain corporate expenses that are identifiable and directly benefit those segments. The unallocated expenses included in the "Corporate" category are those corporate overhead expenses that are not directly attributable to an operating segment and include: finance, legal, executive technology support and human resources. | ||||||||||||||||
Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), a non-GAAP measure, is the primary metric by which the chief operating decision maker evaluates the performance of the Company's businesses, on which its marketing expenditures and internal budgets are based and by which management and many employees are compensated. Adjusted EBITDA is defined as operating income or loss (which excludes interest expense and taxes) adjusted to exclude amortization of intangibles and depreciation, and excludes (1) non-cash compensation expense, (2) non-cash intangible asset impairment charges, (3) gain/loss on disposal of assets, (4) restructuring and severance expenses, (5) litigation settlements and contingencies and legal fees for certain patent litigation, (6) adjustments for acquisitions or dispositions and (7) one-time items. For the periods presented in this report, there are no adjustments for one-time items, except for $0.9 million related to a discretionary cash bonus payment to employee stock option holders during the nine months ended September 30, 2013. | ||||||||||||||||
Assets and other balance sheet information are not used by the chief operating decision maker to evaluate the performance of the Company's business. | ||||||||||||||||
Summarized information by segment and reconciliations to Adjusted EBITDA and income (loss) before income taxes is as follows (in thousands): | ||||||||||||||||
Three Months Ended September 30, 2014 | ||||||||||||||||
Lending | Other | Corporate | Total | |||||||||||||
Revenue | $ | 37,644 | $ | 3,662 | $ | — | $ | 41,306 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenue (exclusive of depreciation shown separately below) | 1,990 | 120 | — | 2,110 | ||||||||||||
Selling and marketing expense | 24,707 | 2,461 | — | 27,168 | ||||||||||||
General and administrative expense | 1,129 | 900 | 4,561 | 6,590 | ||||||||||||
Product development | 1,419 | 239 | — | 1,658 | ||||||||||||
Depreciation | 432 | 329 | 79 | 840 | ||||||||||||
Amortization of intangibles | — | 41 | — | 41 | ||||||||||||
Restructuring and severance | — | (3 | ) | 10 | 7 | |||||||||||
Litigation settlements and contingencies | — | — | 2,338 | 2,338 | ||||||||||||
Total costs and expenses | 29,677 | 4,087 | 6,988 | 40,752 | ||||||||||||
Operating income (loss) | 7,967 | (425 | ) | (6,988 | ) | 554 | ||||||||||
Adjustments to reconcile to Adjusted EBITDA: | ||||||||||||||||
Amortization of intangibles | — | 41 | — | 41 | ||||||||||||
Depreciation | 432 | 329 | 79 | 840 | ||||||||||||
Restructuring and severance | — | (3 | ) | 10 | 7 | |||||||||||
Loss on disposal of assets | — | 185 | — | 185 | ||||||||||||
Non-cash compensation | 580 | 221 | 985 | 1,786 | ||||||||||||
Acquisition expense | — | 40 | — | 40 | ||||||||||||
Litigation settlements and contingencies | — | — | 2,338 | 2,338 | ||||||||||||
Adjusted EBITDA | $ | 8,979 | $ | 388 | $ | (3,576 | ) | $ | 5,791 | |||||||
Operating income | $ | 554 | ||||||||||||||
Interest expense | (1 | ) | ||||||||||||||
Income before income taxes | $ | 553 | ||||||||||||||
Three Months Ended September 30, 2013 (a) | ||||||||||||||||
Lending | Other | Corporate | Total | |||||||||||||
Revenue | $ | 34,716 | $ | 2,627 | $ | — | $ | 37,343 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenue (exclusive of depreciation shown separately below) | 1,545 | 168 | 20 | 1,733 | ||||||||||||
Selling and marketing expense | 23,089 | 1,743 | — | 24,832 | ||||||||||||
General and administrative expense | 711 | 604 | 4,295 | 5,610 | ||||||||||||
Product development | 990 | 227 | — | 1,217 | ||||||||||||
Depreciation | 357 | 426 | 108 | 891 | ||||||||||||
Amortization of intangibles | — | 33 | — | 33 | ||||||||||||
Restructuring and severance | 1 | (77 | ) | 6 | (70 | ) | ||||||||||
Litigation settlements and contingencies | — | — | 2,875 | 2,875 | ||||||||||||
Total costs and expenses | 26,693 | 3,124 | 7,304 | 37,121 | ||||||||||||
Operating income (loss) | 8,023 | (497 | ) | (7,304 | ) | 222 | ||||||||||
Adjustments to reconcile to Adjusted EBITDA: | ||||||||||||||||
Amortization of intangibles | — | 33 | — | 33 | ||||||||||||
Depreciation | 357 | 426 | 108 | 891 | ||||||||||||
Restructuring and severance | 1 | (77 | ) | 6 | (70 | ) | ||||||||||
Loss on disposal of assets | — | — | 1 | 1 | ||||||||||||
Non-cash compensation | 411 | 220 | 781 | 1,412 | ||||||||||||
Litigation settlements and contingencies | — | — | 2,875 | 2,875 | ||||||||||||
Adjusted EBITDA | $ | 8,792 | $ | 105 | $ | (3,533 | ) | $ | 5,364 | |||||||
Operating loss | $ | 222 | ||||||||||||||
Interest expense | (4 | ) | ||||||||||||||
Loss before income taxes | $ | 218 | ||||||||||||||
(a) | For comparative purposes, revenue from and expenses related to personal loan offerings have been recast from the "Other" category to the lending segment. | |||||||||||||||
Nine Months Ended September 30, 2014 | ||||||||||||||||
Lending | Other | Corporate | Total | |||||||||||||
Revenue | $ | 113,621 | $ | 9,865 | $ | — | $ | 123,486 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenue (exclusive of depreciation shown separately below) | 5,308 | 362 | — | 5,670 | ||||||||||||
Selling and marketing expense | 77,278 | 6,303 | — | 83,581 | ||||||||||||
General and administrative expense | 3,622 | 2,297 | 12,282 | 18,201 | ||||||||||||
Product development | 4,516 | 900 | — | 5,416 | ||||||||||||
Depreciation | 1,195 | 1,063 | 283 | 2,541 | ||||||||||||
Amortization of intangibles | — | 96 | — | 96 | ||||||||||||
Restructuring and severance | 162 | 12 | 58 | 232 | ||||||||||||
Litigation settlements and contingencies | — | — | 10,430 | 10,430 | ||||||||||||
Total costs and expenses | 92,081 | 11,033 | 23,053 | 126,167 | ||||||||||||
Operating income (loss) | 21,540 | (1,168 | ) | (23,053 | ) | (2,681 | ) | |||||||||
Adjustments to reconcile to Adjusted EBITDA: | ||||||||||||||||
Amortization of intangibles | — | 96 | — | 96 | ||||||||||||
Depreciation | 1,195 | 1,063 | 283 | 2,541 | ||||||||||||
Restructuring and severance | 162 | 12 | 58 | 232 | ||||||||||||
Loss on disposal of assets | — | 220 | 17 | 237 | ||||||||||||
Non-cash compensation | 1,707 | 655 | 2,461 | 4,823 | ||||||||||||
Acquisition expense | — | 114 | — | 114 | ||||||||||||
Litigation settlements and contingencies | — | — | 10,430 | 10,430 | ||||||||||||
Adjusted EBITDA | $ | 24,604 | $ | 992 | $ | (9,804 | ) | $ | 15,792 | |||||||
Operating loss | (2,681 | ) | ||||||||||||||
Interest expense | (1 | ) | ||||||||||||||
Loss before income taxes | $ | (2,682 | ) | |||||||||||||
Nine Months Ended September 30, 2013 (a) | ||||||||||||||||
Lending | Other | Corporate | Total | |||||||||||||
Revenue | $ | 94,170 | $ | 8,037 | $ | 622 | $ | 102,829 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenue (exclusive of depreciation shown separately below) | 4,095 | 505 | 439 | 5,039 | ||||||||||||
Selling and marketing expense | 62,371 | 6,097 | 5 | 68,473 | ||||||||||||
General and administrative expense | 2,563 | 1,534 | 13,720 | 17,817 | ||||||||||||
Product development | 3,166 | 748 | — | 3,914 | ||||||||||||
Depreciation | 1,076 | 1,269 | 303 | 2,648 | ||||||||||||
Amortization of intangibles | — | 119 | — | 119 | ||||||||||||
Restructuring and severance | 24 | 48 | 4 | 76 | ||||||||||||
Litigation settlements and contingencies | — | — | 6,812 | 6,812 | ||||||||||||
Total costs and expenses | 73,295 | 10,320 | 21,283 | 104,898 | ||||||||||||
Operating income (loss) | 20,875 | (2,283 | ) | (20,661 | ) | (2,069 | ) | |||||||||
Adjustments to reconcile to Adjusted EBITDA: | ||||||||||||||||
Amortization of intangibles | — | 119 | — | 119 | ||||||||||||
Depreciation | 1,076 | 1,269 | 303 | 2,648 | ||||||||||||
Restructuring and severance | 24 | 48 | 4 | 76 | ||||||||||||
Loss on disposal of assets | — | — | 25 | 25 | ||||||||||||
Non-cash compensation | 1,307 | 457 | 2,514 | 4,278 | ||||||||||||
Discretionary cash bonus | — | — | 920 | 920 | ||||||||||||
Litigation settlements and contingencies | — | — | 6,812 | 6,812 | ||||||||||||
Adjusted EBITDA | $ | 23,282 | $ | (390 | ) | $ | (10,083 | ) | $ | 12,809 | ||||||
Operating loss | (2,069 | ) | ||||||||||||||
Interest expense | (18 | ) | ||||||||||||||
Loss before income taxes | $ | (2,087 | ) | |||||||||||||
(a) | For comparative purposes, revenue from and expenses related to personal loan offerings have been recast from the "Other" category to the lending segment. |
RESTRUCTURING_EXPENSE
RESTRUCTURING EXPENSE | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Restructuring and Related Activities [Abstract] | ' | |||
RESTRUCTURING EXPENSE | ' | |||
RESTRUCTURING | ||||
