What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-03 compared with 2022-08-04 · 119 added, 87 removed, 398 unchanged (34% of the section changed)

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cost of services rendered

1 unchanged sentence

Depreciation and amortization expense

Goodwill and intangibles impairment

Restructuring charges

12 unchanged sentences

(In millions, except share data)

September 30,

Current Assets:

28 unchanged sentences

2,000,000,000 shares authorized;

86,048,827 shares issued and 81,487,995 shares outstanding at June 30, 2022 and 85,798,765 shares issued and 83,232,481 shares outstanding as of December 31, 2021

86,053,212 shares issued and 81,490,682 shares outstanding at September 30, 2022 and 85,798,765 shares issued and 83,232,481 shares outstanding as of December 31, 2021

Additional paid-in capital

Retained earnings

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

Less common stock held in treasury, at cost;

4,560,832 shares at June 30, 2022 and 2,566,284 shares as of December 31, 2021

4,562,530 shares at September 30, 2022 and 2,566,284 shares as of December 31, 2021

Total Liabilities and Shareholders'

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Balance at beginning of period

6 unchanged sentences

Stock-based employee compensation

Issuance of common stock upon ESPP purchase

Balance at end of period

2 unchanged sentences

Balance at end of period

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Income (Loss)

Balance at beginning of period

Other comprehensive income (loss), net of tax

Other comprehensive income, net of tax

Balance at end of period

6 unchanged sentences

(In millions)

Six Months Ended

Nine Months Ended

September 30,

Cash and Cash Equivalents at Beginning of Period

2 unchanged sentences

Depreciation and amortization expense

Deferred income tax provision

Deferred income tax (benefit) provision

Stock-based compensation expense

Goodwill and intangibles impairment

Restructuring charges

1 unchanged sentence

Loss on extinguishment of debt

Change in working capital, net of acquisitions:

Change in working capital:

Prepaid expenses and other current assets

7 unchanged sentences

Purchases of property and equipment

Other investing activities

Net Cash Used for Investing Activities

7 unchanged sentences

Net Cash Used for Financing Activities

Cash Increase (Decrease) During the Period

Cash Decrease During the Period

Cash and Cash Equivalents at End of Period

5 unchanged sentences

Our customizable home service plans help customers protect and maintain their homes, typically their most valuable asset, from costly and unplanned breakdowns of essential home systems and appliances.

Our home service plan customers usually subscribe to an annual service plan agreement that covers the repair or replacement of major components of more than 20 home systems and appliances, including electrical, plumbing, central HVAC systems, water heaters, refrigerators, dishwashers and ranges/ovens/cooktops, as well as optional coverages for electronics, pools, spas and pumps.

Our home service plan customers usually subscribe to an annual service plan agreement that covers the repair or replacement of major components of more than 20 home systems and appliances, including electrical, plumbing, HVAC systems, water heaters, refrigerators, dishwashers and ranges/ovens/cooktops, as well as optional coverages for electronics, pools, spas and pumps.

Our operations also include our ProConnect on-demand home services business and Streem, a technology platform that uses augmented reality, computer vision and machine learning to, among other things, help home service professionals more quickly and accurately diagnose breakdowns and complete repairs.

At June 30, 2022, we had 2.2 million active home service plans across all 50 states and the District of Columbia.

At September 30, 2022, we had 2.2 million active home service plans across all 50 states and the District of Columbia.

We recommend that the accompanying condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in our 2021 Form 10-K.

4 unchanged sentences

While these macroeconomic conditions generally impact the United States as a whole, we believe our nationwide presence limits the risk of poor economic conditions in any particular region of the United States.

During the first six months of 2022, our financial condition and results of operations were adversely impacted by the following:

During the first nine months of 2022, our financial condition and results of operations were adversely impacted by the following:

 The challenging home seller’s market, driven, in part, by extremely low home inventory levels, continued to constrain demand for home service plans in the first-year real estate channel.

5 unchanged sentences

The implications of the ongoing COVID-19 pandemic on our results of operations and overall financial performance remain uncertain.

Given the emergence of COVID-19 variants and surges in COVID-19 cases, a significant number of people may continue to spend greater time at home, which may result in a continued increase in usage of home systems and appliances and demand for our services and a resulting increase in service-related costs.

Moreover, as a result of the increase in remote or hybrid working arrangements in response to the pandemic, which trend may continue to persist even as the pandemic continues to subside, a significant number of people may continue to spend greater time at home, which may result in a continued increase in usage of home systems and appliances and demand for our services and a resulting increase in service-related costs.

We also expect that industry-wide supply chain challenges may continue to contribute to increased costs and impact the customer experience, which may affect customer retention.

3 unchanged sentences

Our significant accounting policies are described in Note 2 to the audited consolidated financial statements included in our 2021 Form 10-K.

There have been no material changes to the significant accounting policies for the six months ended June 30, 2022.

There have been no material changes to the significant accounting policies for the nine months ended September 30, 2022.

The majority of our revenue is generated from annual home service plan agreements entered into with our customers.

10 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions)

11 unchanged sentences

First-year revenue from the direct-to-consumer channel is classified as direct-to-consumer above.

Other revenue includes revenue generated by ProConnect and Streem, as well as administrative fees and ancillary services attributable to our home service plan agreements.

Other revenue includes revenue generated by our ProConnect on-demand home services business and Streem, as well as administrative fees and ancillary services attributable to our home service plan agreements.

Costs to obtain a contract with a customer

We capitalize the incremental costs of obtaining a contract with a customer, primarily sales commissions, and recognize the expense using the input method in proportion to the costs expected to be incurred in performing services under the contract, over the expected customer relationship period.

Deferred customer acquisition costs were $ 18 million and $ 16 million as of June 30, 2022 and December 31, 2021, respectively.

Amortization of these deferred acquisition costs was $ 6 million for each of the three months ended June 30, 2022 and 2021 and $ 10 million for each of the six months ended June 30, 2022 and 2021.

Deferred customer acquisition costs were $ 17 million and $ 16 million as of September 30, 2022 and December 31, 2021, respectively.

Amortization of these deferred acquisition costs was $ 6 million and $ 5 million for the three months ended September 30, 2022 and 2021, respectively, and $ 15 million for each of the nine-month periods ended September 30, 2022 and 2021.

There were no impairment losses in relation to these capitalized costs.

6 unchanged sentences

As a result, a contract asset is created when revenue is recognized on monthly-pay customers before being billed.

As of June 30, 2022, a contract asset of $ 12 million was recorded related to the recognition of monthly-pay customer revenue on an other-than-straight-line basis to match the timing of cost recognition.

As of September 30, 2022, a contract asset of $ 65 million was recorded related to the recognition of monthly-pay customer revenue on an other-than-straight-line basis to match the timing of cost recognition.

Deferred revenue represents a contract liability and is recognized when cash payments are received in advance of the performance of services, including when the amounts are refundable.

Amounts are recognized as revenue in proportion to the costs expected to be incurred in performing services under our contracts.

Deferred revenue was $ 126 million and $ 155 million as of June 30, 2022 and December 31, 2021, respectively.

Changes in deferred revenue for the six months ended June 30, 2022 were as follows:

Deferred revenue was $ 113 million and $ 155 million as of September 30, 2022 and December 31, 2021, respectively.

Changes in deferred revenue for the nine months ended September 30, 2022 were as follows:

(In millions)

2 unchanged sentences

Recognition of deferred revenue

Balance as of June 30, 2022

There was approximately $ 62 million and $ 122 million of revenue recognized in the three and six months ended June 30, 2022, respectively, that was included in the deferred revenue balance as of December 31, 2021.

Deferred revenue decreased during the six months ended June 30, 2022, reflecting a decline in the number of first-year real estate home service plans.

Balance as of September 30, 2022

There was approximately $ 33 million and $ 155 million of revenue recognized in the three and nine months ended September 30, 2022, respectively, that was included in the deferred revenue balance as of December 31, 2021.

Deferred revenue decreased during the nine months ended September 30, 2022, reflecting a decline in the number of first-year real estate home service plans and the recognition of previously deferred amounts on an other than straight-line basis to match the timing of cost recognition.

Goodwill and Intangible Assets

1 unchanged sentence

An assessment for impairment is performed on October 1 of every year.

The balance of goodwill was $ 512 million as of June 30, 2022 and December 31, 2021.

There were no goodwill or trade name impairment charges recorded in the six months ended June 30, 2022 and 2021.

There were no accumulated impairment losses recorded as of June 30, 2022 and December 31, 2021.

In connection with the preparation of our condensed consolidated financial statements for the third quarter of 2022, we determined that indicators of a potential goodwill and intangible assets impairment were present for our Streem reporting unit.

In particular, we will now be more focused on integrating Streem’s technology into the core business and will be less focused on selling this technology platform to third-party business-to-business customers as a software-as-a-service platform.

This shift in focus resulted in significantly lower projected revenue for Streem.

We performed an interim impairment analysis of the Streem reporting unit as of September 30, 2022.

In performing the discounted cash flow analysis, we determined that the carrying amount of the Streem reporting unit exceeded its fair value.

An impairment charge of $ 14 million was recognized during the third quarter, which comprised the remaining net book value of Streem’s goodwill of $ 9 million and intangibles of $ 5 million.

The balance of goodwill was $ 503 million as of September 30, 2022 and $ 512 million as of December 31, 2021.

There were no goodwill or trade name impairment charges recorded in the three or nine months ended September 30, 2021, and there were no accumulated impairment losses recorded as of December 31, 2021.

The table below summarizes the other intangible asset balances:

As of June 30, 2022

As of September 30, 2022

As of December 31, 2021

7 unchanged sentences

(1) Not subject to amortization.

Amortization expense was $ 2 million and $ 3 million for the three months ended June 30, 2022 and 2021, respectively, and $ 4 million and $ 6 million for the six months ended June 30, 2022 and 2021, respectively.

(2) Includes a net $ 3 million impairment relating to the Streem reporting unit, which comprises $ 6 million of gross cost and $ 4 million of accumulated amortization.

(3) Includes a net $ 2 million impairment relating to the Streem reporting unit, which comprises $ 4 million of gross cost and $ 2 million of accumulated amortization.

Amortization expense was $ 2 million for each of the three months ended September 30, 2022 and 2021 and $ 6 million and $ 8 million for the nine months ended September 30, 2022 and 2021, respectively.

The following table outlines expected amortization expense for existing intangible assets for the remainder of 2022 and the next five years :

7 unchanged sentences

The weighted-average remaining lease term and weighted-average discount rate related to operating leases is as follows:

September 30,

Weighted-average remaining lease term (years)

Weighted-average discount rate

We recognized operating lease expense of $ 1 million for each of the three months ended June 30, 2022 and 2021 and $ 2 million for each of the six months ended June 30, 2022 and 2021 .

We recognized operating lease expense of $ 1 million for each of the three-month periods ended September 30, 2022 and 2021 and $ 3 million for each of the nine-month periods ended September 30, 2022 and 2021 .

These expenses are included in Selling and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive income.

Supplemental cash flow information related to operating leases is as follows:

Six Months Ended

Nine Months Ended

September 30,

(In millions)

2 unchanged sentences

Supplemental balance sheet information related to operating leases is as follows:

September 30,

(In millions)

Operating lease right-of-use assets

Less lease incentives

Operating lease right-of-use assets, net

Other accrued liabilities

1 unchanged sentence

Total operating lease liabilities

The following table presents maturities of our operating lease liabilities as of June 30, 2022.

The following table presents maturities of our operating lease liabilities as of September 30, 2022.

(In millions)

2 unchanged sentences

Less imputed interest

_____________________________

(1) Each of the years ending December 31, 2023 through 2026 presented net of approximately $ 1 million of projected annual sublease income.

Sublease of Company Headquarters

It is the intent of the company to sublease our corporate headquarters facility in Memphis, Tennessee.

As a result of us exiting the facility on June 27, 2022, with intent to sublease, we incurred a non-cash impairment charge of $ 11 million for the three and six months ended June 30, 2022.

On August 10, 2022, we subleased our corporate headquarters facility in Memphis, Tennessee.

As a result of us exiting the facility on June 27, 2022, we incurred a non-cash impairment charge of $ 11 million for the nine months ended September 30, 2022.

There were no such charges for the three months ended September 30, 2022.

As required by ASC 740, we compute interim period income taxes by applying an anticipated annual effective tax rate to our year-to-date income or loss from operations before income taxes, except for significant unusual or infrequently occurring items.

Our estimated tax rate is adjusted each quarter in accordance with ASC 740.

The effective tax rate on income was 23.2 percent and 26.0 percent for the three months ended June 30, 2022 and 2021, respectively, and 25.1 percent and 24.5 percent for six months ended June 30, 2022 and 2021, respectively .

The decrease in the effective tax rate for the three months ended June 30, 2022 compared to 2021 is primarily due to share-based awards and income tax credits, offset, in part, by an increase in state income taxes.

The increase in the effective tax rate for the six months ended June 30, 2022 compared to 2021 is primarily due to share-based awards and state income taxes, offset, in part, by an increase in income tax credits.

The effective tax rate on income was 28.2 percent and 24.3 percent for the three months ended September 30, 2022 and 2021, respectively, and 26.5 percent and 24.4 percent for nine months ended September 30, 2022 and 2021, respectively .

The increase in the effective tax rate for both the three and nine months ended September 30, 2022 compared to 2021 is primarily due to share-based awards and impairment of goodwill and intangible assets, offset, in part, by income tax credits and state income taxes.

We are subject to taxation in the United States, various states and foreign jurisdictions.

Substantially all of our income before income taxes for the six months ended June 30 , 2022 and 2021 was generated in the United States.

Substantially all of our income before income taxes for the nine months ended September 30 , 2022 and 2021 was generated in the United States.

Restructuring Charges

We incurred restructuring charges of $ 12 million ($ 9 million, net of tax) and $ 1 million (less than $ 1 million, net of tax) for the three months ended June 30, 2022 and 2021, respectively, and $ 12 million ($ 9 million, net of tax) and $ 2 million ($ 1 million, net of tax) for the six months ended June 30, 2022 and 2021, respectively.

For the three and six months ended June 30, 2022, restructuring charges primarily comprised an $ 11 million impairment charge related to our Memphis headquarters facility operating lease right-of-use asset and leasehold improvements and $ 1 million of severance and other costs.

The impairment was the result of vacating the facility with the intent to sublease.

For the three months ended June 30, 2021 , restructuring charges primarily comprised accelerated depreciation of certain technology systems driven by efforts to enhance our technological capabilities.

For the six months ended June 30, 2021, restructuring charges comprised $ 1 million of accelerated depreciation of certain technology systems driven by efforts to enhance our technological capabilities and $ 1 million of severance and other costs.

We incurred restructuring charges of $ 5 million ($ 4 million, net of tax) and less than $ 1 million (less than $ 1 million, net of tax) for the three months ended September 30, 2022 and 2021, respectively, and $ 18 million ($ 13 million, net of tax) and $ 2 million ($ 1 million, net of tax) for the nine months ended September 30, 2022 and 2021, respectively.

For the three months ended September 30, 2022, restructuring charges primarily comprised a $ 2 million impairment of certain internally developed software and $ 3 million of severance and other costs.

Severance costs of $ 2 million related to a reduction in workforce of seven percent as part of our completed strategic review of our selling, general and administrative expenses.

For the nine months ended September 30, 2022, restructuring charges primarily comprised an $ 11 million impairment charge related to our Memphis headquarters facility operating lease right-of-use asset and leasehold improvements, a $ 2 million impairment of certain internally developed software and $ 5 million of severance and other costs.

Severance costs of $ 2 million related to a reduction in workforce of seven percent as part of our completed strategic review of our selling, general and administrative expenses.

For the three months ended September 30, 2021 , restructuring charges primarily comprised severance costs.

For the nine months ended September 30, 2021, restructuring charges comprised $ 1 million of accelerated depreciation of certain technology systems driven by efforts to enhance our technological capabilities and $ 1 million of severance and other costs.

The pre-tax charges discussed above are reported in “Restructuring charges” in the accompanying consolidated statements of operations and comprehensive income.

As of December 31, 2021, there were less than $ 1 million of restructuring charges accrued, which were paid or otherwise settled during the six months ended June 30, 2022.

As of June 30, 2022, there were $ 1 million in accrued restructuring charges in the accompanying condensed consolidated statements of financial position.

As of December 31, 2021, there were less than $ 1 million of restructuring charges accrued, which were paid or otherwise settled during the nine months ended September 30, 2022.

As of September 30, 2022, there were $ 2 million in accrued restructuring charges in the accompanying condensed consolidated statements of financial position.

Commitments and Contingencies

14 unchanged sentences

Stock-Based Compensation

We recognized stock-based compensation expense of $ 6 million ($ 4 million, net of tax) and $ 8 million ($ 6 million, net of tax) for the three months ended June 30, 2022 and 2021, respectively, and $ 12 million ($ 10 million, net of tax) and $ 13 million ($ 10 million, net of tax) for the six months ended June 30, 2022 and 2021, respectively.

We recognized stock-based compensation expense of $ 5 million ($ 4 million, net of tax) for each of the three-month periods ended September 30, 2022 and 2021 and $ 17 million ($ 15 million, net of tax) and $ 19 million ($ 14 million, net of tax) for the nine months ended September 30, 2022 and 2021, respectively.

These charges are included in Selling and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive income.

A summary of awards granted under the Omnibus Plan during the six months ended June 30, 2022 is presented below:

A summary of awards granted under the Omnibus Plan during the nine months ended September 30, 2022 is presented below:

Weighted Avg.

6 unchanged sentences

_____________________________

(1) The number of performance options granted during the six months ended June 30, 2022 represents the target value of the awards.

(1) The number of performance options granted during the nine months ended September 30, 2022 represents the target value of the awards.

The performance options contain a market condition that is based on our share price target, and the ultimate number of performance options to be earned depends on the achievement of this market condition.

(2) The number of performance shares granted during the six months ended June 30, 2022 represents the target value of the awards.

(2) The number of performance shares granted during the nine months ended September 30, 2022 represents the target value of the awards.

The performance shares contain a performance condition that is based on our revenue target, and the ultimate number of performance shares to be earned depends on the achievement of this performance condition.

As of June 30, 2022 , there was $ 57 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options, restricted stock units (“RSUs”), performance shares and restricted stock awards (“RSAs”).

As of September 30, 2022 , there was $ 43 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options, restricted stock units (“RSUs”), performance shares and restricted stock awards (“RSAs”).

These remaining costs are expected to be recognized over a weighted-average period of 2.29 years.

1 unchanged sentence

Long-term debt is summarized in the following table:

September 30,

(In millions)

5 unchanged sentences

_______________________________

(1) As of June 30, 2022 , and December 31, 2021, each presented net of $ 2 million in unamortized debt issuance costs.

(2) As of June 30, 2022 , and December 31, 2021, each presented net of $ 3 million in unamortized debt issuance costs and $ 2 million in unamortized original issue discount.

(1) As of September 30, 2022 , and December 31, 2021, each presented net of $ 2 million in unamortized debt issuance costs.

(2) As of September 30, 2022 , and December 31, 2021, each presented net of $ 3 million in unamortized debt issuance costs and $ 2 million in unamortized original issue discount.

(3) As of September 30, 2022, there were $ 2 million of letters of credit outstanding under our $ 250 million Revolving Credit Facility.

The letters of credit are posted in lieu of cash to satisfy regulatory requirements in certain states in which we operate.

The Credit Agreement contains covenants that limit or restrict our ability, including the ability of certain of our subsidiaries, to incur additional indebtedness, repurchase debt, incur liens, sell assets, make certain payments (including dividends) and enter into transactions with affiliates;

therefore, from time to time, our ability to draw on the Revolving Credit Facility may be limited.

As of September 30, 2022, the available borrowing capacity under the Revolving Credit Facility was limited by the applicable consolidated first lien leverage ratio contained in the Credit Agreement to $ 199 million.

Scheduled Long-term Debt Payments

As of June 30, 2022, future scheduled long - term debt payments are $ 8 million for the remainder of 2022, $ 17 million for each of the years ending December 31, 2023 through 2025, $ 205 million for the year ending December 31, 2026 and $ 4 million for the year ending December 31, 2027.

As of September 30, 2022, future scheduled long - term debt payments are $ 4 million for the remainder of 2022, $ 17 million for each of the years ending December 31, 2023 through 2025, $ 205 million for the year ending December 31, 2026 and $ 4 million for the year ending December 31, 2027.

Supplemental Cash Flow Information

Supplemental information relating to the accompanying condensed consolidated statements of cash flows is presented in the following table:

Six Months Ended

Nine Months Ended

September 30,

(In millions)

2 unchanged sentences

Income tax payments, net of refunds

Interest income

Comprehensive Income (Loss)

4 unchanged sentences

Balance as of December 31, 2021

Other comprehensive income (loss) before reclassifications:

Other comprehensive income before reclassifications:

Pre-tax amount

Tax provision (benefit)

Tax provision

After-tax amount

Amounts reclassified from accumulated

‎ other comprehensive income (loss) (1)

Net current period other comprehensive income (loss)

Balance as of June 30, 2022

Amounts reclassified from accumulated other comprehensive income (1)

Net current period other comprehensive income

Balance as of September 30, 2022

Balance as of December 31, 2020

Other comprehensive income (loss) before reclassifications:

Other comprehensive income before reclassifications:

Pre-tax amount

Tax provision (benefit)

Tax provision

After-tax amount

Amounts reclassified from accumulated

‎ other comprehensive income (loss) (1)

Net current period other comprehensive income (loss)

Balance as of June 30, 2021

Amounts reclassified from accumulated other comprehensive income (1)

Net current period other comprehensive income

Balance as of September 30, 2021

___________________________________

4 unchanged sentences

Other Comprehensive Income (Loss)

Six Months Ended

Nine Months Ended

September 30,

Condensed Consolidated Statements of

19 unchanged sentences

See Note 12 to the accompanying condensed consolidated financial statements for the effective portion of the gain or loss on derivative instruments recorded in AOCI and for the amounts reclassified out of AOCI and into earnings.

As the underlying forecasted transactions occur during the next 12 months, the unrealized hedging loss in AOCI expected to be recognized in earnings is less than one million, net of tax, as of June 30, 2022 .

As the underlying forecasted transactions occur during the next 12 months, the unrealized hedging gain in AOCI expected to be recognized in earnings is $ 3 million, net of tax, as of September 30, 2022 .

The amounts that are ultimately reclassified into earnings will be based on actual interest rates at the time the positions are settled and may differ materially from the amount noted above.

7 unchanged sentences

The period-end carrying amounts of cash and cash equivalents, receivables, accounts payable and accrued liabilities approximate fair value because of the short maturity of these instruments.

The carrying amount of total debt was $ 617 million and $ 625 million, and the estimated fair value was $ 613 million and $ 630 million as of June 30, 2022 and December 31, 2021, respectively.

The carrying amount of total debt was $ 613 million and $ 625 million, and the estimated fair value was $ 602 million and $ 630 million as of September 30, 2022 and December 31, 2021, respectively.

The fair value of our debt is estimated based on available market prices for the same or similar instruments that are considered significant other observable inputs (Level 2) within the fair value hierarchy.

The fair values presented reflect the amounts that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).

The fair value estimates presented in this report are based on information available to us as of June 30, 2022 and December 31, 2021.

The fair value estimates presented in this report are based on information available to us as of September 30, 2022 and December 31, 2021.

We value our interest rate swap contract using a forward interest rate curve obtained from a third-party market data provider.

1 unchanged sentence

The expected future settlements are determined by comparing the contract interest rate to the expected forward interest rate as of each settlement date and applying the difference between the two rates to the notional amount of debt in the interest rate swap contract.

We did not change our valuation techniques for measuring the fair value of any financial assets and liabilities during the six months ended June 30, 2022 .

We did not change our valuation techniques for measuring the fair value of any financial assets and liabilities during the nine months ended September 30, 2022 .

Transfers between levels, if any, are recognized at the end of the reporting period.

There were no transfers between levels during the six months ended June 30, 2022 and 2021.

There were no transfers between levels during the nine months ended September 30, 2022 and 2021.

The carrying amount and estimated fair value of our financial instruments that are recorded at fair value on a recurring basis are as follows:

4 unchanged sentences

‎ Unobservable

As of June 30, 2022:

Financial Liabilities:

As of September 30, 2022:

Financial Assets:

Interest rate swap contract

Other accrued liabilities

Other long-term obligations

Total financial liabilities

Prepaid expenses and other assets

Total financial assets

As of December 31, 2021:

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions, except per share data)

9 unchanged sentences

Basic and diluted earnings per share are calculated as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions, except per share data)

6 unchanged sentences

___________________________________

(1) RSUs of 1.0 million and 0.2 million shares for the three months ended June 30, 2022 and 2021, respectively, and 0.9 million and 0.1 million shares for the six months ended June 30, 2022 and 2021, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.

(2) Options to purchase 1.6 million and 0.2 million shares for the three months ended June 30, 2022 and 2021 , respectively, and 1.4 million and 0.1 million shares for the six months ended June 30, 2022 and 2021, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.

(1) RSUs of 0.8 million and 0.3 million shares for the three months ended September 30, 2022 and 2021, respectively, and 1.0 million and 0.3 million shares for the nine months ended September 30, 2022 and 2021, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.

(2) Options to purchase 1.6 million and 0.7 million shares for the three months ended September 30, 2022 and 2021 , respectively, and 1.4 million and 0.6 million shares for the nine months ended September 30, 2022 and 2021, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

46 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements