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LENDINGTREE, INC. – 10-K – Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and accompanying notes included elsewhere within this report. This discussion includes both historical information and forward-looking information that involves risks, uncertainties and assumptions. Our actual results may differ materially from management's expectations as a result of various factors, including but not limited to those discussed in the sections entitled "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Information."
Company Overview
LendingTree, Inc. is the parent ofLT Intermediate Company, LLC , which holds all of the outstanding ownership interests ofLendingTree, LLC , andLendingTree, LLC owns several companies. We operate what we believe to be the leading online consumer platform that connects consumers with the choices they need to be confident in their financial decisions. Our online consumer platform provides consumers with access to product offerings from ourNetwork Partners , including mortgage loans, home equity loans and lines of credit, auto loans, credit cards, deposit accounts, personal loans, student loans, small business loans, insurance quotes, sales of insurance policies and other related offerings. In addition, we offer tools and resources, including free credit scores, that facilitate comparison shopping for loans, deposit products, insurance, and other offerings. We seek to match consumers with multiple providers, who can offer them competing quotes for the product(s) they are seeking. We also serve as a valued partner to lenders and other providers seeking an efficient, scalable and flexible source of customer acquisition with directly measurable benefits, by matching the consumer inquiries we generate with theseNetwork Partners . Our MyLendingTree platform offers a personalized comparison-shopping experience by providing free credit scores and credit score analysis. This platform enables us to monitor consumers' credit profiles and then identify and alert them to loans and other offerings on our marketplace that may be more favorable than the terms they may have at a given point in time. This is designed to provide consumers with measurable savings opportunities over their lifetimes. We are focused on developing new product offerings and enhancements to improve the experiences that consumers andNetwork Partners have as they interact with us. By expanding our portfolio of financial services offerings, we are growing and diversifying our business and sources of revenue. We intend to capitalize on our expertise in performance marketing, product development and technology by leveraging the widespread recognition of the LendingTree brand. We believe the consumer and small business financial services industry is still in the early stages of a fundamental shift to online product offerings, similar to the shift that started in retail and travel many years ago and is now well established. We believe that like retail and travel, as consumers continue to move towards online shopping and transactions for financial services, suppliers will increasingly shift their product offerings and advertising budgets toward the online channel. We believe the strength of our brands and of ourNetwork Partners place us in a strong position to continue to benefit from this market shift. The LendingTree Loans business is presented as discontinued operations in the accompanying consolidated balance sheets, consolidated statements of operations and comprehensive income (loss) and consolidated cash flows for all periods presented. Except for the discussion under the heading "Discontinued Operations," the analysis within Management's Discussion and Analysis of Financial Condition and Results of Operations reflects our continuing operations.
Economic Conditions
We continue to monitor the impact of the COVID-19 pandemic, government actions
and measures taken to prevent its spread, and the potential to affect our
operations. We are also monitoring the current global economic environment,
specifically including inflationary pressures and interest rates, and any
resulting impacts on our financial position and results of operations. Refer to
Item 1A. "Risk Factors" for additional information.
Of our three reportable segments, the Consumer segment was impacted the most as
unsecured credit and the flow of capital in certain areas of the market
contracted. Most of our selling and marketing expenses are variable costs that
we adjust dynamically in relation to revenue opportunities to profitably meet
demand. Thus, as our revenue was negatively impacted during the COVID-19
pandemic and the macro-economic conditions that followed, our marketing expenses
generally decreased in line with revenue.
During 2022, the challenging interest rate environment and persistent
inflationary pressures have presented additional challenges for many of our
mortgage lending and insurance partners. We have seen the most significant
impact in our Home segment as mortgage rates have nearly doubled in 2022,
causing a sharp decline in refinance volumes and more recent pressure on
purchase activity. Although our Insurance segment continues to rebound from the
trough in the fourth quarter of 2021, the recovery has been slower than expected
as demand from our carrier partners remains volatile as they continue to attempt
to
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implement premium increases to offset the effect of inflation on claims. In
addition, the auto and home insurance industry was impacted in 2022 by
persistent industry headwinds, supply chain issues, rising accident severity and
frequency, and hurricane losses.
Segment Reporting
We have three reportable segments: Home, Consumer, and Insurance.
Recent Business Acquisitions & Investments
In
intelligently automates loan payment scheduling and helps consumers better
manage their money and improve their financial well-being.
InFebruary 2020 , we acquired an equity interest in Stash for$80.0 million , and inJanuary 2021 , we acquired an additional equity interest in Stash for$1.2 million . Stash is a consumer investing and banking platform. Stash brings together banking, investing, and financial services education into one seamless experience offering a full suite of personal investment accounts, traditional andRoth IRAs , custodial investment accounts, and banking services, including checking accounts and debit cards with a Stock-Back® rewards program. In the fourth quarter of 2021, we sold a portion of our investment in Stash for$46.3 million , realizing a gain on the sale of$27.9 million .
See Note 8-Equity Investments in the notes to the consolidated financial
statements included elsewhere in this report for additional information on the
equity interest in Stash and EarnUp.
Recent Mortgage Interest Rate Trends
Interest rate and market risks are substantial in the mortgage lead generation business. Short-term fluctuations in mortgage interest rates primarily affect consumer demand for mortgage refinancings, while long-term fluctuations in mortgage interest rates, coupled with theU.S. real estate market, affect consumer demand for new mortgages. Consumer demand, in turn, affects lender demand for mortgage leads from third-party sources, as well as our own ability to attract online consumers to our website. Typically, when interest rates decline, we see increased consumer demand for mortgage refinancings, which in turn leads to increased traffic to our website and decreased selling and marketing efforts associated with that traffic. At the same time, lender demand for leads from third-party sources typically decreases, as there are more consumers in the marketplace seeking refinancing and, accordingly, lenders receive more organic mortgage lead volume. Due to lower lender demand, our revenue earned per consumer typically decreases, but with correspondingly lower selling and marketing costs. Conversely, when interest rates increase, we typically see decreased consumer demand for mortgage refinancing, leading to decreased traffic to our website and higher associated selling and marketing efforts associated with that traffic. At the same time, lender demand for leads from third-party sources typically increases, as there are fewer consumers in the marketplace and, accordingly, the supply of organic mortgage lead volume decreases. Due to high lender demand, we typically see an increase in the amount lenders will pay per matched lead, which often leads to higher revenue earned per consumer. However, increases in the amount lenders will pay per matched lead in this situation is limited by the overall cost models of our lenders, and our revenue earned per consumer can be adversely affected by the overall reduced demand for refinancing in a rising rate environment.