Accrued restructuring costs primarily relate to lease obligations for call center leases exited in 2010, which are expected to be completed by 2015. Restructuring expense and payments against liabilities are as follows (in thousands): | ||||
Continuing | ||||
Lease | ||||
Obligations | ||||
Balance at December 31, 2013 | $ | 462 | ||
Restructuring expense | 11 | |||
Payments | (222 | ) | ||
Balance at September 30, 2014 | $ | 251 | ||
The Company does not expect to incur significant additional costs related to the restructuring noted above. |
DISCONTINUED_OPERATIONS
DISCONTINUED OPERATIONS | 9 Months Ended | ||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | ' | ||||||||||||||||||
DISCONTINUED OPERATIONS | ' | ||||||||||||||||||
DISCONTINUED OPERATIONS | |||||||||||||||||||
On May 12, 2011, the Company entered into an asset purchase agreement, later amended on February 7, 2012, that provided for the sale of substantially all of the operating assets of its LendingTree Loans business to Discover. The sale was completed on June 6, 2012. Discover has participated as a network lender since the closing of the transaction. An evaluation of the facts and circumstances of the transaction and the applicable accounting guidance for discontinued operations indicates that the LendingTree Loans business should be reflected as discontinued operations in the accompanying consolidated financial statements for all periods presented. The continuing cash flows related to this transaction are not significant and, accordingly, are not deemed to be direct cash flows of the divested business. | |||||||||||||||||||
The Company agreed to indemnify Discover for a breach or inaccuracy of any representation, warranty or covenant made by it in the asset purchase agreement, 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 any applicable bulk sales law, subject to certain limitations. Discover submitted a claim for indemnification relating to the sale prior to the closing of certain loans that were listed in the asset purchase agreement as to be conveyed to Discover at closing. In May 2013, this indemnification claim and other miscellaneous items were settled by agreeing to credit Discover for $1.3 million in future services. A majority of these credits were applied against services during the year ended December 31, 2013. The remaining credits were exhausted in the first quarter of 2014. | |||||||||||||||||||
The revenue and net loss reported as discontinued operations in the accompanying consolidated statements of operations are as follows (in thousands): | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Revenue | $ | 114 | $ | (37 | ) | $ | 118 | $ | (1,523 | ) | |||||||||
Loss before income taxes | $ | (175 | ) | $ | (526 | ) | $ | (3,676 | ) | $ | (3,908 | ) | |||||||
Income tax benefit (expense) | 1 | (3 | ) | (3 | ) | (54 | ) | ||||||||||||
Gain from sale of discontinued operations, net of tax | — | — | — | 10,101 | |||||||||||||||
Net income (loss) | $ | (174 | ) | $ | (529 | ) | $ | (3,679 | ) | $ | 6,139 | ||||||||
The assets and liabilities of discontinued operations in the accompanying consolidated balance sheets are as follows (in thousands): | |||||||||||||||||||
September 30, | December 31, | ||||||||||||||||||
2014 | 2013 | ||||||||||||||||||
Current assets | $ | 125 | $ | 521 | |||||||||||||||
Non-current assets | 100 | 129 | |||||||||||||||||
Current liabilities | (31,782 | ) | (32,004 | ) | |||||||||||||||
Non-current liabilities | (215 | ) | (254 | ) | |||||||||||||||
Net liabilities | $ | (31,772 | ) | $ | (31,608 | ) | |||||||||||||
Significant Assets and Liabilities of LendingTree Loans | |||||||||||||||||||
Upon closing of the sale of substantially all of the operating assets of the LendingTree Loans business on June 6, 2012, LendingTree Loans ceased to originate consumer loans. The remaining operations are being wound down. These wind-down activities have included, among other things, selling the balance of loans held for sale to investors, paying off and then terminating the warehouse lines of credit and settling derivative obligations, all of which have been completed. Liability for losses on previously sold loans will remain with LendingTree Loans and are discussed below. | |||||||||||||||||||
Loan Loss Obligations | |||||||||||||||||||
LendingTree 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 to the investor. However, LendingTree Loans was required by these investors to make certain representations and warranties relating to credit information, loan documentation and collateral. These representations and warranties may extend through the contractual life of the loan. Subsequent to the loan sale, if underwriting deficiencies, borrower fraud or documentation defects are discovered in individual loans, LendingTree Loans may be obligated to repurchase the respective loan or indemnify the investors for any losses from borrower defaults if such deficiency or defect cannot be cured within the specified period following discovery. In the case 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 the investor. | |||||||||||||||||||
HLC, a subsidiary of the Company, continues to be liable for these indemnification obligations, repurchase obligations and premium repayment obligations following the sale of substantially all of the operating assets of its LendingTree Loans business in the second quarter of 2012. As of September 30, 2014, approximately $19.3 million is being held in escrow pending resolution of certain of these contingent liabilities. The Company has been negotiating with certain secondary market purchasers to settle any existing and future contingent liabilities, but it may 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 nor generally have access to the current balances and loan performance data with respect to the individual loans previously sold to investors. Accordingly, LendingTree Loans is unable to determine, with precision, its maximum exposure for breaches of the representations and warranties it made to the investors that purchased such loans. | |||||||||||||||||||
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 settlement discount framework. This model estimates lifetime losses on the population of remaining loans originated and sold by LendingTree Loans using actual defaults for loans with similar characteristics and projected future defaults. It also considers the likelihood of claims expected due to alleged breaches of representations and warranties made by LendingTree Loans and the percentage of those claims investors estimate LendingTree Loans may agree to repurchase. A settlement discount factor is then applied to the result of the foregoing to reflect publicly-announced bulk settlements for similar loan types and vintages, as well as LendingTree Loans' 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 $16.3 million to $29.4 million as of September 30, 2014. The reserve balance recorded as of September 30, 2014 was $28.4 million. Management has considered both objective and subjective factors in the estimation process, but given current general industry trends in mortgage loans as well as housing prices and market expectations, actual losses related to LendingTree Loans' obligations could vary significantly from the obligation recorded as of the balance sheet date or the range estimated above. | |||||||||||||||||||
Additionally, Tree.com has guaranteed certain loans sold to two investors in the event that LendingTree Loans is unable to satisfy its repurchase and warranty obligations related to such loans. | |||||||||||||||||||
The following table represents the loans sold for the periods shown and the aggregate loan losses through September 30, 2014: | |||||||||||||||||||
30-Sep-14 | |||||||||||||||||||
Period of Loan Sales | Number of | Original | Number of | Original | Amount of | ||||||||||||||
Loans Sold | Principal | Loans with | Principal | Aggregate | |||||||||||||||
Balance | Losses | Balance of | Losses | ||||||||||||||||
Loans with | |||||||||||||||||||
Losses | |||||||||||||||||||
(in billions) | (in millions) | (in millions) | |||||||||||||||||
2014 | — | $ | — | — | $ | — | $ | — | |||||||||||
2013 | — | — | — | — | — | ||||||||||||||
2012 | 9,200 | 1.9 | — | — | — | ||||||||||||||
2011 | 12,500 | 2.7 | 1 | 0.3 | 0.1 | ||||||||||||||
2010 | 12,400 | 2.8 | 4 | 1.1 | 0.1 | ||||||||||||||
2009 | 12,800 | 2.8 | 5 | 1.2 | 0.2 | ||||||||||||||
2008 | 11,000 | 2.2 | 33 | 6.9 | 2.2 | ||||||||||||||
2007 | 36,300 | 6.1 | 160 | 22.1 | 8.2 | ||||||||||||||
2006 | 55,000 | 7.9 | 207 | 24.5 | 13.4 | ||||||||||||||
2005 and prior years | 86,700 | 13 | 89 | 12.3 | 5 | ||||||||||||||
Total | 235,900 | $ | 39.4 | 499 | $ | 68.4 | $ | 29.2 | |||||||||||
In the second quarter of 2014, LendingTree Loans completed settlements with two buyers of previously purchased loans. The settlement amounts were included in charge-offs to the reserve in the second quarter of 2014. The settlement amounts for these settlements were not determined on an individual loan basis and are, therefore, not included in the loss amounts disclosed above for the years such loans were sold. | |||||||||||||||||||
