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Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2014	Mar. 09, 2015	Jun. 30, 2014
Document and Entity Information
Entity Registrant Name	LendingTree, Inc.
Entity Central Index Key	0001434621
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-K
Document Period End Date	Dec. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 186,884,728
Entity Common Stock, Shares Outstanding		11,446,513

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Revenue	$ 167,350	$ 139,240	$ 77,443
Costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	7,903	6,542	4,295
Selling and marketing expense	112,704	91,121	48,934
General and administrative expense	25,883	24,658	22,231
Product development	7,457	5,264	3,529
Depreciation	3,245	3,501	4,105
Amortization of intangibles	136	147	358
Restructuring and severance	373	159	(57)
Litigation settlements and contingencies	10,618	8,955	(3,101)
Total costs and expenses	168,319	140,347	80,294
Operating loss	(969)	(1,107)	(2,851)
Other expense:
Interest expense	(2)	(19)	(881)
Loss before income taxes	(971)	(1,126)	(3,732)
Income tax benefit	484	453	1,483
Loss from continuing operations	(487)	(673)	(2,249)
Discontinued operations:
Gain from sale of discontinued operations, net of tax	0	9,561	24,373
Income (loss) from discontinued operations, net of tax	9,849	(4,941)	24,501
Income from discontinued operations	9,849	4,620	48,874
Net income and comprehensive income	9,362	3,947	46,625
Comprehensive income	$ 9,362	$ 3,947	$ 46,625
Weighted average shares outstanding:
Weighted average basic common shares (in shares)	11,188	11,035	10,695
Weighted average diluted common shares (in shares)	11,188	11,035	10,695
Loss per share from continuing operations:
Basic (in dollars per share)	$ (0.04)	$ (0.06)	$ (0.21)
Diluted (in dollars per share)	(0.04)	(0.06)	(0.21)
Income per share from discontinued operations:
Basic (in dollars per share)	0.88	0.42	4.57
Diluted (in dollars per share)	0.88	0.42	4.57
Net income per share:
Basic (in dollars per share)	0.84	0.36	4.36
Diluted (in dollars per share)	$ 0.84	$ 0.36	$ 4.36

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2014	Dec. 31, 2013
ASSETS:
Cash and cash equivalents	$ 86,212	$ 91,667
Restricted cash and cash equivalents	18,716	26,017
Accounts receivable, net of allowance of $349 and $408, respectively	13,611	12,850
Prepaid and other current assets	931	1,689
Current assets of discontinued operations	189	521
Total current assets	119,659	132,744
Property and equipment, net	5,257	5,344
Goodwill	3,632	3,632
Intangible assets, net	11,141	10,684
Other non-current assets	102	111
Non-current assets of discontinued operations	100	129
Total assets	139,891	152,644
LIABILITIES:
Accounts payable, trade	1,060	4,881
Accrued expenses and other current liabilities	25,521	23,314
Current liabilities of discontinued operations	12,055	32,004
Total current liabilities	38,636	60,199
Other non-current liabilities	0	334
Deferred income taxes	4,738	4,849
Non-current liabilities of discontinued operations	151	254
Total liabilities	43,525	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; 12,854,517 and 12,619,835 shares issued, respectively, and 11,386,240 and 11,250,903 shares outstanding, respectively	129	126
Additional paid-in capital	909,751	907,148
Accumulated deficit	(798,171)	(807,533)
Treasury stock 1,468,277 and 1,368,932 shares, respectively	(15,343)	(12,733)
Total shareholders' equity	96,366	87,008
Total liabilities and shareholders' equity	$ 139,891	$ 152,644

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Accounts receivable, allowance	$ 349	$ 408
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	12,854,517	12,619,835
Common stock, outstanding shares	11,386,240	11,250,903
Treasury stock, shares	1,468,277	1,368,932

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Comprehensive Income	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Treasury Stock
Balance at Dec. 31, 2011	$ 45,471		$ 118	$ 911,990	$ (858,105)	$ (8,532)
Balance (in shares) at Dec. 31, 2011			11,826,000			1,123,000
Increase (Decrease) in Stockholders' Equity
Net income and comprehensive income	46,625	$ 46,625			46,625
Non-cash compensation	4,756			4,756
Purchase of treasury stock	$ (880)					$ (880)
Purchase of treasury stock (in shares)	65,218					65,000
Dividends	$ (12,236)			(12,236)
Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes	(814)		$ 4	(818)
Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes (in shares)			369,000
Balance at Dec. 31, 2012	82,922		$ 122	903,692	(811,480)	$ (9,412)
Balance (in shares) at Dec. 31, 2012			12,195,000			1,188,000
Increase (Decrease) in Stockholders' Equity
Net income and comprehensive income	3,947	3,947			3,947
Non-cash compensation	5,629			5,629
Purchase of treasury stock	$ (3,321)					$ (3,321)
Purchase of treasury stock (in shares)	180,453					181,000
Dividends	$ 637			637
Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes	(2,806)		$ 4	(2,810)
Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes (in shares)			425,000
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
Increase (Decrease) in Stockholders' Equity
Net income and comprehensive income	9,362	$ 9,362			9,362
Non-cash compensation	7,446			7,446
Purchase of treasury stock	$ (2,610)					$ (2,610)
Purchase of treasury stock (in shares)	99,345					99,000
Dividends	$ (28)			(28)
Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes	(4,812)		$ 3	(4,815)
Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes (in shares)			235,000
Balance at Dec. 31, 2014	$ 96,366		$ 129	$ 909,751	$ (798,171)	$ (15,343)
Balance (in shares) at Dec. 31, 2014			12,855,000			1,468,000

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Cash flows from operating activities attributable to continuing operations:
Net income and comprehensive income	$ 9,362	$ 3,947	$ 46,625
Less: Income from discontinued operations, net of tax	(9,849)	(4,620)	(48,874)
Loss from continuing operations	(487)	(673)	(2,249)
Adjustments to reconcile loss from continuing operations to net cash provided by (used in) operating activities attributable to continuing operations:
Loss on disposal of fixed assets	282	165	747
Impairment of long-lived assets	805	0	0
Amortization of intangibles	136	147	358
Depreciation	3,245	3,501	4,105
Non-cash compensation expense	7,446	5,627	4,587
Deferred income taxes	106	64	(92)
Bad debt expense (benefit)	206	248	(4)
Changes in current assets and liabilities:
Accounts receivable	(1,228)	(3,614)	(6,011)
Prepaid and other current assets	(84)	(170)	620
Accounts payable, accrued expenses and other current liabilities	(1,935)	6,157	(6,123)
Income taxes payable	740	(610)	(98)
Other, net	(157)	(604)	(562)
Net cash provided by (used in) operating activities attributable to continuing operations	9,075	10,238	(4,722)
Cash flows from investing activities attributable to continuing operations:
Capital expenditures	(3,856)	(2,750)	(2,632)
Acquisition of a business	(740)	0	0
Decrease (increase) in restricted cash	7,300	3,397	(1,085)
Net cash provided by (used in) investing activities attributable to continuing operations	2,704	647	(3,717)
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	(4,812)	(2,806)	(815)
Purchase of treasury stock	(2,610)	(3,321)	(879)
Dividends	(229)	144	(11,428)
Decrease in restricted cash	0	0	1,199
Net cash used in financing activities attributable to continuing operations	(7,651)	(5,983)	(11,923)
Total cash provided by (used in) continuing operations	4,128	4,902	(20,362)
Discontinued operations:
Net cash provided by (used in) operating activities attributable to discontinued operations	(9,583)	(3,425)	226,747
Net cash provided by investing activities attributable to discontinued operations	0	10,000	25,923
Net cash used in financing activities attributable to discontinued operations	0	0	(197,659)
Total cash provided by (used in) discontinued operations	(9,583)	6,575	55,011
Net increase (decrease) in cash and cash equivalents	(5,455)	11,477	34,649
Cash and cash equivalents at beginning of period	91,667	80,190	45,541
Cash and cash equivalents at end of period	86,212	91,667	80,190
Supplemental cash flow information:
Interest	2	19	1,308
Income tax payments	3	654	1,238
Income tax refunds	$ (779)	$ (4)	$ (25)