We dynamically adjust selling and marketing expenditures in all interest rate
environments to optimize our results against these variables.
According to Freddie Mac, 30-year mortgage interest rates steadily decreased in 2020, largely as a result of stimulus efforts in response to the COVID-19 pandemic, beginning at a monthly average of 3.62% inJanuary 2020 and ending at a monthly average of 2.68% inDecember 2020 . During 2021, 30-year mortgage interest rates steadily increased from a monthly average of 2.74% inJanuary 2021 , ending at a monthly average of 3.10% inDecember 2021 . During 2022, 30-year mortgage interest rates increased significantly from a monthly average of 3.45% inJanuary 2022 , ending at a monthly average of 6.36% inDecember 2022 .
On a full-year basis, 30-year mortgage interest rates increased to an average
5.33% in 2022, compared to 2.96% and 3.11% in 2021 and 2020, respectively.
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[[Image Removed: tree-20221231_g3.jpg]] Typically, as mortgage interest rates rise, there are fewer consumers in the marketplace seeking refinancings and, accordingly, the mix of mortgage origination dollars will move toward purchase mortgages. According toMortgage Bankers Association ("MBA") data, total refinance origination dollars of total mortgage origination dollars remained relatively consistent in 2020 and 2021, with 60% of total 2020 mortgage origination dollars from refinance and 59% of total 2021 mortgage origination dollars from refinance as a result of the general trend in average mortgage interest rates. Total refinance original dollars decreased to 30% of total mortgage origination dollars in 2022 due to the increase in average mortgage interest rates. Total refinance origination dollars decreased by 11% in 2021 over 2020 and 74% in 2022 over 2021. Industry-wide mortgage origination dollars decreased by 3% in 2021 over 2020 and 49% in 2022 over 2021. Looking forward, the MBA is projecting 30-year mortgage interest rates to decrease in 2023 to an average 5.2%. According to MBA projections, the mix of mortgage origination dollars is expected to continue to move towards purchase mortgages with the refinance share representing just 24% for 2023.
The
The health of theU.S. real estate market and interest rate levels are the primary drivers of consumer demand for new mortgages. Consumer demand, in turn, affects lender demand for purchase mortgage leads from third-party sources. Typically, a strong real estate market will lead to reduced lender demand for leads, as there are more consumers in the marketplace seeking financing and, accordingly, lenders receive more organic lead volume. Conversely, a weaker real estate market will typically lead to an increase in lender demand, as there are fewer consumers in the marketplace seeking mortgages. According to Fannie Mae data, in 2020, existing home sales grew by 6% over 2019, fueled by increased competition for low inventory as well as an increase in first-time home buyers. This trend continued into 2021 with existing home sales growing 9% over 2020. In 2022, existing home sales decreased by 17% as compared to 2021 due to increased interest rates and limited inventory of homes. Fannie Mae expects a 22% decrease in existing home sales in 2023 compared to 2022. 37
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MyLendingTree
We consider certain metrics related to MyLendingTree set forth below to help us evaluate our business and growth trends and assess operational efficiencies. The calculation of the metrics discussed below may differ from other similarly titled metrics used by other companies, securities analysts or investors. We continued to grow our user base and added 3.8 million new users in 2022, bringing cumulative sign-ups to 24.8 million atDecember 31, 2022 . We attribute$123.7 million of revenue in 2022 to registered MyLendingTree members across the LendingTree platform. Our focus on improving the MyLendingTree experience for consumers remains a top priority. Becoming an integrated digital advisor will greatly improve the consumer experience, which we expect to result in higher levels of engagement improved membership growth rates, and ultimately stronger financial results.
Convertible Senior Notes and Hedge and Warrant Transactions
OnJuly 24, 2020 , we issued$575.0 million aggregate principal amount of our 0.50% Convertible Senior Notes dueJuly 15, 2025 and, in connection therewith, entered into Convertible Note Hedge and Warrant transactions with respect to our common stock. OnMay 31, 2017 , we issued$300.0 million aggregate principal amount of our 0.625% Convertible Senior Notes dueJune 1, 2022 and, in connection therewith, entered into Convertible Note Hedge and Warrant transactions with respect to our common stock. OnJuly 24, 2020 , a portion of the net proceeds from the issuance of the 2025 Notes was used to repurchase approximately$130.3 million principal amount of the 2022 Notes. A portion of the call spread transactions associated with the 2022 Notes was also terminated onJuly 24, 2020 in notional amounts corresponding to the principal amount of the 2022 Notes repurchased. OnMay 31, 2022 , we drew$250.0 million on the Term Loan Facility. A portion of this was used to pay the outstanding balance of$169.7 million and interest on our 0.625% Convertible Senior Notes that matured onJune 1, 2022 . The remaining call spread transactions associated with the 2022 Notes terminated in 2022.
For more information, see Note 16-Debt, in the notes to the consolidated
financial statements included elsewhere in this report.
Our new corporate office is located on approximately 176,000 square feet of
office space in
that commenced in the second quarter of 2021.