Based on historical experience, it is anticipated that LendingTree Loans will continue to receive repurchase requests and incur losses on loans sold in prior years. | |||||||||||||||||||
The activity related to loss reserves on previously sold loans is as follows (in thousands): | |||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Loan loss reserve, beginning of period | $ | 28,390 | $ | 28,675 | $ | 28,543 | $ | 27,182 | |||||||||||
Provisions | — | 38 | — | 1,531 | |||||||||||||||
Charge-offs to reserves | — | — | (153 | ) | — | ||||||||||||||
Loan loss reserve, end of period | $ | 28,390 | $ | 28,713 | $ | 28,390 | $ | 28,713 | |||||||||||
The liability for losses on previously sold loans is presented as current liabilities of discontinued operations in the accompanying consolidated balance sheet as of September 30, 2014 and December 31, 2013. |
SIGNIFICANT_ACCOUNTING_POLICIE1
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Accounting Estimates | ' |
Accounting Estimates | |
Management 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 the consolidated 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; the recoverability of long-lived assets, goodwill and intangible assets; the determination of income taxes payable and deferred income taxes, including related valuation allowances; restructuring reserves; contingent consideration related to business combinations; various other allowances, reserves and accruals; and assumptions related to the determination of stock-based compensation. | |
Certain Risks and Concentrations | ' |
Certain Risks and Concentrations | |
Tree.com's business is subject to certain risks and concentrations including dependence on third-party technology providers, exposure to risks associated with online commerce security and credit card fraud. | |
Financial instruments, which potentially subject the Company to concentration of credit risk at September 30, 2014, consist primarily of cash and cash equivalents and accounts receivable, as disclosed in the consolidated balance sheet. Cash and cash equivalents are in excess of Federal Deposit Insurance Corporation insurance limits, but are maintained with quality financial institutions of high credit. The Company generally requires certain network lenders to maintain 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 network. | |
Lenders participating on the Company's lender network can offer their products directly to consumers through brokers, mass marketing campaigns or through other traditional methods of credit distribution. These lenders can also offer their products online, either directly to prospective borrowers, through one or more online competitors, or both. If a significant number of potential consumers are able to obtain loans from participating lenders without utilizing the Company's service, its ability to generate revenue may be limited. Because the Company does not have exclusive relationships with the lenders whose loan offerings are offered 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. | |
Litigation Settlements and Contingencies | ' |
Litigation Settlements and Contingencies | |
Litigation settlements and contingencies consists of expenses related to actual or anticipated litigation settlements, in addition to legal fees incurred in connection with various patent litigation claims the Company pursues against others. | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09 related to revenue recognition. This ASU was initiated as a joint project between the FASB and the International Accounting Standards Board ("IASB") to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and international financial reporting standards ("IFRS"). This guidance will supersede the existing revenue recognition requirements in Accounting Standards Codification ("ASC") Topic 605, Revenue Recognition and is effective for annual reporting periods beginning after December 15, 2016. Early adoption is not permitted and the ASU can be applied (i) retrospectively to each prior period presented or (ii) retrospectively with 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 on its consolidated financial statements. | |
There are no recently issued accounting pronouncements that were adopted during the nine months ended September 30, 2014. |
RESTRICTED_CASH_RESTRICTED_CAS1
RESTRICTED CASH RESTRICTED CASH (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Cash and Cash Equivalents [Abstract] | ' | |||||||
Schedule of Restricted Cash and Cash Equivalents | ' | |||||||
Restricted cash and cash equivalents consists of the following (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Cash in escrow for surety bonds | $ | 2,453 | $ | 2,453 | ||||
Cash in escrow for corporate purchasing card program | 100 | 400 | ||||||
Cash in escrow for sale of LendingTree Loans (a) | 16,106 | 18,117 | ||||||
Cash in escrow for earnout related to an acquisition (b) | — | 1,956 | ||||||
Cash restricted for loan loss obligations | 3,164 | 3,051 | ||||||
Other | 51 | 40 | ||||||
Total restricted cash and cash equivalents | $ | 21,874 | $ | 26,017 | ||||
(a) | Home Loan Center, Inc. ("HLC"), a subsidiary of the Company, continues to be liable for certain indemnification obligations, repurchase obligations and premium repayment obligations following the sale of substantially all of the operating assets of its LendingTree Loans business in the second quarter of 2012. During the second quarter of 2014, the Company reached and executed a settlement with one of its secondary market purchasers related to these contingent liabilities, upon which $2.0 million of cash previously held in escrow was released to the Company. This settlement had no impact on the results of operations for the three and nine months ended September 30, 2014. | |||||||
(b) | During the first quarter of 2014, the Company reached and executed a settlement with the disputing party on the earnout related to an acquisition completed prior to the spinoff from IAC/InterActiveCorp in August 2008, upon which $2.0 million of cash previously held in escrow was released, of which $1.0 million was paid out to the disputing party. This settlement had no impact on the results of operations for the three and nine months ended September 30, 2014. |
GOODWILL_AND_INTANGIBLE_ASSETS1
GOODWILL AND INTANGIBLE ASSETS (Tables) | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||
Schedule of balance of goodwill and intangible assets, net | ' | |||||||||||
The balance of goodwill and intangible assets, net is as follows (in thousands): | ||||||||||||
September 30, | December 31, | |||||||||||
2014 | 2013 | |||||||||||
Goodwill | $ | 486,720 | $ | 486,720 | ||||||||
Accumulated impairment losses | (483,088 | ) | (483,088 | ) | ||||||||
Net goodwill | $ | 3,632 | $ | 3,632 | ||||||||
Intangible assets with indefinite lives | $ | 10,142 | $ | 10,142 | ||||||||
Intangible assets with definite lives, net | 1,446 | 542 | ||||||||||
Total intangible assets, net | $ | 11,588 | $ | 10,684 | ||||||||
Schedule of intangible assets with definite lives | ' | |||||||||||
Intangible assets with definite lives relate to the following (in thousands): | ||||||||||||
Cost | Accumulated | Net | ||||||||||
Amortization | ||||||||||||
Purchase agreements | $ | 236 | $ | (236 | ) | $ | — | |||||
Technology | 25,194 | (25,194 | ) | — | ||||||||
Customer lists | 7,682 | (6,236 | ) | 1,446 | ||||||||
Other | 1,517 | (1,517 | ) | — | ||||||||
Balance at September 30, 2014 | $ | 34,629 | $ | (33,183 | ) | $ | 1,446 | |||||
Cost | Accumulated | Net | ||||||||||
Amortization | ||||||||||||
Purchase agreements | $ | 236 | $ | (212 | ) | $ | 24 | |||||
Technology | 25,194 | (25,194 | ) | — | ||||||||
Customer lists | 6,682 | (6,166 | ) | 516 | ||||||||
Other | 1,517 | (1,515 | ) | 2 | ||||||||
Balance at December 31, 2013 | $ | 33,629 | $ | (33,087 | ) | $ | 542 | |||||
Schedule of amortization of intangible assets with definite lives for the next five years | ' | |||||||||||
Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on balances as of September 30, 2014, future amortization is estimated to be as follows (in thousands): | ||||||||||||
Amortization Expense | ||||||||||||
Remainder of current year | $ | 36 | ||||||||||
Year ending December 31, 2015 | 115 | |||||||||||
Year ending December 31, 2016 | 98 | |||||||||||
Year ending December 31, 2017 | 111 | |||||||||||
Year ending December 31, 2018 | 115 | |||||||||||
Thereafter | 971 | |||||||||||
Total intangible assets with definite lives, net | $ | 1,446 | ||||||||||
ACCRUED_EXPENSES_AND_OTHER_CUR1
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Payables and Accruals [Abstract] | ' | |||||||
Schedule of accrued expenses and other current liabilities | ' | |||||||
Accrued expenses and other current liabilities consist of the following (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Accrued litigation liabilities | $ | 2,686 | $ | 500 | ||||
Accrued advertising expense | 9,257 | 8,837 | ||||||
Accrued compensation and benefits | 2,411 | 3,378 | ||||||
