-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HcLbOLROrQ9y2BkRSRC7kIO14BBrQmwlUHy11rJv/bNvcvt3YZ1xrc6VU58fjchm LikP0/SSkG8s797gabXgkw== 0000950144-02-010990.txt : 20021031 0000950144-02-010990.hdr.sgml : 20021031 20021031172215 ACCESSION NUMBER: 0000950144-02-010990 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20021022 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021031 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LENDINGTREE INC CENTRAL INDEX KEY: 0001096479 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 251795344 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-29215 FILM NUMBER: 02805527 BUSINESS ADDRESS: STREET 1: 11115 RUSHMORE DRIVE STREET 2: . CITY: CHARLOTTE STATE: NC ZIP: 28277 MAIL ADDRESS: STREET 1: 11115 RUSHMORE DRIVE STREET 2: . CITY: CHARLOTTE STATE: NC ZIP: 28277 8-K 1 g78982e8vk.htm LENDINGTREE, INC. LendingTree, Inc.
 

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): October 22, 2002

LENDINGTREE, INC.

(Exact name of registrant as specified in charter)
         
Delaware   000-29215   25-1795344
 
 
(State or other jurisdiction
of incorporation)		   (Commission
file number) 		  (IRS Employer
Identification Number)
     
11115 Rushmore Drive, Charlotte, North Carolina   28277
 
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (704) 541-5351

 

 

Item 5. Other Events.

     On October 22, 2002, LendingTree issued a press release announcing its financial results for the third quarter 2002. See Exhibit 99.1.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

     (a)  Financial Statements. Not applicable.

     (b)  Pro Forma Financial Information. Not applicable.

     (c)  Exhibits. The following exhibit is filed herewith:

     
99.1   Press release issued on October 22, 2002.

2

 

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

     
    LENDINGTREE, INC.
 
 
 
Date: October 22, 2002   By: /s/ Keith B. Hall
   
    Name: Keith B. Hall
Title: Senior Vice President & Chief Financial Officer

3

 

SECURITIES AND EXCHANGE COMMISSION
Washington, DC

EXHIBITS

CURRENT REPORT
ON
FORM 8-K

     
Date of Event Reported:   Commission File No:
October 22, 2002   000-29215

LENDINGTREE, INC.