With our expansion inNorth Carolina , inDecember 2016 , we received a grant from the state that provides up to$4.9 million in reimbursements through 2029 beginning in 2017 for investing in real estate and infrastructure in addition to increasing jobs inNorth Carolina at specific targeted levels through 2021, and maintaining the jobs thereafter. We have received approximately$0.7 million related to theDecember 2016 grants. If we are unable to maintain the specified target levels, our ability to earn further reimbursements could be limited. Additionally, the city ofCharlotte and the county ofMecklenburg provided a grant that will be paid over five years and is based on a percentage of new property tax we pay on the development of a corporate headquarters. InDecember 2018 , we received an additional grant from the state that provides an aggregate amount up to$8.4 million in reimbursements through 2032 beginning in 2021 for increasing jobs inNorth Carolina at specific targeted levels through 2024, and maintaining the jobs thereafter. We have currently not met the specified target levels set forth in theDecember 2018 grant and may not realize any reimbursements from this grant. 38
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Results of Operations for the Years ended
For information on fiscal 2020 results and similar comparisons, see Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations-Results of Operations for the Years ended
of our Form 10-K for the fiscal year ended
Year Ended December 31, 2022 vs. 2021
$ %
2022 2021 Change Change
(Dollars in thousands)
Home $ 289,383 $ 441,738 $ (152,355) (34) %
Consumer 396,109 329,945 66,164 20 %
Insurance 299,073 326,153 (27,080) (8) %
Other 427 663 (236) (36) %
Revenue 984,992 1,098,499 (113,507) (10) %
Costs and expenses:
Cost of revenue (exclusive of depreciation and
amortization shown separately below) 57,769 57,297 472 1 %
Selling and marketing expense 702,238 773,990 (71,752) (9) %
General and administrative expense 152,377 153,472 (1,095) (1) %
Product development 55,553 52,865 2,688 5 %
Depreciation 20,095 17,910 2,185 12 %
Amortization of intangibles 25,306 42,738 (17,432) (41) %
Change in fair value of contingent consideration - (8,249) 8,249 100 %
Restructuring and severance 4,428 53 4,375 8,255 %
Litigation settlements and contingencies (18) 392 (410) (105) %
Total costs and expenses 1,017,748 1,090,468 (72,720) (7) %
Operating (loss) income (32,756) 8,031 (40,787) (508) %
Other (expense) income, net:
Interest expense, net (26,014) (46,867) (20,853) (44) %
Other income 3,843 123,272 (119,429) (97) %
(Loss) income before income taxes (54,927) 84,436 (139,363) (165) %
Income tax expense (133,019) (11,298) 121,721 1,077 %
Net (loss) income from continuing operations (187,946) 73,138 (261,084) (357) %
Loss from discontinued operations, net of tax (6) (4,023) (4,017) (100) %
Net (loss) income and comprehensive (loss) income
$ 69,115 $ (257,067) (372) % Revenue
Revenue decreased in 2022 compared to 2021 due to decreases in our Home and
Insurance segments, partially offset by an increase in our Consumer segment.
Our Consumer segment includes the following products: credit cards, personal loans, small business loans, student loans, auto loans, deposit accounts, and other credit products such as credit repair and debt settlement. Many of our Consumer segment products are not individually significant to revenue. Revenue from our Consumer segment increased$66.2 million in 2022 from 2021, or 20%, primarily due to increases in our personal loans, small business loans products, credit cards, and deposit accounts, partially offset by a decrease in student loans. Many of our products in the Consumer segment experienced increases in revenue in 2022 from 2021 due to the recovery from the impacts of the COVID-19 pandemic.
Revenue from our personal loans product increased
in the number of consumers completing request forms.
Revenue from our credit cards product increased$6.8 million , or 7%, to$100.2 million in 2022 from$93.4 million in 2021 primarily due to an increase in revenue earned per click, partially offset by a decrease in the number of clicks. 39
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For the periods presented, no other products in our Consumer segment represented more than 10% of revenue; however, certain other Consumer products experienced notable changes. Revenue from our small business loans product increased$19.9 million in 2022 compared to 2021, due to an increase in revenue earned per consumer, partially offset by a decrease in the number of consumers. Revenue from our deposit accounts product increased$6.6 million in 2022 compared to 2021 due to an increase in the number of consumers and an increase in revenue earned per consumer. Student loans decreased$6.4 million in 2022 compared to 2021, due to a decrease in the number of consumers, partially offset by an increase in revenue earned per consumer. Revenue from our Insurance segment decreased$27.1 million , or 8%, to$299.1 million in 2022 from$326.2 million in 2021 primarily due to a decrease in carrier budgets reducing the number of consumers completing request forms. The decrease in carrier budgets was due primarily to reduced customer acquisition activity for insurance carriers as they attempted to raise premium rates in response to inflationary pressures on claims. Our Home segment includes the following products: purchase mortgage, refinance mortgage, home equity loans and lines of credit, and real estate. We ceased offering reverse mortgage loans in the fourth quarter of 2022. Revenue from our Home segment decreased$152.4 million , or 34%, in 2022 from 2021 primarily due to a decrease in revenue from our refinance mortgage product, partially offset by increases in our home equity loans and purchase mortgage products. Revenue from our mortgage products decreased$196.6 million , or 52%, to$179.4 million in 2022 from$376.1 million in 2021. Revenue from our refinance mortgage product decreased$203.7 million in 2022 compared to 2021, primarily due to a decrease in the number of consumers completing request forms and a decrease in revenue earned per consumer, as interest rates rose significantly in 2022. Revenue from our purchase mortgage product increased$7.1 million in 2022 compared to 2021 primarily due to an increase in revenue earned per consumer, partially offset by a decrease in the number of consumers completing request forms. Revenue from our home equity loans and lines of credit product increased$43.0 million , or 67% to$105.8 million in 2022 from$62.7 million in 2021 due to an increase in both the number of consumers completing request forms and the revenue earned per consumer. While we believe our three reportable segments have generally recovered from the impacts of the ongoing COVID-19 pandemic, we are continuously monitoring the impacts of the pandemic on the economy and any potential future impacts to our segment revenue. Cost of revenue Cost of revenue consists primarily of costs associated with compensation and other employee-related costs (including stock-based compensation) relating to internally-operated customer call centers, third-party customer call center fees, credit scoring fees, credit card fees, website network hosting, and server fees.
Cost of revenue remained relatively consistent in 2022 compared to 2021.
Cost of revenue as a percentage of revenue increased to 6% in 2022 compared to
5% in 2021.
