2020 Annual Report to Stockholders
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IAC/InterActiveCorp Report on Form 10-K for the Fiscal Year ended December 31, 2020 As filed with the Securities and Exchange Commission on February 17 , 2021 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2020 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-39356 IAC/INTERACTIVECORP (Exact name of registrant as specified in its charter) Delaware 84-3727412 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 555 West 18th Street, New York, New York 10011 (Address of registrant’s principal executive offices) (212) 314-7300 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of exchange on which registered Common Stock, par value $0.001 IAC The Nasdaq Stock Market LLC Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐ Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by a check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal controls over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C 7262(b)) by the registered public accounting firm that prepared or issues its audit report. ☐ Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of January 29, 2021, the following shares of the Registrant’s Common Stock were outstanding: Common Stock ....................................................................... 82,977,602 Class B Common Stock .................................................................. 5,789,499 Total............................................................................ 88,767,101 As of June 30, 2020, the Registrant’s common stock was not publicly traded. Documents Incorporated By Reference: Portions of the Registrant’s proxy statement for its 2021 Annual Meeting of Stockholders are incorporated by reference into Part III herein. TABLE OF CONTENTS Page Number PART I Item 1. Business ....................................................... 3 Item 1A. Risk Factors .................................................... 22 Item 1B. Unresolved Staff Comments ......................................... 37 Item 2. Properties ...................................................... 37 Item 3. Legal Proceedings ................................................. 38 Item 4. Mine Safety Disclosures ............................................ 40 PART II Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ........................................ 41 Item 6. Selected Financial Data ............................................. 41 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ...................................................... 41 Item 7A. Quantitative and Qualitative Disclosures About Market Risk .................. 70 Item 8. Consolidated and Combined Financial Statements and Supplementary Data ........ 71 Note 1 – Organization .............................................. 80 Note 2 – Summary of Significant Accounting Policies ........................ 82 Note 3 – Income Taxes ............................................. 97 Note 4 – Business Combination ....................................... 101 Note 5 – Goodwill and Intangible Assets ................................. 103 Note 6 – Financial Instruments and Fair Value Measurements .................. 105 Note 7 – Long-Term Debt ........................................... 109 Note 8 – Shareholders’ Equity ........................................ 111 Note 9 – Accumulated Other Comprehensive Loss .......................... 111 Note 10 – Earnings Per Share ......................................... 113 Note 11 – Stock-Based Compensation ................................... 113 Note 12 – Segment Information ....................................... 118 Note 13 – Leases ................................................. 123 Note 14 – Commitments and Contingencies .............................. 125 Note 15 – Related Party Transactions ................................... 127 Note 16 – Benefit Plans ............................................. 129 Note 17 – Financial Statement Details .................................. 130 Note 18 – Quarterly Results (Unaudited) ................................. 132 Note 19 – Subsequent Events ......................................... 134 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ...................................................... 135 Item 9A. Controls and Procedures ............................................ 135 Item 9B. Other Information ................................................ 135 PART III Item 10. Directors, Executive Officers and Corporate Governance ..................... 136 Item 11. Executive Compensation ............................................ 136 1 Page Number Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ............................................... 136 Item 13. Certain Relationships and Related Transactions, and Director Independence ........ 136 Item 14. Principal Accounting Fees and Services .................................. 136 PART IV Item 15. Exhibits and Financial Statement Schedules ............................... 137 2 PART I Item 1. Business OVERVIEW Who We Are IAC operates Vimeo, Dotdash and Care.com, among many other businesses, and also has majority ownership of ANGI Homeservices, which operates HomeAdvisor, Angie’s List and Handy. As used herein, “IAC,” the “Company,” “we,” “our,” “us” and other similar terms refer to IAC/ InterActiveCorp and its subsidiaries (unless the context requires otherwise). Our History IAC began as a hybrid media/electronic retailing company over twenty-five years ago. Since then, IAC (directly and through predecessor entities) has transformed itself into a leading Internet company through the development, building, acquisition and distribution to its stockholders of a number of businesses over two decades, and IAC continues to build companies and invest opportunistically. From and after the late 1990s, we acquired a number of e-commerce companies, including Ticketmaster Group, Hotel Reservations Network (later renamed Hotels.com), Expedia.com, Match.com, LendingTree, TripAdvisor, HomeAdvisor and AskJeeves, as well as Interval International. In 2005, we completed the separation of our travel and travel-related businesses and investments into an independent public company called Expedia, Inc. (now known as Expedia Group, Inc.). In 2008, we separated into five independent, publicly traded companies: IAC, HSN, Inc. (now part of Qurate Retail, Inc.), Interval Leisure Group, Inc. (now part of Marriott Vacations Worldwide Corporation), Ticketmaster (now part of Live Nation, Inc.) and Tree.com, Inc. (now LendingTree, Inc.). Following this transaction, we continued to invest in and acquire e-commerce companies, including About.com (now known as Dotdash) and a number of online dating companies in the United States and various jurisdictions abroad. In 2017, we completed the combination of the businesses in our former HomeAdvisor financial reporting segment with those of Angie’s List, Inc. under a new publicly traded holding company that we control, ANGI Homeservices Inc. (“ANGI Homeservices”). And in 2018, through ANGI Homeservices, we acquired Handy Technologies, Inc., a leading platform in the United States for connecting consumers looking for household services (primarily cleaning