EXHIBIT INDEX

             
Exhibit No.   Exhibit Description        
 
       
99.1   Press release issued on October 22, 2002.

4 EX-99.1 3 g78982exv99w1.txt PRESS RELEASE ISSUED ON OCTOBER 22, 2002 EXHIBIT 99.1 FOR IMMEDIATE RELEASE Contacts: Keith Hall Brian Regan Deborah Roth Senior Vice President Vice President of Senior Director, and CFO Finance Corporate Communications (704) 944-8580 (704) 944-8531 (704) 944-8571 khall@lendingtree.com bregan@lendingtree.com droth@lendingtree.com
LendingTree Reports Earnings Per Share of $0.12 for Third Quarter 2002 o FOR THE FIRST TIME SINCE INCEPTION, COMPANY REPORTS POSITIVE EARNINGS PER SHARE (EPS). DILUTED EPS OF $0.12 IS FAVORABLE TO PREVIOUSLY REVISED GUIDANCE AND TO THE PRIOR QUARTER BY $0.06 AND $0.17 PER SHARE, RESPECTIVELY. o NET INCOME AVAILABLE TO COMMON SHAREHOLDERS OF $3.2 MILLION IS GREATER THAN THE PREVIOUS QUARTER AND THE THIRD QUARTER OF 2001 BY $4.3 MILLION AND $6.9 MILLION, RESPECTIVELY. o RECORD THIRD QUARTER REVENUE OF $30.9 MILLION INCREASES 26% FROM PREVIOUS QUARTER AND 80% OVER THE SAME QUARTER OF 2001. o VALUE OF CLOSED LOANS FACILITATED BY THE LENDINGTREE EXCHANGE IS A RECORD $5.8 BILLION, AN INCREASE OF 33% OVER THE PREVIOUS QUARTER, BRINGING THE YEAR-TO-DATE VALUE OF LOANS CLOSED TO $14.0 BILLION. o COMPANY REVISES UPWARD ITS FOURTH QUARTER 2002 AND FULL YEAR 2003 GUIDANCE, PROJECTING FULL YEAR DILUTED EPS OF $0.07 IN 2002 AND $0.40 IN 2003. CHARLOTTE, N.C., OCTOBER 22, 2002 -- LendingTree, Inc. (NASDAQ: TREE), the leading online lending exchange, today announced financial results for its third quarter ended September 30, 2002, posting its first ever positive earnings per share (EPS). During the quarter, the Company earned $0.12 per diluted share, favorable to its previously improved guidance by $0.06 per share. The Company also reported another record quarter for revenue, transaction volume, and closings for both its lending and realty services exchanges, and revised its financial guidance upward for the remainder of 2002 and 2003. For the quarter, the Company earned revenue of $30.9 million, which was $6.5 million, or 26%, more than the second quarter of 2002 and $13.7 million, or 80%, higher than the third quarter of 2001. Net income available to common shareholders for the third quarter was $3.2 million, or $0.12 per diluted share, in accordance with generally accepted accounting principles (GAAP). The third quarter profit was $4.3 million favorable to the previous quarter's loss and was $6.9 million favorable to the same quarter in 2001. The closing rates for the Company's lending exchange in the third quarter improved for each loan product versus the second quarter, resulting in a record average close rate of 16.1% in the third quarter, versus 14.0% in the second quarter and 11.9% in the same quarter last year. During the quarter, the Company facilitated $5.8 billion in closed loans, an increase of 33% over the second quarter and 77% more than the amount closed during the same quarter last year. The LendingTree exchange has now facilitated $14.0 billion in closed loans through the first nine months in 2002. Doug Lebda, founder and CEO, stated, "Our third quarter financial results represent a major milestone in our Company's history. Our scaleable business model continues to thrive from increased consumer loan and real estate demand and, equally important, from the expanded capacity of our lending exchange. Our efforts to add lenders and improve automation, along with a number of other new initiatives, have resulted in record capacity levels. As the leading online lending exchange, we now have 189 participating lenders, representing an increase of nearly 50% over last year. Our strong brand awareness, coupled with the low interest rate environment, once again attracted a record number of consumers to our lending exchange in the third quarter. Unlike previous refinance markets, we were able to facilitate a greater number of mortgage refinancing requests this quarter due to our expanded capacity. Moreover, higher capacity has benefited all loan products, with home equity, auto, and personal transmitted loan requests each rising by at least 18% over the previous quarter." Lebda continued, "While our management team and our employees are certainly pleased with our accomplishments to date, we are even more excited about further potential growth. In spite of our progress since inception, we estimate our market share to be less than 1% of the total consumer lending market in the United States. Due to our brand strength, continued consumer adoption of online lending, the favorable trend of repeat customers, and the opportunity to expand into new channels, we believe we are well positioned to capture greater market share. We believe these investments will continue to deliver positive returns in the years ahead." KEITH HALL, SENIOR VICE PRESIDENT AND CFO, STATED, "SCALABILITY IS FUNDAMENTAL TO THE SUCCESS OF AN EXCHANGE BUSINESS MODEL. AS AN EXCHANGE, WE HAVE BEEN ABLE TO FOCUS ON SCALEABLE TECHNOLOGY AND OPERATIONAL EFFICIENCY, WHILE AVOIDING UNNECESSARY PAPERWORK AND CONSUMER CREDIT RISK. AS A RESULT, OUR LENDING EXCHANGE BUSINESS CONTINUES TO SHOW IMPROVEMENTS IN OUR CORE OPERATING METRICS ACROSS ALL PRODUCTS, WHILE KEEPING TOTAL OPERATING COSTS STEADY. FOR INSTANCE, OUR SG&A EXPENSE HAS NOT INCREASED PROPORTIONATELY WITH OUR REVENUE, AS THE RATIO OF THE THIRD QUARTER'S SG&A EXPENSE-TO-REVENUE DROPPED TO 25%, DOWN FROM 34% IN THE PREVIOUS QUARTER AND 31% IN THE SAME QUARTER LAST YEAR. GROSS MARGIN FOR THE COMPANY IN THE THIRD QUARTER NEARLY REACHED 85%. DUE TO OUR IMPROVING GROSS MARGIN, TRANSMIT RATES, AND CLOSE RATES, THE TOTAL CONTRIBUTION MARGIN PER TRANSMITTED LOAN REQUEST REACHED A RECORD LEVEL OF $24.48, IMPROVING 9% OVER THE PREVIOUS QUARTER AND 137% OVER THE THIRD QUARTER OF 2001." Hall continued, "At the end of the third quarter, LendingTree had $13.7 million in total cash, and we did not have any balances outstanding under our available credit facilities. During the quarter, we terminated our $2.5 million line of credit with Freddie Mac, as we believed there was little likelihood of utilizing the line based on our revised favorable outlook. Based on our current cash position and expectations for continued positive operating results, we remain confident that we will have more than adequate cash to fund our operating needs for the foreseeable future." BUSINESS OUTLOOK Hall added, "We remain confident with our business outlook. Consequently, we are increasing our guidance for fourth quarter revenue by $4.3 million and fourth quarter EPS by $0.07, as we 2 now expect to earn $0.10 per share. This brings our annual guidance for 2002 up to $106.0 million in revenue and $0.07 in EPS." "We are also revising guidance for 2003, reflecting the continued strength in our core operating metrics, somewhat offset by the anticipated return of the mortgage refinance market to more normal levels. Our 2003 revenue guidance has been revised upward by $5.0 million to $131.0 million. This increase