Selling and marketing expense
Selling and marketing expense consists primarily of advertising and promotional expenditures and compensation and other employee-related costs (including stock-based compensation) for personnel engaged in sales or marketing functions. Advertising and promotional expenditures primarily include online marketing, as well as television, print, and radio spending. Advertising production costs are expensed in the period the related ad is first run. The$71.8 million decrease in selling and marketing expense in 2022 compared to 2021 was primarily due to the decreases in advertising and promotional expense discussed below. Additionally, compensation and benefits decreased$2.4 million in 2022 compared to 2021. 40
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Advertising and promotional expense is the largest component of selling and
marketing expense, and is comprised of the following:
Year Ended December 31, 2022 vs. 2021
$ %
2022 2021 Change Change
(Dollars in thousands)
Online $ 614,369 $ 687,976 $ (73,607) (11) %
Broadcast 16,654 8,738 7,916 91 %
Other 16,301 19,925 (3,624) (18) %
Total advertising and promotional expense $ 647,324 $ 716,639 $ (69,315) (10) %
In the periods presented, advertising and promotional expenses are equivalent to
the non-GAAP measure variable marketing expense. See Variable Marketing Expense
and Variable Marketing Margin below for additional information.
Revenue is primarily driven by Network Partner demand for our products, which is
matched to corresponding consumer requests. We adjust our selling and marketing
expenditures dynamically in relation to anticipated revenue opportunities in
order to ensure sufficient consumer inquiries to profitably meet such demand. An
increase in a product's revenue is generally met by a corresponding increase in
marketing spend, and conversely a decrease in a product's revenue is generally
met by a corresponding decrease in marketing spend. This relationship exists for
our Home, Consumer, and Insurance segments.
We adjusted our advertising expenditures in 2022 compared to 2021 in response to
changes in Network Partner demand on our marketplace. We will continue to adjust
selling and marketing expenditures dynamically in response to anticipated
revenue opportunities.
General and administrative expense
General and administrative expense consists primarily of compensation and other
employee-related costs (including stock-based compensation) for personnel
engaged in finance, legal, tax, corporate information technology, human
resources and executive management functions, as well as facilities and
infrastructure costs and fees for professional services.
General and administrative expense decreased in 2022 compared to 2021, primarily due to decreases in compensation and benefits, facilities, and professional fees expense of$13.4 million ,$1.6 million , and$1.1 million , respectively. This was partially offset by increases in technology, fees and charges, travel and entertainment, and other tax expense of$5.6 million ,$2.0 million ,$1.5 million , and$1.5 million , respectively. Additionally, losses on the disposal of assets increased$3.1 million in 2022 compared to 2021.
Non-cash compensation expense, included in total compensation and benefits noted
above, within general and administrative expense decreased in 2022, which
resulted in an increase in net income from continuing operations in 2022
compared to 2021. For additional information, see Note-14-Stock-Based
Compensation in the notes to the consolidated financial statements included
elsewhere in this report. Non-cash compensation expense is excluded from
Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization
("Adjusted EBITDA"), as discussed below.
General and administrative expense as a percentage of revenue increased to 15%
in 2022 from 14% in 2021.
Product development
Product development expense consists primarily of compensation and other
employee-related costs (including stock-based compensation) and third-party
labor costs that are not capitalized, for employees and consultants engaged in
the design, development, testing, and enhancement of technology.
Product development expense increased in 2022 compared to 2021 as we continued to invest in internal development of new and enhanced features, functionality and business opportunities that we believe will enable us to better and more fully serve consumers andNetwork Partners .
Depreciation
The increase in depreciation expense in 2022 compared to 2021 was primarily the
result of higher investment in internally developed software in recent years, to
support the growth of our business in addition to depreciation on new assets
related to our principal executive offices which we moved into in mid-2021.
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Amortization of Intangibles
The decrease in amortization of intangibles in 2022 compared to 2021 was due to
certain intangible assets associated with our recent business acquisitions
becoming fully amortized.
Contingent consideration
During 2022, we did not record contingent consideration expense. All earnouts
were completed prior to 2022.
During 2021, we recorded aggregate contingent consideration gains of
payment related to the QuoteWizard acquisition for which the earnout period
ended in 2021.
Restructuring and severance
During 2022, we completed workforce reductions in each of the first, second, and fourth quarters of approximately 75 employees, 25 employees, and 50 employees, respectively. We incurred total expense of$4.4 million consisting of employee separation costs of$3.3 million and non-cash compensation expense of$1.1 million due to the accelerated vesting of certain equity awards. All employee separation costs are expected to be paid by the third quarter of 2023.
Interest expense
Interest expense decreased in 2022 compared to 2021 primarily due to the
adoption of Accounting Standards Update ("ASU") 2020-06 on January 1, 2022 ,
whereby we derecognized the remaining debt discounts on the 2022 Notes and 2025
Notes and therefore no longer recognize any amortization of debt discounts as
interest expense, partially offset by an increase in interest from our Term Loan
Facility. See Note-2 Significant Accounting Policies in the notes to the
consolidated financial statements included elsewhere in this report for
additional information.
Other Income
Other income for 2022 primarily consists of dividend income. During 2021, we sold a portion of our investment in Stash and realized a gain of$27.9 million . Additionally, we recorded unrealized gains of$95.4 million as a result of an adjustment to the fair value of the Stash equity securities still held by us based on observable market events. Income tax expense Year Ended December 31, 2022 2021 (in thousands, except percentages) Income tax expense $ (133,019)$ (11,298) Effective tax rate (242.2) % 13.4 % For 2022, the effective tax rate varied from the federal statutory rate of 21% primarily due to expense of$139.4 million to record a full valuation allowance against our net deferred tax assets. See Note-15 Income Taxes in the notes to the consolidated financial statements included elsewhere in this report for additional information on the valuation allowance. For 2021, the effective tax rate varied from the federal statutory rate of 21% in part due to the benefit derived from excess tax deductions from exercise of stock options of$11.7 million , including state taxes and from research and experimentation tax credits of$3.2 million , partially offset by expense due to nondeductible executive compensation of$3.1 million and incremental valuation allowance on state net operating losses of$0.6 million , primarily due to state legislative changes. Discontinued Operations The results of discontinued operations include the results of the LendingTree Loans business formerly operated by our wholly-owned subsidiary, HLC. The sale of substantially all of the assets of HLC, including the LendingTree Loans business, was completed onJune 6, 2012 . HLC filed a petition under Chapter 11 of the United States Bankruptcy Code onJuly 21, 2019 , which was converted to Chapter 7 of the United States Bankruptcy Code onSeptember 16, 2019 . As a result of the voluntary bankruptcy petition, as of the initialJuly 21, 2019 bankruptcy petition filing date, HLC and its consolidated subsidiary were deconsolidated from LendingTree's consolidated financial statements. The effect of such deconsolidation was the elimination of the consolidated assets and liabilities of HLC (and its consolidated subsidiary) from LendingTree's consolidated balance sheets.
During the HLC bankruptcy, a bar date for claims against HLC was set,
establishing a deadline for all HLC's creditors to assert any claim they may
have had against HLC. Distributions were made to holders of allowed claims
deemed timely filed.
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After all distributions to creditors were made andHLC's Chapter 7 bankruptcy estate was fully administered, the HLC bankruptcy case was closed onJuly 14, 2021 .
The results of discontinued operations include litigation settlements and
contingencies and legal fees associated with legal proceedings against
business or the HLC bankruptcy filing.
See Note 22-Discontinued Operations in the notes to the consolidated financial
statements included elsewhere in this report for more information, including the
accounting effect of HLC's bankruptcy filing on our consolidated financial
statements.
Segment Profit
Year Ended December 31, 2022 vs. 2021
$ %
2022 2021 Change Change
(Dollars in thousands)
Home $ 103,084 $ 153,352 $ (50,268) (33) %
Consumer 174,578 143,497 31,081 22 %
Insurance 91,834 113,464 (21,630) (19) %
Other (555) 53 (608) 1,147 %
Segment profit $ 368,941 $ 410,366 $ (41,425) (10) %
Segment profit is our primary segment operating metric. Segment profit is
calculated as segment revenue less segment selling and marketing expenses
attributed to variable costs paid for advertising, direct marketing and related
expenses that are directly attributable to the segments' products. See Note
23-Segment Information in the notes to the consolidated financial statements
included elsewhere in this report for additional information on segments and a
reconciliation of segment profit to pre-tax income from continuing operations.
HOME
Revenue in the Home segment decreased 34% to$289.4 million in 2022 from 2021, with segment profit of$103.1 million in 2022, a decrease of 33% from 2021. Our Home segment margin (segment profit divided by segment revenue) remained relatively consistent, at 36% in 2022 compared to 35% in 2021. Within Home, our core mortgage business generated revenue of$179.4 million in 2022, down 52% from 2021, as demand for refinancing transactions diminished throughout the year, with almost no outstanding mortgages later in the year carrying a higher rate than current loan offerings. The 30-year mortgage interest rates increased from a monthly average of 3.1% inDecember 2021 to a monthly average of 6.36% inDecember 2022 , according to Freddie Mac Near record home prices coupled with higher mortgage rates led to a 17% decrease in existing home sales in 2022 compared to 2021. Our mortgage volume decreased 47% and revenue per lead decreased 10% in 2022 compared to 2021. The volume mix in our mortgage business was close to evenly balanced between refinance at 54% and purchase loans at 46% of total volume in 2022 as compared to refinance at 67% and purchase at 33% of total volume in 2021. Revenue from our home equity loan product of$105.8 million in 2022 increased 69% from 2021, as homeowners in theU.S. enjoy near record levels of equity to borrow against for other debt repayments and to finance home improvements. Home equity revenue per lead increased 13% in 2022 compared to 2021 as we were able to capture 49% more volume in 2022 compared to 2021. During the fourth quarter of 2022, we discontinued our reverse mortgage offering to better focus resources on supporting our traditional lendingNetwork Partners going forward. The outlook for the mortgage industry is a sustained period of lower refinance demand, with theMortgage Bankers Association forecasting a 37% decline in refinance originations in 2023 after falling 76% in 2022. We have been actively engaged with ourNetwork Partners in mortgage to increase purchase lead conversion rates, and are focusing on this metric internally as a key growth priority for the segment this year. We expect home equity will continue to generate the majority of our Home revenue in 2023, as ourNetwork Partners have leaned on the favorable environment for cash-out transactions to maintain loan officer productivity. CONSUMER
Growth in our Consumer segment continued, with revenue of
2022, an increase of 20% from 2021, and segment profit of
2022, an increase of 22% from 2021. Our Consumer segment margin remained
consistent, at 44% in 2022 compared to 43% in 2021.
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Revenue from our personal loan product of$144.1 million increased 31% in 2022 compared to 2021 as debt consolidation was attractive with consumer credit card balances continuing to rise. Many of our partners have tightened their underwriting criteria to reduce portfolio risk given recession fears, focusing their customer acquisition activity on consumers with somewhat higher credit quality. Credit card revenue increased to$100.2 million or 7.3% in 2022 compared to 2021. Revenue per click grew 17% in 2022 compared to 2021 while we experienced an 8% decrease in the number of clicks. Operational improvements are being implemented and improving credit card results is a core priority for the company in 2023. Small business achieved revenue growth of 41% in 2022 from 2021. In the second half of 2022 we continue to focus on lender performance to grow originations and improve conversion rates. By optimizing our marketing mix, we have aimed to increase the quality of our leads which benefits lenders and increases profitability. Our ability to efficiently steer borrowers to the most appropriate lender on our network with our concierge model continues to positively impact results. Going forward we are implementing technology improvements to automate capture of applicant financial data to enhance the borrower experience and increase lender match rate.
INSURANCE
The auto and home insurance industry in 2022 was impacted by persistent industry headwinds, supply chain issues, rising accident severity and frequency, and hurricane losses in the back half of the year. This difficult operating environment for our carrier partners caused an 8% decrease in revenue in our Insurance segment to$299.1 million in 2022, from 2021. Segment profit of$91.8 million in 2022 decreased 19% from 2021. Our Insurance segment margin decreased to 31% in 2022 compared to 35% in 2021.
Variable Marketing Expense and Variable Marketing Margin
We report variable marketing expense and variable marketing margin as supplemental measures to GAAP. These related measures are the primary metrics by which we measure the effectiveness of our marketing efforts. Variable marketing expense represents the portion of selling and marketing expense attributable to variable costs paid for advertising, direct marketing, and related expenses, and excludes overhead, fixed costs, and personnel-related expenses. Variable marketing margin is a measure of the efficiency of our operating model, measuring revenue after subtracting variable marketing expense. Our operating model is highly sensitive to the amount and efficiency of variable marketing expenditures, and our proprietary systems are able to make rapidly changing decisions concerning the deployment of variable marketing expenditures (primarily but not exclusively online and mobile advertising placement) based on proprietary and sophisticated analytics. We believe that investors should have access to the same set of tools that we use in analyzing our results. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP but should not be considered a substitute for or superior to GAAP results. We provide and encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures discussed below. Variable marketing expense is defined as the expense attributable to variable costs paid for advertising, direct marketing and related expenses, and excluding overhead, fixed costs and personnel-related expenses. The majority of these variable advertising costs are expressly intended to drive traffic to our websites and these variable advertising costs are included in selling and marketing expense on our consolidated statements of operations and comprehensive income (loss). Variable marketing margin is defined as revenue less variable marketing expense.
The following shows the calculation of variable marketing margin:
Year Ended December 31,
2022 2021
(in thousands)
Revenue $ 984,992 $ 1,098,499
Variable marketing expense 647,324 716,639
Variable marketing margin $ 337,668 $ 381,860
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Below is a reconciliation of selling and marketing expense, the most directly
comparable GAAP measure, to variable marketing expense:
Year Ended December 31,
2022 2021
(in thousands)
Selling and marketing expense $ 702,238 $ 773,990
Non-variable selling and marketing expense (54,914) (57,351)
Variable marketing expense $ 647,324 $ 716,639
The following is a reconciliation of net (loss) income from continuing
operations, the most directly comparable GAAP measure, to variable marketing
margin:
Year Ended December 31,
2022 2021
(in thousands)
Net (loss) income from continuing operations $ (187,946) $ 73,138
Adjustments to reconcile to variable marketing margin:
Cost of revenue
57,769 57,297 Non-variable selling and marketing expense (1) 54,914 57,351 General and administrative expense 152,377 153,472 Product development 55,553 52,865 Depreciation 20,095 17,910 Amortization of intangibles 25,306 42,738 Change in fair value of contingent consideration - (8,249) Restructuring and severance 4,428 53 Litigation settlements and contingencies (18) 392 Interest expense, net 26,014 46,867 Other income (3,843) (123,272) Income tax expense 133,019 11,298 Variable marketing margin$ 337,668 $ 381,860
(1) Represents the portion of selling and marketing expense not attributable to variable
costs paid for advertising, direct marketing and related expenses. Includes overhead,
fixed costs and personnel-related expenses.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
We report Adjusted EBITDA as a supplemental measure to GAAP. This measure is the primary metric by which we evaluate the performance of our businesses, on which our marketing expenditures and internal budgets are based and by which, in most years, management and many employees are compensated. We believe that investors should have access to the same set of tools that we use in analyzing our results. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP but should not be considered a substitute for or superior to GAAP results. We provide and encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures discussed below.
Definition of Adjusted EBITDA
We report Adjusted EBITDA as net income from continuing operations adjusted to exclude interest, income tax, amortization of intangibles and depreciation, and to further exclude (1) non-cash compensation expense, (2) non-cash impairment charges, (3) gain/loss on disposal of assets, (4) gain/loss on investments (5) restructuring and severance expenses, (6) litigation settlements and contingencies, (7) acquisitions and dispositions income or expense (including with respect to changes in fair value of contingent consideration), (8) contributions to theLendingTree Foundation , and (9) one-time items. Adjusted EBITDA has certain limitations in that it does not take into account the impact to our statement of operations of certain expenses, including depreciation, non-cash compensation and acquisition-related accounting. We endeavor to compensate for the limitations of the non-GAAP measures presented by also providing the comparable GAAP measures with 45
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equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-GAAP measures. These non-GAAP measures may not be comparable to similarly titled measures used by other companies.
One-Time Items
Adjusted EBITDA is adjusted for one-time items, if applicable. Items are considered one-time in nature if they are non-recurring, infrequent or unusual and have not occurred in the past two years or are not expected to recur in the next two years, in accordance withSEC rules. One-time items for the year endedDecember 31, 2022 consisted of the$1.5 million franchise tax caused by the equity investment gain in Stash. There are no adjustments for one-time items for the year endedDecember 31, 2021 .
Non-Cash Expenses that are Excluded from Adjusted EBITDA
Non-cash compensation expense consists principally of expense associated with grants of restricted stock, restricted stock units and stock options, some of which awards have performance-based vesting conditions. These expenses are not paid in cash, and we include the related shares in our calculations of fully diluted shares outstanding. Upon settlement of restricted stock units, exercise of certain stock options or vesting of restricted stock awards, the awards may be settled, on a net basis, with us remitting the required tax withholding amount from our current funds.
Amortization of intangibles are non-cash expenses relating primarily to
intangible assets acquired through acquisitions. At the time of an acquisition,
the intangible assets of the acquired company, such as purchase agreements,
technology and customer relationships, are valued and amortized over their
estimated lives.
The following table is a reconciliation of net (loss) income from continuing
operations, the most directly comparable GAAP measure, to Adjusted EBITDA.
Year Ended December 31,
2022 2021
(in thousands)
Net (loss) income from continuing operations
73,138
Adjustments to reconcile to Adjusted EBITDA: Amortization of intangibles 25,306 42,738 Depreciation 20,095 17,910 Restructuring and severance 4,428 53 Loss on impairments and disposal of assets 6,590
3,465
Gain on investments -
(123,272)
Non-cash compensation expense 58,541
68,555
Franchise tax caused by equity investment gain 1,500
-
Contribution toLendingTree Foundation 500
-
Change in fair value of contingent consideration -
(8,249)
Acquisition expense 277
1,796
Litigation settlements and contingencies (18) 392 Interest expense, net 26,014 46,867 Dividend income (3,842) - Income tax expense 133,019 11,298 Adjusted EBITDA$ 84,464 $ 134,691
Financial Position, Liquidity and Capital Resources
For information on fiscal 2020 results and similar comparisons, see Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations-Financial Position, Liquidity and Capital Resources of our Form 10-K
for the fiscal year ended
General
As of
compared to
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We expect our cash and cash equivalents and cash flows from operations to be sufficient to fund our operating needs for the next twelve months and beyond. Our credit facility described below is an additional potential source of liquidity. We will continue to monitor economic impacts caused by the challenging interest rate environment, high levels of inflation, and lingering effects of the COVID-19 pandemic on our liquidity and capital resources.