Accrued professional fees | 494 | 1,806 | ||||||
Accrued restructuring costs | 251 | 284 | ||||||
Customer deposits and escrows | 4,615 | 4,279 | ||||||
Deferred rent | 227 | 245 | ||||||
Other | 3,673 | 3,985 | ||||||
Total accrued expenses and other current liabilities | $ | 23,614 | $ | 23,314 | ||||
SHAREHOLDERS_EQUITY_Tables
SHAREHOLDERS' EQUITY (Tables) | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||
Schedule of computation of weighted average diluted shares | ' | |||||||||||
Basic and diluted loss per share was determined based on the following share data (in thousands): | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||
Weighted average basic common shares | 11,182 | 11,017 | 11,180 | 11,039 | ||||||||
Effect of stock options | 471 | 419 | — | — | ||||||||
Effect of dilutive share awards | 183 | 284 | — | — | ||||||||
Weighted average diluted common shares | 11,836 | 11,720 | 11,180 | 11,039 | ||||||||
STOCKBASED_COMPENSATION_Tables
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||||
Schedule of non-cash compensation expense related to equity awards | ' | |||||||||||||||
Non-cash compensation related to equity awards is included in the following line items in the accompanying consolidated statements of operations (in thousands): | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Cost of revenue | $ | 11 | $ | 4 | $ | 24 | $ | 9 | ||||||||
Selling and marketing expense | 205 | 242 | 664 | 765 | ||||||||||||
General and administrative expense | 1,292 | 976 | 3,281 | 2,885 | ||||||||||||
Product development | 278 | 190 | 854 | 619 | ||||||||||||
Restructuring and severance | — | — | 36 | — | ||||||||||||
Total non-cash compensation | $ | 1,786 | $ | 1,412 | $ | 4,859 | $ | 4,278 | ||||||||
Summary of changes in outstanding stock options | ' | |||||||||||||||
A summary of changes in outstanding stock options is as follows: | ||||||||||||||||
Number of Options | Weighted | Weighted | Aggregate | |||||||||||||
Average | Average | Intrinsic | ||||||||||||||
Exercise | Remaining | Value(a) | ||||||||||||||
Price | Contractual | |||||||||||||||
Term | ||||||||||||||||
(per option) | (in years) | (in thousands) | ||||||||||||||
Options outstanding at January 1, 2014 | 1,038,999 | $ | 8.98 | |||||||||||||
Granted (b) | 1,106,265 | 26.72 | ||||||||||||||
Exercised | (4,620 | ) | 12.07 | |||||||||||||
Forfeited | — | — | ||||||||||||||
Expired | (675 | ) | 13.42 | |||||||||||||
Options outstanding at September 30, 2014 | 2,139,969 | 18.14 | 6.68 | $ | 37,974 | |||||||||||
Options exercisable at September 30, 2014 | 983,703 | $ | 9.04 | 3.87 | $ | 26,409 | ||||||||||
(a) | The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $35.89 on the last trading day of the quarter ended September 30, 2014 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2014. The intrinsic value changes based on the market value of the Company's common stock. | |||||||||||||||
(b) | During the first nine months ended September 30, 2014, the Company granted stock options (a) to certain executives with weighted average grant date fair values per share ranging from $10.68 to $17.13, of which some vest over a period of three years from the grant date and others vest 25% and 75% over a period of 2.5 years and 3.5 years, respectively, and (b) to non-employee members of the board of directors with a weighted average grant date fair value per share of $13.08 that vest over a period of two years from the grant date. | |||||||||||||||
Schedule of stock option valuation assumptions | ' | |||||||||||||||
For purposes of determining stock-based compensation expense, the weighted average grant date fair value per share of the stock options was estimated using the Black-Scholes option pricing model, which requires the use of various key assumptions. The weighted average assumptions used are as follows: | ||||||||||||||||
Expected term (1) | 5.75 - 6.63 years | |||||||||||||||
Expected dividend (2) | — | |||||||||||||||
Expected volatility (3) | 36% - 54% | |||||||||||||||
Risk-free interest rate (4) | 1.85% - 2.13% | |||||||||||||||
-1 | The expected term of stock options granted was calculated using the 'Simplified Method', which utilizes the midpoint between the weighted average time 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 the Company's employees. | |||||||||||||||
-2 | For all stock options granted in 2014, no dividends are expected to be paid over the contractual term of the 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 historical volatility 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 comparable expected terms as the awards, in effect at the grant date. | |||||||||||||||
Schedule of changes in outstanding non-vested RSUs, RSUs with a performance condition, restricted stock and restricted stock with a market condition | ' | |||||||||||||||
A summary of the changes in outstanding nonvested restricted stock units ("RSUs") and restricted stock is as follows: | ||||||||||||||||
RSUs | RSUs | |||||||||||||||
Performance Condition | ||||||||||||||||
Number of Units | Weighted | Number of Units | Weighted | |||||||||||||
Average | Average | |||||||||||||||
Grant Date | Grant Date | |||||||||||||||
Fair Value | Fair Value | |||||||||||||||
(per unit) | (per unit) | |||||||||||||||
Nonvested at January 1, 2014 | 599,122 | $ | 14.15 | — | $ | — | ||||||||||
Granted | 128,760 | 32 | 500 | 33.59 | ||||||||||||
Vested | (244,080 | ) | 13.25 | — | — | |||||||||||
Forfeited | (47,624 | ) | 15.83 | — | — | |||||||||||
Nonvested at September 30, 2014 | 436,178 | $ | 19.79 | 500 | $ | 33.59 | ||||||||||
Restricted Stock | Restricted Stock | |||||||||||||||
Market Condition | ||||||||||||||||
Number of | Weighted | Number of | Weighted | |||||||||||||
Shares | Average | Shares | Average | |||||||||||||
Grant Date | Grant Date | |||||||||||||||
Fair Value | Fair Value | |||||||||||||||
(per share) | (per share) | |||||||||||||||
Nonvested at January 1, 2014 | 119,500 | $ | 22.47 | 62,500 | $ | 13.93 | ||||||||||
Granted | 43,389 | 25.14 | — | — | ||||||||||||
Vested | (20,833 | ) | 17.49 | (62,500 | ) | 13.93 | ||||||||||
Forfeited | — | — | — | — | ||||||||||||
Nonvested at September 30, 2014 | 142,056 | $ | 24.02 | — | $ | — | ||||||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Income Tax Disclosure [Abstract] | ' | |||||||||||||||
Schedule of income tax benefit (provision) | ' | |||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Income tax benefit (provision) | $ | 2 | $ | 98 | $ | 86 | $ | 97 | ||||||||
Effective tax rate | 0.4 | % | 45 | % | 3.2 | % | 4.6 | % |
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Summary of information by segment and reconciliations to Adjusted EBITDA and income (loss) before income taxes | ' | |||||||||||||||
Summarized information by segment and reconciliations to Adjusted EBITDA and income (loss) before income taxes is as follows (in thousands): | ||||||||||||||||
Three Months Ended September 30, 2014 | ||||||||||||||||
Lending | Other | Corporate | Total | |||||||||||||
Revenue | $ | 37,644 | $ | 3,662 | $ | — | $ | 41,306 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenue (exclusive of depreciation shown separately below) | 1,990 | 120 | — | 2,110 | ||||||||||||
Selling and marketing expense | 24,707 | 2,461 | — | 27,168 | ||||||||||||
General and administrative expense | 1,129 | 900 | 4,561 | 6,590 | ||||||||||||
Product development | 1,419 | 239 | — | 1,658 | ||||||||||||
Depreciation | 432 | 329 | 79 | 840 | ||||||||||||
Amortization of intangibles | — | 41 | — | 41 | ||||||||||||
Restructuring and severance | — | (3 | ) | 10 | 7 | |||||||||||
Litigation settlements and contingencies | — | — | 2,338 | 2,338 | ||||||||||||
Total costs and expenses | 29,677 | 4,087 | 6,988 | 40,752 | ||||||||||||
Operating income (loss) | 7,967 | (425 | ) | (6,988 | ) | 554 | ||||||||||
Adjustments to reconcile to Adjusted EBITDA: | ||||||||||||||||
Amortization of intangibles | — | 41 | — | 41 | ||||||||||||
Depreciation | 432 | 329 | 79 | 840 | ||||||||||||
Restructuring and severance | — | (3 | ) | 10 | 7 | |||||||||||
Loss on disposal of assets | — | 185 | — | 185 | ||||||||||||
Non-cash compensation | 580 | 221 | 985 | 1,786 | ||||||||||||
Acquisition expense | — | 40 | — | 40 | ||||||||||||
Litigation settlements and contingencies | — | — | 2,338 | 2,338 | ||||||||||||
Adjusted EBITDA | $ | 8,979 | $ | 388 | $ | (3,576 | ) | $ | 5,791 | |||||||
Operating income | $ | 554 | ||||||||||||||
Interest expense | (1 | ) | ||||||||||||||
Income before income taxes | $ | 553 | ||||||||||||||
Three Months Ended September 30, 2013 (a) | ||||||||||||||||
Lending | Other | Corporate | Total | |||||||||||||
Revenue | $ | 34,716 | $ | 2,627 | $ | — | $ | 37,343 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenue (exclusive of depreciation shown separately below) | 1,545 | 168 | 20 | 1,733 | ||||||||||||
Selling and marketing expense | 23,089 | 1,743 | — | 24,832 | ||||||||||||
General and administrative expense | 711 | 604 | 4,295 | 5,610 | ||||||||||||
