What changed in this filing

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Item 1. Financial Statements

2020-08-04 compared with 2020-05-05 · 239 added, 114 removed, 672 unchanged (34% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands, except per share amounts)

8 unchanged sentences

Total costs and expenses

Operating income (loss)

Operating (loss) income

Other (expense) income, net:

Interest expense, net

Income (loss) before income taxes

(Loss) income before income taxes

Income tax benefit

Net income from continuing operations

Net (loss) income from continuing operations

Loss from discontinued operations, net of tax

Net income (loss) and comprehensive income (loss)

Net (loss) income and comprehensive (loss) income

Weighted average shares outstanding:

Income per share from continuing operations:

(Loss) income per share from continuing operations:

Loss per share from discontinued operations:

Net income (loss) per share:

Net (loss) income per share:

The accompanying notes to consolidated financial statements are an integral part of these statements.

10 unchanged sentences

Property and equipment (net of accumulated depreciation of $20,971 and $17,979, respectively)

Operating lease right-of-use assets

Intangible assets, net

10 unchanged sentences

Long-term debt

Operating lease liabilities

Non-current contingent consideration

26 unchanged sentences

Balance as of March 31, 2020

Net loss and comprehensive loss

Non-cash compensation

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes

Balance as of June 30, 2020

Treasury Stock

6 unchanged sentences

Balance as of March 31, 2019

Net income and comprehensive income

Non-cash compensation

Issuance of common stock for stock options, restricted stock awards and restricted stock units, net of withholding taxes

Balance as of June 30, 2019

The accompanying notes to consolidated financial statements are an integral part of these statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(in thousands)

Cash flows from operating activities attributable to continuing operations:

Net income (loss) and comprehensive income (loss)

Net (loss) income and comprehensive (loss) income

Loss from discontinued operations, net of tax

1 unchanged sentence

Adjustments to reconcile income from continuing operations to net cash provided by operating activities attributable to continuing operations:

Loss on impairments and disposal of assets

Loss (gain) on impairments and disposal of assets

Amortization of intangibles

15 unchanged sentences

Capital expenditures

Proceeds from sale of fixed assets

Equity investment

Acquisition of ValuePenguin, net of cash acquired

Acquisition of QuoteWizard, net of cash acquired

Net cash used in investing activities attributable to continuing operations

2 unchanged sentences

Contingent consideration payments

Net proceeds from revolving credit facility

Net proceeds from (repayment of) revolving credit facility

Payment of debt issuance costs

1 unchanged sentence

Other financing activities

Net cash provided by financing activities attributable to continuing operations

Total cash used in continuing operations

Net cash provided by (used in) financing activities attributable to continuing operations

Total cash provided by (used in) continuing operations

Discontinued operations:

1 unchanged sentence

Total cash used in discontinued operations

Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents

Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents

Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period

22 unchanged sentences

Basis of Presentation

The accompanying unaudited interim consolidated financial statements as of March 31, 2020 and for the three months ended March 31, 2020 and 2019 , respectively, have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the rules and regulations of the U.S.

The accompanying unaudited interim consolidated financial statements as of June 30, 2020 and for the three and six months ended June 30, 2020 and 2019 , respectively, have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the rules and regulations of the U.S.

Securities and Exchange Commission ("SEC").

In the opinion of management, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited financial statements, and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair statement of the Company's financial position for the periods presented.

The results for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 , or any other period.

The results for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 , or any other period.

The accompanying consolidated balance sheet as of December 31, 2019 was derived from audited financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2019 (the " 2019 Annual Report").

8 unchanged sentences

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;

fair value of assets acquired in a business

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

fair value of assets acquired in a business combination;

contingent consideration related to business combinations;

2 unchanged sentences

contract assets;

various other allowances, reserves and accruals;

and assumptions related to the determination of stock-based compensation.

various other

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

allowances, reserves and accruals;

assumptions related to the determination of stock-based compensation;

and the determination of the right-of-use assets and lease liabilities.

The Company considered the impact of COVID-19 on the assumptions and estimates used when preparing its quarterly financial statements including, but not limited to, our allowance for doubtful accounts, valuation allowances, contract asset and contingent consideration.

3 unchanged sentences

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 March 31, 2020 , consist primarily of cash and cash equivalents and accounts receivable, as disclosed in the consolidated balance sheet.

Financial instruments, which potentially subject the Company to concentration of credit risk at June 30, 2020 , 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.

15 unchanged sentences

The expense related to these capitalized implementation costs are included within general and administrative expense on the consolidated statement of operations and comprehensive income.

The adoption of ASU 2018-15 did not have a material impact on the consolidated financial statements as of March 31, 2020 and for the three months ended March 31, 2020.

The adoption of ASU 2018-15 did not have a material impact on the consolidated financial statements as of June 30, 2020 and for the three and six months ended June 30, 2020 .

In August 2018, the FASB issued ASU 2018-13, which removes, modifies and adds certain disclosure requirements in Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurement.

25 unchanged sentences

Three Months Ended

Six Months Ended

Personal loans

27 unchanged sentences

The Company's contractual right to the match fee consideration is contemporaneous with the satisfaction of the performance obligation to deliver a consumer request to the customer.

The contract asset recorded within prepaid and other current assets on the consolidated balance sheets related to estimated variable consideration was $ 6.8 million and $ 6.5 million on March 31, 2020 and December 31, 2019 , respectively.

The contract liability recorded within accrued expenses and other current liabilities on the consolidated balance sheets related to upfront fees paid by consumers in the Company's Consumer business was $ 0.7 million and $ 0.6 million at March 31, 2020 and December 31, 2019 , respectively.

During the first quarter of 2020 , the Company recognized revenue of $ 0.5 million that was included in the contract liability balance at December 31, 2019 .

During the first quarter of 2019 , the Company recognized revenue of $ 0.3 million that was included in the contract liability balance at December 31, 2018 .