ORGANIZATION	12 Months Ended
ORGANIZATION	Dec. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
ORGANIZATION	ORGANIZATION Company Overview LendingTree, Inc. ("LendingTree" or the "Company"), formerly known as Tree.com, Inc., is the parent of LendingTree, LLC and several companies owned by LendingTree, LLC. LendingTree operates what it believes to be the leading online loan marketplace for consumers seeking a broad array of loan types and other credit-based offerings. The Company offers consumers tools and resources, including free credit scores, that help them to comparison-shop for mortgage loans, home equity loans and lines of credit, reverse mortgages, personal loans, auto loans, student loans, credit cards, small business loans and other related offerings. The Company seeks to match in-market consumers with multiple lenders on its marketplace who can provide them with competing quotes for the loans or credit-based offerings they are seeking. The Company also serves as a valued partner to lenders seeking an efficient, scalable and flexible source of customer acquisition with directly measurable benefits, by matching the consumer inquiries it generates with these lenders. The consolidated financial statements include the accounts of LendingTree and all its wholly-owned entities. Intercompany transactions and accounts have been eliminated. Certain amounts from the prior consolidated financial statements have been reclassified to conform to the presentation adopted in the current year. Spin-Off On August 20, 2008, LendingTree was spun off from its parent company, IAC/InterActiveCorp ("IAC"), into a separate publicly-traded company. In connection with the spin-off, LendingTree was incorporated as a Delaware corporation in April 2008. Discontinued Operations The businesses of RealEstate.com, REALTORS® (which represent the former Real Estate segment) and LendingTree Loans are presented as discontinued operations in the accompanying consolidated balance sheets, consolidated statements of operations and comprehensive income 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. See Note 15 —Discontinued Operations for additional information. Basis of Presentation The accompanying consolidated financial statements as of December 31, 2014 and 2013, respectively, and for the years ended December 31, 2014, 2013 and 2012, respectively, have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC").

SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

The Company derives its revenue primarily from match fees, which are earned through the delivery of qualified leads that originated through one of its websites or affiliates. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is reasonably assured. Delivery is deemed to have occurred at the time a qualified lead is delivered to the customer, provided that no significant obligations remain.

The Company also derives revenues from lenders for closing fees on certain auto, business and personal loan products when a transaction is closed with the consumer. Closed loan fees and closed sale fees are recognized at the time the lender reports the closed loan or closed sale to the Company, which could be several months after the original request form is transmitted.

Prior to January 2013, the Company also derived revenue from lenders for closing fees on home equity loan products, which were recognized in the same manner as the closed loan fees on its auto loan products.

In addition, during the years ended December 31, 2013 and 2012, the Company recognized approximately $0.6 million and $1.9 million of revenue, respectively, from marketing-related services provided to Discover Bank ("Discover"), a wholly owned subsidiary of Discover Financial Services. Revenue from these services was recognized in the period the services were provided. See Note 15—Discontinued Operations for additional information.

Cash and Cash Equivalents

Cash and cash equivalents include cash and short-term, highly liquid money market investments with original maturities of three months or less.

Restricted Cash

Cash escrowed or contractually restricted for a specific purpose is designated as restricted cash.

Accounts Receivable

Accounts receivable are stated at amounts due from customers, net of an allowance for doubtful accounts.

The Company determines its allowance for doubtful accounts by considering a number of factors, including the length of time accounts receivable are past due, previous loss history and the specific customer's current ability to pay its obligation. Accounts receivable are considered past due when they are outstanding longer than the contractual payment terms. Accounts receivable are written off when management deems them uncollectible.

A reconciliation of the beginning and ending balances of the allowance for doubtful accounts is as follows (in thousands):



	Year Ended December 31,
	2014			2013			2012
Balance, beginning of the period	$	408		$	503		$	86
Charges to earnings	206			248			406
Write-off of uncollectible accounts receivable	(265		)	(343		)	11
Balance, end of the period	$	349		$	408		$	503

Loan Loss Obligations (Discontinued Operations)

The Company's Home Loan Center, Inc. ("HLC") subsidiary, which during its period of active operation primarily conducted business as LendingTree Loans, sold loans it originated to investors on a servicing-released basis and the risk of loss or default by the borrower was generally transferred to the investor. However, LendingTree Loans was required by these investors to make certain representations relating to credit information, loan documentation and collateral. To the extent LendingTree Loans did not comply with such representations or there are early payment defaults, LendingTree Loans may be required to repurchase loans or indemnify the investors for any losses from borrower defaults. LendingTree Loans maintains a liability for the estimated exposure relating to such contingent obligations and changes to the estimate are recorded in income from discontinued operations in the periods they occur.

The Company estimates the liability for loan losses using a settlement discount framework. This approach estimates the lifetime losses on the population 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. The Company then applies a settlement discount factor to the result of the foregoing to reflect publicly announced bulk settlements for similar loan types and vintages, the Company's own settlement experience, as well as LendingTree Loans' non-operating status, in order to estimate a range of potential liability. Changes to any one of these factors could significantly impact the estimate of the liability and could have a material impact on the Company's results of operations for any particular period. See Note 15—Discontinued Operations—LendingTree Loans—Loan Loss Obligations for additional information on the loan loss reserve.

Segment Reporting

The Company has four operating segments: lending, auto, education and home services. The lending operating segment is in the Company's core business of lead generation in the lending marketplace, matching consumers looking for lending products with marketplace lenders. Similarly, the auto, education and home services businesses match consumers with auto financing providers and dealers, prospective students with educational institutions and agencies, and homeowners with home improvement professionals, respectively.

The Company's review of these operating segments at December 31, 2014 indicates that only its lending operating segment meets the quantitative threshold to be reported as a reportable segment.

Property and Equipment

Property and equipment, including internally-developed software and significant improvements, are recorded at cost less accumulated depreciation. Repairs and maintenance and any gains or losses on dispositions are recognized as incurred in current operations.

Depreciation is recorded on a straight-line basis to allocate the cost of depreciable assets to operations over their estimated service lives. The following table presents the estimated useful lives for each asset category:



Asset Category	Estimated Useful Lives
Computer equipment and capitalized software	1 to 5 years
Leasehold improvements	Lesser of asset life or life of lease
Furniture and other equipment	3 to 7 years

Software Development Costs

Software development costs primarily include internal and external labor expenses incurred to develop the software that powers the Company's websites. Certain costs incurred during the application development stage are capitalized based on specific activities tracked on internal time sheets and external invoices (or time sheets), while costs incurred during the preliminary project stage and post-implementation/operation stage are expensed as incurred. Capitalized software development costs are amortized over an estimated useful life of one to three years.

Goodwill and Indefinite-Lived Intangible Assets

Goodwill acquired in business combinations is assigned to the reporting units that are expected to benefit from the combination as of the acquisition date. Goodwill and indefinite-lived intangible assets, primarily the Company's trade names and trademarks, are not amortized. Rather, these assets are tested annually for impairment as of October 1, or more frequently upon the occurrence of certain events or substantive changes in circumstances.

Goodwill impairment is determined using a two-step process. The first step is to compare the fair value of a reporting unit with its carrying amount, including goodwill. In performing the first step, the Company determines the fair value of its reporting units by using a market approach and a discounted cash flow ("DCF") analysis. Determining fair value using a DCF analysis requires the exercise of significant judgments, including judgments about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired and the second step of the impairment test is not required. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is required to be performed to measure the amount of impairment, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

The impairment test for indefinite-lived intangible assets involves a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the indefinite-lived intangible asset exceeds its estimated fair value, an impairment loss is recognized in an amount equal to that excess. The estimates of fair value of indefinite-lived intangible assets are determined using a DCF valuation analysis that employs a relief-from-royalty methodology in estimating the fair value of trade names and trademarks. Significant judgments inherent in this analysis include the determination of royalty rates, discount rates, perpetual growth rates and the amount and timing of future revenues.

For the October 1, 2014 annual impairment test of goodwill, the fair value of the lending reporting unit was estimated using a DCF analysis and a market comparable method, with each method being equally weighted in the calculation. Results of the October 1, 2014 annual impairment test for goodwill and the indefinite-lived intangible assets indicated that no impairments had occurred.

Long-Lived Assets and Intangible Assets with Definite Lives

Long-lived assets include property and equipment and intangible assets with definite lives. Amortization of definite-lived intangible assets is recorded on a straight-line basis over their estimated lives.

Long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying amount is deemed to not be recoverable, an impairment loss is recorded as the amount by which the carrying amount of the long-lived asset exceeds its fair value.

During the fourth quarter of 2014, the Company lost key customers and experienced a decline in revenue for a certain product included within the Education business. Accordingly, in early 2015, the Company amended its strategic course for this product, resulting in a reduction in anticipated future cash flows. At December 31, 2014, the Company reviewed the long-lived assets associated with this product for recoverability, resulting in an impairment charge to customer lists and internally developed software of approximately $0.8 million. The fair value of the long-lived assets was determined using a discounted cash flow model. The impairment charge is included in general and administrative expense on the accompanying consolidated statement of operations and comprehensive income and the "Other" category in the reconciliation of segment information in Note 16—Segment Information.

Fair Value Measurements

The Company categorizes its assets and liabilities measured at fair value into a fair value hierarchy that prioritizes the assumptions used in pricing the asset or liability into the following three levels:


•	Level 1: Observable inputs, such as quoted prices for identical assets and liabilities in active markets obtained from independent sources.


•	Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs that are derived principally from or corroborated by observable market data.


•	Level 3: Unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions, based on the best information available under the circumstances, about the assumptions market participants would use in pricing the asset or liability.

The Company's non-financial assets, such as goodwill, intangible assets and property and equipment are measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment charge is recognized. Such fair value measurements are based predominantly on Level 3 inputs. As of December 31, 2014 and 2013, the carrying value of all of the Company's financial instruments are equal to the fair value.

Cost of Revenue

Cost of revenue consists primarily of expenses associated with compensation and other employee-related costs (including stock-based compensation) related to customer call centers, credit scoring fees and website network hosting and server fees.

Product Development

Product development expense consists primarily of compensation and other employee-related costs (including stock-based compensation) for personnel engaged in the design, development, testing and enhancement of technology that are not capitalized.

Advertising

Advertising costs are expensed in the period incurred (except for production costs which are initially capitalized and then recognized as expense when the advertisement first runs) and principally represent offline costs, including television, print and radio advertising, and online advertising costs, including fees paid to search engines and distribution partners. Advertising expense was $102.2 million, $80.7 million and $40.8 million for the years ended December 31, 2014, 2013 and 2012, respectively, and is included in selling and marketing expense on the consolidated statements of operations and comprehensive income.

Income Taxes

Income taxes are accounted for under the liability method, and deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In estimating future tax consequences, all expected future events are considered. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided on deferred tax assets if it is determined that it is more likely than not that the deferred tax asset will not be realized. Interest is recorded on potential tax contingencies as a component of income tax expense and recorded net of any applicable related income tax benefit. During 2014, 2013 and 2012, the Company reported losses from continuing operations and income from discontinued operations. As a result, the Company followed the accounting guidance prescribed in ASC 740-20-45-7, which provides an exception to the "with" and "without" approach to intraperiod tax allocation for determination of the amount of tax benefit to allocate to continuing operations in such circumstances.

In accordance with the accounting standard for uncertainty in income taxes, liabilities for uncertain tax positions are recognized based on the two-step process prescribed by the accounting standards. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it 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 which is more than 50% likely of being realized upon ultimate settlement.

Stock-Based Compensation

The forms of stock-based awards granted to LendingTree employees are principally restricted stock units ("RSUs"), stock options and restricted stock. RSUs are awards in the form of units, denominated in a hypothetical equivalent number of shares of LendingTree common stock and with the value of each award equal to the fair value of LendingTree common stock at the date of grant. RSUs may be settled in cash, stock or both, as determined by the Company's Compensation Committee at the time of grant. The Company does not have a history of settling these awards in cash. Each stock-based award is subject to service-based vesting, where a specific period of continued employment must pass before an award vests. The Compensation Committee can modify the vesting provisions of an award. Certain restricted stock awards also include performance-based vesting, where certain performance targets set at the time of grant must be achieved before an award vests.

LendingTree recognizes as expense non-cash compensation for all stock-based awards for which vesting is considered probable. The amount of non-cash compensation is reduced by estimated forfeitures, as the amount recorded to the consolidated statement of operations and comprehensive income is based on awards ultimately expected to vest. The forfeiture rate is estimated at the grant date, based on historical experience and revised, if necessary, in subsequent periods if the actual forfeiture rate differs from the estimated rate.

For service-based awards, non-cash compensation is measured at fair value on the grant date and expensed ratably over the vesting term. The fair value of each stock option award is estimated using the Black-Scholes option pricing model, while the fair value of an RSU or restricted stock award is measured as the closing common stock price at the time of grant. For certain performance-based awards, the fair value is measured on the grant date as the fair value of the Company's common stock awarded and recognized as non-cash compensation, using a graded vesting attribution model that considers the probability of the targets being achieved.

Tax benefits resulting from tax deductions in excess of the non-cash compensation recognized in the consolidated statement of operations and comprehensive income are reported as a component of financing cash flows. In 2014, 2013 and 2012, while there were excess tax benefits from non-cash compensation, the tax benefits are not reflected in the consolidated statement of operations and comprehensive income because of the utilization of net operating losses ("NOLs").

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.

The Company is involved in legal proceedings on an ongoing basis. If the Company believes that a loss arising from such matters is probable and can be reasonably estimated, the estimated liability is accrued in the consolidated financial statements. If only a range of estimated losses can be determined, an amount within the range is accrued that, in the Company's judgment, reflects the most likely outcome; if none of the estimates within that range is a better estimate than any other amount, the low end of the range is accrued. For those proceedings in which an unfavorable outcome is reasonably possible but not probable, an estimate of the reasonably possible loss or range of losses or a conclusion that an estimate of the reasonably possible loss or range of losses arising directly from the proceeding (i.e., monetary damages or amounts paid in judgment or settlement) are not material is disclosed. Legal expenses associated with these matters are recognized as incurred.

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

LendingTree'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 December 31, 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 marketplace 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 marketplace.

For the years ended December 31, 2014, 2013 and 2012, one marketplace lender accounted for revenue representing 13%, 12% and 14% of total revenue, respectively, and another marketplace lender accounted for 11%, 12% and 11% of total revenue, respectively.