Notable transactions affecting cash and cash equivalents during the reported
periods are as follows:
2022
In 2022, we repurchased an aggregate of 379,895 shares of our common stock
pursuant to a stock repurchase program for
In the first quarter of 2022, we acquired an equity interest in EarnUp for
financial statements included elsewhere in this report for additional
information on the equity interest.
2021
In 2021, we repurchased an aggregate of 334,253 shares of our common stock
pursuant to a stock repurchase program for
In the first quarter of 2021, we acquired an additional equity interest in Stash for$1.2 million . In the fourth quarter of 2021, we sold a portion of our Stash equity securities to a third party for$46.3 million . See Note 8-Equity Investment in the notes to the consolidated financial statements included elsewhere in this report for additional information on the equity interest in Stash. Credit Facility OnSeptember 15, 2021 , we entered into a credit agreement (the "Credit Agreement"), consisting of a$200.0 million Revolving Facility, which matures onSeptember 15, 2026 , and a$250.0 million delayed draw Term Loan Facility, which matures onSeptember 15, 2028 . The proceeds of the Revolving Facility can be used to finance working capital, for general corporate purposes, and any other purpose not prohibited by the Credit Agreement. We drew$250.0 million under the Term Loan Facility onMay 31, 2022 and used$170.2 million of the proceeds to settle the Company's 2022 Notes, including interest. The remaining proceeds of$79.8 million may be used for general corporate purposes and any other purposes not prohibited by the Credit Agreement. As ofFebruary 27, 2023 , we have outstanding$248.8 million under the Term Loan Facility, a$0.2 million letter of credit under the Revolving Facility, and the remaining borrowing capacity is$199.8 million .
For additional information on the Credit Facility, see Note 16-Debt in the notes
to the consolidated financial statements included elsewhere in this report.
Operating Leases
We have operating lease obligations associated with office space in various cities across the country and office equipment. Our principal executive office is located inCharlotte, North Carolina under an approximate 15-year lease that commenced in the second quarter of 2021. We anticipate cash payments under operating lease obligations of$13.1 million in 2023. See Note 12-Leases in the notes to the consolidated financial statements included elsewhere in this report for more information.
Cash Flows from Continuing Operations
Our cash flows attributable to continuing operations are as follows:
Year Ended December 31,
2022 2021
(in thousands)
Net cash provided by operating activities $ 42,974 $ 131,256
Net cash (used in) provided by investing activities $ (27,876) $ 10,067
Net cash provided by (used in) financing activities $ 32,536
Cash Flows from Operating Activities
Our largest source of cash provided by our operating activities is revenues
generated by our products. Our primary uses of cash from our operating
activities include advertising and promotional payments. In addition, our uses
of cash from operating
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activities include compensation and other employee-related costs, other general
corporate expenditures, litigation settlements and contingencies, certain
contingent consideration payments, and income taxes.
Net cash provided by operating activities attributable to continuing operations decreased in 2022 from 2021 primarily due to a decrease in revenue, partially offset by a corresponding decrease in selling and marketing expense. Additionally, cash from changes in working capital decreased primarily as a result of changes in accounts payable, accrued expenses and other current liabilities, and income taxes receivable, partially offset by favorable changes in accounts receivable.
Cash Flows from Investing Activities
Net cash used in investing activities attributable to continuing operations in
2022 of
investment in EarnUp and another small investment, as well as capital
expenditures of
software.
Net cash provided by investing activities attributable to continuing operations in 2021 of$10.1 million consisted of$46.3 million in proceeds from a partial sale of our equity interest in Stash partially offset by$1.2 million for the purchase of an additional equity interest in Stash and capital expenditures of$35.1 million primarily related to internally developed software.
Cash Flows from Financing Activities
Net cash provided by financing activities attributable to continuing operations in 2022 of$32.5 million consisted primarily of$250.0 million in proceeds from the term loan and the repayment of$169.7 million to settle our 2022 Notes discussed in the "Credit Facility" section above,$43.0 million for the repurchase of our stock,$3.4 million in withholding taxes paid upon surrender of shares to satisfy obligations on equity awards, net of proceeds from the exercise of stock options and$1.3 million repayment of the term loan. Net cash used in financing activities attributable to continuing operations in 2021 of$63.3 million consisted primarily of$40.0 million for the repurchase of our stock,$14.4 million in withholding taxes paid upon surrender of shares to satisfy obligations on equity awards, net of proceeds from the exercise of stock options, as well as$6.4 million for the payment of debt issuance costs and$2.5 million paid for the original issue discount on the Term Loan Facility.
Critical Accounting Policies and Estimates
The following disclosure is provided to supplement the description of our accounting policies contained in Note 2-Significant Accounting Policies in the notes to the consolidated financial statements included elsewhere in this report in regard to significant areas of judgment. This disclosure includes accounting policies related to both continuing operations and discontinued operations. Management is required to make certain estimates and assumptions during the preparation of the consolidated financial statements in accordance with generally accepted accounting principles. 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. Because of the size of the financial statement elements to which they relate, some of our accounting policies and estimates have a more significant impact on our consolidated financial statements than others. A discussion of some of our more significant accounting policies and estimates follows.
Income Taxes
Estimates of current and deferred income taxes and the significant items giving rise to the deferred assets and liabilities are shown in Note 15-Income Taxes in the notes to the consolidated financial statements included elsewhere in this report, and reflect management's assessment of actual future taxes to be paid on items reflected in the consolidated financial statements, giving consideration to both timing and the probability of realization. Actual income taxes could vary from these estimates due to future changes in income tax law, state income tax apportionment or the outcome of any review of our tax returns by theIRS and/or state tax authorities, as well as actual operating results that may vary significantly from anticipated results. We also recognize liabilities for uncertain tax positions based on the two-step process prescribed by the accounting guidance for uncertainty in income taxes. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. This measurement step is inherently difficult and requires subjective estimations of such amounts to determine the probability of various possible outcomes. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes. 48
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A valuation allowance is provided on deferred tax assets if it is determined
that it is "more likely than not" that the deferred tax asset will not be
realized.