The contract asset recorded within prepaid and other current assets on the consolidated balance sheets related to estimated variable consideration was $ 6.5 million at each of June 30, 2020 and December 31, 2019 .

The contract liability recorded within accrued expenses and other current liabilities on the consolidated balance sheets related to upfront fees paid by consumers in the Company's Consumer business was $ 0.9 million and $ 0.6 million at June 30, 2020 and December 31, 2019 , respectively.

During the second quarter and first six months of 2020 , the Company recognized revenue of $ 0.1 million and $ 0.6 million , respectively, that was included in the contract liability balance at December 31, 2019 .

During the second quarter and first six months of 2019 , the Company recognized revenue of $ 0.1 million and $ 0.4 million , respectively, that was included in the contract liability balance at December 31, 2018 .

Revenue recognized in any reporting period includes estimated variable consideration for which the Company has satisfied the related performance obligations, but are still pending the occurrence or non-occurrence of a future event outside the Company's control (such as lenders providing loans to consumers or credit card approvals of consumers) before the Company has a contractual right to payment.

The Company recognized increases to such revenue from prior periods of $ 0.1 million and $ 0.9 million , respectively, in the first quarters of 2020 and 2019 .

The Company recognized increases to such revenue from prior periods of $ 0.3 million and $ 0.5 million in the second quarters of 2020 and 2019 , respectively.

NOTE 4 — CASH AND RESTRICTED CASH

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

Three Months Ended

Three Months Ended June 30,

Six Months Ended

Balance, beginning of the period

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Goodwill and Indefinite-Lived Intangible Assets

The Company's goodwill at each of March 31, 2020 and December 31, 2019 consists of $ 59.3 million associated with the Home segment, $ 166.1 million associated with the Consumer segment, and $ 194.7 million associated with the Insurance segment.

The Company's goodwill at each of June 30, 2020 and December 31, 2019 consists of $ 59.3 million associated with the Home segment, $ 166.1 million associated with the Consumer segment, and $ 194.7 million associated with the Insurance segment.

Intangible assets with indefinite lives relate to the Company's trademarks.

4 unchanged sentences

Website content

Balance at March 31, 2020

Balance at June 30, 2020

LENDINGTREE, INC.

5 unchanged sentences

Balance at December 31, 2019

Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on balances as of March 31, 2020 , future amortization is estimated to be as follows (in thousands) :

Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on balances as of June 30, 2020 , future amortization is estimated to be as follows (in thousands) :

Amortization Expense

12 unchanged sentences

The Stash equity securities will be carried at cost and subsequently marked to market upon observable market events with any gains or losses recorded in operating income in the consolidated statement of operations.

As of March 31, 2020 , there have been no observable market events that would result in upward or downward adjustments in the fair value and there have been no impairments to the original cost of $ 80.0 million .

As of June 30, 2020 , there have been no observable market events that would result in upward or downward adjustments in the fair value and there have been no impairments to the original cost of $ 80.0 million .

NOTE 8 — BUSINESS ACQUISITIONS

2 unchanged sentences

In 2017, the Company acquired certain assets of Snap Capital LLC, which does business under the name SnapCap (“SnapCap”) and all of the assets of Deposits Online, LLC, which does business under the name DepositAccounts.com (“DepositAccounts”).

The Company will make an earnout payment ranging from zero to $ 1.0 million based on the achievement of defined milestone targets for DepositAccounts, a payment of $ 3.0 million based on the achievement of certain defined earnings targets for SnapCap, payments ranging from zero to $ 4.4 million based on the achievement of certain defined operating metrics for Ovation, and payments ranging from zero to $ 46.8 million based on the achievement of certain defined performance targets for QuoteWizard.

The Company will make an earnout payment of $ 4.4 million based on the achievement of certain defined operating metrics for Ovation, and payments ranging from zero to $ 46.8 million based on the achievement of certain defined performance targets for QuoteWizard.

During 2020, the Company made the final earnout payments related to the achievement of certain defined earnings targets for SnapCap.

LENDINGTREE, INC.

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Three Months Ended

Six Months Ended

DepositAccounts

Total changes in fair value of contingent consideration

As of March 31, 2020 , the estimated fair value of the contingent consideration for the QuoteWizard acquisition totaled $ 16.2 million , of which $ 8.0 million is included in current contingent consideration and $ 8.2 million is included in non-current contingent consideration in the accompanying consolidated balance sheet.

The estimated fair value of the contingent consideration payments is determined using an option pricing model.

The estimated value of the contingent consideration is based upon available information and certain assumptions, known at the time of this report, which management believes are reasonable.

As of March 31, 2020 , the estimated fair value of the contingent consideration for the Ovation acquisition totaled $ 3.2 million , which is included in current contingent consideration in the accompanying consolidated balance sheet.

As of June 30, 2020 , the estimated fair value of the contingent consideration for the QuoteWizard acquisition totaled $ 24.2 million , of which $ 14.7 million is included in current contingent consideration and $ 9.5 million is included in non-current contingent consideration in the accompanying consolidated balance sheet.

The estimated fair value of the contingent consideration payments is determined using an option pricing model.

The estimated value of the contingent consideration is based upon available information and certain assumptions, known at the time of this report, which management believes are reasonable.

As of March 31, 2020 , the estimated fair value of the contingent consideration for the SnapCap acquisition totaled $ 2.9 million , which is included in current contingent consideration in the accompanying consolidated balance sheet.

The estimated fair value of the contingent consideration payments is based on the $ 3.0 million achieved target discounted from the payment due date to March 31, 2020.

As of March 31, 2020 , no liability has been recorded for the DepositAccounts acquisition in the accompanying consolidated balance sheet for the remaining contingent consideration payment based on Federal Funds interest rates.

The estimated fair value of the portion of the contingent consideration payments based on increases in interest rates is determined using a scenario approach based on the interest rate forecasts of Federal Open Market Committee participants.

The estimated value of the contingent consideration is based upon available information and certain assumptions, known at the time of this report, which management believes are reasonable.

As of June 30, 2020 , the estimated fair value of the contingent consideration for the Ovation acquisition totaled $ 4.3 million , which is included in current contingent consideration in the accompanying consolidated balance sheet.

The estimated fair value of the contingent consideration payment is based on the $ 4.4 million achieved target discounted from the payment due date to June 30, 2020.

As of June 30, 2020 , no liability remains outstanding for the DepositAccounts acquisition in the accompanying consolidated balance sheet for the final contingent consideration payment based on Federal Funds interest rates and the earnout is complete.

Any differences in the actual contingent consideration payments will be recorded in operating income in the consolidated statements of operations and comprehensive income.

8 unchanged sentences

Total accrued expenses and other current liabilities

NOTE 10— LEASES

The Company is a lessee to leases of corporate offices and certain office equipment.

The majority of leases for corporate offices include one or more options to renew, with renewal terms ranging from two to five years .

These renewal options have not been included in the calculation of right-of-use assets and lease liabilities, as the Company is not reasonably certain of the exercise of these renewal options.

The Company used its incremental borrowing rate to calculate the right-of-use asset and lease liability for each lease.

LENDINGTREE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of June 30, 2020 , right-of-use assets totaled $ 87.9 million and lease liabilities, the current portion of which is included in accrued expenses and other current liabilities in the accompanying balance sheet, totaled $ 92.6 million .

At December 31, 2019 , right-of-use assets totaled $ 25.5 million and lease liabilities totaled $ 28.2 million .

During the second quarter of 2020 the right-of-use assets and lease liabilities increased $ 65.7 million due to commencement of the lease, as defined under ASC Topic 842, Leases, for the Company’s new principal executive offices currently under construction in Charlotte, North Carolina, occurring during the second quarter.

Lease expense, which is included in general and administrative expense on the accompanying consolidated statements of operations and comprehensive income, consists of the following (in thousands) :

Three Months Ended

Six Months Ended

Operating lease cost

Short-term lease cost

Total lease cost

Weighted average remaining lease term and discount rate for operating leases are as follows:

June 30, 2020

December 31, 2019

Weighted average remaining lease term

Weighted average discount rate

Supplemental cash flow information related to leases is as follows (in thousands) :

Six Months Ended

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Right-of-use assets obtained in exchange for new operating lease liabilities

Maturities of lease liabilities as of June 30, 2020 are as follows (in thousands) :

Operating Leases

Remainder of current year

Year ending December 31, 2021

Year ending December 31, 2022

Year ending December 31, 2023

Year ending December 31, 2024

Total lease payments

Tenant improvement allowances

Present value of lease liabilities

Rental income of $ 0.1 million and $ 0.3 million in the second quarter and first six months of 2019 , respectively, is included in other income on the accompanying consolidated statements of operations and comprehensive income.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 11 — SHAREHOLDERS' EQUITY

1 unchanged sentence

Three Months Ended

Six Months Ended

Weighted average basic common shares

3 unchanged sentences

Weighted average diluted common shares

For the first quarter of 2020 , the weighted average shares that were anti-dilutive, and therefore excluded from the calculation of diluted income per share, included options to purchase 0.1 million shares of common stock.

For the first quarter of 2019 , the weighted average shares that were anti-dilutive included options to purchase 0.4 million shares of common stock.

The 0.625 % Convertible Senior Notes due June 1, 2022 and the warrants issued by the Company in 2017 could be converted into the Company’s common stock, subject to certain contingencies.

See Note 13 —Debt for additional information.

For the three months ended June 30, 2020 , the Company had a loss 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 was used to compute loss per share.

Approximately 0.8 million shares related to potentially dilutive securities were excluded from the calculation of diluted loss per share for the three months ended June 30, 2020 , because their inclusion would have been anti-dilutive.

For the three months ended June 30, 2020 , the weighted average shares that were anti-dilutive included options to purchase 0.7 million shares of common stock and 0.1 million restricted stock units.

For the six months ended June 30, 2020 , the weighted average shares that were anti-dilutive included options to purchase 0.2 million shares of common stock.

For each of the three and six months ended June 30, 2019 , the weighted average shares that were anti-dilutive included options to purchase 0.1 million shares of common stock.

The convertible notes and the warrants issued by the Company could be converted into the Company’s common stock, subject to certain contingencies.

See Note 14 —Debt and Note 19 —Subsequent Events for additional information.

Shares of the Company's common stock associated with the warrants were excluded from the calculation of diluted income per share for the six months ended June 30, 2020 as they were anti-dilutive since the strike price of the warrants was greater than the average market price of the Company's common stock during the period.

Common Stock Repurchases

In each of February 2018 and February 2019, the board of directors authorized and the Company announced the repurchase of up to $ 100.0 million and $ 150.0 million , respectively, of LendingTree's common stock.

During the first quarter of 2019 , the Company purchased 17,501 shares of its common stock for aggregate consideration of $ 4.0 million .

At March 31, 2020 , approximately $ 179.7 million of the previous authorizations to repurchase common stock remain available.

During the first six months of 2019 , the Company purchased 17,501 shares of its common stock for aggregate consideration of $ 4.0 million .

At June 30, 2020 , approximately $ 179.7 million of the previous authorizations to repurchase common stock remain available.

NOTE 12 — STOCK-BASED COMPENSATION

1 unchanged sentence

Three Months Ended

Six Months Ended

Cost of revenue

11 unchanged sentences

Options outstanding at January 1, 2020

Options outstanding at March 31, 2020

Options exercisable at March 31, 2020

The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $ 183.39 on the last trading day of the quarter ended March 31, 2020 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been received by the option holder had the option holder exercised these options on March 31, 2020 .

Options outstanding at June 30, 2020

Options exercisable at June 30, 2020

The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $ 289.53 on the last trading day of the quarter ended June 30, 2020 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been received by the option holder had the option holder exercised these options on June 30, 2020 .

The intrinsic value changes based on the market value of the Company's common stock.

During the three months ended March 31, 2020 , the Company granted stock options to certain employees with a weighted average grant date fair value per share of $ 138.29 , calculated using the Black-Scholes option pricing model, which vesting periods include (a) three years from grant date and (b) four years from grant date .

During the six months ended June 30, 2020 , the Company granted stock options to certain employees and members of the board of directors with a weighted average grant date fair value per share of $ 138.75 , calculated using the Black-Scholes option pricing model, which vesting periods include (a) immediate vesting on grant date (b) 1 year from grant date (c) three years from grant date and (d) four years from 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.

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Options outstanding at January 1, 2020

Options outstanding at March 31, 2020

Options exercisable at March 31, 2020

Options outstanding at June 30, 2020

Options exercisable at June 30, 2020

The intrinsic value changes based on the market value of the Company's common stock.

During the three months ended March 31, 2020 , the Company granted stock options with a grant date fair value per share of $ 196.07 , calculated using the Monte Carlo simulation model, which has a vesting date of March 31, 2024 .

During the six months ended June 30, 2020 , the Company granted stock options with a grant date fair value per share of $ 196.07 , calculated using the Monte Carlo simulation model, which has a vesting date of March 31, 2024 .

For purposes of determining stock-based compensation expense, the grant date fair value per share of the stock options was estimated using the Monte Carlo simulation model, which requires the use of various key assumptions.

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A maximum of 805,885 shares may be earned for achieving superior performance up to 167 % of the target number of shares.

As of March 31, 2020 , performance-based nonqualified stock options with a market condition of 481,669 had been earned, which have a vest date of September 30, 2022 .

As of June 30, 2020 , performance-based nonqualified stock options with a market condition of 481,669 had been earned, which have a vest date of September 30, 2022 .

LENDINGTREE, INC.

6 unchanged sentences

Nonvested at January 1, 2020

Nonvested at March 31, 2020

Nonvested at June 30, 2020

Restricted Stock Units with Performance Conditions

4 unchanged sentences

Nonvested at January 1, 2020

Nonvested at March 31, 2020

Nonvested at June 30, 2020

Restricted Stock Awards with Performance Conditions

4 unchanged sentences

Nonvested at January 1, 2020

Nonvested at March 31, 2020

Nonvested at June 30, 2020

LENDINGTREE, INC.

7 unchanged sentences

Nonvested at January 1, 2020

Nonvested at March 31, 2020

Nonvested at June 30, 2020

A maximum of 44,545 shares may be earned for achieving superior performance up to 167 % of the target number of shares.

As of March 31, 2020 , performance-based restricted stock awards with a market condition of 29,601 had been earned, which have a vest date of September 30, 2022 .

As of June 30, 2020 , performance-based restricted stock awards with a market condition of 29,601 had been earned, which have a vest date of September 30, 2022 .

NOTE 13 — INCOME TAXES

Three Months Ended

Six Months Ended

(in thousands, except percentages)

1 unchanged sentence

Effective tax rate

For the first quarter of 2020 , the effective tax rate varied from the federal statutory rate of 21 % in part due to a tax benefit of $ 1.1 million recognized for excess tax benefits resulting from employee exercises of stock options and vesting of restricted stock in accordance with ASU 2016-09 and the effect of state taxes, as well as a tax benefit of $ 6.1 million for the impact of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, as described below.

For the second quarter and first six months of 2020 , the effective tax rate varied from the federal statutory rate of 21 % in part due to a tax benefit of $ 0.8 million and $ 1.8 million , respectively, recognized for excess tax benefits resulting from employee exercises of stock options and vesting of restricted stock in accordance with ASU 2016-09 and the effect of state taxes.

The effective tax rate for the first six months of 2020 was also impacted by a tax benefit of $ 6.1 million for the impact of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, as described below.

On March 27, 2020, President Trump signed into law the CARES Act.

This legislation is an economic relief package in response to the public health and economic impacts of COVID-19 and includes various provisions that impact the Company, including, but not limited to, modifications for net operating losses, accelerated timeframe for refunds associated with prior minimum taxes and modifications of the limitation on business interest.

The Company revalued deferred tax assets related to net operating losses in light of the changes in the CARES Act, and recorded a net tax benefit of $ 6.1 million during the first quarter of 2020.

The Company revalued deferred tax assets related to net operating losses in light of the changes in the CARES Act, and recorded a net tax benefit of $ 6.1 million during the first six months of 2020 .

These deferred tax assets are being revalued, as they will be carried back to 2016 and 2017, which are tax periods prior to the Tax Cuts and Jobs Act ("TCJA") when the federal statutory tax rate was 35% versus the 21% federal statutory tax rate in effect after the enactment of the TCJA.

For the first quarter of 2019 , the effective tax rate varied from the federal statutory rate of 21 % primarily due to a tax benefit of $ 6.0 million recognized for excess tax benefits resulting from employee exercises of stock options and vesting of restricted stock in accordance with ASU 2016-09 and the effect of state taxes.

For the second quarter and first six months of 2019 , the effective tax rate varied from the federal statutory rate of 21 % primarily due to a tax benefit of $ 7.7 million and $ 13.7 million , respectively, recognized for excess tax benefits resulting from employee exercises of stock options and vesting of restricted stock in accordance with ASU 2016-09 and the effect of state taxes.

LENDINGTREE, INC.

2 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

Income tax (expense) benefit - excluding excess tax benefit on stock compensation and CARES Act

Income tax benefit (expense) - excluding excess tax benefit on stock compensation and CARES Act

Excess tax benefit on stock compensation

19 unchanged sentences

upon the occurrence of specified corporate events including but not limited to a fundamental change.

Holders of the Notes were entitled to convert the Notes during the calendar quarter ended March 31, 2020, based on the last reported sales price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on December 31, 2019, being greater than or equal to 130 % of the conversion price of the Notes on each applicable trading day.

Holders of the Notes are not entitled to convert the Notes during the calendar quarter ended June 30, 2020 as the last reported sales price of the Company's common stock, for at least 20 trading days (whether or not

Holders of the 2022 Notes were not entitled to convert the 2022 Notes during the calendar quarter ended June 30, 2020 as the last reported sales price of the Company's common stock, for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on March 31, 2020, was not greater than or equal to 130 % of the conversion price of the 2022 Notes on each applicable trading day.

Holders of the 2022 Notes are not entitled to convert the 2022 Notes during the calendar quarter ended September 30, 2020 as the last reported sales price of the Company's common stock, for at least 20 trading

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

consecutive) during the period of 30 consecutive trading days ending on March 31, 2020, was not greater than or equal to 130% of the conversion price of the Notes on each applicable trading day.

days (whether or not consecutive) during the period of 30 consecutive trading days ending on June 30, 2020, was not greater than or equal to 130% of the conversion price of the 2022 Notes on each applicable trading day.

On or after February 1, 2022, until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2022 Notes, holders of the 2022 Notes may convert all or a portion of their 2022 Notes regardless of the foregoing conditions.

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Financing costs related to the issuance of the 2022 Notes were approximately $ 9.3 million of which $ 7.4 million were allocated to the liability component and are being amortized to interest expense over the term of the debt and $ 1.9 million were allocated to the equity component.

In the first three months of 2020 , the Company recorded interest expense on the Notes of $ 4.0 million which consisted of $ 0.5 million associated with the 0.625 % coupon rate, $ 3.1 million associated with the accretion of the debt discount, and $ 0.4 million associated with the amortization of the debt issuance costs.

In the first three months of 2019 , the Company recorded interest expense on the Notes of $ 3.8 million which consisted of $ 0.5 million associated with the 0.625 % coupon rate, $ 3.0 million associated with the accretion of the debt discount, and $ 0.3 million associated with the amortization of the debt issuance costs.

In the first six months of 2020 , the Company recorded interest expense on the 2022 Notes of $ 7.9 million which consisted of $ 0.9 million associated with the 0.625 % coupon rate, $ 6.3 million associated with the accretion of the debt discount, and $ 0.7 million associated with the amortization of the debt issuance costs.

In the first six months of 2019 , the Company recorded interest expense on the 2022 Notes of $ 7.5 million which consisted of $ 0.9 million associated with the 0.625 % coupon rate, $ 5.9 million associated with the accretion of the debt discount, and $ 0.7 million associated with the amortization of the debt issuance costs.

The debt discount is being amortized over the term of the debt.

As of March 31, 2020 , the fair value of the Notes is estimated to be approximately $ 337.1 million using the Level 1 observable input of the last quoted market price on March 31, 2020 .

As of June 30, 2020 , the fair value of the 2022 Notes is estimated to be approximately $ 430.5 million using the Level 1 observable input of the last quoted market price for the quarter ended June 30, 2020 .

A summary of the gross carrying amount, unamortized debt cost, debt issuance costs and net carrying value of the liability component of the 2022 Notes are as follows (in thousands) :

3 unchanged sentences

Net carrying amount

On July 24, 2020, the Company repurchased approximately $ 130.3 million principal amount of the 2022 Notes through separate and individually-negotiated transactions with certain holders of the 2022 Notes.

See Note 19 —Subsequent Events for additional information.

Convertible Note Hedge and Warrant Transactions

On May 31, 2017, in connection with the issuance of the 2022 Notes, the Company entered into Convertible Note Hedge (the “2017 Hedge”) and Warrant transactions with respect to the Company’s common stock.

The Company used approximately $ 18.1 million of the net proceeds from the Notes to pay for the cost of the Hedge, after such cost was partially offset by the proceeds from the Warrant transactions.

On May 31, 2017, the Company paid $ 61.5 million to the counterparties for the Hedge transactions.

The Hedge transactions cover approximately 1.4 million shares of the Company’s common stock, the same number of shares initially underlying the Notes, and are exercisable upon any conversion of the Notes.

The Hedge Transactions are expected generally to reduce the potential dilution to the Common Stock upon conversion of the Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted Notes, as the case may be, in the event that the market price per share of Common

The Company used approximately $ 18.1 million of the net proceeds from the 2022 Notes to pay for the cost of the 2017 Hedge, after such cost was partially offset by the proceeds from the 2017 Warrants transactions.

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock, as measured under the terms of the Hedge transactions, is greater than the strike price of the Hedge transactions, which initially corresponds to the initial conversion price of the Notes, or approximately $ 207.63 per share of Common Stock.

On May 31, 2017, the Company paid $ 61.5 million to the counterparties for the 2017 Hedge transactions.

The 2017 Hedge transactions cover approximately 1.4 million shares of the Company’s common stock, the same number of shares initially underlying the 2022 Notes, and are exercisable upon any conversion of the 2022 Notes.

The 2017 Hedge transactions are expected generally to reduce the potential dilution to the Common Stock upon conversion of the 2022 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted 2022 Notes, as the case may be, in the event that the market price per share of Common Stock, as measured under the terms of the 2017 Hedge transactions, is greater than the strike price of the 2017 Hedge transactions, which initially corresponds to the initial conversion price of the 2022 Notes, or approximately $ 207.63 per share of Common Stock.

The 2017 Hedge transactions will expire upon the maturity of the Notes.

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If the market price per share of the Common Stock, as measured under the terms of the 2017 Warrants, exceeds the strike price of the 2017 Warrants, the 2017 Warrants could have a dilutive effect, unless the Company elects, subject to certain conditions, to settle the 2017 Warrants in cash.

The Hedge and Warrant transactions are indexed to, and potentially settled in, the Company's common stock and the net cost of $ 18.1 million has been recorded as a reduction to additional paid-in capital in the consolidated statement of shareholders’ equity.

The 2017 Hedge and 2017 Warrants transactions are indexed to, and potentially settled in, the Company's common stock and the net cost of $ 18.1 million has been recorded as a reduction to additional paid-in capital in the consolidated statement of shareholders’ equity.

To the extent of the repurchases of the 2022 Notes noted above, the Company entered into agreements with the counterparties for the 2017 Hedge and 2017 Warrants transactions to terminate a portion of the existing call spread transactions effective July 24, 2020 in notional amounts corresponding to the principal amount of the 2022 Notes repurchased.

See Note 19 —Subsequent Events for additional information.

Senior Secured Revolving Credit Facility

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Borrowings under the Amended Revolving Credit Facility can be used to finance working capital needs, capital expenditures and general corporate purposes, including to finance permitted acquisitions.

As of March 31, 2020 , the Company had a $ 130.0 million , 28 -day borrowing outstanding under the Amended Revolving Credit Facility bearing interest at the LIBO rate option of 2.21 % .

As of June 30, 2020 , the Company had a $ 130.0 million , 30 -day borrowing outstanding under the Amended Revolving Credit Facility bearing interest at the LIBO rate option of 1.44 % .

As of December 31, 2019 , the Company had $ 75.0 million in borrowings outstanding under the Amended Revolving Credit Facility at the LIBO rate option with a weighted average interest rate of 3.01 % , consisting of a $ 50.0 million 31 -day borrowing and a $ 25.0 million 31 -day borrowing.

See Note 19 —Subsequent Events for activity related to the Amended Revolving Credit Facility in July 2020.

Up to $ 10.0 million of the Amended Revolving Credit Facility will be available for short-term loans, referred to as swingline loans.

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Additionally, up to $ 10.0 million of the Amended Revolving Credit Facility will be available for the issuance of letters of credit.

At each of March 31, 2020 and December 31, 2019 , the Company had outstanding one letter of credit issued in the amount of $ 0.2 million .

At each of June 30, 2020 and December 31, 2019 , the Company had outstanding one letter of credit issued in the amount of $ 0.2 million .

The Company’s borrowings under the Amended Revolving Credit Facility bear interest at annual rates that, at the Company’s option, will be either:

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a LIBO rate generally defined as the sum of (i) the rate for Eurodollar deposits in the applicable currency and (ii) an applicable percentage of 1.25 % to 2.0 % based on a total consolidated debt to EBITDA ratio.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All swingline loans bear interest at the base rate defined above.

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In addition, the Amended Revolving Credit Facility contains customary affirmative and negative covenants in addition to events of default for a transaction of this type that, among other things, restrict additional indebtedness, liens, mergers or certain fundamental changes, asset dispositions, dividends, stock repurchases and other restricted payments, transactions with affiliates, sale-leaseback transactions, hedging transactions, loans and investments and other matters customarily restricted in such agreements.

The Company was in compliance with all covenants at March 31, 2020 .

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company was in compliance with all covenants at June 30, 2020 .

The Amended Revolving Credit Facility requires LendingTree, LLC to pledge as collateral, subject to certain customary exclusions, substantially all of its assets, including 100 % of its equity in all of its domestic subsidiaries and 66 % of the voting equity, and 100 % of the non-voting equity, in all of its material foreign subsidiaries (of which there are currently none).

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In addition to the remaining unamortized debt issuance costs associated with the original revolving credit facility and the Revolving Credit Facility, debt issuance costs of $ 2.8 million related to the Amended Revolving Credit Facility entered into on December 10, 2019 are being amortized to interest expense over the life of the Amended Revolving Credit Facility, and are included in prepaid and other current assets and other non-current assets in the Company's consolidated balance sheet.

In the first three months of 2020 , the Company recorded interest expense related to the Amended Revolving Credit Facility of $ 1.1 million which consisted of $ 0.6 million associated with borrowings bearing interest at the LIBO rate, $ 0.3 million in unused commitment fees, and $ 0.2 million associated with the amortization of the debt issuance costs.

In the first three months of 2019 , the Company recorded interest expense related to the revolving credit facility of $ 2.1 million which consisted of $ 1.9 million associated with borrowing bearing interest at the LIBO rate, $ 0.1 million in unused commitment fees, and $ 0.1 million associated with the amortization of the debt issuance costs.

In the first six months of 2020 , the Company recorded interest expense related to the Amended Revolving Credit Facility of $ 2.1 million which consisted of $ 1.1 million associated with borrowings bearing interest at the LIBO rate, $ 0.5 million in unused commitment fees, and $ 0.5 million associated with the amortization of the debt issuance costs.

In the first six months of 2019 , the Company recorded interest expense related to the revolving credit facility of $ 3.8 million which consisted of $ 3.2 million associated with borrowings bearing interest at the LIBO rate, $ 0.3 million in unused commitment fees, and $ 0.3 million associated with the amortization of the debt issuance costs.

NOTE 15 — CONTINGENCIES

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With respect to the matters disclosed in this Note 15 , 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 March 31, 2020 , the Company had litigation settlement accruals of $ 0.6 million and $ 36.0 million in continuing operations and discontinued operations, respectively.

As of June 30, 2020 , the Company had litigation settlement accruals of $ 0.1 million and $ 62.3 million in continuing operations and discontinued operations, respectively.

As of December 31, 2019 , the Company had litigation settlement accruals of $ 0.2 million and $ 31.0 million in continuing operations and discontinued operations, respectively.

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See Note 18 —Discontinued Operations for additional information.

NOTE 15 — FAIR VALUE MEASUREMENTS

Other than the 0.625 % Convertible Senior Notes and the Warrants, as well as the equity interest in Stash, the carrying amounts of the Company's financial instruments are equal to fair value at March 31, 2020 .

See Note 13 —Debt for additional information on the 0.625 % Convertible Senior Notes and the Warrants, and see Note 7 —Equity Investment for additional information on the equity interest in Stash.

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 16 — FAIR VALUE MEASUREMENTS

Other than the convertible notes and warrants, as well as the equity interest in Stash, the carrying amounts of the Company's financial instruments are equal to fair value at June 30, 2020 .

See Note 14 —Debt and Note 19 —Subsequent Events for additional information on the convertible notes and warrants, and see Note 7 —Equity Investment for additional information on the equity interest in Stash.

Contingent consideration payments related to acquisitions are measured at fair value each reporting period using Level 3 unobservable inputs.

The changes in the fair value of the Company's Level 3 liabilities during the first quarters of 2020 and 2019 are as follows (in thousands) :

The changes in the fair value of the Company's Level 3 liabilities are as follows (in thousands) :

Three Months Ended

Six Months Ended

Contingent consideration, beginning of period

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Contingent consideration, end of period

The contingent consideration liability at March 31, 2020 is the estimated fair value of the earnout payments of the DepositAccounts, SnapCap, Ovation and QuoteWizard acquisitions.

The Company will make earnout payments ranging from zero to $ 1.0 million based on the achievement of defined milestone targets for DepositAccounts, a payment of $ 3.0 million based on the achievement of certain defined earnings targets for SnapCap, payments ranging from zero to $ 4.4 million based on the achievement of certain defined operating metrics for Ovation, and payments ranging from zero to $ 46.8 million based on the achievement of certain defined performance targets for QuoteWizard.

The contingent consideration liability at June 30, 2020 is the estimated fair value of the earnout payments of the Ovation and QuoteWizard acquisitions.

See Note 8 —Business Acquisitions for additional information on the contingent consideration for each of these respective acquisitions.

The significant unobservable inputs used to calculate the fair value of the contingent consideration are estimated future cash flows for the acquisitions, estimated customer growth rates, estimated date and likelihood of an increase in interest rates and the discount rate.

The significant unobservable inputs used to calculate the fair value of the contingent consideration are estimated future cash flows for the acquisitions and the discount rate.

Actual results will differ from the projected results and could have a significant impact on the estimated fair value of the contingent considerations.

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Fair Value at

March 31, 2020

Valuation Technique(s)

June 30, 2020

Valuation Technique

Unobservable Input

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20.7% - 28.4% (24.6%)

Customer growth rate

Discount rate

10.3% - 10.5% (10.4%)

Scenario approach based on interest rate forecasts (b)

Date and likelihood of an increase in interest rates

Discount rate

(a) Discount rates were weighted by the relative undiscounted value of expected earnout payments.

Other unobservable inputs were weighted by the relative maximum potential earnout payments.

(b) See discussion over DepositAccounts within Note 8 —Business Acquisitions—Changes in Contingent Consideration.

LENDINGTREE, INC.

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Characteristics which were relied upon in making the determination of the reportable segments include the nature of the products, the organization's internal structure, and the information that is regularly reviewed by the chief operating decision maker for the purpose of assessing performance and allocating resources.

The Company changed its reportable segments in the fourth quarter of 2019 and previously reported segment results have been revised to conform to the Company's reportable segments at March 31, 2020 .

The Company changed its reportable segments in the fourth quarter of 2019 and previously reported segment results have been revised to conform to the Company's reportable segments at June 30, 2020 .

The Home segment includes the following products:

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For the Other category, segment cost of revenue and marketing expense also includes the portion of cost of revenue attributable to costs paid for advertising re-sold to third parties.

Three Months Ended March 31, 2020

The Company ceased reselling online advertising space during the first quarter of 2020.

Three Months Ended June 30, 2020

(in thousands)

Segment marketing expense

Segment profit (loss)

Cost of revenue

Brand and other marketing expense

General and administrative expense

Product development

Amortization of intangibles

Change in fair value of contingent consideration

Litigation settlements and contingencies

Operating loss

Interest expense, net

Loss before income taxes and discontinued operations

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three Months Ended June 30, 2019

(in thousands)

Segment cost of revenue and marketing expense

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Income before income taxes and discontinued operations

Six Months Ended June 30, 2020

(in thousands)

Segment cost of revenue and marketing expense

Segment profit (loss)

Cost of revenue (exclusive of cost of advertising re-sold to third parties included above)

Brand and other marketing expense

General and administrative expense

Product development

Amortization of intangibles

Change in fair value of contingent consideration

Litigation settlements and contingencies

Operating income

Interest expense, net

Income before income taxes and discontinued operations

LENDINGTREE, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three Months Ended March 31, 2019

Six Months Ended June 30, 2019

(in thousands)

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Litigation settlements and contingencies

Operating loss

Operating income

Interest expense, net

Loss before income taxes and discontinued operations

Income before income taxes and discontinued operations

NOTE 18 — DISCONTINUED OPERATIONS

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LendingTree, LLC believes the declaration of the dividend was proper, that the amounts paid to LendingTree, LLC following such declaration are not subject to recovery by HLC and that any claims by HLC relating to such dividend declaration are without merit.

During the second quarter of 2020, LendingTree, LLC and HLC reached a verbal settlement agreement in the amount of $ 36.0 million for the release of any and all claims against the Company defendants by HLC, including the dividend claim.

LendingTree estimates the range of potential losses related to the dividend matter to be $ 0.0 million to $ 40.0 million plus a potential award of prejudgment interest.

An estimated liability of $ 36.0 million is included in the accompanying consolidated balance sheet as of March 31, 2020 related to LendingTree LLC's ownership in HLC.

During the second quarter of 2020, LendingTree, LLC and HLC entered into a settlement agreement, subject to the approval of the bankruptcy court in the HLC Bankruptcy, in the amount of $ 36.0 million for the release of any and all claims against the Company defendants by HLC, including the dividend claim.

The bankruptcy court held a hearing on July 16, 2020 on the motion to approve the settlement to which no objections were made, and approved the settlement the same day.

A liability of $ 36.0 million is included in the accompanying consolidated balance sheet as of June 30, 2020 related to LendingTree LLC's ownership in HLC.

The $ 36.0 million settlement payment was made in July 2020.

HLC’s voluntary petition under the Bankruptcy Code does not represent an event of default under LendingTree, LLC’s Second Amended and Restated Credit Agreement dated as of December 10, 2019 or the Company’s indenture dated May 31, 2017 with respect to the Company’s 0.625 % Convertible Senior Notes due 2022.

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On August 27, 2019, plaintiff filed a lawsuit captioned ResCap Liquidating Trust v.

LendingTree, LCC, et al., Case No.

LendingTree, LLC, et al., Case No.

19-cv-2360 (U.S.

Ct., Minn.) , seeking to hold the Company liable for the judgment against HLC, under assumption of liability, agency and alter ego theories.

The Company believes that these claims lack merit and intends to defend this action vigorously.

The Company believes that these claims lack merit.

On October 17, 2019, the Company filed a motion to dismiss the liability and agency claims, and oral arguments with respect to such motion were held on January 10, 2020.

On March 20, 2020, the court denied the Company's motion to dismiss, or in the alternative, to compel arbitration, and on April 3, 2020, the Company appealed the court's findings with respect to the Company's request to compel arbitration of the first count of the lawsuit.

On June 17, 2020, the Company entered into a settlement agreement with ResCap, pursuant to which, the Company agreed to, among other things, pay ResCap $ 58.5 million , less any amounts ResCap receives in the HLC bankruptcy, in exchange for, among other things, ResCap releasing any and all claims against the Company, and the Company’s directors and officers, including any claims asserted in ResCap v.

Pursuant to the settlement agreement, the Company will be responsible for the difference of $ 58.5 million minus the amount that ResCap receives through the HLC Bankruptcy.

In July 2020, the Company made a $ 26.5 million payment to the ResCap Liquidating Trust.

Lehman Brothers Holdings, Inc.

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Bankruptcy Filing creates an automatic stay of this proceeding.

On June 11, 2020, LBHI filed a lawsuit captioned Lehman Brothers Holdings Inc.

LendingTree, LLC, et al., Case No.

20-cv-01351 (U.S.

Ct., Minn.) , seeking to hold the Company liable for their allowed bankruptcy claim of $ 13.3 million , under assumption of liability, agency and alter ego theories.

The Company believes that these claims lack merit and intends to defend this action vigorously.

Financial Information of Discontinued Operations

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Three Months Ended

Six Months Ended

Loss before income taxes

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or LendingTree LLC that arose due to the LendingTree Loans Business or the HLC bankruptcy filing.

LENDINGTREE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 19 — SUBSEQUENT EVENTS

Senior Secured Revolving Credit Facility

On July 21, 2020, the Company executed a temporary amendment to its Amended Revolving Credit Facility to provide for certain covenant relief, primarily to facilitate the issuance of convertible notes outlined below, the repurchase of a portion of the 2022 Notes, and to pay down existing borrowings under the credit facility.

The amendment amends the existing credit agreement to, among other things:

(i) temporarily replace the total consolidated debt to EBITDA ratio covenant with a consolidated liquidity covenant requiring the Company to maintain unrestricted cash and cash equivalents in the United States plus amounts available and permitted to be drawn under the Amended Revolving Credit Facility to be no less than $ 200.0 million ;

(ii) impose additional limitations on certain restricted payments during such temporary period;

and (iii) increase the applicable margins to (x) 2.25 % for loans based on the LIBO rate and (y) 1.25 % for loans based on the base rate, subject to a 0.75 % floor, and unused commitment fees to 0.50 % under the Amended Revolving Credit Facility during the temporary period.

These amendments shall apply from the effective date through the fiscal quarter ending June 30, 2021, unless terminated in advance by the Company.

During July 2020, the Company made net repayments of $ 130.0 million on its Amended Revolving Credit Facility, which represented the outstanding balance.

Convertible Senior Notes

On July 24, 2020, the Company issued $ 575.0 million aggregate principal amount of its 0.50 % Convertible Senior Notes due July 15, 2025 (the “2025 Notes”) in a private placement, for estimated net proceeds of approximately $ 559.8 million .

The 2025 Notes bear interest at a rate of 0.50 % per year, payable semi-annually on January 15 and July 15 of each year, beginning on January 15, 2021.

The 2025 Notes will mature on July 15, 2025, unless earlier repurchased, redeemed or converted.

The initial conversion rate of the 2025 Notes is 2.1683 shares of Common Stock per $1,000 principal amount of 2025 Notes (which is equivalent to an initial conversion price of approximately $ 461.19 per share).

On July 24, 2020, the Company used approximately $ 234.0 million of the net proceeds from the issuance of the 2025 Notes to repurchase approximately $ 130.3 million principal amount of the 2022 Notes through separate and individually-negotiated transactions with certain holders of the 2022 Notes.

On July 24, 2020, in connection with the issuance of the 2025 Notes, the Company entered into Convertible Note Hedge (the “2020 Hedge”) and Warrant (the “2020 Warrants”) transactions with respect to the Company’s common stock.

The Company used approximately $ 63.0 million of the net proceeds from the 2025 Notes to pay for the cost of the 2020 Hedge, after such cost was partially offset by the proceeds from the 2020 Warrants transactions.

The 2020 Warrants have a strike price of $ 709.52 per share, which represents a premium of 100 % over the reported sale price of the Common Stock of $ 354.76 on July 21, 2020.

The Company received approximately $ 15.6 million as a result of terminating such portions of the 2017 Hedge and 2017 Warrants.

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