will add $0.07 per share to full year earnings, now expected to be $0.40 per diluted share, up 21% from our previous guidance." THE FOLLOWING INFORMATION IS BASED ON CURRENT EXPECTATIONS. ACTUAL RESULTS MAY DIFFER MATERIALLY. THESE STATEMENTS ARE FORWARD-LOOKING AND DO NOT REFLECT THE POTENTIAL IMPACT OF EVENTS THAT MAY OCCUR AFTER THE DATE OF THIS RELEASE, INCLUDING THE RISKS DESCRIBED BELOW UNDER THE CAPTION "DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS." (all figures in millions, except %, per share and per transmit data)
2002 ACTUAL GUIDANCE 2002 FULL YEAR --------------------------------------- ------- --------------- P&L DATA Q1 Q2 Q3 Q4 ESTIMATES --------- ------- ------- ------- ------- --------------- Revenue LOAN EXCHANGE $ 18.3 $ 20.5 $ 27.5 $ 26.0 $ 92.3 REALTY EXCHANGE $ 1.3 $ 2.7 $ 2.9 $ 2.5 $ 9.4 LEND-X TECHNOLOGY $ 1.6 $ 1.3 $ 0.5 $ 0.8 $ 4.3 ------- ------- ------- ------- ------- Total Revenue $ 21.3 $ 24.5 $ 30.9 $ 29.3 $ 106.0 Gross Margin $ 18.0 $ 20.7 $ 26.2 $ 24.7 $ 89.6 Gross Margin % 84.8% 84.4% 84.6% 84.3% 84.5% Total Operating Expense $ 18.8(1) $ 21.3 $ 22.4 $ 21.6 $ 84.1 ------- ------- ------- ------- ------- Interest Income $ 0.0 $ 0.2 $ 0.0 $ 0.0 $ 0.2 ------- ------- ------- ------- ------- Net (Loss)/Income ($ 0.7)(1) $ (0.4) $ 3.8 $ 3.1 $ 5.8 ======= ======= ======= ======= ======= Dividends and Accretion on Preferred Stock $ 2.1 $ 0.7 $ 0.6 $ 0.6 $ 4.0 ------- ------- ------- ------- ------- Net (Loss)/Income (Attributable)/Available to Common Shareholders ($ 2.8)(1) ($ 1.1) $ 3.2 $ 2.5 $ 1.7 ======= ======= ======= ======= ======= EPS - Diluted ($ 0.15) ($ 0.05) $ 0.12 $ 0.10 $ 0.07 ======= ======= ======= ======= ======= Weighted Average Common Shares- 19.4 20.8 22.2 22.2 21.2 Basic Weighted Average Common Shares - N/A N/A 32.2 32.5 24.8 Diluted (2,3)
3 (1) Includes one-time credit for a revision to an estimate of approximately $0.6 million related to incentive compensation. Excluding this positive adjustment, cash operating expense for the quarter was $17.2 million, net loss was $1.3 million, net loss attributable to common shareholders was $3.4 million, and net loss per basic share was $0.18. (2) For the quarter ended September 30, 2002, diluted weighted average common shares outstanding include 10.0 million weighted average potential common shares. Potential common shares consist of 6.55 million shares issuable upon the assumed conversion of convertible preferred stock and 3.45 million net shares issuable from options and warrants under the treasury stock method. (3) As of September 30, 2002, the Company has 22.3 million common shares issued and outstanding, 6.1 million options and warrants outstanding, and 6.0 million shares of preferred stock outstanding, which were convertible into 6.6 million shares of common stock.
2002 ACTUAL GUIDANCE 2002 --------------------------------------- --------- --------- KEY METRICS Q1 Q2 Q3 Q4 FULL YEAR ----------- --------- --------- --------- --------- --------- Volume Transmitted Loan Requests 382 367 555 475 1,779 (000's) Variable Marketing Expense ($ in $ 9.0 $ 10.3 $ 11.1 $ 11.0 $ 41.4 millions) PER TRANSMIT METRICS: Revenue $ 47.93 $ 55.89 $ 49.48 $ 54.74 $ 51.87 Variable Marketing Exp. $ 23.49 $ 28.17 $ 20.05 $ 23.16 $ 23.29 Cost of Revenue $ 5.21 $ 5.29 $ 4.95 $ 6.57 $ 5.51 --------- --------- --------- --------- --------- Total Contribution Margin $ 19.23 $ 22.43 $ 24.48 $ 25.01 $ 23.07 ========= ========= ========= ========= =========
4 (all figures in millions, except %, per share and per transmit data)
2003 GUIDANCE P&L DATA Q1 Q2 Q3 Q4 FULL YEAR --------- ------- ------- ------- ------- ---------- Revenue LOAN EXCHANGE $ 27.9 $ 28.9 $ 29.9 $ 28.9 $ 115.6 REALTY EXCHANGE $ 2.0 $ 2.9 $ 4.2 $ 4.3 $ 13.4 LEND-X TECHNOLOGY $ 0.5 $ 0.5 $ 0.5 $ 0.5 $ 2.0 ------- ------- ------- ------- ------- Total Revenue $ 30.4 $ 32.3 $ 34.6 $ 33.7 $ 131.0 Gross Margin $ 25.2 $ 26.9 $ 28.9 $ 28.2 $ 109.2 Gross Margin % 82.9% 83.3% 83.5% 83.7% 83.4% Total Operating Expense $ 23.0 $ 24.0 $ 25.1 $ 23.8 $ 95.9 Interest Income $ 0.04 $ 0.05 $ 0.05 $ 0.06 $ 0.2 ------- ------- ------- ------- ------- Net Income $ 2.2 $ 3.0 $ 3.9 $ 4.5 $ 13.5 ======= ======= ======= ======= ======= Dividends and Accretion on Preferred Stock $ 0.6 $ 0.6 $ 0.6 $ 0.6 $ 2.5 ------- ------- ------- ------- ------- Net Income Available to Common Shareholders $ 1.6 $ 2.3 $ 3.2 $ 3.8 $ 11.0 ======= ======= ======= ======= ======= EPS - Diluted $ 0.07 $ 0.09 $ 0.11 $ 0.13 $ 0.40 ======= ======= ======= ======= ======= Weighted Average Common Shares- 22.3 22.3 22.3 22.3 22.3 Basic Weighted Average Common Shares - 33.3 33.8 34.3 35.0 34.1 Diluted
5
2003 GUIDANCE KEY METRICS Q1 Q2 Q3 Q4 FULL YEAR ----------- --------- --------- --------- --------- --------- Volume Transmitted Loan Requests 475 485 510 470 1,940 (000's) Variable Marketing Expense ($ in $ 12.5 $ 13.3 $ 14.0 $ 13.0 $ 52.8 millions) PER TRANSMIT METRICS: Revenue $ 58.74 $ 59.59 $ 58.63 $ 61.49 $ 59.59 Variable Marketing Exp $ 26.32 $ 27.42 $ 27.45 $ 27.66 $ 27.22 Cost of Revenue $ 8.22 $ 7.75 $ 6.45 $ 6.15 $ 7.14 --------- --------- --------- --------- --------- Total Contribution Margin $ 24.20 $ 24.42 $ 24.73 $ 27.68 $ 25.24 ========= ========= ========= ========= =========
THE ABOVE INFORMATION IS BASED ON CURRENT EXPECTATIONS. ACTUAL RESULTS MAY DIFFER MATERIALLY. THESE STATEMENTS ARE FORWARD-LOOKING AND DO NOT REFLECT THE POTENTIAL IMPACT OF EVENTS THAT MAY OCCUR AFTER THE DATE OF THIS RELEASE, INCLUDING THE RISKS DESCRIBED BELOW UNDER THE CAPTION "DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS." CONFERENCE CALL INFORMATION: LENDINGTREE HAS SCHEDULED A CONFERENCE CALL TO DISCUSS THE COMPANY'S FINANCIAL RESULTS FOR THE THIRD QUARTER OF 2002 ON WEDNESDAY, OCTOBER 23RD AT 8:30 A.M. EST. TO LISTEN TO THE CONFERENCE CALL, PLEASE DIAL (888) 799-0558. A REPLAY OF THE CALL WILL BE AVAILABLE STARTING TWO HOURS AFTER THE COMPLETION OF THE CALL UNTIL NOVEMBER 6, 2002. THE DIAL-IN NUMBER FOR THE REPLAY WILL BE 800-642-1687, CONFERENCE ID # 6119489. THE CONFERENCE CALL WILL ALSO BE AVAILABLE VIA WEBCAST AT WWW.LENDINGTREE.COM. ABOUT LENDINGTREE, INC. Founded in 1996, LendingTree (NASDAQ: TREE) is the leading online lending Exchange that connects consumers, Lenders, Realtors(R), and related service providers. The LendingTree Exchange is made up of more than 180 banks, lenders, and brokers (Lenders) and has facilitated nearly $32 billion in closed loans since inception. More than 7.5 million consumers have accessed the LendingTree Exchange through the Company's site at www.lendingtree.com and through online and offline partners. Loans available via the LendingTree Exchange include home mortgage, home equity, automobile, personal, debt consolidation, and credit cards. LendingTree is the No. 1 brand in the online lending market for consumers, with 67 percent national awareness. The LendingTree Lend-X technology has been cited as 'the platform of choice'(a) for online lending and has been adopted by industry leaders to power their online lending initiatives. The LendingTree Realty Services offering connects consumers to a nationwide network of approximately 6,500 realtors. The Company's services and products are specifically designed to empower consumers, Lenders, and related service providers throughout the lending process, delivering convenience, choice, and excellent value. (A) RESUSCITATING MORTGAGE LENDING. FORRESTER RESEARCH, MARCH 2001 6 Disclosure Regarding Forward-Looking Statements THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS AND INFORMATION REGARDING: OUR GUIDANCE REGARDING OUR PROJECTED FINANCIAL AND OPERATING RESULTS THROUGH THE END OF 2003; OUR PROSPECTS TO GROW, CAPTURE GREATER MARKET SHARE, AND DELIVER POSITIVE RETURNS IN THE YEARS AHEAD; AND OUR BELIEF THAT OUR CURRENT CASH BALANCE AND PROJECTED POSITIVE RESULTS FROM OPERATIONS WILL ADEQUATELY FUND OUR CASH NEEDS FOR THE FORESEEABLE FUTURE. THESE STATEMENTS ARE BASED ON MANAGEMENT'S CURRENT EXPECTATIONS OR BELIEFS AND ARE SUBJECT TO A NUMBER OF RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE SET FORTH IN THE FORWARD LOOKING STATEMENTS. THE COMPANY'S ACTUAL RESULTS MIGHT DIFFER MATERIALLY FROM THOSE STATED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS DUE TO RISKS AND UNCERTAINTIES ASSOCIATED WITH THE COMPANY'S BUSINESS, WHICH INCLUDE, BUT ARE NOT LIMITED TO: VARIATIONS IN CONSUMER DEMAND OR ACCEPTANCE; THE WILLINGNESS OF LENDING INSTITUTIONS TO OFFER THEIR PRODUCTS OVER THE INTERNET; FURTHER CHANGES IN THE COMPANY'S RELATIONSHIPS WITH EXISTING LENDERS, COMPANIES, AND/OR STRATEGIC PARTNERS; THE COMPANY'S ABILITY TO ATTRACT AND INTEGRATE NEW LENDING COMPANIES AND STRATEGIC PARTNERS; IMPLEMENTATION OF COMPETING INTERNET STRATEGIES BY EXISTING AND POTENTIAL LENDING PARTICIPANTS; IMPLEMENTATION AND ACCEPTANCE OF NEW PRODUCT OR SERVICE OFFERINGS; CONSUMER LENDING INDUSTRY REGULATION; COMPETITION IN ALL ASPECTS OF THE COMPANY'S BUSINESS; FLUCTUATIONS IN OPERATING RESULTS; OR OTHER UNFORESEEN FACTORS. THE FORWARD-LOOKING STATEMENTS SHOULD BE CONSIDERED IN THE CONTEXT OF THESE AND OTHER RISK FACTORS DISCLOSED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. 7 LENDINGTREE, INC. OPERATING STATISTICS BY PRODUCT FOR THE QUARTER ENDED SEPTEMBER 30, 2002
LENDINGTREE EXCHANGE --------------------------------------------------------------------------------------------- LENDING HOME CREDIT EXCHANGE REALTY MORTGAGE EQUITY AUTO CARD PERSONAL SUB-TOTAL SERVICES TOTAL -------- -------- -------- -------- -------- -------- -------- -------- VOLUME LOAN/REAL ESTATE REQUESTS TRANSMITTED: NUMBER 300,498 90,039 105,988 40,860 18,010 555,395 15,182 570,577 VOLUME OF REQUESTS (IN $ MILLIONS) $ 50,776 $ 4,187 $ 1,762 $ 204 $ 166 $ 57,095 $ 3,534 $ 60,628 TRANSACTIONS CLOSED IN THE QUARTER: NUMBER 20,737 19,788 12,608 33,266(1) 2,876 89,275 1,321 90,596 VOLUME OF TRANSACTIONS CLOSED (IN $ MILLIONS) $ 4,197 $ 1,129 $ 228 $ 166(1) $ 32 $ 5,753 $ 307 $ 6,061 CONVERSION RATES TRANSMIT RATE 82.0% 85.0% 63.2% 71.0% 26.3% 62.0% 62.0% STATIC POOL CLOSE RATE (QUARTERLY AVERAGE)(2) 9.5% 25.9% 20.2% 12.3%(3) 37.7% 16.1% 5.6%(6) 16.1% REVENUE (IN $000'S) EXCHANGE REVENUE $ 16,082 $ 7,773 $ 1,423 $ 494(1) $ 311 $ 26,952(4) $ 482 $ 27,434 AFFINITY PARTNER REVENUE 528 528 2,430 2,958 LEND-X TECHNOLOGY REVENUE 549 -------- -------- -------- -------- -------- -------- -------- -------- TOTAL REVENUE $ 16,609 $ 7,773 $ 1,423 $ 494 $ 311 $ 27,480 $ 2,912 $ 30,941 AVERAGE REVENUE PER TRANSMIT $ 55.27 $ 86.33 $ 13.43 $ 12.10 $ 17.25 $ 49.48 $ 191.81 $ 53.27 OTHER DATA NUMBER OF LENDERS/REALTY AGENCIES 131 62 13 5 8 189(5) 647 836 -------- --------
- ------------------------------------------------ (1) INCLUDES CREDIT CARD CROSS-SELL ACTIVITY. (2) THE STATIC POOL CLOSE RATE INCORPORATES THE AVERAGE TIME LAG BETWEEN THE SUBMISSION OF A LOAN REQUEST (A "QF") AND THE CLOSURE OF A LOAN. IT REPRESENTS THE CLOSURE RATE OF APPROVED QFS FROM A STATIC POOL OF REQUESTS SUBMITTED IN THE MOST RECENT MONTH WITH A COMPLETE CLOSURE CYCLE. A STATIC POOL IS CONSIDERED TO HAVE A COMPLETE CLOSURE CYCLE AFTER 120 DAYS FROM THE MONTH IN WHICH A MORTGAGE QF WAS SUBMITTED, 90 DAYS AFTER A HOME EQUITY QF WAS SUBMITTED, 60 DAYS AFTER AN AUTO OR PERSONAL QF WAS SUBMITTED, AND LESS THAN 30 DAYS AFTER A CREDIT CARD QF WAS SUBMITTED. (3) THE CLOSE RATE FOR CREDIT CARDS REPRESENTS THE PERCENTAGE OF CARDS TRANSMITTED VIA THE NETWORK THAT RESULTED IN CARD ISSUANCES IN THE THIRD QUARTER (EXCLUDING CREDIT CARD CROSS-SELL ACTIVITY). (4) TOTAL LENDING EXCHANGE REVENUE DOES NOT ADD ACROSS AS THE TOTAL INCLUDES SET-UP FEES, ADAPTIVE MARKETING FEES AND REALTY SERVICES REVENUE. (5) NUMBER OF LENDERS DOES NOT ADD ACROSS BECAUSE A LENDER CAN OFFER MULTIPLE LOAN PRODUCTS. THE TOTAL LENDER NUMBER IS THE DISCRETE NUMBER OF LENDINGTREE EXCHANGE PARTICIPANTS. (6) THE STATIC POOL CLOSING CYCLE FOR A REAL ESTATE REFERRAL IS 180 DAYS FROM THE MONTH IN WHICH A REAL ESTATE REFERRAL WAS SUBMITTED. 8 LENDINGTREE, INC. Operating Statistics by Marketing Channel For the Quarter Ended September 30, 2002
CROSS-SELL/ LT.COM LEND-X/B2B AFFILIATES OTHER TOTAL -------- ------- ------- ----------- -------- REVENUE (IN $000'S) LENDING EXCHANGE REVENUE $ 20,396 $ 2,877 $ 3,041 $1,165(1) $ 27,480 REALTY SERVICES REVENUE 2,912 2,912 LEND-X TECHNOLOGY REVENUE 549 549 -------- ------- ------- ------ -------- TOTAL REVENUE $ 20,396 $ 6,338 $ 3,041 $1,165 $ 30,941 MARKETING & ADVERTISING VARIABLE MARKETING & ADVERTISING COSTS (IN $000'S)(2) $ 8,401 $ 796(3) $ 1,941 $ 0 $ 11,138 VOLUME LOAN REQUESTS TRANSMITTED 364,821 92,852(3) 97,722 0 555,395 LENDING EXCHANGE PER TRANSMIT METRICS REVENUE $ 55.91 $ 30.98(3) $ 31.12 $ 2.10 $ 49.48 VARIABLE MARKETING & ADVERTISING COSTS 23.03 8.57(3) 19.87 0.00 20.05 -------- ------- ------- ------ -------- VARIABLE MARKETING CONTRIBUTION MARGIN $ 32.88 $ 22.41 $ 11.26 $ 2.10 $ 29.42
(1) INCLUDES CREDIT CARD CROSS-SELL FEES, SET-UP FEES, AND ADAPTIVE MARKETING FEES. (2) VARIABLE MARKETING & ADVERTISING INCLUDES WORKING MEDIA ADVERTISING, AFFILIATE NETWORK COSTS, AND LEND-X NETWORK COSTS. (3) VARIABLE MARKETING COSTS, LOAN REQUESTS TRANSMITTED AND AVERAGE EXCHANGE REVENUE PER TRANSMIT EXCLUDES LEND-X REVENUE DERIVED FROM AFFINITY PARTNERS. 9 LENDINGTREE, INC. Consolidated Statements of Operations (unaudited)
FOR THE THREE MONTHS FOR THE NINE MONTHS Ended September 30, Ended September 30, ------------------------ ------------------------ 2002 2001 2002 2001 -------- -------- -------- -------- (in thousands, (in thousands, except per share data) except per share data) Revenue: Exchange $ 30,392 $ 15,243 $ 73,159 $ 40,397 Lend-X technology 549 1,960 3,517 4,871 -------- -------- -------- -------- Total revenue 30,941 17,203 76,676 45,268 -------- -------- -------- -------- Cost of revenue: Exchange 4,478 3,033 10,923 9,314 Lend-X technology 275 277 877 1,075 -------- -------- -------- -------- Total cost of revenue 4,753 3,310 11,800 10,389 Gross profit: Exchange 25,914 12,210 62,236 31,083 Lend-X technology 274 1,683 2,640 3,796 -------- -------- -------- -------- Total gross profit 26,188 13,893 64,876 34,879 Operating expenses: Product development 817 1,137 2,378 3,386 Marketing and advertising 13,813 9,973 36,681 29,447 Sales, general and administrative 7,772 5,362 23,393 25,927 -------- -------- -------- -------- Total operating expenses 22,402 16,472 62,452 58,760 -------- -------- -------- -------- Income (loss) from operations 3,786 (2,579) 2,424 (23,881) Loss on impaired investments -- -- -- (350) Interest and other non-operating income 136 176 559 522 Interest expense, financing and other charges (93) (590) (310) (718) -------- -------- -------- -------- Net income (loss) 3,829 (2,993) 2,673 (24,427) -------- -------- -------- -------- Accretion of mandatorily redeemable convertible preferred stock (165) (155) (509) (361) Dividends on mandatorily redeemable convertible preferred stock (459) (577) (2,936) (1,538) -------- -------- -------- -------- Net income (loss) available to common shareholders $ 3,205 $ (3,725) $ (772) $(26,326) ======== ======== ======== ======== Net income (loss) per share: Basic $ 0.14 $ (0.20) $ (0.04) $ (1.37) ======== ======== ======== ======== Diluted $ 0.12 $ (0.20) $ (0.04) $ (1.37) ======== ======== ======== ======== Weighted average shares - basic 22,202 18,976 20,803 19,190 ======== ======== ======== ======== Weighted average shares - diluted 32,203 18,976 20,803 19,190 ======== ======== ======== ========
10 LENDINGTREE, INC. Consolidated Balance Sheets (unaudited)
SEPTEMBER 30, DECEMBER 31, 2002 2001 ------------- ------------ ($ in thousands) ASSETS Current assets: Cash and cash equivalents $ 4,093 $ 3,400 Restricted cash 9,586 2,764 --------- --------- Total cash and cash equivalents and restricted cash 13,679 6,164 Accounts receivable, net of allowance for doubtful accounts 18,150 11,438 Prepaid expenses and other current assets 1,553 1,174 --------- --------- Total current assets 33,382 18,776 Equipment, furniture and leasehold improvements, net 1,888 2,016 Software, net 1,219 2,854 Intangible assets, net 1,916 3,667 Other assets 272 618 --------- --------- Total assets $ 38,677 $ 27,931 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 5,456 $ 4,508 Deferred revenue 1,285 2,013 Accrued incentive and other compensation 4,104 5,627 Accrued professional services and other fees 216 444 Accrued consumer promotional costs 1,144 1,709 Accrued other expenses 2,346 1,774 Current portion capital lease obligations 381 743 --------- --------- Total current liabilities 14,932 16,818 Deposits by subtenants 122 145 Capital lease obligations 19 291 Commitments and contingencies Mandatorily redeemable securities Series A convertible preferred stock, $.01 par value, 8% cumulative, 6,885,715 shares authorized, 6,038,940 and 6,885,715 shares issued and outstanding at September 30, 2002 and December 31, 2001, respectively 21,685 23,878 Shareholders' equity (deficit): Common stock, $.01 par value, 100,000,000 shares authorized, 22,265,655 and 19,907,034 shares issued at September 30, 2002 and December 31, 2001, respectively 227 199 Treasury stock (392,590 shares at September 30, 2002 and 661,996 shares at December 31, 2001, at cost) (2,494) (4,170) Additional paid-in-capital 131,769 121,675 Accumulated deficit (124,391) (127,064) Deferred compensation (851) (1,477) Notes receivable from officers (2,341) (2,364) --------- --------- Total shareholders' equity (deficit) 1,919 (13,201) --------- --------- Total liabilities and shareholders' equity (deficit) $ 38,677 $ 27,931 ========= =========
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