During the third quarter of 2022, we established a full valuation allowance against our net deferred tax assets due to historical cumulative pre-tax losses and continued pre-tax losses in the quarter. We regularly review our deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing taxable temporary differences, and tax planning strategies. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. In determining the amount of the valuation allowance, we considered the scheduled reversal of deferred tax liabilities. We will maintain a full valuation allowance on net deferred tax assets until there is sufficient evidence to support the reversal of some or all of the allowance. Should there be a change in the valuation allowance in the future, the income tax provision would increase or decrease in the period in which the allowance is changed. The indefinite carryforward period for certain deferred tax assets means that indefinite-lived deferred tax liabilities can be considered as support for realization of such deferred tax assets including postDecember 31, 2017 net operating loss carryovers, which can affect the need to record or maintain a valuation allowance for deferred tax assets. During 2022, we incurred income tax expense of$139.4 million related to the valuation allowance. AtDecember 31, 2022 , we maintain a valuation allowance of$145.4 million against our net deferred tax assets. AtDecember 31, 2021 and 2020, we recorded a partial valuation allowance of$6.0 million and$5.8 million , respectively, primarily related to state net operating losses, which we do not expect to be able to utilize prior to expiration.
Stock-Based Compensation
The forms of stock-based awards granted to our employees are principally
restricted stock units ("RSUs"), RSUs with performance conditions, stock
options, and employee stock purchases related to the Employee Stock Purchase
Plan ("Employee Stock Purchase Rights"). Further, stock options with market
conditions, restricted stock awards ("RSAs") with performance conditions and
RSAs with market conditions have been granted to our Chairman and Chief
Executive Officer. The value of RSUs is measured at their grant dates as the
fair value of common stock and amortized ratably as non-cash compensation
expense over the vesting term. The value of stock options issued and Employee
Stock Purchase Rights are generally estimated using a Black-Scholes option
pricing model. The value of performance-based grants is measured at their grant
dates and recognized as non-cash compensation expense, considering the
probability of the targets being achieved. Performance-based grants with a
market condition are generally valued using a Monte Carlo simulation model. If
an award is modified, we determine if the modification requires a new
calculation of fair value or change in the vesting term of the award. See
Note 14-Stock-Based Compensation in the notes to the consolidated financial
statements included elsewhere in this report for additional information on
assumptions and inputs to the fair value determination of stock-based awards.
Evaluation of Goodwill Impairment
We test goodwill annually for impairment as ofOctober 1 , or more frequently upon the occurrence of certain events or substantive changes in circumstances. As part of our annual impairment testing of goodwill, we may elect to assess qualitative factors as a basis for determining whether it is necessary to perform the traditional quantitative impairment testing. If our assessment of these qualitative factors indicates that it is not more likely than not that the fair value of the reporting unit or indefinite-lived intangible asset is less than its carrying value, then no further testing is required. Otherwise, the goodwill reporting unit must be quantitatively tested for impairment. Performing the quantitative test for goodwill impairment that compares the reporting unit fair value with its carrying value using a discounted cash flow and market analysis requires the exercise of significant judgments, including judgments about appropriate discount rates, perpetual growth rates, including revenue, the amount and timing of expected future cash flows, and market multiples. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. AtJune 30, 2022 , we assessed the qualitative factors in our impairment testing of goodwill and determined that the effects of the challenging interest rate environment, consumer price inflation, and the decline in our market capitalization required a quantitative impairment test be performed. The quantitative goodwill impairment test found that the fair value of each reporting unit exceeded its carrying amount, indicating no goodwill impairment. We will monitor the recovery of the Insurance reporting unit and the Mortgage reporting unit. The property and casualty auto insurance industry is experiencing challenges caused by inflation, supply chain challenges, and the rising severity and frequency of claims. Additionally, the significant increase in mortgage interest rates have had a negative impact on our Mortgage reporting unit. Changes in the timing of the recovery compared to current expectations could cause an impairment to the Insurance or Mortgage reporting units.
The value of goodwill subject to assessment for impairment at
is
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Recoverability of Long-Lived Assets
We review the carrying value of all long-lived assets, primarily property and equipment, definite-lived intangible assets and operating lease right-of-use assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may be impaired. Impairment is considered to have occurred whenever the carrying value of a long-lived asset cannot be recovered from cash flows that are expected to result from the use and eventual disposition of the asset. This recoverability test requires us to make assumptions and judgments related to factors used in a calculation of undiscounted cash flows, including, but not limited to, management's expectations for future operations and projected cash flows. The key assumptions used in this calculation include Adjusted EBITDA, the remaining useful lives of the primary cash flow generating asset in the asset group and, to a lesser extent, the deduction of capital expenditures and taxes paid in cash to arrive at net cash flows.
Subsequent to the adoption of ASU 2018-15 in the first quarter of 2020,
capitalized implementation costs incurred in a hosting arrangement that is a
service contract are also allocated to and included within long-lived asset
groups tested for recoverability.
The combined value of long-lived assets and capitalized implementation costs
incurred in a hosting arrangement that is a service contract subject to
assessment for impairment is
Business Acquisitions
When we acquire businesses, we allocate the purchase price to tangible assets and liabilities and identifiable intangible assets acquired at their acquisition date fair values. Any residual purchase price is recorded as goodwill. We also estimate the fair value of any contingent consideration using Level 3 unobservable inputs. Our estimates of fair value are based upon assumptions believed to be reasonable but which are uncertain and involve significant judgments by management. We reassess the fair value of contingent consideration quarterly until the contingency is resolved, and changes in the fair value are recorded in operating income in the consolidated statements of operations and comprehensive income (loss).Equity Investment Our equity securities do not have a readily determinable fair value and, upon acquisition, we elected the measurement alternative to value these securities. Accordingly, the equity securities will be carried at cost less impairment, if any, and subsequently measured to fair value upon observable price changes in an orderly transaction for the identical or similar investments with any gains or losses recorded to the consolidated statement of operations and comprehensive income.
The carrying value of our equity investment at
million
New Accounting Pronouncements
See Note 2-Significant Accounting Policies in the notes to the consolidated
financial statements included elsewhere in this report for a description of
recent accounting pronouncements.
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