Lenders participating on the Company's marketplace 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.

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 International Accounting Standards board ("IASB") to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and 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.

In February 2013, the FASB issued new accounting guidance that requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance also requires an entity to disclose the nature and amount of these obligations, as well as other information about them. The new accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this guidance did not have a material impact on the consolidated financial statements.

RESTRICTED CASH

12 Months Ended

Dec. 31, 2014

Cash and Cash Equivalents [Abstract]

RESTRICTED CASH

Restricted cash and cash equivalents consists of the following (in thousands):



	December 31, 2014		December 31, 2013
Cash in escrow for surety bonds ^(a)	$	2,453	$	2,453
Cash in escrow for corporate purchasing card program	100		400
Cash in escrow from sale of LendingTree Loans ^(b)	16,106		18,117
Cash in escrow for earnout related to an acquisition ^(c)	—		1,956
Cash restricted for loan loss obligations ^(d)	—		3,051
Other	57		40
Total restricted cash and cash equivalents	$	18,716	$	26,017


(a)	See Note 10—Commitments for a discussion of surety bonds.

(b)

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 year ended December 31, 2014. During the fourth quarter of 2014, the Company completed a settlement agreement with the largest investor to which it had sold loans. As a result of this settlement agreement, $12.1 million of cash held in escrow is expected to be released in December 2015.

(c)

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 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 year ended December 31, 2014.


(d)	During the fourth quarter of 2014, the Company reached and executed a settlement with the disputing party on certain loan loss obligations, upon which $3.1 million of cash previously held in escrow was paid out to the disputing party.

PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

The balance of property and equipment, net is as follows (in thousands):



	December 31, 2014			December 31, 2013
Computer equipment and capitalized software	$	16,080		$	18,130
Leasehold improvements	2,096			2,096
Furniture and other equipment	1,030			981
Projects in progress	861			2,145
Total gross property and equipment	20,067			23,352
Accumulated depreciation	(14,810		)	(18,008		)
Total property and equipment, net	$	5,257		$	5,344

Unamortized capitalized software development costs, in service or under development, are $4.5 million and $4.3 million at December 31, 2014 and 2013, respectively. Capitalized software development depreciation expense was $2.8 million, $3.0 million and $3.1 million for the years ended December 31, 2014, 2013 and 2012, respectively.

During 2014, the Company recorded an impairment charge in its Education business of approximately $0.4 million to internally developed software. See Note 2—Significant Accounting Policies for a discussion of the impairment.

GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

The balance of goodwill and intangible assets, net is as follows (in thousands):



	December 31, 2014			December 31, 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	999			542
Total intangible assets, net	$	11,141		$	10,684

Goodwill and Indefinite-Lived Intangible Assets

The Company's goodwill is associated with its one reportable segment, lending. There were no changes in the carrying amount of goodwill during the years ended December 31, 2014 and 2013. Results of the annual impairment test as of October 1, 2014 indicated that no impairment had occurred.

Intangible assets with indefinite lives relate to the Company's trademarks. Results of the annual impairment test as of October 1, 2014 indicated that no impairment had occurred.

Intangible Assets with Definite Lives

Intangible assets with definite lives relate to the following (dollars in thousands):



	Weighted Average Amortization Life	Cost		Accumulated Amortization			Net
Customer lists	10.0 years	$	1,049	$	(50	)	$	999
Other	2.2 years	1,087		(1,087		)	—
Balance at December 31, 2014		$	2,136	$	(1,137	)	$	999



	Weighted Average Amortization Life	Cost		Accumulated Amortization			Net
Purchase agreements	5.0 years	$	236	$	(212	)	$	24
Technology	3.0 years	25,194		(25,194		)	—
Customer lists	4.2 years	6,682		(6,166		)	516
Other	2.5 years	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 December 31, 2014, future amortization is estimated to be as follows (in thousands):



	Amortization Expense
Year ending December 31, 2015	$	149
Year ending December 31, 2016	100
Year ending December 31, 2017	100
Year ending December 31, 2018	100
Year ending December 31, 2019	100
Thereafter	450
Total intangible assets with definite lives, net	$	999

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. During the fourth quarter of 2014, the Company finalized the purchase price of $1.0 million, which includes an estimated contingent consideration of $0.4 million. The entire purchase price was allocated to the customer lists acquired, which is being amortized on a straight-line basis over a useful life of 10 years.

During 2014, the Company recorded an impairment charge in its Education business of approximately $0.4 million to customer lists. See Note 2—Significant Accounting Policies for a discussion of the impairment.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

12 Months Ended

Dec. 31, 2014

Payables and Accruals [Abstract]

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following (in thousands):



	December 31, 2014		December 31, 2013
Accrued litigation liabilities	$	2,786	$	500
Accrued advertising expense	11,170		8,837
Accrued compensation and benefits	2,666		3,378
Accrued professional fees	337		1,806
Accrued restructuring costs	178		284
Customer deposits and escrows	4,560		4,279
Deferred rent	162		245
Other	3,662		3,985
Total accrued expenses and other current liabilities	$	25,521	$	23,314

SHAREHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

SHAREHOLDERS' EQUITY

Basic and diluted income (loss) per share was determined based on the following share data (in thousands):



	Year Ended December 31,
	2014	2013	2012
Weighted average basic common shares	11,188	11,035	10,695
Effect of stock options	—	—	—
Effect of dilutive share awards	—	—	—
Weighted average diluted common shares	11,188	11,035	10,695

For the years ended December 31, 2014, 2013 and 2012, 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 years ended December 31, 2014, 2013 and 2012, approximately 0.7 million, 0.7 million, and 0.6 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.

See Note 8—Stock-Based Compensation for a full description of outstanding equity awards.

Common Stock Repurchases

In January 2010, the board of directors authorized and the Company announced the repurchase of up to $10.0 million of LendingTree's common stock. In May 2014, the board of directors authorized and the Company announced the repurchase of up to an additional $10.0 million of LendingTree's common stock. During the years ended December 31, 2014, 2013 and 2012, the Company purchased 99,345, 180,453 and 65,218 shares, respectively, of its common stock for aggregate consideration of $2.6 million, $3.3 million and $0.9 million, respectively. At December 31, 2014, approximately $7.5 million remains authorized for share repurchase.

Special Dividend

On December 6, 2012, the Company announced a special cash dividend of $1.00 per share. The dividend was paid on December 26, 2012 to shareholders of record on December 17, 2012. The total amount of the dividend was approximately $11.6 million, giving effect to a 2013 correction to the overpayment of dividends totaling $0.4 million, and has been presented as a reduction of additional paid-in capital in the consolidated financial statements.

STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

The Company currently has one active plan, the Fourth Amended and Restated LendingTree 2008 Stock and Annual Incentive Plan (the "Equity Award Plan"), under which future awards may be granted, which currently covers outstanding stock options to acquire shares of the Company's common stock, restricted stock and RSUs, and provides for the future grants of these and other equity awards. Under the Equity Award Plan, the Company is authorized to grant stock options, restricted stock, RSUs and other equity-based awards for up to 4.35 million shares of LendingTree common stock to employees, officers and directors. This Equity Award Plan also governs certain equity awards of IAC that were converted into equity awards of LendingTree in connection with the spin-off.

The Equity Award Plan has a stated term of ten years and provides that the exercise price of stock options granted will not be less than the market price of the common stock on the grant date. The Equity Award Plan itself does not specify grant dates or vesting schedules, as those determinations are delegated to the Compensation Committee of the board of directors. Each grant agreement reflects the vesting schedule for that particular grant, as determined by the Compensation Committee. The Compensation Committee has the authority to modify the vesting provisions of an award.

Prior to the 2008 spin-off from IAC, employees received equity awards that were granted under various IAC stock and annual incentive plans. Upon spin-off, these IAC awards were converted into awards of both LendingTree and other former IAC companies, which vested in 2012.

Non-cash compensation related to equity awards is included in the following line items in the accompanying consolidated statements of operations and comprehensive income (in thousands):



	Year Ended December 31,
	2014		2013		2012
Cost of revenue	$	32	$	13	$	6
Selling and marketing expense	901		931		750
General and administrative expense	5,148		3,841		3,205
Product development	1,196		842		626
Restructuring and severance	169		—		—
Total non-cash compensation	$	7,446	$	5,627	$	4,587

For the years ended December 31, 2014, 2013 and 2012, the Company recognized no income tax benefit related to non-cash compensation due to its net operating losses and valuation allowance. As of December 31, 2014, there was approximately $10.9 million, $5.8 million and $2.2 million of unrecognized compensation cost, net of estimated forfeitures, related to stock options, RSUs and restricted stock, respectively. These costs are expected to be recognized over a weighted-average period of approximately 3.0 years for stock options, 1.7 years for RSUs and 1.9 years for restricted stock.

Stock Options

A summary of the changes in outstanding stock options is as follows:



	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value^(a)
			(per option)		(in years)	(in thousands)
Outstanding at December 31, 2013	1,038,999		$	8.98
Granted	1,106,791		26.73
Exercised	(8,361	)	13.58
Forfeited	—		—
Expired	(750	)	13.04
Outstanding at December 31, 2014	2,136,679		$	18.16	6.43	$	64,492
Options exercisable	983,107		$	9.07	3.63	$	38,602

(a)

The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $48.34 on the last trading day of 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 December 31, 2014. The intrinsic value changes based on the market value of the Company's common stock.

Upon exercise, the intrinsic value represents the pre-tax difference between the Company's closing stock price on the exercise date and the exercise price, multiplied by the number of stock options exercised. During the years ended December 31, 2014, 2013 and 2012, the total intrinsic value of stock options that were exercised was $0.2 million, $0.4 million and $0.3 million, respectively. Cash received from stock option exercises and the related actual tax benefit realized were $0.1 million and $0.1 million, respectively, for the year ended December 31, 2014.

During the years ended December 31, 2014 and 2012, the Company granted stock options with a weighted average grant date fair value per share of $11.22 and $3.63, respectively, of which the vesting periods include (a) three years from the grant date, (b) 25% and 75% over a period of 2.5 years and 3.5 years, respectively, and (c) 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:



	Year Ended December 31,
	2014	2012
Expected term ⁽¹⁾	5.75 - 6.63 years	7.0 years
Expected dividend ⁽²⁾	—	—
Expected volatility ⁽³⁾	36% - 64%	45	%
Risk-free interest rate ⁽⁴⁾	1.81% - 2.13%	2.0	%

(1)

For the year ended December 31, 2014, 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. For the year ended December 31, 2012, the expected term of stock options granted was based on analyses of historical employee termination rates and option exercise patterns, giving consideration to expectations of future employee behavior.


(2)	For all stock options granted during the years ended December 31, 2014 and 2012, 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.

As of December 31, 2014, the non-vested options are expected to vest over a weighted-average period of approximately 3.0 years. During the years ended December 31, 2014, 2013 and 2012, the total fair value of options vested was $0.4 million, $3.2 million and $0.3 million, respectively.

Restricted Stock Units

A summary of the changes in outstanding nonvested RSUs is as follows:



	RSUs				RSUs Performance Condition
	Number of Units		Weighted Average Grant Date Fair Value		Number of Units		Weighted Average Grant Date Fair Value
			(per unit)				(per unit)
Nonvested at December 31, 2013	599,122		$	14.15	—		$	—
Granted ^(a)	135,607		32.33		500		33.59
Vested	(328,681	)	12.08		(500	)	33.59
Forfeited	(54,247	)	16.31		—		—
Nonvested at December 31, 2014	351,801		$	22.83	—		$	—


(a)	The grant date fair value per share of the RSUs is calculated as the closing market price of LendingTree's common stock at the time of the grant.

The total fair value of RSUs that vested during the years ended December 31, 2014, 2013 and 2012 was $11.0 million, $7.5 million and $4.3 million, respectively. The total fair value of RSUs with a performance condition that vested during the year ended December 31, 2014 was $22,000.

Restricted Stock

A summary of the changes in outstanding nonvested restricted stock is as follows:



	Restricted Stock				Restricted Stock Market Condition
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
			(per share)				(per share)
Nonvested at December 31, 2013	119,500		$	22.47	62,500		$	13.93
Granted ^(a)(b)	43,389		25.14		—		—
Vested	(39,832	)	22.47		(62,500	)	13.93
Forfeited	—		—		—		—
Nonvested at December 31, 2014	123,057		$	23.41	—		$	—


(a)	The grant date fair value per share of the restricted stock is calculated as the closing market price of LendingTree's common stock at the time of grant.


(b)	The grant date fair value per share of the restricted stock with an underlying market condition was calculated using a Monte Carlo simulation model. These shares vest based on the achievement of a market-based performance target within three years, but not earlier than one year from the grant date. The fair value on grant date is recognized over the requisite service period.

The total fair value of restricted stock that vested during the years ended December 31, 2014, 2013 and 2012 was $1.5 million, $3.2 million and $0.8 million, respectively. The total fair value of restricted stock with a market condition that vested during the year ended December 31, 2014 was $2.1 million.

INCOME TAXES

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

INCOME TAXES

Income Tax Provision

The components of the income tax benefit are as follows (in thousands):



	Year Ended December 31,
	2014			2013			2012
Current income tax benefit:
Federal	$	(371	)	$	(425	)	$	(1,358	)
State	(219		)	(92		)	(33		)
Current income tax benefit	(590		)	(517		)	(1,391		)
Deferred income tax provision (benefit):
Federal	63			63			147
State	43			1			(239		)
Deferred income tax provision (benefit)	106			64			(92		)
Income tax benefit	$	(484	)	$	(453	)	$	(1,483	)

A reconciliation of the income tax benefit to the amounts computed by applying the statutory federal income tax rate to loss from continuing operations before income taxes is shown as follows (in thousands):



	Year Ended December 31,
	2014			2013			2012
Income tax benefit at the federal statutory rate of 35%	$	(340	)	$	(394	)	$	(1,306	)
State income taxes, net of effect of federal tax benefit	(143		)	(60		)	(177		)
Other, net	(1		)	1			—
Income tax benefit	$	(484	)	$	(453	)	$	(1,483	)

Deferred Income Taxes

The tax effects of cumulative temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows (in thousands):



	December 31,
	2014			2013
Deferred tax assets:
Provision for accrued expenses	$	7,265		$	13,009
Net operating loss carryforwards ^(a)	23,370			26,365
Non-cash compensation expense	3,010			2,753
Goodwill, intangible and other assets	567			1,874
Other	1,296			1,125
Total gross deferred tax assets	35,508			45,126
Less: valuation allowance ^(b)	(40,121		)	(49,674		)
Total deferred tax assets, net of the valuation allowance	(4,613		)	(4,548		)
Deferred tax liabilities:
Other	(237		)	(194		)
Total gross deferred tax liabilities	(237		)	(194		)
Net deferred taxes	$	(4,850	)	$	(4,742	)


(a)	At December 31, 2014 and 2013, the Company had pre-tax consolidated federal NOLs of $35.6 million and $30.1 million, respectively. The federal NOLs will expire between 2031 and 2034. In addition, the Company has separate state NOLs of approximately $315.8 million at December 31, 2014 that will expire at various times between 2015 and 2034.


(b)	The valuation allowance is related to items for which it is "more likely than not" that the tax benefit will not be realized.

During the quarter ended December 31, 2014, the Company identified an error in the calculation of its previously disclosed deferred tax asset for net operating loss carryforwards. The error related primarily to the calculation of the Federal benefit of the state operating loss carryforwards. The Company has determined that the error is not material to prior periods. The Company has corrected this error as an out-of-period adjustment in 2014, resulting in a $5.8 million decrease to the deferred tax asset for net operating loss carryforwards with a corresponding decrease in the related valuation allowance, resulting in no net change to net deferred taxes in the table above. There was no impact to the accompanying consolidated statements of operations and comprehensive income, consolidated balance sheets or the consolidated statements of cash flows.

Deferred income taxes are presented in the accompanying consolidated balance sheets as follows (in thousands):



	December 31,
	2014			2013
Deferred tax assets	$	—		$	107
Deferred tax liabilities	(4,850		)	(4,849		)
Net deferred taxes	$	(4,850	)	$	(4,742	)

Valuation Allowance

The Company had a valuation allowance recorded at December 31, 2014 and 2013 related to the portion of net operating loss carryforwards and other deferred tax assets for which it is "more likely than not" that the tax benefit will not be realized.

A reconciliation of the beginning and ending balances of the deferred tax valuation allowance is as follows (in thousands):



	Year Ended December 31,
	2014			2013			2012
Balance, beginning of the period	$	49,674		$	54,961		$	68,138
Charges to earnings ^(a)	(3,707		)	(5,287		)	(13,176		)
Out of period adjustment ^(b)	(5,846		)	—			—
Balance, end of the period	$	40,121		$	49,674		$	54,961


(a)	Amount is primarily related to the Company's net operating loss carryforwards and other deferred tax assets, including accrued expenses and goodwill, which impacted the income tax provision.


(b)	Out of period adjustment in the valuation allowance is offset by an out of period adjustment to the deferred tax assets, as noted above, thus adjustment is limited to disclosure.

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands):



	Year Ended December 31,
	2014			2013
Balance, beginning of the period	$	36		$	—
Additions based on tax positions of prior years	—			36
Lapse of statute of limitations	(13		)	—
Balance, end of the period	$	23		$	36

Interest and, if applicable, penalties are recognized related to unrecognized tax benefits in income tax expense. Interest and penalties on unrecognized tax benefits included in income tax expense for each of the years ended December 31, 2014, 2013 and 2012 are immaterial. There are no significant accruals for interest and penalties at December 31, 2014 and 2013.

As of December 31, 2014 and 2013, the accrual for unrecognized tax benefits, including interest, was $25,000 and $40,000, respectively, all of which would benefit the effective tax rate if recognized.

Tax Audits

LendingTree is subject to audits by federal, state and local authorities in the area of income tax. These audits include questioning the timing and the amount of deductions and the allocation of income among various tax jurisdictions. Income taxes payable include amounts considered sufficient to pay assessments that may result from examination of prior year returns; however, any amounts paid upon resolution of issues raised may differ from the amount provided. Differences between the reserves for tax contingencies and the amounts owed by the Company are recorded in the period they become known. As of December 31, 2014, the Company is subject to a federal income tax examination for the tax years 2011 through 2013. In addition, the Company is subject to state and local tax examinations for the tax years 2011 through 2013.

The Company was indemnified by its previous owner for any federal and/or combined state income tax liabilities resulting from years prior to the spin-off in 2008. The Joint Committee of Taxation has completed its review of IAC's tax returns and approved the audit settlement previously agreed to with the Internal Revenue Services for the years ended December 31, 2001 through 2008. The statute of limitations for the years 2001 through 2009 expired on July 1, 2014. Various state and local jurisdictions are open to examination, the most significant of which is New York, for various tax years beginning with 2006.

COMMITMENTS

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS

Operating Leases

The Company leases office space, equipment and services used in connection with its operations under various operating leases, many of which contain escalation clauses. The Company's primary operating leases relate to its office space in Charlotte, North Carolina and Burlingame, California, each of which expire in 2015.

Future minimum payments as of December 31, 2014 under operating lease agreements having an initial or remaining non-cancelable lease term in excess of one year are as follows (in thousands):



Year ending December 31,	Amount
2015	$	1,003
Total ^(a)	$	1,003


(a)	The Company subleases certain of its office space to third parties. These future minimum payments have not been reduced by the $0.1 million of minimum sublease rental income to be received in the future under non-cancelable subleases.

Rental expense for all operating leases, except those with terms of a month or less that were not renewed, charged to continuing operations was $1.1 million, $1.3 million and $1.1 million, net of $0, $18,000 and $42,000 sublease rental income, for each of the years ended December 31, 2014, 2013 and 2012, respectively, and a majority of which is included in general and administrative expense in the consolidated statements of operations and comprehensive income.

Surety Bonds

The Company has funding commitments that could potentially require performance in the event of demands by third parties or contingent events, as follows (in thousands):



	Commitments Due By Period
	Total		Less Than 1 year		1-3 years		3-5 years		More Than 5 years
Surety bonds	$	4,648	$	4,648	$	—	$	—	$	—

State laws and regulations generally require businesses which engage in mortgage brokering activity to maintain a mortgage broker or similar license. Mortgage brokering activity is generally defined to include, among other things, receiving valuable consideration for offering assistance to a buyer in obtaining a residential mortgage or soliciting financial and mortgage information from the public and providing that information to an originator of residential mortgage loans. All states require that the Company maintain surety bonds for potential claims.