Product development | 990 | 227 | — | 1,217 | ||||||||||||
Depreciation | 357 | 426 | 108 | 891 | ||||||||||||
Amortization of intangibles | — | 33 | — | 33 | ||||||||||||
Restructuring and severance | 1 | (77 | ) | 6 | (70 | ) | ||||||||||
Litigation settlements and contingencies | — | — | 2,875 | 2,875 | ||||||||||||
Total costs and expenses | 26,693 | 3,124 | 7,304 | 37,121 | ||||||||||||
Operating income (loss) | 8,023 | (497 | ) | (7,304 | ) | 222 | ||||||||||
Adjustments to reconcile to Adjusted EBITDA: | ||||||||||||||||
Amortization of intangibles | — | 33 | — | 33 | ||||||||||||
Depreciation | 357 | 426 | 108 | 891 | ||||||||||||
Restructuring and severance | 1 | (77 | ) | 6 | (70 | ) | ||||||||||
Loss on disposal of assets | — | — | 1 | 1 | ||||||||||||
Non-cash compensation | 411 | 220 | 781 | 1,412 | ||||||||||||
Litigation settlements and contingencies | — | — | 2,875 | 2,875 | ||||||||||||
Adjusted EBITDA | $ | 8,792 | $ | 105 | $ | (3,533 | ) | $ | 5,364 | |||||||
Operating loss | $ | 222 | ||||||||||||||
Interest expense | (4 | ) | ||||||||||||||
Loss before income taxes | $ | 218 | ||||||||||||||
(a) | For comparative purposes, revenue from and expenses related to personal loan offerings have been recast from the "Other" category to the lending segment. | |||||||||||||||
Nine Months Ended September 30, 2014 | ||||||||||||||||
Lending | Other | Corporate | Total | |||||||||||||
Revenue | $ | 113,621 | $ | 9,865 | $ | — | $ | 123,486 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenue (exclusive of depreciation shown separately below) | 5,308 | 362 | — | 5,670 | ||||||||||||
Selling and marketing expense | 77,278 | 6,303 | — | 83,581 | ||||||||||||
General and administrative expense | 3,622 | 2,297 | 12,282 | 18,201 | ||||||||||||
Product development | 4,516 | 900 | — | 5,416 | ||||||||||||
Depreciation | 1,195 | 1,063 | 283 | 2,541 | ||||||||||||
Amortization of intangibles | — | 96 | — | 96 | ||||||||||||
Restructuring and severance | 162 | 12 | 58 | 232 | ||||||||||||
Litigation settlements and contingencies | — | — | 10,430 | 10,430 | ||||||||||||
Total costs and expenses | 92,081 | 11,033 | 23,053 | 126,167 | ||||||||||||
Operating income (loss) | 21,540 | (1,168 | ) | (23,053 | ) | (2,681 | ) | |||||||||
Adjustments to reconcile to Adjusted EBITDA: | ||||||||||||||||
Amortization of intangibles | — | 96 | — | 96 | ||||||||||||
Depreciation | 1,195 | 1,063 | 283 | 2,541 | ||||||||||||
Restructuring and severance | 162 | 12 | 58 | 232 | ||||||||||||
Loss on disposal of assets | — | 220 | 17 | 237 | ||||||||||||
Non-cash compensation | 1,707 | 655 | 2,461 | 4,823 | ||||||||||||
Acquisition expense | — | 114 | — | 114 | ||||||||||||
Litigation settlements and contingencies | — | — | 10,430 | 10,430 | ||||||||||||
Adjusted EBITDA | $ | 24,604 | $ | 992 | $ | (9,804 | ) | $ | 15,792 | |||||||
Operating loss | (2,681 | ) | ||||||||||||||
Interest expense | (1 | ) | ||||||||||||||
Loss before income taxes | $ | (2,682 | ) | |||||||||||||
Nine Months Ended September 30, 2013 (a) | ||||||||||||||||
Lending | Other | Corporate | Total | |||||||||||||
Revenue | $ | 94,170 | $ | 8,037 | $ | 622 | $ | 102,829 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenue (exclusive of depreciation shown separately below) | 4,095 | 505 | 439 | 5,039 | ||||||||||||
Selling and marketing expense | 62,371 | 6,097 | 5 | 68,473 | ||||||||||||
General and administrative expense | 2,563 | 1,534 | 13,720 | 17,817 | ||||||||||||
Product development | 3,166 | 748 | — | 3,914 | ||||||||||||
Depreciation | 1,076 | 1,269 | 303 | 2,648 | ||||||||||||
Amortization of intangibles | — | 119 | — | 119 | ||||||||||||
Restructuring and severance | 24 | 48 | 4 | 76 | ||||||||||||
Litigation settlements and contingencies | — | — | 6,812 | 6,812 | ||||||||||||
Total costs and expenses | 73,295 | 10,320 | 21,283 | 104,898 | ||||||||||||
Operating income (loss) | 20,875 | (2,283 | ) | (20,661 | ) | (2,069 | ) | |||||||||
Adjustments to reconcile to Adjusted EBITDA: | ||||||||||||||||
Amortization of intangibles | — | 119 | — | 119 | ||||||||||||
Depreciation | 1,076 | 1,269 | 303 | 2,648 | ||||||||||||
Restructuring and severance | 24 | 48 | 4 | 76 | ||||||||||||
Loss on disposal of assets | — | — | 25 | 25 | ||||||||||||
Non-cash compensation | 1,307 | 457 | 2,514 | 4,278 | ||||||||||||
Discretionary cash bonus | — | — | 920 | 920 | ||||||||||||
Litigation settlements and contingencies | — | — | 6,812 | 6,812 | ||||||||||||
Adjusted EBITDA | $ | 23,282 | $ | (390 | ) | $ | (10,083 | ) | $ | 12,809 | ||||||
Operating loss | (2,069 | ) | ||||||||||||||
Interest expense | (18 | ) | ||||||||||||||
Loss before income taxes | $ | (2,087 | ) | |||||||||||||
(a) | For comparative purposes, revenue from and expenses related to personal loan offerings have been recast from the "Other" category to the lending segment. |
RESTRUCTURING_EXPENSE_Tables
RESTRUCTURING EXPENSE (Tables) | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Restructuring and Related Activities [Abstract] | ' | |||
Schedule of restructuring expense and payments against liabilities | ' | |||
Restructuring expense and payments against liabilities are as follows (in thousands): | ||||
Continuing | ||||
Lease | ||||
Obligations | ||||
Balance at December 31, 2013 | $ | 462 | ||
Restructuring expense | 11 | |||
Payments | (222 | ) | ||
Balance at September 30, 2014 | $ | 251 | ||
DISCONTINUED_OPERATIONS_Tables
DISCONTINUED OPERATIONS (Tables) | 9 Months Ended | ||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||
DISCONTINUED OPERATIONS | ' | ||||||||||||||||||
Schedule of revenue and net income (loss) of the discontinued operations | ' | ||||||||||||||||||
The revenue and net loss reported as discontinued operations in the accompanying consolidated statements of operations are as follows (in thousands): | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Revenue | $ | 114 | $ | (37 | ) | $ | 118 | $ | (1,523 | ) | |||||||||
Loss before income taxes | $ | (175 | ) | $ | (526 | ) | $ | (3,676 | ) | $ | (3,908 | ) | |||||||
Income tax benefit (expense) | 1 | (3 | ) | (3 | ) | (54 | ) | ||||||||||||
Gain from sale of discontinued operations, net of tax | — | — | — | 10,101 | |||||||||||||||
Net income (loss) | $ | (174 | ) | $ | (529 | ) | $ | (3,679 | ) | $ | 6,139 | ||||||||
Schedule of assets and liabilities of the discontinued operations | ' | ||||||||||||||||||
The assets and liabilities of discontinued operations in the accompanying consolidated balance sheets are as follows (in thousands): | |||||||||||||||||||
September 30, | December 31, | ||||||||||||||||||
2014 | 2013 | ||||||||||||||||||
Current assets | $ | 125 | $ | 521 | |||||||||||||||
Non-current assets | 100 | 129 | |||||||||||||||||
Current liabilities | (31,782 | ) | (32,004 | ) | |||||||||||||||
Non-current liabilities | (215 | ) | (254 | ) | |||||||||||||||
Net liabilities | $ | (31,772 | ) | $ | (31,608 | ) | |||||||||||||
Lending Tree Loans | ' | ||||||||||||||||||
DISCONTINUED OPERATIONS | ' | ||||||||||||||||||
Schedule of loans sold for the period and the aggregate loan losses | ' | ||||||||||||||||||
The following table represents the loans sold for the periods shown and the aggregate loan losses through September 30, 2014: | |||||||||||||||||||
30-Sep-14 | |||||||||||||||||||
Period of Loan Sales | Number of | Original | Number of | Original | Amount of | ||||||||||||||
Loans Sold | Principal | Loans with | Principal | Aggregate | |||||||||||||||
Balance | Losses | Balance of | Losses | ||||||||||||||||
Loans with | |||||||||||||||||||
Losses | |||||||||||||||||||
(in billions) | (in millions) | (in millions) | |||||||||||||||||
2014 | — | $ | — | — | $ | — | $ | — | |||||||||||
2013 | — | — | — | — | — | ||||||||||||||
2012 | 9,200 | 1.9 | — | — | — | ||||||||||||||
2011 | 12,500 | 2.7 | 1 | 0.3 | 0.1 | ||||||||||||||
2010 | 12,400 | 2.8 | 4 | 1.1 | 0.1 | ||||||||||||||
2009 | 12,800 | 2.8 | 5 | 1.2 | 0.2 | ||||||||||||||
2008 | 11,000 | 2.2 | 33 | 6.9 | 2.2 | ||||||||||||||
2007 | 36,300 | 6.1 | 160 | 22.1 | 8.2 | ||||||||||||||
2006 | 55,000 | 7.9 | 207 | 24.5 | 13.4 | ||||||||||||||
2005 and prior years | 86,700 | 13 | 89 | 12.3 | 5 | ||||||||||||||
Total | 235,900 | $ | 39.4 | 499 | $ | 68.4 | $ | 29.2 | |||||||||||
Schedule of activity related to loss reserves on previously sold loans | ' | ||||||||||||||||||
The activity related to loss reserves on previously sold loans is as follows (in thousands): | |||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Loan loss reserve, beginning of period | $ | 28,390 | $ | 28,675 | $ | 28,543 | $ | 27,182 | |||||||||||
Provisions | — | 38 | — | 1,531 | |||||||||||||||
Charge-offs to reserves | — | — | (153 | ) | — | ||||||||||||||
Loan loss reserve, end of period | $ | 28,390 | $ | 28,713 | $ | 28,390 | $ | 28,713 | |||||||||||
ORGANIZATION_Details_Disc_Ops
ORGANIZATION (Details - Disc Ops) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2013 | Sep. 30, 2014 | Feb. 07, 2012 | |
Cash in escrow for sale of LendingTree Loans | Cash in escrow for sale of LendingTree Loans | Lending Tree Loans | Lending Tree Loans | Lending Tree Loans | ||||||
Discover Bank | Discover Bank | Discover Bank | ||||||||
Organization - Discontinued Operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total proceeds from the sale | ' | ' | ' | ' | ' | ' | ' | ' | ' | $55,900,000 |
Amount received from sale of assets prior to closing | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,000,000 |
Amount received from sale of assets on the closing | ' | ' | ' | ' | ' | ' | ' | ' | ' | 37,900,000 |
Amount received from the sale on the first anniversary of the closing | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10,000,000 |
Gain from sale of discontinued operations, net of tax | 0 | 0 | 0 | 10,101,000 | ' | ' | ' | 10,000,000 | ' | ' |
Restricted cash and cash equivalents | $21,874,000 | ' | $21,874,000 | ' | $26,017,000 | $16,106,000 | $18,117,000 | ' | $19,300,000 | ' |
Period for which marketing related services are to be provided | ' | ' | ' | ' | ' | ' | ' | ' | '17 months | ' |
RESTRICTED_CASH_RESTRICTED_CAS2
RESTRICTED CASH RESTRICTED CASH (Details - Balance Sheet) (USD $) | 9 Months Ended | 3 Months Ended | 3 Months Ended | ||||||||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | |
Cash in Escrow for Surety Bonds | Cash in Escrow for Surety Bonds | Cash in Escrow for Corporate Purchasing Card Program | Cash in Escrow for Corporate Purchasing Card Program | Cash in escrow for sale of LendingTree Loans | Cash in escrow for sale of LendingTree Loans | Cash in escrow for sale of LendingTree Loans | Cash in Escrow for Earnout Related to an Acquisition | Cash in Escrow for Earnout Related to an Acquisition | Cash in Escrow for Earnout Related to an Acquisition | Cash Restricted for Loan Loss Obligations | Cash Restricted for Loan Loss Obligations | Other Restricted Cash and Cash Equivalents | Other Restricted Cash and Cash Equivalents | ||||
Restricted Cash and Cash Equivalents | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted cash and cash equivalents | $21,874,000 | ' | $26,017,000 | $2,453,000 | $2,453,000 | $100,000 | $400,000 | ' | $16,106,000 | $18,117,000 | ' | $0 | $1,956,000 | $3,164,000 | $3,051,000 | $51,000 | $40,000 |
Decrease (increase) in Restricted Cash | 4,143,000 | 3,396,000 | ' | ' | ' | ' | ' | 2,000,000 | ' | ' | 2,000,000 | ' | ' | ' | ' | ' | ' |
Payment made from restricted cash on loss contingency | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,000,000 | ' | ' | ' | ' | ' | ' |
GOODWILL_AND_INTANGIBLE_ASSETS2
GOODWILL AND INTANGIBLE ASSETS (Details - Balance Sheet) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' |
Goodwill | $486,720 | $486,720 |
Accumulated impairment losses | -483,088 | -483,088 |
Net goodwill | 3,632 | 3,632 |
Intangible assets with indefinite lives | 10,142 | 10,142 |
Intangible assets with definite lives, net | 1,446 | 542 |
Total intangible assets, net | $11,588 | $10,684 |
GOODWILL_AND_INTANGIBLE_ASSETS3
GOODWILL AND INTANGIBLE ASSETS (Details - Definite Lived Intangibles) (USD $) | 0 Months Ended | ||
Jun. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | |
Intangible assets with definite lives | ' | ' | ' |
Cash consideration on acquisition date | $600,000 | ' | ' |
Contingent consideration on acquisition date | 400,000 | ' | ' |
Total consideration on acquisition date | 1,000,000 | ' | ' |
Contingent consideration range, minimum | 0 | ' | ' |
Contingent consideration range, maximum | 800,000 | ' | ' |
Intangible assets acquired | 1,000,000 | ' | ' |
Cost | ' | 34,629,000 | 33,629,000 |
Accumulated amortization | ' | -33,183,000 | -33,087,000 |
Total intangible assets with definite lives, net | ' | 1,446,000 | 542,000 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | '10 years | ' | ' |
Purchase agreements | ' | ' | ' |
Intangible assets with definite lives | ' | ' | ' |
Cost | ' | 236,000 | 236,000 |
Accumulated amortization | ' | -236,000 | -212,000 |
Total intangible assets with definite lives, net | ' | 0 | 24,000 |
Technology | ' | ' | ' |
Intangible assets with definite lives | ' | ' | ' |
Cost | ' | 25,194,000 | 25,194,000 |
Accumulated amortization | ' | -25,194,000 | -25,194,000 |
Total intangible assets with definite lives, net | ' | 0 | 0 |
Customer lists | ' | ' | ' |
Intangible assets with definite lives | ' | ' | ' |
Cost | ' | 7,682,000 | 6,682,000 |
Accumulated amortization | ' | -6,236,000 | -6,166,000 |
Total intangible assets with definite lives, net | ' | 1,446,000 | 516,000 |
Other | ' | ' | ' |
Intangible assets with definite lives | ' | ' | ' |
Cost | ' | 1,517,000 | 1,517,000 |
Accumulated amortization | ' | -1,517,000 | -1,515,000 |
Total intangible assets with definite lives, net | ' | $0 | $2,000 |
GOODWILL_AND_INTANGIBLE_ASSETS4
GOODWILL AND INTANGIBLE ASSETS (Details - 5yr Definite Lived Intangibles Amortization) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Amortization of intangible assets with definite lives computed on a straight-line basis | ' | ' |
Remainder of current year | $36 | ' |
2015 | 115 | ' |
2016 | 98 | ' |
2017 | 111 | ' |
2018 | 115 | ' |
Thereafter | 971 | ' |
Total intangible assets with definite lives, net | $1,446 | $542 |
ACCRUED_EXPENSES_AND_OTHER_CUR2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details - Balance Sheet) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Accrued expenses and other current liabilities | ' | ' |
Accrued litigation liability | $2,686 | $500 |
Accrued advertising expense | 9,257 | 8,837 |
Accrued compensation and benefits | 2,411 | 3,378 |
Accrued professional fees | 494 | 1,806 |
Accrued restructuring costs | 251 | 284 |
Customer deposits and escrows | 4,615 | 4,279 |
Deferred rent | 227 | 245 |
Other | 3,673 | 3,985 |
Total accrued expenses and other current liabilities | $23,614 | $23,314 |
SHAREHOLDERS_EQUITY_Details
SHAREHOLDERS' EQUITY (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | 7-May-14 | Jan. 11, 2010 | |
Calculation of weighted average common shares | ' | ' | ' | ' | ' | ' |
Weighted average common shares, basic | 11,182,000 | 11,017,000 | 11,180,000 | 11,039,000 | ' | ' |
Effect of dilutive securities | ' | ' | ' | ' | ' | ' |
Effect of stock options (in shares) | 471,000 | 419,000 | 0 | 0 | ' | ' |
Effect of dilutive share awards (in shares) | 183,000 | 284,000 | 0 | 0 | ' | ' |
Weighted average common shares, diluted | 11,836,000 | 11,720,000 | 11,180,000 | 11,039,000 | ' | ' |
Anti-dilutive securities excluded from calculation of diluted earnings per share (in shares) | 100,000 | 0 | 700,000 | 700,000 | ' | ' |
Common stock repurchases | ' | ' | ' | ' | ' | ' |
Value of common stock authorized to be repurchased | ' | ' | ' | ' | $10,000,000 | $10,000,000 |
Purchase of treasury stock (in shares) | 38,645 | ' | 97,845 | ' | ' | ' |
Remaining authorized repurchase amount | $7,600,000 | ' | $7,600,000 | ' | ' | ' |
STOCKBASED_COMPENSATION_Detail
STOCK-BASED COMPENSATION (Details - P&L Impact) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Non-cash compensation expense related to equity awards | ' | ' | ' | ' |
Total non-cash compensation | $1,786 | $1,412 | $4,859 | $4,278 |
Cost of revenue | ' | ' | ' | ' |
Non-cash compensation expense related to equity awards | ' | ' | ' | ' |
Total non-cash compensation | 11 | 4 | 24 | 9 |
Selling and marketing expense | ' | ' | ' | ' |
Non-cash compensation expense related to equity awards | ' | ' | ' | ' |
Total non-cash compensation | 205 | 242 | 664 | 765 |
General and administrative expense | ' | ' | ' | ' |
Non-cash compensation expense related to equity awards | ' | ' | ' | ' |
Total non-cash compensation | 1,292 | 976 | 3,281 | 2,885 |
Product development | ' | ' | ' | ' |
Non-cash compensation expense related to equity awards | ' | ' | ' | ' |
Total non-cash compensation | 278 | 190 | 854 | 619 |
Restructuring and severance | ' | ' | ' | ' |
Non-cash compensation expense related to equity awards | ' | ' | ' | ' |
Total non-cash compensation | $0 | $0 | $36 | $0 |
STOCKBASED_COMPENSATION_Detail1
STOCK-BASED COMPENSATION (Details - Stock Options Rollforward) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
STOCK-BASED COMPENSATION | ' |
Share Price | $35.89 |
Aggregate stock options | ' |
Stock options, Shares | ' |
Outstanding at the beginning of the period (in shares) | 1,038,999 |
Granted (in shares) | 1,106,265 |
Exercised (in shares) | -4,620 |
Forfeited (in shares) | 0 |
Expired (in shares) | -675 |
Outstanding at the end of the period (in shares) | 2,139,969 |
Options exercisable at the end of the period (in shares) | 983,703 |
Stock options, Weighted Average Exercise Price | ' |
Outstanding at the beginning of the period (in dollars per share) | $8.98 |
Granted (in dollars per share) | $26.72 |
Exercised (in dollars per share) | $12.07 |
Forfeited (in dollars per share) | $0 |
Expired (in dollars per share) | $13.42 |
Outstanding at the end of the period (in dollars per share) | $18.14 |
Options exercisable at the end of the period (in dollars per share) | $9.04 |
Stock options, Weighted Average Remaining Contractual Term | ' |
Outstanding at the end of the period | '6 years 8 months 5 days |
Options exercisable at the end of the period | '3 years 10 months 12 days |
Stock options, Aggregate Intrinsic Value | ' |
Outstanding at the end of the period | $37,974,000 |
Options exercisable at the end of the period | 26,409,000 |
Stock options, Grant Date Fair Value Valuation | ' |
Expected dividends | $0 |
Expected dividend rate | 0.00% |
Expected volatility, minimum | 36.00% |
Expected volatility, maximum | 54.00% |
Risk-free interest rate, minimum | 1.85% |
Risk-free interest rate, maximum | 2.13% |
Executive stock options | ' |
Stock options, Grant Date Fair Value Valuation | ' |
Vesting period | '3 years |
Director stock options | ' |
Stock options, Grant Date Fair Value Valuation | ' |
Grant date fair value | $13.08 |
Vesting period | '2 years |
Minimum | Aggregate stock options | ' |
Stock options, Grant Date Fair Value Valuation | ' |
Expected term | 'P5Y9M |
Minimum | Executive stock options | ' |
Stock options, Grant Date Fair Value Valuation | ' |
Grant date fair value | $10.68 |
Maximum | Aggregate stock options | ' |
Stock options, Grant Date Fair Value Valuation | ' |
Expected term | 'P6Y7M17D |
Maximum | Executive stock options | ' |
Stock options, Grant Date Fair Value Valuation | ' |
Grant date fair value | $17.13 |
Tranche1 | Executive stock options | ' |
Stock options, Grant Date Fair Value Valuation | ' |
Vesting period | '2 years 6 months |
Award vesting rights percentage | 25.00% |
Tranche2 | Executive stock options | ' |
Stock options, Grant Date Fair Value Valuation | ' |
Vesting period | '3 years 6 months |
Award vesting rights percentage | 75.00% |
STOCKBASED_COMPENSATION_Detail2
STOCK-BASED COMPENSATION (Details - RSA & RSU Rollforwards) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
RSUs | ' |
Nonvested RSUs, RSUs with a Market Condition, Restricted Stock and Restricted Stock with a Market Condition, Number of Shares | ' |
Nonvested at the beginning of the period (in shares) | 599,122 |
Granted (in shares) | 128,760 |
Vested (in shares) | -244,080 |
Forfeited (in shares) | -47,624 |
Nonvested at the end of the period (in shares) | 436,178 |
Nonvested RSUs, RSUs with a Market Condition, Restricted Stock and Restricted Stock with a Market Condition, Weighted Average Grant Date Fair Value | ' |
Nonvested at the beginning of the period (in dollars per share) | $14.15 |
Granted (in dollars per share) | $32 |
Vested (in dollars per share) | $13.25 |
Forfeited (in dollars per share) | $15.83 |
Nonvested at the end of the period (in dollars per share) | $19.79 |
RSUs with a performance condition | ' |
Nonvested RSUs, RSUs with a Market Condition, Restricted Stock and Restricted Stock with a Market Condition, Number of Shares | ' |
Nonvested at the beginning of the period (in shares) | 0 |
Granted (in shares) | 500 |
Nonvested at the end of the period (in shares) | 500 |
Nonvested RSUs, RSUs with a Market Condition, Restricted Stock and Restricted Stock with a Market Condition, Weighted Average Grant Date Fair Value | ' |
Nonvested at the beginning of the period (in dollars per share) | $0 |
Granted (in dollars per share) | $33.59 |
Nonvested at the end of the period (in dollars per share) | $33.59 |
Restricted stock | ' |
Nonvested RSUs, RSUs with a Market Condition, Restricted Stock and Restricted Stock with a Market Condition, Number of Shares | ' |
Nonvested at the beginning of the period (in shares) | 119,500 |
Granted (in shares) | 43,389 |
Vested (in shares) | -20,833 |
Nonvested at the end of the period (in shares) | 142,056 |
Nonvested RSUs, RSUs with a Market Condition, Restricted Stock and Restricted Stock with a Market Condition, Weighted Average Grant Date Fair Value | ' |
Nonvested at the beginning of the period (in dollars per share) | $22.47 |
Granted (in dollars per share) | $25.14 |
Vested (in dollars per share) | $17.49 |
Nonvested at the end of the period (in dollars per share) | $24.02 |
Restricted stock with a market condition | ' |
Nonvested RSUs, RSUs with a Market Condition, Restricted Stock and Restricted Stock with a Market Condition, Number of Shares | ' |
Nonvested at the beginning of the period (in shares) | 62,500 |
Vested (in shares) | -62,500 |
Nonvested at the end of the period (in shares) | 0 |
Nonvested RSUs, RSUs with a Market Condition, Restricted Stock and Restricted Stock with a Market Condition, Weighted Average Grant Date Fair Value | ' |
Nonvested at the beginning of the period (in dollars per share) | $13.93 |
Vested (in dollars per share) | $13.93 |
Nonvested at the end of the period (in dollars per share) | $0 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' |
Income tax benefit | $2 | $98 | $86 | $97 |
Effective tax rates (as a percent) | 0.40% | 45.00% | 3.20% | 4.60% |
CONTINGENCIES_Details
CONTINGENCIES (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Oct. 14, 2011 | Sep. 30, 2014 | Nov. 07, 2014 | Dec. 31, 2012 | Oct. 25, 2013 | Jun. 30, 2013 | Jul. 31, 2014 | Sep. 30, 2014 | Sep. 08, 2010 | Sep. 30, 2014 | Mar. 12, 2014 | 25-May-07 | Dec. 31, 2013 |
Unfavorable regulatory action | Unfavorable regulatory action | Unfavorable regulatory action | Pending litigation or appeal | Pending litigation or appeal | Pending litigation or appeal | Pending litigation or appeal | Pending litigation or appeal | Pending litigation or appeal | Pending litigation or appeal | Pending litigation or appeal | Settled litigation | Settled litigation | |||
regulator | Subsequent Event [Member] | Internet Patents Corporation f/k/a InsWeb v. Tree.com, Inc. | Internet Patents Corporation f/k/a InsWeb v. Tree.com, Inc. | The Money Suite Company vs. LendingTree, LLC | Lijkel Dijkstra v. Harry Carenbauer, Home Loan Center, Inc | Lijkel Dijkstra v. Harry Carenbauer, Home Loan Center, Inc | Lending Tree v. Zillow, Inc. | Lending Tree v. Zillow, Inc. | Lending Tree v. Zillow, Inc. | Boschma v. Home Loan Center, Inc. | Boschma v. Home Loan Center, Inc. | ||||
regulator | patent | patent | patent | patent | patent | complaint | |||||||||
Contingencies | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accrued litigation liability | $2,686,000 | $500,000 | ' | $500,000 | ' | ' | ' | ' | ' | $2,800,000 | ' | $2,200,000 | ' | ' | ' |
Litigation loss | ' | ' | ' | ' | ' | ' | ' | ' | 2,800,000 | ' | ' | 2,200,000 | ' | ' | 450,000 |
Range of possible loss, minimum | ' | ' | ' | 500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Range of possible loss, maximum | ' | ' | ' | $6,500,000 | ' | ' | ' | ' | ' | ' | ' | $9,700,000 | ' | ' | ' |
Number of patents alleged infringement upon, maximum | ' | ' | ' | ' | ' | 1 | ' | 1 | ' | ' | 2 | ' | ' | ' | ' |
Number of patents found not infringed upon | ' | ' | ' | ' | ' | ' | 1 | ' | ' | ' | ' | ' | 2 | ' | ' |
Number of total complaints filed | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8 | ' |
Number of complaints dismissed by federal and state courts | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7 | ' |
Number of Joining Regulators | ' | ' | 34 | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
segment | ||||
SEGMENT INFORMATION | ' | ' | ' | ' |
Number of reportable operating segments | ' | ' | 1 | ' |
Revenue | $41,306 | $37,343 | $123,486 | $102,829 |
Cost of revenue (exclusive of depreciation shown separately below) | 2,110 | 1,733 | 5,670 | 5,039 |
Selling and marketing expense | 27,168 | 24,832 | 83,581 | 68,473 |
General and administrative expense | 6,590 | 5,610 | 18,201 | 17,817 |
Product development | 1,658 | 1,217 | 5,416 | 3,914 |
Depreciation | 840 | 891 | 2,541 | 2,648 |
Amortization of intangibles | 41 | 33 | 96 | 119 |
Restructuring and severance | 7 | -70 | 232 | 76 |
Litigation settlements and contingencies | 2,338 | 2,875 | 10,430 | 6,812 |
Total costs and expenses | 40,752 | 37,121 | 126,167 | 104,898 |
Operating income (loss) | 554 | 222 | -2,681 | -2,069 |
Adjustments to reconcile to Adjusted EBITDA: | ' | ' | ' | ' |
Amortization of intangibles | 41 | 33 | 96 | 119 |
Depreciation | 840 | 891 | 2,541 | 2,648 |
Restructuring and severance | 7 | -70 | 232 | 76 |
Loss (gain) on disposal of assets | 185 | 1 | 237 | 25 |
Non-cash compensation | 1,786 | 1,412 | 4,823 | 4,278 |
Acquisition expense | 40 | ' | 114 | ' |
Discretionary cash bonus | ' | ' | ' | 920 |
Litigation settlements and contingencies | 2,338 | 2,875 | 10,430 | 6,812 |
Adjusted EBITDA | 5,791 | 5,364 | 15,792 | 12,809 |
Adjustments to reconcile to Income before taxes: | ' | ' | ' | ' |
Operating income (loss) | 554 | 222 | -2,681 | -2,069 |
Interest expense | -1 | -4 | -1 | -18 |
Income (loss) before income taxes | 553 | 218 | -2,682 | -2,087 |
Lending | ' | ' | ' | ' |
SEGMENT INFORMATION | ' | ' | ' | ' |
Revenue | 37,644 | 34,716 | 113,621 | 94,170 |
Cost of revenue (exclusive of depreciation shown separately below) | 1,990 | 1,545 | 5,308 | 4,095 |
Selling and marketing expense | 24,707 | 23,089 | 77,278 | 62,371 |
General and administrative expense | 1,129 | 711 | 3,622 | 2,563 |
Product development | 1,419 | 990 | 4,516 | 3,166 |
Depreciation | 432 | 357 | 1,195 | 1,076 |
Amortization of intangibles | 0 | 0 | 0 | 0 |
Restructuring and severance | 0 | 1 | 162 | 24 |
Litigation settlements and contingencies | 0 | 0 | 0 | 0 |
Total costs and expenses | 29,677 | 26,693 | 92,081 | 73,295 |
Operating income (loss) | 7,967 | 8,023 | 21,540 | 20,875 |
Adjustments to reconcile to Adjusted EBITDA: | ' | ' | ' | ' |
Amortization of intangibles | 0 | 0 | 0 | 0 |
Depreciation | 432 | 357 | 1,195 | 1,076 |
Restructuring and severance | 0 | 1 | 162 | 24 |
Loss (gain) on disposal of assets | 0 | 0 | 0 | 0 |
Non-cash compensation | 580 | 411 | 1,707 | 1,307 |
Acquisition expense | 0 | ' | 0 | ' |
Discretionary cash bonus | ' | ' | ' | 0 |
Litigation settlements and contingencies | 0 | 0 | 0 | 0 |
Adjusted EBITDA | 8,979 | 8,792 | 24,604 | 23,282 |
Adjustments to reconcile to Income before taxes: | ' | ' | ' | ' |
Operating income (loss) | 7,967 | 8,023 | 21,540 | 20,875 |
Other | ' | ' | ' | ' |
SEGMENT INFORMATION | ' | ' | ' | ' |
Revenue | 3,662 | 2,627 | 9,865 | 8,037 |
Cost of revenue (exclusive of depreciation shown separately below) | 120 | 168 | 362 | 505 |
Selling and marketing expense | 2,461 | 1,743 | 6,303 | 6,097 |
General and administrative expense | 900 | 604 | 2,297 | 1,534 |
Product development | 239 | 227 | 900 | 748 |
Depreciation | 329 | 426 | 1,063 | 1,269 |
Amortization of intangibles | 41 | 33 | 96 | 119 |
Restructuring and severance | -3 | -77 | 12 | 48 |
Litigation settlements and contingencies | 0 | 0 | 0 | 0 |
Total costs and expenses | 4,087 | 3,124 | 11,033 | 10,320 |
Operating income (loss) | -425 | -497 | -1,168 | -2,283 |
Adjustments to reconcile to Adjusted EBITDA: | ' | ' | ' | ' |
Amortization of intangibles | 41 | 33 | 96 | 119 |
Depreciation | 329 | 426 | 1,063 | 1,269 |
Restructuring and severance | -3 | -77 | 12 | 48 |
Loss (gain) on disposal of assets | 185 | 0 | 220 | 0 |
Non-cash compensation | 221 | 220 | 655 | 457 |
Acquisition expense | 40 | ' | 114 | ' |
Discretionary cash bonus | ' | ' | ' | 0 |
Litigation settlements and contingencies | 0 | 0 | 0 | 0 |
Adjusted EBITDA | 388 | 105 | 992 | -390 |
Adjustments to reconcile to Income before taxes: | ' | ' | ' | ' |
Operating income (loss) | -425 | -497 | -1,168 | -2,283 |
Corporate | ' | ' | ' | ' |
SEGMENT INFORMATION | ' | ' | ' | ' |
Revenue | 0 | 0 | 0 | 622 |
Cost of revenue (exclusive of depreciation shown separately below) | 0 | 20 | 0 | 439 |
Selling and marketing expense | 0 | 0 | 0 | 5 |
General and administrative expense | 4,561 | 4,295 | 12,282 | 13,720 |
Product development | 0 | 0 | 0 | 0 |
Depreciation | 79 | 108 | 283 | 303 |
Amortization of intangibles | 0 | 0 | 0 | 0 |
Restructuring and severance | 10 | 6 | 58 | 4 |
Litigation settlements and contingencies | 2,338 | 2,875 | 10,430 | 6,812 |
Total costs and expenses | 6,988 | 7,304 | 23,053 | 21,283 |
Operating income (loss) | -6,988 | -7,304 | -23,053 | -20,661 |
Adjustments to reconcile to Adjusted EBITDA: | ' | ' | ' | ' |
Amortization of intangibles | 0 | 0 | 0 | 0 |
Depreciation | 79 | 108 | 283 | 303 |
Restructuring and severance | 10 | 6 | 58 | 4 |
Loss (gain) on disposal of assets | 0 | 1 | 17 | 25 |
Non-cash compensation | 985 | 781 | 2,461 | 2,514 |
Acquisition expense | 0 | ' | 0 | ' |
Discretionary cash bonus | ' | ' | ' | 920 |
Litigation settlements and contingencies | 2,338 | 2,875 | 10,430 | 6,812 |
Adjusted EBITDA | -3,576 | -3,533 | -9,804 | -10,083 |
Adjustments to reconcile to Income before taxes: | ' | ' | ' | ' |
Operating income (loss) | ($6,988) | ($7,304) | ($23,053) | ($20,661) |
RESTRUCTURING_EXPENSE_Details
RESTRUCTURING EXPENSE (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 |
In Thousands, unless otherwise specified | Continuing Lease Obligations | ||
Changes in restructuring expenses | ' | ' | ' |
31-Dec-13 | ' | ' | $462 |
Restructuring expense | ' | ' | 11 |
Payments | ' | ' | -222 |
30-Sep-14 | ' | ' | 251 |
Restructuring liabilities | ' | ' | ' |
Restructuring liabilities included in accrued expense and other current liabilities | $251 | $284 | ' |
DISCONTINUED_OPERATIONS_Detail
DISCONTINUED OPERATIONS (Details-Disposal Groups) (USD $) | 3 Months Ended | 9 Months Ended | 1 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | 31-May-13 | |
Discover | ||||||
DISCONTINUED OPERATIONS | ' | ' | ' | ' | ' | ' |
Settlement value of indemnification claim and other miscellaneous items | ' | ' | ' | ' | ' | $1,300,000 |
Revenue and net income (loss) of discontinued operations | ' | ' | ' | ' | ' | ' |
Revenue | 114,000 | -37,000 | 118,000 | -1,523,000 | ' | ' |
Loss before income taxes | -175,000 | -526,000 | -3,676,000 | -3,908,000 | ' | ' |
Income tax benefit (expense) | 1,000 | -3,000 | -3,000 | -54,000 | ' | ' |
Gain from sale of discontinued operations, net of tax | 0 | 0 | 0 | 10,101,000 | ' | ' |
Income (loss) from discontinued operations | -174,000 | -529,000 | -3,679,000 | 6,139,000 | ' | ' |
Assets and liabilities of facilities reported as discontinued operations | ' | ' | ' | ' | ' | ' |
Current assets | 125,000 | ' | 125,000 | ' | 521,000 | ' |
Non-current assets of discontinued operations | 100,000 | ' | 100,000 | ' | 129,000 | ' |
Current liabilities | -31,782,000 | ' | -31,782,000 | ' | -32,004,000 | ' |
Non-current liabilities | -215,000 | ' | -215,000 | ' | -254,000 | ' |
Net liabilities | ($31,772,000) | ' | ($31,772,000) | ' | ($31,608,000) | ' |
DISCONTINUED_OPERATIONS_Detail1
DISCONTINUED OPERATIONS (Details - Loan Loss Reserve) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 |
Lending Tree Loans | Loan loss obligations | Loan loss obligations | Loan loss obligations | Loan loss obligations | Loan loss obligations | Loan loss obligations | Loan loss obligations | Loan loss obligations | Loan loss obligations | Loan loss obligations | Loan loss obligations | Loan loss obligations | Loan loss obligations | Loan loss obligations | Discover Bank | |||
Discontinued operations | Lending Tree Loans | Lending Tree Loans | Lending Tree Loans | Lending Tree Loans | Lending Tree Loans | Lending Tree Loans | Lending Tree Loans | Lending Tree Loans | Lending Tree Loans | Lending Tree Loans | Lending Tree Loans | Lending Tree Loans | Lending Tree Loans | Lending Tree Loans | Lending Tree Loans | |||
investor | Discontinued operations | Discontinued operations | Discontinued operations | Discontinued operations | Discontinued operations | Discontinued operations | Discontinued operations | Discontinued operations | Discontinued operations | Discontinued operations | Discontinued operations | Discontinued operations | Discontinued operations | Discontinued operations | ||||
loan | loan | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 and prior years | |||||||
loan | loan | loan | loan | loan | loan | loan | loan | loan | loan | |||||||||
Loan Loss Obligations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted cash and cash equivalents | $21,874,000 | $26,017,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $19,300,000 |
Loan loss reserve, at carrying value | ' | ' | ' | 28,390,000 | 28,713,000 | 28,390,000 | 28,713,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated range of remaining possible losses due to loan losses, minimum | ' | ' | ' | 16,300,000 | ' | 16,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated range of remaining possible losses due to loan losses, maximum | ' | ' | ' | 29,400,000 | ' | 29,400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of investors to whom loans are guaranteed | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of loans sold | ' | ' | ' | 235,900 | ' | 235,900 | ' | 0 | 0 | 9,200 | 12,500 | 12,400 | 12,800 | 11,000 | 36,300 | 55,000 | 86,700 | ' |
Original principal balance of loans sold | ' | ' | ' | 39,400,000,000 | ' | 39,400,000,000 | ' | 0 | 0 | 1,900,000,000 | 2,700,000,000 | 2,800,000,000 | 2,800,000,000 | 2,200,000,000 | 6,100,000,000 | 7,900,000,000 | 13,000,000,000 | ' |
Number of loans sold with losses | ' | ' | ' | 499 | ' | 499 | ' | 0 | 0 | 0 | 1 | 4 | 5 | 33 | 160 | 207 | 89 | ' |
Original principal balance of loans sold with losses | ' | ' | ' | 68,400,000 | ' | 68,400,000 | ' | 0 | 0 | 0 | 300,000 | 1,100,000 | 1,200,000 | 6,900,000 | 22,100,000 | 24,500,000 | 12,300,000 | ' |
Amount of aggregate losses | ' | ' | ' | 29,200,000 | ' | 29,200,000 | ' | 0 | 0 | 0 | 100,000 | 100,000 | 200,000 | 2,200,000 | 8,200,000 | 13,400,000 | 5,000,000 | ' |
Activity related to loss reserves on previously sold loans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Loan loss reserve, beginning of period | ' | ' | ' | 28,390,000 | 28,675,000 | 28,543,000 | 27,182,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Provisions | ' | ' | ' | 0 | 38,000 | 0 | 1,531,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Charge-offs to reserves | ' | ' | ' | 0 | 0 | -153,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Loan loss reserve, end of period | ' | ' | ' | $28,390,000 | $28,713,000 | $28,390,000 | $28,713,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |