Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Conclusion Regarding the Effectiveness of the Company's Disclosure Controls and Procedures
The Company monitors and evaluates on an ongoing basis its disclosure controls and procedures and internal control over financial reporting in order to improve their overall effectiveness. In the course of these evaluations, the Company modifies and refines its internal processes as conditions warrant.
As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), conducted an evaluation, as of the end of the period covered by this report, of the effectiveness of the Company's disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based on this evaluation, our CEO and our CFO concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report.
Management's Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) for the Company. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020. In making this assessment, our management used the criteria for effective internal control over financial reporting described in “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this assessment, management has determined that, as of December 31, 2020, the Company’s internal control over financial reporting is effective. The effectiveness of our internal control over financial reporting as of December 31, 2020 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their attestation report, included herein.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control Over Financial Reporting
The Company monitors and evaluates on an ongoing basis its internal control over financial reporting in order to improve its overall effectiveness. In the course of these evaluations, the Company modifies and refines its internal processes as conditions warrant. As required by Rule 13a-15(d), our management, including our CEO and our CFO, also conducted an evaluation of the Company's internal control over financial reporting to determine whether any changes occurred during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. Based on that evaluation, there has been no such change during the quarter ended December 31, 2020.
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of ANGI Homeservices Inc.
Opinion on Internal Control Over Financial Reporting
We have audited ANGI Homeservices Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, ANGI Homeservices Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2020 and 2019, and the related consolidated statements of operations, comprehensive operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and the financial statement schedule listed in the Index at Item 15(a), and our report dated February 16, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
New York, New York
February 16, 2021
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Item 9B. Other Information
Not applicable.
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PART III
The information required by Part III (Items 10, 11, 12, 13 and 14) has been incorporated herein by reference to the definitive Proxy Statement to be used in connection with the ANGI Homeservices 2021 Annual Meeting of Stockholders (the “2021 Proxy Statement”), as set forth below in accordance with General Instruction G(3) of Form 10-K.
Item 10. Directors, Executive Officers and Corporate Governance
The information required by Items 401 and 405 of Regulation S-K relating to directors and executive officers of ANGI Homeservices and their compliance with Section 16(a) of the Exchange Act is set forth in the sections entitled “Information Concerning Director Nominees” and “Information Concerning ANGI Executive Officers Who Are Not Directors,” and “Delinquent Section 16(a) Reports,” respectively, in the 2021 Proxy Statement and is incorporated herein by reference. The information required by Item 406 of Regulation S-K relating to the ANGI Homeservices Code of Ethics is set forth under the caption “Part I-Item 1-Business-Description of Our Businesses-Additional Information-Code of Ethics” of this annual report and is incorporated herein by reference. The information required by subsections (c)(3), (d)(4) and (d)(5) of Item 407 of Regulation S-K is set forth in the sections entitled “Corporate Governance” and “The Board and Board Committees” in the 2021 Proxy Statement and is incorporated herein by reference.
Item 11. Executive Compensation
The information required by Item 402 of Regulation S-K relating to executive and director compensation and pay ratio disclosure is set forth in the sections entitled “Executive Compensation,” “Director Compensation” and “Pay Ratio Disclosure,” respectively, in the 2021 Proxy Statement and is incorporated herein by reference. The information required by subsections (e)(4) and (e)(5) of Item 407 of Regulation S-K relating to certain compensation committee matters is set forth in the sections entitled “The Board and Board Committees,” “Compensation Committee Report” and “Compensation Committee Interlocks and Insider Participation” in the 2021 Proxy Statement and is incorporated herein by reference; provided, that the information set forth in the section entitled “Compensation Committee Report” shall be deemed furnished herein and shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information regarding ownership of the Company’s Class A common stock and Class B common stock required by Item 403 of Regulation S-K and securities authorized for issuance under our equity compensation plans required by Item 201(d) of Regulation S-K is set forth in the sections entitled “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information,” respectively, in the 2021 Proxy Statement and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information regarding certain relationships and related transactions involving ANGI Homeservices required by Item 404 of Regulation S-K and director independence determinations required by Item 407(a) of Regulation S-K is set forth in the sections entitled “Certain Relationships and Related Person Transactions” and “Corporate Governance,” respectively, in the 2021 Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
Information required by Item 9(e) of Schedule 14A regarding the fees and services of the Company’s independent registered public accounting firm and the pre-approval policies and procedures applicable to services provided to the Company by such firm is set forth in the sections entitled “Fees Paid to Our Independent Registered Public Accounting Firm” and “Audit and Non-Audit Services Pre-Approval Policy,” respectively, in the 2021 Proxy Statement and is incorporated herein by reference.
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) List of documents filed as part of this Report:
(1) Consolidated Financial Statements of ANGI Homeservices
Report of Independent Registered Public Accounting Firm: Ernst & Young LLP.
Consolidated Balance Sheet as of December 31, 2020 and 2019.
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Consolidated Statement of Operations for the Years Ended December 31, 2020, 2019 and 2018.
Consolidated Statement of Comprehensive Operations for the Years Ended December 31, 2020, 2019 and 2018.
Consolidated Statement of Shareholders’ Equity for the Years Ended December 31, 2020, 2019 and 2018.
Consolidated Statement of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018.
Notes to Consolidated Financial Statements.
(2) Consolidated Financial Statement Schedule of ANGI Homeservices
Schedule
Number
II Valuation and Qualifying Accounts.
All other financial statements and schedules not listed have been omitted since the required information is either included in the Consolidated Financial Statements or the notes thereto, is not applicable or is not required.
(3) Exhibits
The documents set forth below, numbered in accordance with Item 601 of Regulation S-K, are filed herewith, incorporated by reference herein by reference to the location indicated or furnished herewith.
Exhibit Number Description Location
2.1 Agreement and Plan of Merger, dated as of May 1, 2017, as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated as of August 26, 2017, by and among Angie's List, Inc., IAC/InterActiveCorp, ANGI Homeservices Inc. and Casa Merger Sub, Inc. Annex B to the Proxy Statement/Prospectus of Angie's List, Inc. and ANGI Homeservices Inc., filed on August 30, 2017 pursuant to Rule 424(b)(3) .
3.1 Amended and Restated Certificate of Incorporation of ANGI Homeservices Inc. Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017 .
3.2 Amended and Restated Bylaws of ANGI Homeservices Inc. Exhibit 3.2 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017 .
4.1
Description of Securities (1) .
4.2 Investor Rights Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp. Exhibit 2.2 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017 .
4.3 Registration Rights Agreement, dated October 19, 2018, by and among ANGI Homeservices Inc. and the holders signatory thereto. Exhibit 4.2 to the Registration Statement on Form S-3ASR (SEC File No. 333-227932), filed on October 22, 2018.
4.4 Indenture, dated as of August 20, 2020, among ANGI Group, LLC, the guarantors party thereto and Computershare Trust Company, N.A., as trustee.
Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed on August 20, 2020.
10.1 Contribution Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp. (2)
Exhibit 2.1 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017 .
10.2 Services Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp. (2)
Exhibit 2.3 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017 .
10.3 Tax Sharing Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp. (2)
Exhibit 2.4 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017 .
10.4 Employee Matters Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp. (2)
Exhibit 2.5 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017 .
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10.5 ANGI Homeservices Inc. 2017 Stock and Annual Incentive Plan. (3)
Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017 .
10.6 Form of Notice and Terms and Conditions for Restricted Stock Units granted under the ANGI Homeservices Inc. 2017 Stock and Annual Incentive Plan. (3)
Exhibit 10.8 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017 .
10.7 Form of Notice and Terms and Conditions for Stock Options granted under the ANGI Homeservices Inc. 2017 Stock and Annual Incentive Plan. (3)
Exhibit 10.9 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017 .
10.8 Form of Terms and Conditions for Stock Appreciation Rights granted under the ANGI Homeservices Inc. 2017 Stock and Annual Incentive Plan. (3)
Exhibit 10.2 to the Registration Statement on Form S-4, as amended (SEC File No. 333-219064), filed on August 28, 2017 .
10.9 Employment Agreement between William B. Ridenour and ANGI Homeservices Inc., dated as of November 18, 2018. (3)
Exhibit 10-9 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
10.1 Employment Agreement between Jamie Cohen and ANGI Homeservices Inc., dated as of March 12, 2019. (3)
Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019.
10.11 Employment Agreement between Craig Smith and ANGI Homeservices Inc., dated as of August 24, 2017. (3)
Exhibit 10.7 to the Registration Statement on Form S-4, as amended (SEC File No. 333-219064), filed on August 28, 2017 .
10.12 Employment Agreement between Allison Lowrie and ANGI Homeservices Inc., dated as of August 24, 2017. (3)
Exhibit 10.8 to the Registration Statement on Form S-4, as amended (SEC File No. 333-219064), filed on August 28, 2017 .
10.13 Employment Agreement between Shannon Shaw and ANGI Homeservices Inc., dated as of February 22, 2019. (3)
Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019.
10.14 Employment Agreement between Oisin Hanrahan and ANGI Homeservices Inc., dated as of June 26, 2019. (3)
Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2019.
10.15 Employment Agreement between Angela R. Hicks Bowman and ANGI Homeservices Inc., dated as of June 29, 2017. (3)
Exhibit 10.4 to the Registration Statement on Form S-4 (SEC File No. 333-219064), filed on June 30, 2018.
10.16 Amended and Restated Credit Agreement, dated as of November 5, 2018, by and among ANGI Homeservices Inc., the Lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on November 9, 2018.
10.17 Amendment No. 1, dated as of August 12, 2020, among ANGI Homeservices Inc., the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent.
Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on August 12, 2020.
10.18 Joinder and Reaffirmation Agreement, dated as of August 12, 2020, among ANGI Homeservices Inc., ANGI Group, LLC, each of the parties listed on Schedule 1 thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent.
Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed on August 12, 2020.
10.19 Advisory Agreement, dated September 8, 2020, between ANGI Homeservices Inc. and Craig Smith. (3)
Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on September 11, 2020.
21.1
Subsidiaries of the Registrant as of December 31, 2020. (1)
23.1
Consent of Ernst & Young LLP. (1)
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31.1
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (1)
31.2
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (1)
32.1
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (4)
32.2
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (4)
101.INS Inline XBRL Instance (the instance document
does not appear in the Interactive Data File because
its XBRL tags are embedded within the Inline XBRL
document)
101.SCH Inline XBRL Taxonomy Extension Schema (1)
101.CAL Inline XBRL Taxonomy Extension Calculation (1)
101.DEF Inline XBRL Taxonomy Extension Definition (1)
101.LAB Inline XBRL Taxonomy Extension Labels (1)
101.PRE Inline XBRL Taxonomy Extension Presentation (1)
104 Cover Page Interactive Data File (formatted as Inline
XBRL and contained in Exhibit 101)
_________________________________________
(1) Filed herewith.
(2) Annexes, schedules and/or exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted attachment to the SEC on a confidential basis upon request.
(3) Reflects management contracts and management and director compensatory plans.
(4) Furnished herewith.
Item 16. Form 10-K Summary
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
February 16, 2021 ANGI Homeservices Inc.
By: /s/ GLENN H. SCHIFFMAN
Glenn H. Schiffman
Interim Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on February 16, 2021:
Signature Title
/s/ WILLIAM B. RIDENOUR Chief Executive Officer and Director
William B. Ridenour
/s/ GLENN H. SCHIFFMAN Interim Chief Financial Officer and Director
Glenn H. Schiffman
/s/ CHRISTOPHER W. BOHNERT Senior Vice President, Principal Accounting Officer
Christopher W. Bohnert
/s/ JOSEPH LEVIN Chairman of the Board and Director
Joseph Levin
/s/ THOMAS R. EVANS Director
Thomas R. Evans
/s/ ALESIA J. HAAS Director
Alesia J. Haas
/s/ KENDALL HANDLER Director
Kendall Handler
/s/ ANGELA R. HICKS BOWMAN Director
Angela R. Hicks Bowman
/s/ MARK STEIN Director
Mark Stein
/s/ SUZY WELCH Director
Suzy Welch
/s/ GREGG WINIARSKI Director
Gregg Winiarski
/s/ YILU ZHAO Director
Yilu Zhao
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Schedule II
ANGI HOMESERVICES INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Description Balance at
Beginning
of Period Charges to
Earnings Charges to
Other Accounts Deductions Balance at
End of Period
(In thousands)
2020
Credit loss reserves $ 19,066 $ 78,229 (a)
$ ( 152 ) $ ( 71,097 ) (c)
$ 26,046
Revenue reserves 1,227 103,627 (b)
— ( 103,061 ) (d)
1,793
Deferred tax valuation allowance 71,472 ( 235 ) (e)
5,839 (f)
— 77,076
Other reserves 5,057 7,495
2019
Credit loss reserves $ 15,622 $ 64,278 (a)
$ ( 46 ) $ ( 60,788 ) (c)
$ 19,066
Revenue reserves 981 111,069 (b)
( 2 ) ( 110,821 ) (d)
1,227
Deferred tax valuation allowance 58,903 14,083 (g)
( 1,514 ) (f)
— 71,472
Other reserves 3,919 5,057
2018
Credit loss reserves $ 8,375 $ 47,242 (a)
$ ( 501 ) $ ( 39,494 ) (c)
$ 15,622
Revenue reserves 888 86,901 (b)
( 5 ) ( 86,803 ) (d)
981
Deferred tax valuation allowance 61,563 ( 599 ) (h)
( 2,061 ) (f)
— 58,903
Other reserves — 3,919
_________________________________________________________
(a) Additions to the credit loss reserve are charged to expense.
(b) Additions to the revenue reserves are charged against revenue.
(c) Write-off of fully reserved accounts receivable balance, which occurs when they are deemed uncollectible.
(d) Write-off of revenue reserve as credits are granted to service professionals
(e) Amount is primarily related to an increase in foreign NOLs largely offset by a decrease in state NOLs.
(f) Amount is primarily related to currency translation adjustments on foreign NOLs.
(g) Amount is primarily related to foreign and state NOLs.
(h) Amount is primarily related to state NOLs.
104