CONTINGENCIES	12 Months Ended
CONTINGENCIES	Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
CONTINGENCIES	CONTINGENCIES Overview LendingTree 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 a manner that could have a material and adverse impact on the business. With respect to the matters disclosed in this Note 11, 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 December 31, 2014 and 2013, the Company has a litigation settlement accrual of $2.8 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. 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 U.S. 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 the Company's maintenance of the asserted patents. Defendant NexTag asserted defenses of laches and equitable estoppel. In July 2011, the Company reached a settlement agreement with Leadpoint, Inc., pursuant to which all claims against Leadpoint, Inc. and all counter-claims 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 defenses of laches and equitable estoppel. The jury found in the Company’s favor on the defendants' counterclaims alleging inequitable conduct and antitrust violations. Judgment was entered on March 31, 2014. After the court entered judgment, on May 27, 2014, the Company reached a settlement agreement with defendant Adchemy, Inc., including an agreement to dismiss and withdraw 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 a portion of its attorneys' fees and costs totaling $2.3 million, plus interest. A reserve of $2.3 million for this matter is included in the accompanying consolidated balance sheet as of December 31, 2014. The trial and post-trial motion process is now complete. In November 2014, the Company filed a notice of appeal to the U.S. Court of Appeals for the Federal Circuit with respect to the jury verdict concerning Zillow, Inc. and Nextag, Inc. and the award of attorneys' fees. In March 2015, the U.S. Court of Appeals for the Federal Circuit granted the Company's motion to stay appellate briefing pending an en banc review by such court of the laches defense in an unrelated patent infringement matter and ruled in favor of Zillow, Inc. on an immaterial amount of legal fees. 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 order remains 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 LendingTree, LLC seeking a judgment that it infringed a patent held by plaintiff. The plaintiff alleges that LendingTree, LLC 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, LLC, together with defendants in related matters, requested that the stay be lifted and filed a motion to dismiss the case. In January 2015, the court granted defendants' motions for invalidity and dismissed the case. In February 2015, the plaintiff filed a notice of appeal to the U.S. Court of Appeals for the Federal Circuit. The Company believes the plaintiff's allegations lack merit and intends to defend against this action vigorously. AlphaCap Ventures AlphaCap Ventures LLC v. LendingTree, LLC, No. 2:15CV00062 (U.S. Dist. Ct, E.D.Tex). In January 2015, the plaintiff filed a patent infringement lawsuit against LendingTree, LLC seeking a judgment that LendingTree, LLC infringed three patents held by the plaintiff. The plaintiff alleges that LendingTree, LLC infringes each of U.S. Patent No. 7,848,976, U.S. Patent No. 7,908,208 and U.S. Patent No. 8,433,630, each such patent entitled "Private Entity Profile Network" and relating generally to a computer-implemented method of collecting and managing information related to financing. The plaintiff seeks damages (including pre- and post-judgment interest thereon), injunctive relief and such other costs as the court may deem proper. The Company believes the plaintiff's allegations lack merit and intends to defend against this action vigorously. Other Litigation Massachusetts Division of Banks On February 11, 2011, the Massachusetts Division of Banks (the "Division") delivered a Report of Examination/Inspection to LendingTree, LLC, which identified various alleged violations of Massachusetts and federal laws, including the alleged insufficient delivery by LendingTree, LLC 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, LLC would enter into the Consent Agreement and Order, they would agree not to pursue any analogous allegations that they otherwise might assert. None of 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, LLC 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 marketplace 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 December 31, 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. The CID indicated that this investigation was 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 was alleged, nor were any specific fines or penalties discussed in the CID. In January 2015, the FTC closed this investigation; no fines or penalties were assessed against the Company. Litigation Related to Discontinued Operations 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). In November 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 includes 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. In February 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 December 31, 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. In December 2014, the U.S. Court of Appeals for the Fourth Circuit determined that the district court's order was not yet final, and accordingly, HLC's appeal was dismissed. HLC intends to renew its appeal following the issuance of a final order by the district court. The district court has stayed this matter pending plaintiffs' investigation and subsequent report to the district court as to whether any class members will seek trials on individual damages.

RELATED PARTY TRANSACTIONS	12 Months Ended
RELATED PARTY TRANSACTIONS	Dec. 31, 2014
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	RELATED PARTY TRANSACTIONS During 2013, the Company made a contribution of $0.4 million to an educational trust. The Company's Chairman and Chief Executive Officer is the trustee. However, he will not receive compensation as trustee and neither he nor any of his family members are entitled to distributions from the trust. On November 7, 2012, the audit committee, compensation committee and board of directors approved an early redemption of 2,097.67 outstanding shares of Series A Redeemable Preferred Stock of the Company's wholly-owned subsidiary LendingTree Holdings Corp. owned by the Chairman and CEO, including all accrued dividends, for $3.3 million in cash. The redemption closed on November 30, 2012. The redemption value of the preferred stock was determined in part based on a valuation of the discounted remaining dividend stream through the mandatory redemption date of August 20, 2013.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References + Details

BENEFIT PLANS	12 Months Ended
BENEFIT PLANS	Dec. 31, 2014
Defined Contribution Pension and Other Postretirement Plans Disclosure [Abstract]
BENEFIT PLANS	BENEFIT PLANS The Company operates a retirement savings plan for its employees in the United States that is qualified under Section 401(k) of the Internal Revenue Code. Employees are eligible to enroll in the plan upon date of hire. Participating employees may contribute up to 50% of their pre-tax earnings, but not more than statutory limits (generally $17,500, $17,500 and $17,000 for 2014, 2013 and 2012, respectively). The company match contribution is fifty cents for each dollar a participant contributes to the plan, with a maximum contribution of 6% of a participant's eligible earnings. Matching contributions are invested in the same manner as each participant's voluntary contributions in the investment options provided under the plan. LendingTree stock is not included in the available investment options or the plan assets. Funds contributed to the plan vest according to the participant's years of service, with less than three years of service vesting at 0%, and three years or more of service vesting at 100%. Matching contributions were approximately $0.5 million, $0.2 million and $0.3 million for the years ended December 31, 2014, 2013 and 2012, respectively.

RESTRUCTURING EXPENSE

12 Months Ended

Dec. 31, 2014

Restructuring and Related Activities [Abstract]

RESTRUCTURING EXPENSE

Accrued restructuring costs primarily relate to lease obligations for call center leases exited in 2010, which are expected to be completed by 2015, and severance for headcount reductions in corporate infrastructure departments. Restructuring expense and payments against liabilities are as follows (in thousands):



	Employee Termination Costs			Continuing Lease Obligations			Other			Total
Balance at December 31, 2011	$	129		$	1,207		$	—		$	1,336
Restructuring income	(29		)	(47		)	(70		)	(146		)
Payments	(100		)	(254		)	70			(284		)
Balance at December 31, 2012	$	—		$	906		$	—		$	906
Restructuring income	—			56			—			56
Payments	—			(500		)	—			(500		)
Balance at December 31, 2013	$	—		$	462		$	—		$	462
Restructuring expense	—			13			—			13
Payments	—			(297		)	—			(297		)
Balance at December 31, 2014	$	—		$	178		$	—		$	178

The Company does not expect to incur significant additional costs related to the restructuring noted above.

DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

The revenue and net income that are reported as discontinued operations in the accompanying consolidated statements of operations and comprehensive income are as follows (in thousands):



	Year Ended December 31,
	2014			2013			2012
Revenue	$	14,256		$	(1,520	)	$	86,833

Income (loss) before income taxes ^(a)	$	10,392		$	(4,887	)	$	25,750
Income tax benefit (expense)	(543		)	(54		)	(1,249		)
Gain from sale of discontinued operations, net of tax	—			9,561			24,373
Net income	$	9,849		$	4,620		$	48,874


(a)	Income before income taxes for the year ended December 31, 2012 includes goodwill and intangible asset impairment charges of $1.4 million and restructuring expense totaling $0.3 million. Income before income taxes for the year ended December 31, 2014 includes income from a reduction in the loan loss reserve of $14.1 million. See additional information in "Loan Loss Obligations" below.

LendingTree Loans

On June 6, 2012, the Company sold substantially all of the operating assets of its LendingTree Loans business for $55.9 million in cash to Discover. Of the 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 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 December 31, 2014, $16.1 million is being held in escrow in accordance with the agreement with Discover for certain loan loss obligations that remain with the Company following the sale. As a result of a settlement agreement in 2014 with a secondary market purchaser of loans, $12.1 million of such amount is expected to be released from escrow in December 2015. The escrowed amount is recorded as restricted cash at December 31, 2014.

Separate from the asset purchase agreement, LendingTree 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 2013.

Discover has participated as a marketplace lender since closing of the transaction.

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 2014.

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.

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 December 31, 2014, approximately $16.1 million is being held in escrow pending resolution of certain of these contingent liabilities. As a result of a settlement agreement in 2014 with a secondary market purchaser of loans, $12.1 million of such amount is expected to be released from escrow in December 2015.

Prior to the sale of substantially all of the operating assets of LendingTree Loans in June 2012, it originated approximately 234,000 loans with an original issue balance of $38.9 billion.

During the fourth quarter of 2014, LendingTree Loans completed a settlement agreement for $5.4 million with the largest investor to which it had sold loans. This investor accounted for approximately 40% of both the total number of loans sold and the original issue balance. This settlement related to all existing and future losses on loans sold to this investor. The settlement was paid in the fourth quarter of 2014 with restricted cash of $3.1 million and cash on hand of $2.3 million. The settlement with this investor in the fourth quarter of 2014 and the impact this settlement had on the estimate of the remaining loan loss obligations resulted in income of $14.1 million, which is included in income from discontinued operations in the accompanying consolidated statements of operations and comprehensive income. The adjustment to the loan loss reserve did not result in tax expense recognition due to the Company's full valuation allowance against its deferred tax assets.

In the second quarter of 2012, LendingTree Loans completed settlements with two buyers of previously purchased loans. These settlements of $0.5 million and $3.3 million, respectively, relate to all existing and substantially all future losses on loans sold to these buyers. In the second quarter of 2014, LendingTree Loans completed settlements with two buyers of previously purchased loans.

The Company has been negotiating with certain of the remaining 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 the 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, the Company's own settlement experience, 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 $6.3 million to $11.2 million at December 31, 2014. The reserve balance recorded as of December 31, 2014 was $8.8 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, LendingTree 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.

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):



	Year Ended December 31,
	2014			2013			2012
Loan loss reserve, beginning of period	$	28,543		$	27,182		$	31,512
Provision adjustments ^(a)	(14,144		)	1,531			6,977
Change in estimate ^(b)	—			—			(6,493		)
Charge-offs to reserves	(5,649		)	(170		)	(4,814		)
Loan loss reserve, end of period	$	8,750		$	28,543		$	27,182


(a)	As discussed above, during 2014, LendingTree Loans completed a settlement agreement with the largest investor to which it had sold loans, resulting in an adjustment to the provision.


(b)	During 2012, in order to reflect the Company's exit from the mortgage loan origination business and its commercial objective to pursue bulk settlements with investors, management revised the estimation process for evaluating the adequacy of the reserve for loan losses resulting in a change in estimate.

The liability for losses on previously sold loans is included in current liabilities of discontinued operations in the accompanying consolidated balance sheets as of December 31, 2014 and 2013.

Warehouse Lines of Credit

As a result of the closing of the sale of substantially all of the operating assets of the LendingTree Loans business on June 6, 2012, all three then-existing warehouse lines of credit totaling $325.0 million expired and terminated on July 21, 2012. Borrowings under these lines of credit were used to fund, and were secured by, consumer residential loans that were held for sale. Loans under these lines of credit were repaid using proceeds from the sales of loans by LendingTree Loans. The LendingTree Loans business was highly dependent on the availability of these warehouse lines.

Fair Value Measurements

A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Transfers in and out of Level 1, 2 or 3 are recorded at fair value at the beginning of the reporting period.

Following is a description of valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the fair value hierarchy.

LendingTree Loans entered into commitments with consumers to originate loans at specified interest rates (interest rate lock commitments—"IRLCs"). IRLCs were reported as derivative instruments at fair value, with changes in fair value being recorded in discontinued operations. IRLCs for loans to be sold to investors using a mandatory or assignment of trade ("AOT") method were hedged using "to be announced mortgage-backed securities" ("TBA MBS") and were valued using quantitative risk models. The IRLCs derive their base value from an underlying loan type with similar characteristics using the TBA MBS market, which is actively quoted and easily validated through external sources. The most significant data inputs used in this valuation included, but were not limited to, loan type, underlying loan amount, note rate, loan program and expected sale date of the loan. IRLCs for loans sold to investors on a best-efforts basis were hedged using best-efforts forward delivery commitments. LendingTree Loans valued IRLCs for loans sold to investors on a best-efforts basis using quantitative risk models on a loan level basis. The most significant data inputs used in the valuation of these IRLCs included, but were not limited to, investor pricing tables stratified by product, note rate and term, adjusted for current market conditions. These valuations were adjusted at the loan level to consider the servicing-release premium and loan pricing adjustments specific to each loan. LendingTree Loans applied an anticipated loan funding probability based on its own experience to value IRLCs, which resulted in the classification of these derivatives as Level 3. The value of the underlying loans and the anticipated loan funding probability were the most significant assumptions affecting the valuation of IRLCs. A significant change in the unobservable inputs could have resulted in a significant change in the ending fair value measurement. At December 31, 2014 and 2013, there are no IRLCs outstanding.

Loans held for sale measured at fair value and sold to investors using a mandatory or AOT method were also hedged using TBA MBS and valued using quantitative risk models. The valuation was based on the loan amount, note rate, loan program and expected sale date of the loan. Loans held for sale measured at fair value and sold to investors on a best-efforts basis were hedged using best-efforts forward delivery commitments and were valued using quantitative risk models. The most significant data inputs used in the valuation of these loans included investor pricing tables stratified by product, note rate and term, adjusted for current market conditions. Loans held for sale, excluding impaired loans, were classified as Level 2. Loans held for sale measured at fair value that became impaired were transferred from Level 2 to Level 3, as the estimate of fair value was based on LendingTree Loans' experience considering lien position and current status of the loan. A significant change in the unobservable inputs could have resulted in a significant change in the ending fair value measurement. LendingTree Loans recognized interest income separately from other changes in fair value.

Under LendingTree Loans' risk management policy, LendingTree Loans economically hedged the changes in fair value of IRLCs and loans held for sale caused by changes in interest rates by using TBA MBS and entering into best-efforts forward delivery commitments. These hedging instruments were recorded at fair value with changes in fair value recorded in current earnings as a component of revenue from the origination and sale of loans. TBA MBS used to hedge both IRLCs and loans were valued using quantitative risk models based primarily on inputs related to characteristics of the MBS stratified by product, coupon and settlement date. These derivatives were classified as Level 2. Best-efforts forward delivery commitments were valued using quantitative risk models based on investor pricing tables stratified by product, note rate and term, adjusted for current market conditions. An anticipated loan funding probability was applied to value best-efforts commitments hedging IRLCs, which resulted in the classification of these contracts as Level 3. The current base loan price and the anticipated loan funding probability were the most significant assumptions affecting the value of the best-efforts commitments. A significant change in the unobservable inputs could have resulted in a significant change in the ending fair value measurement. The best-efforts forward delivery commitments hedging loans held for sale were classified as Level 2, so such contracts were transferred from Level 3 to Level 2 at the time the underlying loan was originated. For the purposes of the tables below, we refer to TBA MBS and best-efforts forward delivery commitments collectively as "Forward Delivery Contracts".

Assets and liabilities measured at fair value on a recurring basis

There were no assets and liabilities that are measured at fair value on a recurring basis at December 31, 2014 and 2013; however, there were during the year ended December 31, 2012.

The changes in assets and liabilities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31, 2012 are as follows (in thousands):



	December 31, 2012
	Interest Rate Lock Commitments			Forward Delivery Contracts			Loans Held for Sale
Balance at January 1, 2012	$	9,122		$	19		$	295
Transfers into Level 3	—			—			564
Transfers out of Level 3	—			(845		)	—
Total net gains (losses) included in earnings (realized and unrealized)	73,378			846			(147		)
Purchases, sales, and settlements:
Purchases	—			—			—
Sales	(5,640		)	(20		)	(491		)
Settlements	(3,401		)	—			(221		)
Transfers of IRLCs to closed loans	(73,459		)	—			—
Balance at December 31, 2012	$	—		$	—		$	—

The following presents the gains (losses) included in earnings for the year ended December 31, 2012 relating to assets and liabilities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands):