What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-11-09 compared with 2020-08-10 · 239 added, 236 removed, 1083 unchanged (30% of the section changed)

4 unchanged sentences

(Unaudited, in thousands except share and per share data)

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Cash and cash equivalents $ 567,930 $ 575,615

2 unchanged sentences

Prepaid expenses and other current assets 46,594 49,347

Current assets held for sale 2,175 —

Total current assets 807,324 886,890

8 unchanged sentences

Other assets 15,785 15,676

Noncurrent assets held for sale 16,865 —

TOTAL ASSETS $ 3,342,993 $ 3,505,846

6 unchanged sentences

Other current liabilities 901 1,973

Current liabilities held for sale 2,388 —

Total current liabilities 768,913 833,104

6 unchanged sentences

Other long-term liabilities 36,649 10,228

Noncurrent liabilities held for sale 156 —

TOTAL LIABILITIES 2,166,656 2,194,654

10 unchanged sentences

Authorized 95,000,000 ;

total issued and outstanding 46,892,691 and 47,654,929 shares at June 30, 2020 and December 31, 2019, respectively.

total issued and outstanding 44,767,341 and 47,654,929 shares at September 30, 2020 and December 31, 2019, respectively.

Additional paid-in capital 451,741 465,652

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

13 unchanged sentences

Interest expense, net 22,712 17,271 65,879 50,625

Gain on sale of businesses ( 17,122 ) — ( 17,122 ) —

Loss on investments, net 156 7 20,991 45

22 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

2 unchanged sentences

Foreign currency translation adjustment ( 3,202 ) ( 8,166 ) ( 12,085 ) ( 8,852 )

Change in fair value on available-for-sale investments, net of tax expense of $ 173 and $ 173 for the three and six months ended June 30, 2020, respectively, and $ 7 and $ 184 for the three and six months ended June 30, 2019, respectively.

( 163 ) ( 2 ) 545 558

Change in fair value on available-for-sale investments, net of tax expense of $ 141 and $ 314 for the three and nine months ended September 30, 2020, respectively, and zero and $ 184 for the three and nine months ended September 30, 2019, respectively.

Other comprehensive loss, net of tax ( 3,194 ) ( 8,166 ) ( 11,532 ) ( 8,294 )

5 unchanged sentences

(Unaudited, in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

7 unchanged sentences

Deferred income taxes, net 7,815 2,850

Gain on sale of businesses ( 17,122 ) —

Lease asset impairments and other charges 9,786 —

Changes in fair value of contingent consideration ( 243 ) 8,044

15 unchanged sentences

Cash flows from investing activities:

Distribution from equity method investment — 10,288

Purchases of equity method investment ( 29,979 ) ( 22,338 )

2 unchanged sentences

Acquisition of businesses, net of cash received ( 27,156 ) ( 411,349 )

Proceeds from sale of businesses 24,353 —

Proceeds from sale of assets 507 —

2 unchanged sentences

Cash flows from financing activities:

Payment of note payable ( 400 ) ( 5,100 )

Proceeds from line of credit — 185,000

Repayment of line of credit — ( 57,000 )

Repurchase of common stock ( 238,905 ) ( 20,562 )

13 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three and Six Months Ended June 30, 2019 and 2020

Three and Nine Months Ended September 30, 2019 and 2020

(unaudited, in thousands, except share amounts)

1 unchanged sentence

Shares Amount capital Shares Amount earnings loss Equity

Balance, April 1, 2019 47,661,015 $ 477 $ 358,932 — $ — $ 742,173 $ ( 44,928 ) $ 1,056,654

Balance, July 1, 2019 47,765,869 $ 478 $ 365,687 — $ — $ 752,040 $ ( 46,107 ) $ 1,072,098

Net income — — — — — 30,745 — 30,745

Other comprehensive income, net of tax expense of $7 — — — — — — ( 1,179 ) ( 1,179 )

Dividends ($0.4550 per share) — — — — — ( 22,208 ) — ( 22,208 )

Exercise of stock options 500 — 15 — — — — 15

Issuance of shares under employee stock purchase plan 32,154 — 1,995 — — — — 1,995

Other comprehensive income, net of tax expense of zero

— — — — — — ( 8,166 ) ( 8,166 )

Vested restricted stock 26,989 — — — — — — —

1 unchanged sentence

Share based compensation — — 6,446 — — — — 6,446

Balance, June 30, 2019 47,765,869 $ 478 $ 365,687 — $ — $ 752,040 $ ( 46,107 ) $ 1,072,098

Balance, September 30, 2019 47,585,935 $ 476 $ 369,973 — $ — $ 768,192 $ ( 54,273 ) $ 1,084,368

Common stock Additional paid-in Treasury stock Retained other comprehensive Total Stockholders’

Shares Amount capital Shares Amount earnings loss Equity

Balance, April 1, 2020 47,113,423 $ 471 $ 462,430 — $ — $ 832,648 $ ( 54,468 ) $ 1,241,081

Balance, July 1, 2020 46,892,691 $ 469 $ 467,267 — $ — $ 850,232 $ ( 54,800 ) $ 1,263,168

Net income — — — — — 60,883 — 60,883

Other comprehensive income, net of tax expense of $ 141

Issuance of shares under employee stock purchase plan 53,694 — 3,303 — — — — 3,303

Exercise of 3.25% Convertible Note — — ( 12 ) — — — — ( 12 )

— — — — — — ( 3,194 ) ( 3,194 )

Vested restricted stock 19,893 — — — — — — —

1 unchanged sentence

Share based compensation — — 5,800 — — — — 5,800

Balance, June 30, 2020 46,892,691 $ 469 $ 467,267 — $ — $ 850,232 $ ( 54,800 ) $ 1,263,168

Other, net — — 116 — — — — 116

Balance, September 30, 2020 44,767,341 $ 448 $ 451,741 — $ — $ 782,142 $ ( 57,994 ) $ 1,176,337

Common stock Additional

5 unchanged sentences

Other comprehensive income, net of tax expense of $ 184

— — — — — — ( 8,294 ) ( 8,294 )

Dividends ($ 0.9000 per share)

— — — — — ( 43,966 ) — ( 43,966 )

Exercise of stock options 156,038 2 5,272 — — — — 5,274

3 unchanged sentences

Share based compensation — — 18,329 — — 65 — 18,394

Balance, June 30, 2019 47,765,869 $ 478 $ 365,687 — $ — $ 752,040 $ ( 46,107 ) $ 1,072,098

Balance, September 30, 2019 47,585,935 $ 476 $ 369,973 — $ — $ 768,192 $ ( 54,273 ) $ 1,084,368

Common stock Additional

5 unchanged sentences

Other comprehensive income, net of tax expense of $ 314

— — — — — — ( 11,532 ) ( 11,532 )

Exercise of stock options 41,530 — 1,583 — — ( 631 ) — 952

1 unchanged sentence

Exercise of 3.25 % Convertible Note

— — ( 12 ) — — — — ( 12 )

Vested restricted stock 267,894 3 ( 3 ) — — — — —

1 unchanged sentence

Share based compensation — — 18,643 — — — — 18,643

Balance, June 30, 2020 46,892,691 $ 469 $ 467,267 — $ — $ 850,232 $ ( 54,800 ) $ 1,263,168

Other, net — — 116 — — — — 116

Balance, September 30, 2020 44,767,341 $ 448 $ 451,741 — $ — $ 782,142 $ ( 57,994 ) $ 1,176,337

See Notes to Condensed Consolidated Financial Statements

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

SEPTEMBER 30, 2020

Basis of Presentation

13 unchanged sentences

The global impact of the COVID-19 pandemic has had a negative effect on the global economy, disrupting the financial markets creating increasing volatility and overall uncertainty.

The Company began to experience modest adverse impacts of the COVID-19 pandemic in the second quarter of 2020 and these adverse impacts are expected to continue in the third quarter of 2020, and possibly longer.

Despite the modest adverse impacts, there are no indications that the COVID-19 pandemic has resulted in a material decline in the carrying value of assets, (except for equity method investments), or a material change in the estimate of any contingent amounts, recorded in the Company’s Condensed Consolidated Balance Sheet as of June 30, 2020.

The Company began to experience modest adverse impacts of the COVID-19 pandemic in the second quarter of 2020 and these adverse impacts are expected to continue in the fourth quarter of 2020, and possibly longer.

However, there is uncertainty as to the full extent, duration and overall impact of the COVID-19 pandemic, which could result in an adverse material change in a future period to the Company’s results of operations, financial position or liquidity.

55 unchanged sentences

J2 Global assessed whether events or changes in circumstances have occurred that potentially indicate the carrying amount of long-lived assets may not be recoverable.

No impairment was recorded in the second quarter of 2020, excluding an immaterial impairment associated with a sublease (see Note 10 - Leases).

No impairment was recorded in the second quarter of 2019.

In the third quarter of 2020, the Company recorded impairment of certain operating right-of-use assets and associated property and equipment.

(see Note 10 - Leases).

No impairment was recorded in the third quarter of 2019.

The Company classifies its long-lived assets to be sold as held for sale in the period (i) it has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

22 unchanged sentences

If the carrying value of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized for the difference.

In addition, the COVID-19 pandemic could have an adverse impact on the Company’s consolidated financial results in the third quarter of 2020, and possibly longer.

As of June 30, 2020, there were no indications that the carrying value of goodwill and other intangible assets may not be recoverable.

In addition, the COVID-19 pandemic could have an adverse impact on the Company’s consolidated financial results in the fourth quarter of 2020, and possibly longer.

As of September 30, 2020, there were no indications that the carrying value of goodwill and other intangible assets may not be recoverable.

However, a prolonged adverse impact of the COVID-19 pandemic on the Company’s consolidated financial results may require an impairment charge related to one or more of these assets in a future period.

No impairment was recorded in the second quarter of 2020 or 2019.

No COVID-19 related impairments were recorded in the third quarter of 2020 or 2019.

Contingent Consideration

34 unchanged sentences

We do not believe these provisions have a significant impact to our current and deferred income tax balances.

The Company anticipates it will benefit from the technical correction to tax depreciation related to qualified improvement property and has elected to defer income tax payments and employer side social security payments where eligible.

The Company will benefit from the technical correction to tax depreciation related to qualified improvement property and has elected to defer income tax payments and employer side social security payments where eligible.

As further guidance is released regarding the CARES Act, we will record adjustments to our tax balances, as necessary.

19 unchanged sentences

Early adoption is permitted.

The Company is currently evaluating the effect of this ASU on its financial statements and related disclosures.

The Company expects to adopt this ASU on January 1, 2021 and does not expect the adoption to have a material effect on its financial statements or disclosures.

In January 2020, the FASB issued ASU No.

7 unchanged sentences

This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

The Company is currently evaluating the effect of this ASU on its financial statements and related disclosures.

The Company expects to adopt this ASU on January 1, 2021 and does not expect the adoption to have a material effect on its financial statements or disclosures.

In March 2020, the FASB issued ASU No.

6 unchanged sentences

The Company is currently evaluating the effect of this ASU on its financial statements and related disclosures.

In August 2020, the FASB issued ASU No.

2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

The amendments in this ASU reduce the number of accounting models for convertible debt instruments and convertible preferred stock in order to simplify the accounting for convertible instruments and reduce complexity.

In addition, it amends the guidance for scope exception surrounding derivatives for contracts in an entity’s own equity.

In each case, the related guidance surrounding EPS has also been amended.

The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021.

The Company is currently evaluating the effect of this ASU on its financial statements and related disclosures.

Digital Media

36 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

Digital Media 2020 2019 2020 2019

14 unchanged sentences

Total $ 356,976 $ 344,141 $ 1,020,353 $ 966,466

The Company has recorded $ 45.0 million and $ 31.3 million of revenue for the three months ended June 30, 2020 and 2019, respectively, and $ 113.5 million and $ 84.5 million of revenue for the six months ended June 30, 2020 and 2019, respectively, which was previously included in the contract liability balance as of the beginning of each respective year.

As of June 30, 2020, the Company acquired $ 0.5 million of deferred revenue in connection with the Company’s business acquisitions (see Note 4 - Business Acquisitions) which are subject to purchase accounting adjustments.

The Company has recorded $ 29.0 million and $ 20.5 million of revenue for the three months ended September 30, 2020 and 2019, respectively, and $ 142.5 million and $ 105.0 million of revenue for the nine months ended September 30, 2020 and 2019, respectively, which was previously included in the contract liability balance as of the beginning of each respective year.

As of September 30, 2020, the Company acquired $ 2.4 million of deferred revenue in connection with the Company’s business acquisitions (see Note 4 - Business Acquisitions) which are subject to purchase accounting adjustments.

Performance Obligations

57 unchanged sentences

The Company uses acquisitions as a strategy to grow its customer base by increasing its presence in new and existing markets, expand and diversify its service offerings, enhance its technology, and acquire skilled personnel.

The Company completed the following acquisitions during the first six months of fiscal 2020, paying the purchase price in cash in each transaction:

The Company completed the following acquisitions during the first nine months of fiscal 2020, paying the purchase price in cash in each transaction:

(a) an asset purchase of EDC Systems Inc.

(operating under the name “SRFax”), acquired on February 18, 2020, a Canadian-based provider of fax solutions;

and (b) another immaterial acquisition of a digital media business.

The Condensed Consolidated Statement of Operations since the date of each acquisition and balance sheet as of June 30, 2020, reflect the results of operations of all 2020 acquisitions.

For the six months ended June 30, 2020, these acquisitions contributed $ 2.9 million to the Company’s revenues.

and (b) other immaterial acquisitions of Digital Media and Martech businesses.

The Condensed Consolidated Statement of Operations since the date of each acquisition and balance sheet as of September 30, 2020, reflect the results of operations of all 2020 acquisitions.

For the nine months ended September 30, 2020, these acquisitions contributed $ 5.9 million to the Company’s revenues.

Net income contributed by these acquisitions was not separately identifiable due to J2 Global’s integration activities and is impracticable to provide.

3 unchanged sentences

Accounts receivable $ 875

Prepaid expenses and other current assets 91

Property and equipment 53

Operating lease right of use asset 113

Trade names 1,527

4 unchanged sentences

Deferred revenue ( 2,390 )

Operating lease liabilities, current ( 95 )

Operating lease liabilities, non-current ( 19 )

Deferred tax liability ( 405 )

Total $ 39,147

During the six months ended June 30, 2020, the purchase price accounting has been finalized for Highwinds Capital, Inc.

and Cloak Holdings, LLC and immaterial digital media and consumer privacy and protection businesses.

During the nine months ended September 30, 2020, the purchase price accounting has been finalized for Highwinds Capital, Inc.

and Cloak Holdings, LLC, OffsiteDataSync, Inc., BabyCenter LLC, Spiceworks, Inc., and immaterial digital media and consumer privacy and protection businesses.

The initial accounting for all 2020 acquisitions is incomplete and subject to change, which may be significant.

J2 Global has recorded provisional amounts which may be based upon past acquisitions with similar attributes for certain intangible assets (including trade names, software and customer relationships), preliminary acquisition date working capital and related tax items.

During the six months ended June 30, 2020, the Company recorded adjustments to the initial working capital and to the purchase accounting due to the finalization of prior period acquisitions in the Voice, Backup, Security and CPP businesses which resulted in a net decrease in goodwill of $ 2.1 million.

During the nine months ended September 30, 2020, the Company recorded adjustments to the initial working capital and to the purchase accounting due to the finalization of prior period acquisitions in the Voice, Backup, Security and CPP businesses which resulted in a net decrease in goodwill of $ 2.1 million.

In addition, the Company recorded adjustments to the initial working capital and to the purchase accounting due to the finalization of prior period acquisitions in the Digital Media business, which resulted in a net increase in goodwill of $ 9.7 million (see Note 8 - Goodwill and Intangible Assets).

Such adjustments had an immaterial impact on the amortization expense within the Condensed Consolidated Statement of Operations for the six months ended June 30, 2020.

Such adjustments had an immaterial impact on the amortization expense within the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2020.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition.

Goodwill recognized associated with these acquisitions during the six months ended June 30, 2020 is $ 16.5 million, of which $ 16.5 million is expected to be deductible for income tax purposes.

Goodwill recognized associated with these acquisitions during the nine months ended September 30, 2020 is $ 23.8 million, of which $ 22.6 million is expected to be deductible for income tax purposes.

Investments consist of equity and debt securities.

8 unchanged sentences

Cost Impairment Adjustments Reported Amount

June 30, 2020

September 30, 2020

Equity securities $ 54,145 $ ( 23,769 ) $ ( 480 ) $ 29,896

4 unchanged sentences

In March 2020, a portion of the Company’s investment in equity securities declined in value primarily due to changes in the investee’s capital structure and overall market volatility.

During the three and six months ended June 30, 2020, the Company recorded zero and $ 19.6 million of impairment loss on equity securities, respectively, which is reflected in loss on investments, net in the Condensed Consolidated Statements of Operations.

During the three and nine months ended September 30, 2020, the Company recorded zero and $ 19.6 million of impairment loss on equity securities, respectively, which is reflected in loss on investments, net in the Condensed Consolidated Statements of Operations.

During the year ended December 31, 2019, the Company recorded a $ 4.2 million impairment loss related to a portion of its equity securities without a readily determinable fair market value which is reflected in other expense, net in the Condensed Consolidated Statements of Operations.

In the first quarter of 2020, in a non-cash transaction of $ 18.3 million, the Company exchanged shares of redeemable preferred stock that were previously classified as available-for-sale corporate debt securities for a new series of preferred stock, classified as equity securities.

During the three and six months ended June 30, 2020, the Company recognized a loss on exchange of zero and $ 4.4 million, respectively, which is reflected in loss on investments, net in the Condensed Consolidated Statements of Operations.

At June 30, 2020, the Company had preferred stock, which was purchased for $ 0.8 million in the first quarter of 2020.

During the three and six months ended June 30, 2020, the Company recognized a gain of zero and $ 3.2 million, respectively, which is reflected in loss on investments, net in the Condensed Consolidated Statements of Operations.

During the three and nine months ended September 30, 2020, the Company recognized a loss on exchange of zero and $ 4.4 million, respectively, which is reflected in loss on investments, net in the Condensed Consolidated Statements of Operations.

At September 30, 2020, the Company held preferred stock, which was purchased for $ 0.8 million in the first quarter of 2020.

During the three and nine months ended September 30, 2020, the Company recognized a gain of zero and $ 3.2 million, respectively, which is reflected in loss on investments, net in the Condensed Consolidated Statements of Operations.

The following table summarizes the gross unrealized gains and losses and fair values for investments classified as available-for-sale investments (in thousands):

June 30, 2020

September 30, 2020

Corporate debt securities $ 511 $ 142 $ — $ 653

3 unchanged sentences

Total $ 23,256 $ 112 $ ( 698 ) $ 22,670

At June 30, 2020, the Company’s available-for-sale debt securities are carried at fair value, with the unrealized gains and losses reported as a component of other comprehensive income.

At September 30, 2020, the Company’s available-for-sale debt securities are carried at fair value, with the unrealized gains and losses reported as a component of other comprehensive income.

The following table summarizes J2 Global’s corporate debt securities designated as available-for-sale, classified by the contractual maturity date of the security (in thousands):

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Due within 1 year $ — $ —

9 unchanged sentences

These changes will result in earlier recognition of credit losses.

The Company’s available-for-sale debt securities are carried at estimated fair value with any unrealized gains and losses, net of taxes, included in accumulated other comprehensive income (loss) in stockholders’ equity.

Available- for-sale debt securities with an amortized cost basis in excess of estimated fair value are assessed to determine what amount of that difference, if any, is caused by expected credit losses.

Expected credit losses on available-for-sale debt securities are recognized in other expense, net on our Condensed Consolidated Statements of Operations, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive loss in stockholders’ equity.

Expected credit losses on available-for-sale debt securities are recognized in other (income) expense, net on our Condensed Consolidated Statements of Operations, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive loss in stockholders’ equity.

The following table presents gross unrealized losses and fair values for those investments that were in an unrealized loss position as of December 31, 2019, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in thousands).

There were no investments in an unrealized loss position as of June 30, 2020.

There were no investments in an unrealized loss position as of September 30, 2020.

As of December 31, 2019

3 unchanged sentences

Total $ — $ — $ 22,047 $ ( 698 ) $ 22,047 $ ( 698 )

As of June 30, 2020 and December 31, 2019, we did not recognize any credit losses related to debt securities.

As of September 30, 2020 and December 31, 2019, we did not recognize any credit losses related to debt securities.

On September 25, 2017, the Company entered into a commitment to invest $ 200 million (approximately 76.6 % of equity) in the OCV Fund.

10 unchanged sentences

The commitment was approved by the Audit Committee of the Board in accordance with the Company’s related-party transaction approval policy.

In the first six months of 2020, the Company received capital call notices from the management of OCV Management, LLC.

for $ 26.5 million, inclusive of certain management fees, of which $ 26.5 million has been paid for the six months ended June 30, 2020.

In the first six months of 2019, the Company received capital call notices from the management of OCV Management, LLC.

for $ 19.3 million, inclusive of certain management fees, of which $ 14.7 million had been paid for the six months ended June 30, 2019.

In the first nine months of 2020, the Company received capital call notices from the management of OCV Management, LLC.

for $ 31.0 million, inclusive of certain management fees, of which $ 30.0 million has been paid for the nine months ended September 30, 2020.

In the first nine months of 2019, the Company received capital call notices from the management of OCV Management, LLC.

for $ 22.3 million, inclusive of certain management fees, of which $ 22.3 million had been paid for the nine months ended September 30, 2019.

During the nine months ended September 30, 2020 and 2019, the Company received distributions from OCV of zero and $ 10.3 million, respectively.

The Company recognizes its equity in the net earnings or losses relating to the investment in OCV on a one-quarter lag due to the timing and availability of financial information from OCV.

If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline.

During the three months ended June 30, 2020 and 2019, the Company recognized an investment loss (gain) of $ 5.8 million and $( 4.1 ) million, net of tax benefit (expense), respectively, and during the six months ended June 30, 2020 and 2019, the Company recognized an investment loss (gain) of $ 10.1 million and $( 3.6 ) million, respectively.

During the three months ended September 30, 2020 and 2019, the Company recognized an investment loss (gain) of $ 0.7 million and $ 3.5 million, net of tax benefit (expense), respectively, and during the nine months ended September 30, 2020 and 2019, the Company recognized an investment loss (gain) of $ 10.8 million and $( 0.1 ) million, respectively.

The fiscal 2020 loss was primarily a result of the impairment of two of its investments as a result of COVID-19 in the amount of $ 7.0 million, net of tax benefit.

1 unchanged sentence

The loss is presented in the Company’s Condensed Consolidated Statement of Operations as net loss (income) in earnings of equity method investment.

During the three months ended June 30, 2020 and 2019, the Company recognized management fees of $ 0.8 million and $ 0.8 million, net of tax benefit, respectively, and for the six months ended June 30, 2020 and 2019, the Company recognized management fees of $ 1.5 million and $ 1.5 million, net of tax benefit, respectively.

During the three months ended September 30, 2020 and 2019, the Company recognized management fees of $ 0.8 million and $ 0.8 million, net of tax benefit, respectively, and for the nine months ended September 30, 2020 and 2019, the Company recognized management fees of $ 2.3 million and $ 2.3 million, net of tax benefit, respectively.

The following table discloses the carrying amount for the Company’s equity method investment (in thousands):

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Equity method investment $ 66,026 $ 50,274

4 unchanged sentences

Assets Held For Sale

The Company classifies assets held for sale when management approves and commits to a formal plan of sale with the expectation the sale will be completed within one year.

The net assets of the business held for sale are then recorded at the lower of their current carrying value or the fair market value, less costs to sell.

During the second quarter of 2020, the Company committed to a plan to sell certain Voice assets in Australia and New Zealand as they were determined to be non-core assets.

Such assets are recorded within the Voice, Backup, Security, and CPP reportable segment.

This determination resulted in a reclassification of assets and liabilities held for sale on the Condensed Consolidated Balance Sheet with a net carrying value of $ 16.5 million.

The following table presents information related to the assets and liabilities that were classified as held for sale in our Condensed Consolidated Balance Sheet (in thousands):

June 30, 2020

Accounts receivable, net $ 1,638

Prepaid expenses and other current assets 537

Property and equipment, net 503

Operating lease right-of-use assets 271

Trade names, net 125

Customer relationships, net 1,864

Goodwill 13,595

Other purchased intangibles, net 37

Deferred income taxes, noncurrent 378

Other assets 92

Total assets held for sale $ 19,040

Accounts payable and accrued expenses $ 1,813

Deferred revenue, current 457

Operating lease liabilities, current 118

Operating lease liabilities, noncurrent 156

Total liabilities held for sale $ 2,544

On August 31, 2020, in a cash transaction, the Company sold the assets for a gain of $ 17.1 million which was recorded in gain on sale of businesses on the Condensed Consolidated Statement of Operations.

Fair Value Measurements

13 unchanged sentences

The fair value of the Credit Facility approximates its carrying amount due to its variable interest rate, which approximates a market interest rate, and is considered a Level 2 input.

The fair value of the Company’s debt instruments at June 30, 2020 and December 31, 2019 was $ 1.6 billion and $ 1.8 billion, respectively (see Note 9 - Debt).

The fair value of the Company’s debt instruments at September 30, 2020 and December 31, 2019 was $ 1.6 billion and $ 1.8 billion, respectively (see Note 9 - Debt).

In 2019, the Company entered into a $ 5.5 million note payable that was short-term in nature and associated with the quarter’s acquisition activity.

In the same year, the Company paid down $ 5.1 million of the outstanding note.

As of June 30, 2020, the carrying value of the note payable approximates fair value and is classified within Level 2.

In the same year, the Company paid down $ 5.1 million of the outstanding note and in the third quarter of 2020, the balance on the note payable was paid in full.

The Company classifies its contingent consideration liability in connection with acquisitions within Level 3 because factors used to develop the estimated fair value are unobservable inputs, such as volatility and market risks, and are not supported by market activity.

10 unchanged sentences

The following tables present the fair values of the Company’s financial assets or liabilities that are measured at fair value on a recurring basis (in thousands):

June 30, 2020 Level 1 Level 2 Level 3 Fair Value

September 30, 2020 Level 1 Level 2 Level 3 Fair Value

Cash equivalents:

17 unchanged sentences

Contingent consideration payments ( 37,398 ) Not applicable

Balance as of June 30, 2020 $ 8,122

In connection with the acquisition of Humble Bundle on October 13, 2017, contingent consideration of up to an aggregate of $ 40.0 million may be payable upon achieving certain future EBITDA thresholds and had a fair value of approximately zero and $ 20.0 million at June 30, 2020 and December 31, 2019, respectively.

Due to the Company’s achievement of certain EBITDA targets for the years ended December 31, 2019 and 2018 and the amended contingent consideration agreement, $ 20.0 million was paid in the first six months of 2020 and $ 20.0 million in fiscal 2019.

In connection with the Company’s other acquisition activity, contingent consideration of up to $ 19.5 million may be payable upon achieving certain future EBITDA, revenue, and/or unique visitor thresholds and had a combined fair value of $ 8.1 million and $ 8.8 million at June 30, 2020 and December 31, 2019, respectively.

Due to the achievement of certain thresholds, $ 5.5 million was paid in the first six months of 2020.

During the six months ended June 30, 2020, the Company recorded a decrease in the fair value of the contingent consideration of $ 0.2 million and reported such decrease in general and administrative expenses.

Balance as of September 30, 2020 $ 8,352

Due to the Company’s achievement of certain EBITDA targets for the years ended December 31, 2019 and 2018 and the amended contingent consideration agreement, $ 20.0 million was paid in the first nine months of 2020 and $ 20.0 million in fiscal 2019.

In connection with the Company’s other acquisition activity, contingent consideration of up to $ 22.5 million may be payable upon achieving certain future EBITDA, revenue, and/or unique visitor thresholds and had a combined fair value of $ 8.4 million and $ 8.8 million at September 30, 2020 and December 31, 2019, respectively.

Due to the achievement of certain thresholds, $ 8.3 million was paid in the first nine months of 2020.

During the nine months ended September 30, 2020, the Company recorded a decrease in the fair value of the contingent consideration of $ 0.2 million and reported such decrease in general and administrative expenses.

Goodwill and Intangible Assets

6 unchanged sentences

Identifiable intangible assets are amortized over the period of estimated economic benefit, which ranges from one to 20 years.

The changes in carrying amounts of goodwill for the six months ended June 30, 2020 are as follows (in thousands):

The changes in carrying amounts of goodwill for the nine months ended September 30, 2020 are as follows (in thousands):

Fax and Martech Voice, Backup, Security and CPP Total Cloud Services Digital Media Consolidated

1 unchanged sentence

Goodwill acquired (Note 4) 21,950 — 21,950 1,867 23,817

Goodwill reclassified to noncurrent assets held for sale (1)

Goodwill written off related to sale of a business (1)

— ( 4,751 ) ( 4,751 ) — ( 4,751 )

2 unchanged sentences

Foreign exchange translation 2,226 ( 358 ) 1,868 ( 12 ) 1,856

Balance as of June 30, 2020 $ 412,947 $ 460,034 $ 872,981 $ 764,306 $ 1,637,287

(1) During the second quarter of 2020, the Company reclassified $ 13.6 million of goodwill to noncurrent assets held for sale in connection with certain Voice assets in Australia and New Zealand (see Note 6 - Assets Held for Sale).

Balance as of September 30, 2020 $ 421,964 $ 472,845 $ 894,809 $ 766,737 $ 1,661,546

(1) On August 31, 2020, in a cash transaction, the Company sold certain of its Voice assets in Australia and New Zealand which resulted in $ 4.8 million of goodwill being written off in connection with this sale (see Note 6 - Assets Held for Sale).

(2) Purchase accounting adjustments relate to measurement period adjustments to goodwill in connection with prior business acquisitions (see Note 4 - Business Acquisitions).

Intangible Assets with Indefinite Lives:

Intangible assets are summarized as of June 30, 2020 and December 31, 2019 as follows (in thousands):

Intangible assets are summarized as of September 30, 2020 and December 31, 2019 as follows (in thousands):

September 30,

2020 December 31,

3 unchanged sentences

Intangible Assets Subject to Amortization:

As of June 30, 2020, intangible assets subject to amortization relate primarily to the following (in thousands):

As of September 30, 2020, intangible assets subject to amortization relate primarily to the following (in thousands):

Weighted-Average

7 unchanged sentences

Other purchased intangibles 4.4 years 383,555 246,998 136,557

$ 1,274,073 $ 813,300 $ 460,773

(1) Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace in which the asset’s benefits are consumed.

Total $ 1,275,973 $ 848,141 $ 427,832

(1) Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace at which the asset’s benefits are consumed.

This pattern results in a substantial majority of the amortization expense being recognized in the first 4 to 5 years, despite the overall life of the asset.

(2) Intangible assets of $2.0 million, which were classified as assets held for sale, were included in the total at June 30, 2020.

As of December 31, 2019, intangible assets subject to amortization relate primarily to the following (in thousands):

8 unchanged sentences

Total $ 1,275,048 $ 750,180 $ 524,868

(1) Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace in which the asset’s benefits are consumed.

(1) Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace at which the asset’s benefits are consumed.

This pattern results in a substantial majority of the amortization expense being recognized in the first 4 to 5 years, despite the overall life of the asset.

Amortization expense, included in general and administrative expense, approximated $ 35.6 million and $ 44.5 million for the three months ended June 30, 2020 and 2019, respectively, and $ 74.4 million and $ 81.8 million for the six months ended June 30, 2020 and 2019, respectively.

Amortization expense is estimated to approximate $ 82.3 million, $ 119.9 million, $ 69.1 million, $ 64.7 million and $ 35.4 million for the remaining six months of fiscal year 2020 through fiscal year 2024, respectively, and $ 89.4 million thereafter through the duration of the amortization period.

Amortization expense, included in general and administrative expense, approximated $ 41.2 million and $ 50.4 million for the three months ended September 30, 2020 and 2019, respectively, and $ 115.6 million and $ 132.2 million for the nine months ended September 30, 2020 and 2019, respectively.

Amortization expense is estimated to approximate $ 41.9 million, $ 114.4 million, $ 68.7 million, $ 65.2 million and $ 34.3 million for the remaining three months of fiscal year 2020 through fiscal year 2024, respectively, and $ 103.4 million thereafter through the duration of the amortization period.

6.0 % Senior Notes

1 unchanged sentence

J2 Cloud received proceeds of $ 636.5 million, after deducting the initial purchasers’ discounts, commissions and offering expenses.

The 6.0% Senior Notes are presented as long-term debt, net of deferred issuance costs, on the Condensed Consolidated Balance Sheet as of June 30, 2020.

The 6.0% Senior Notes bear interest at a rate of 6.0% per annum, payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2018.

The 6.0% Senior Notes mature on July 15, 2025 , and are senior unsecured obligations of the Issuers and are guaranteed on an unsecured basis by certain subsidiaries of J2 Cloud (as defined in the Indenture agreement dated June 27, 2017, the “Indenture”).

If J2 Cloud or any of its restricted subsidiaries acquires or

creates a domestic restricted subsidiary, other than an insignificant subsidiary (as defined in the Indenture), after the issue date, or any insignificant subsidiary ceases to fit within the definition of insignificant subsidiary, such restricted subsidiary is required to unconditionally guarantee, jointly and severally, on an unsecured basis, the Issuers’ obligations under the 6.0% Senior Notes.

The Issuers may redeem some or all of the 6.0% Senior Notes at any time on or after July 15, 2020 at specified redemption prices plus accrued and unpaid interest, if any, to, but excluding the redemption date.

Before July 15, 2020, in connection with certain equity offerings, the Issuers also may redeem up to 35% of the 6.0% Senior Notes at a price equal to 106.0% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding the redemption date.

In addition, at any time prior to July 15, 2020, the Issuers may redeem some or all of the 6.0% Senior Notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, plus an applicable “make-whole” premium.

The Indenture contains certain restrictive and other covenants applicable to J2 Cloud and subsidiaries designated as restricted subsidiaries including, but not limited to, restrictions on (i) paying dividends or making distributions on J2 Cloud’s membership interests or repurchasing J2 Cloud’s membership interests;

The 6.0 % Senior Notes are presented as long-term debt, net of deferred issuance costs, on the Condensed Consolidated Balance Sheet as of September 30, 2020.

The 6.0 % Senior Notes bear interest at a rate of 6.0 % per annum, payable semi-annually in arrears on January 15 and July 15 of each year.

The indenture pursuant to which the 6.0 % Senior Notes was issued (the “Indenture”) contains certain restrictive and other covenants applicable to J2 Cloud and subsidiaries designated as restricted subsidiaries including, but not limited to, restrictions on (i) paying dividends or making distributions on J2 Cloud’s membership interests or repurchasing J2 Cloud’s membership interests;

(ii) making certain restricted payments;

2 unchanged sentences

(v) merging or consolidating with another company;

and (vi) transferring and selling assets.

(vi) transferring and selling assets.

These covenants include certain exceptions.

Violation of these covenants could result in a default which could result in the acceleration of outstanding amounts if such default is not cured or waived within the time periods outlined in the Indenture.

Restricted payments, specifically dividend payments, are applicable only if J2 Cloud and subsidiaries designated as restricted subsidiaries has a leverage ratio of greater than 3.0 to 1.0.

In addition, if such leverage ratio is in excess of 3.0 to 1.0, the restriction on restricted payments is subject to various exceptions, including an exception for the payment of restricted payments up to $ 75 million.

These contractual provisions did not, as of June 30, 2020, restrict J2 Cloud’s ability to pay dividends to J2 Global, Inc.

The company is in compliance with its debt covenants as of June 30, 2020.

In addition, based on current expectations and assumptions about the COVID-19 pandemic, the Company does not anticipate the COVID-19 pandemic to impact the compliance with its debt covenants.

As of June 30, 2020 and December 31, 2019, the estimated fair value of the 6.0% Senior Notes was approximately $ 661.4 million and $ 689.8 million, respectively, and was based on the quoted market prices of debt instruments with similar terms, credit rating and maturities of the 6.0% Senior Notes which are Level 2 inputs (see Note 7 - Fair Value Measurements).

These contractual provisions did not, as of September 30, 2020, restrict J2 Cloud’s ability to pay dividends to J2 Global, Inc.

The Company is in compliance with its debt covenants as of September 30, 2020.

As of September 30, 2020 and December 31, 2019, the estimated fair value of the 6.0 % Senior Notes was approximately $ 676.2 million and $ 689.8 million, respectively, and was based on the quoted market prices of debt instruments with similar terms, credit rating and maturities of the 6.0 % Senior Notes which are Level 2 inputs (see Note 7 - Fair Value Measurements).

On October 7, 2020, the Company issued $ 750 million aggregate principal amount of 4.625 % Senior Notes due in 2030.

A portion of the proceeds were deposited with the trustee under the Indenture in an amount sufficient to fund the redemption of the outstanding aggregate principal amount of the 6.0 % Senior Notes and to pay the redemption premium due in respect of such redemption and accrued and unpaid interest to, but excluding, the redemption date, which will be December 7, 2020 (see Note 18 - Subsequent Events).

In connection with that deposit, the Indenture restrictive covenants described above ceased to apply.

3.25 % Convertible Notes

14 unchanged sentences

Since the Company intended to settle the principal amount in cash, the net carrying amount of the 3.25 % Convertible Notes was classified within current liabilities on the Condensed Consolidated Balance Sheet as of December 31, 2019.

During the second quarter of 2020, the last reported sale price of the Company’s common stock did not meet the conversion price threshold requirements of the 3.25% Convertible Notes and, accordingly, the 3.25% Convertible Notes are not currently convertible at the option of the holders.

As of June 30, 2020, the conversion rate is 14.7632 shares of J2 Global common stock for each $1,000 principal amount of 3.25% Convertible Notes, which represents a conversion price of approximately $ 67.74 per share of J2 Global common stock.

During the third quarter of 2020, the last reported sale price of the Company’s common stock did not meet the conversion price threshold requirements of the 3.25 % Convertible Notes and, accordingly, the 3.25 % Convertible Notes are not currently convertible at the option of the holders.

As of September 30, 2020, the conversion rate is 14.7632 shares of J2 Global common stock for each $1,000 principal amount of 3.25 % Convertible Notes, which represents a conversion price of approximately $ 67.74 per share of J2 Global common stock.

The conversion rate is subject to adjustment for certain events as set forth in the indenture governing the 3.25 % Convertible Notes, but will not be adjusted for accrued interest.

5 unchanged sentences

In addition, if a fundamental change, as defined in the indenture governing the 3.25 % Convertible Notes, occurs prior to the maturity date, holders may require J2 Global to repurchase for cash all or part of their 3.25 % Convertible Notes at a repurchase price equal to 100 % of the principal amount of the 3.25 % Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

As a result of the Holders’ repurchase option on June 15, 2021, the net carrying value of the 3.25% Convertible Notes was classified within current liabilities on the Condensed Consolidated Balance Sheet as of June 30, 2020.

As a result of the Holders’ repurchase option on June 15, 2021, the net carrying value of the 3.25 % Convertible Notes was classified within current liabilities on the Condensed Consolidated Balance Sheet as of September 30, 2020.

The 3.25 % Convertible Notes are the Company’s general senior unsecured obligations and rank:

11 unchanged sentences

The aggregate debt discount is amortized as interest expense over the period from the issuance date through the first stated repurchase date on June 15, 2021, which management believes is the expected life of the 3.25 % Convertible Notes using an interest rate of 5.81 %.

As of June 30, 2020, the remaining period over which the unamortized debt discount will be amortized is 1.0 year.

As of September 30, 2020, the remaining period over which the unamortized debt discount will be amortized is 0.7 years.

The 3.25 % Convertible Notes are carried at face value less any unamortized debt discount and debt issuance costs.

1 unchanged sentence

If such information is not available, the fair value is determined using cash-flow models of the scheduled payments discounted at market interest rates for comparable debt without the conversion feature.

As of June 30, 2020 and December 31, 2019, the estimated fair value of the 3.25% Convertible Notes was approximately $ 446.0 million and $ 583.6 million, respectively.

As of September 30, 2020 and December 31, 2019, the estimated fair value of the 3.25 % Convertible Notes was approximately $ 461.0 million and $ 583.6 million, respectively.

1.75 % Convertible Notes

12 unchanged sentences

Holders of the notes will have the right to require the Company to repurchase for cash all or any portion of their notes upon the occurrence of certain corporate events, subject to certain conditions.

During the second quarter of 2020 and the fourth quarter of 2019, the last reported sale price of the Company’s common stock did not meet the conversion price threshold requirements of the 1.75% Convertible Notes.

Therefore, the net carrying amount of the 1.75% Convertible Notes is classified as long-term debt on the consolidated balance sheets.

As of June 30, 2020, the conversion rate is 7.9864 shares of J2 Global common stock for each $1,000 principal amount of 1.75% Convertible Notes, which represents an conversion price of approximately $ 125.21 per share of J2 Global common stock.

During the third quarter of 2020 and the fourth quarter of 2019, the last reported sale price of the Company’s common stock did not meet the conversion price threshold requirements of the 1.75 % Convertible Notes.

Therefore, the net carrying amount of the 1.75 % Convertible Notes is classified as long-term debt on the Condensed Consolidated Balance Sheets.

As of September 30, 2020, the conversion rate is 7.9864 shares of J2 Global common stock for each $1,000 principal amount of 1.75 % Convertible Notes, which represents an conversion price of approximately $ 125.21 per share of J2 Global common stock.

The conversion rate is subject to adjustment for certain events as set forth in the indenture governing the 1.75 % Convertible Notes, but will not be adjusted for accrued interest.

14 unchanged sentences

The aggregate debt discount is amortized as interest expense over the period from the issuance date through the maturity date of November 1, 2026, which management believes is the expected life of the 1.75 % Convertible Notes using an interest rate of 5.5 %.

As of June 30, 2020, the remaining period over which the unamortized debt discount will be amortized is 6.3 years.

As of September 30, 2020, the remaining period over which the unamortized debt discount will be amortized is 6.1 years.

In connection with the issuance of the 1.75 % Convertible Notes, the Company incurred $ 12.9 million of deferred issuance costs, which primarily consisted of the underwriters’ discount, legal and other professional service fees.

Of the total deferred issuance costs incurred, $ 10.1 million of such deferred issuance costs were attributable to the liability component and are recorded within other assets and are being amortized to interest expense through the maturity date.

The unamortized balance, as of June 30, 2020, was $ 9.5 million.

The unamortized balance, as of September 30, 2020, was $ 9.2 million.

The remaining $ 2.8 million of the deferred issuance costs were netted with the equity component in additional paid-in capital at the issuance date.

2 unchanged sentences

As of June 30, 2020 and December 31, 2019, the estimated fair value of the 1.75% Convertible Notes was approximately $ 465.9 million and $ 559.6 million, respectively.

As of September 30, 2020 and December 31, 2019, the estimated fair value of the 1.75 % Convertible Notes was approximately $ 490.2 million and $ 559.6 million, respectively.

Credit Facility

During the six months ended June 30, 2020, the Company did not draw down any amounts under its Credit Facility.

During the nine months ended September 30, 2020, the Company did not draw down any amounts under its Credit Facility.

The Company has capitalized a total of $ 0.4 million in debt issuance costs, which are being amortized to interest expense over the life of the Credit Facility.

As of June 30, 2020, these debt issuance costs, net of amortization, were $ 0.3 million.

The related interest expense was zero and $ 1.2 million for the three months ended June 30, 2020 and 2019, respectively, and was zero and $ 1.2 million for the six months ended June 30, 2020 and 2019, respectively.

As of September 30, 2020, these debt issuance costs, net of amortization, were $ 0.2 million.

The related interest expense was zero and $ 1.1 million for the three months ended September 30, 2020 and 2019, respectively, and was zero and $ 2.3 million for the nine months ended September 30, 2020 and 2019, respectively.

See Note 11, “Commitments and Contingencies” for additional information.

Long-term debt as of June 30, 2020 and December 31, 2019 consists of the following (in thousands):

June 30, 2020 December 31, 2019

Long-term debt as of September 30, 2020 and December 31, 2019 consists of the following (in thousands):

September 30, 2020 December 31, 2019

6.0 % Senior Notes

$ 650,000 $ 650,000

Convertible Notes:

3.25 % Convertible Notes

402,414 402,500

1.75 % Convertible Notes

550,000 550,000

Total Notes 1,602,414 1,602,500

7 unchanged sentences

Some of the Company’s leases include options to terminate within one year.

During the third quarter of 2020, the Company decided to exit and seek subleases for certain leased facilities in the Digital Media reportable segment primarily due to a permanent “remote” or “partial remote” work model for a significant number of employees.

The Company recorded a non-cash impairment charge of $ 9.8 million related to operating lease right-of-

use assets for the affected facilities and an impairment charge of $ 3.6 million for associated property and equipment.

The impairment was determined by comparing the fair value of the impacted right-of-use asset to the carrying value of the asset as of the impairment measurement date, as required under ASC Topic 360, Property, Plant, and Equipment.

The fair value of the right-of-use asset was based on the estimated sublease income for the affected facilities taking into consideration the time it will take to obtain a sublease tenant, the applicable discount rate and the sublease rate which represents Level 3 unobservable inputs.

The impairment is presented in general and administrative expenses on the Condensed Consolidated Statements of Operations .

No impairment was recorded in the third quarter of 2019.

In certain agreements in which the Company leases office space where the Company is the tenant, it subleases the site to various other companies through a sublease agreement.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

3 unchanged sentences

Supplemental balance sheet information related to leases was as follows (in thousands):

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Operating leases

Operating lease right-of-use assets $ 97,439 $ 125,822

Operating lease right-of-use assets classified as assets held for sale 271 —

Total operating lease right-of-use assets $ 97,439 $ 125,822

Operating lease liabilities, current $ 27,673 $ 26,927

Operating lease liabilities, current classified as assets held for sale 118 —

Operating lease liabilities, noncurrent 87,563 104,070

Operating lease liabilities, noncurrent classified as assets held for sale 156 —

Total operating lease liabilities $ 115,236 $ 130,997

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

Six Months Ended

Nine Months Ended

September 30,

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

3 unchanged sentences

Other supplemental operating lease information consists of the following:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Operating leases:

1 unchanged sentence

Weighted average discount rate 4.21 % 3.95 %

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

Maturities of operating lease liabilities as of September 30, 2020 were as follows (in thousands):

Operating Leases

4 unchanged sentences

Present value of operating lease liabilities $ 115,236

Total sublease income for the three months ended June 30, 2020 and 2019 was $ 1.0 million and $ 0.6 million, respectively, and was $ 1.8 million and $ 1.5 million for the six months ended June 30, 2020 and 2019, respectively.

Total sublease income for the three months ended September 30, 2020 and 2019 was $ 0.4 million and $ 0.9 million, respectively, and was $ 2.2 million and $ 2.4 million for the nine months ended September 30, 2020 and 2019, respectively.

Total estimated aggregate sublease income to be received in the future is $ 3.2 million.

40 unchanged sentences

On May 21, 2020, the court denied J2 Global affiliates’ motion to dismiss.

Plaintiff has filed a notice for approval of class notice, which the J2 Global affiliates have opposed.

On August 11, 2020, the court approved an opt-in class notice.

Notice has not yet been issued and the J2 Global affiliates have moved to decertify the class.

On July 8, 2020, Jeffrey Garcia filed a putative class action lawsuit against J2 Global in the Central District of California (20-cv-06906), alleging violations of federal securities laws.

J2 Global intends to defend against the lawsuit.

On September 24, 2020, International Union of Operating Engineers of Eastern Pennsylvania and Delaware filed a lawsuit in the Delaware Court of Chancery (C.A.

2020-0819-VCL) asserting derivative claims against directors of J2 Global, Inc.

and other third parties.

The lawsuit alleges violations of breach of fiduciary duty and usurpation of corporate opportunity.

J2 Global and its directors and officers intend to defend against the lawsuit.

J2 Global does not believe, based on current knowledge, that the foregoing legal proceedings or claims, after giving effect to existing accrued liabilities, are likely to have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows.

6 unchanged sentences

On November 15, 2019, the Company reduced its borrowing capacity from $ 200.0 million to $ 100.0 million.

The proceeds of the Credit Facility are intended to be used for working capital and general corporate purposes of J2 Cloud and its subsidiaries, including to finance certain permitted acquisitions and capital expenditures in accordance with the terms of the Credit Agreement.

As of June 30, 2020, were no amounts outstanding under the Credit Facility.

At J2 Cloud’s option, amounts borrowed under the Credit Agreement will bear interest at either (i) a base rate equal to the greatest of (x) the Federal Funds Effective Rate (as defined in the Credit Agreement) in effect on such day plus 1/2 of 1% per annum, (y) the rate of interest per annum most recently announced by the Agent as its U.S.

Dollar “Reference Rate” and (z) one month LIBOR plus 1.00% or (ii) a rate per annum equal to LIBOR divided by 1.00 minus the LIBOR Reserve Requirements (as defined in the Credit Agreement), in each case, plus an applicable margin.

The applicable margin relating to any base rate loan will range from 0.50% to 1.50% and the applicable margin relating to any LIBOR loan will range from 1.50% to 2.50%, in each case, depending on the total leverage ratio of J2 Cloud.

The final maturity of the Credit Facility will occur on January 7, 2024.

J2 Cloud is permitted to make voluntary prepayments of the Credit Facility at any time without payment of a premium or penalty.

The obligations under the Credit Facility and certain cash management are and will be fully and unconditionally guaranteed by certain of J2 Cloud’s existing and subsequently acquired or organized direct and indirect domestic subsidiaries pursuant to a guarantee agreement and secured by a lien on the equity interests of certain of J2 Cloud’s foreign subsidiaries.

The Credit Agreement contains financial maintenance covenants, including (i) a maximum total leverage ratio as of the last date of any fiscal quarter not to exceed 3.00:1.00 for J2 Cloud and its restricted subsidiaries;

(ii) a maximum total leverage ratio as of the last date of any fiscal quarter not to exceed 3.25:1.00 for J2 and its restricted subsidiaries;

and (iii) a minimum EBITDA of not less than $50.0 million for any fiscal quarter for J2 Cloud and its restricted subsidiaries.

The Credit Agreement also contains restrictive covenants that limit, among other things, J2 Cloud’s and its restricted subsidiaries’ ability to incur additional indebtedness, create, incur or assume liens, consolidate, merge, liquidate or dissolve, pay dividends or make other distributions or other restricted payments, make or hold any investments, enter into certain transactions with affiliates, sell assets other than on terms specified by the Credit Agreement, amend the terms of certain other indebtedness and organizational documents and change their lines of business and fiscal years, in each case, subject to customary exceptions.

The Credit Agreement also sets forth customary events of default, including, among other things, the failure to make timely payments under the Credit Facility, the failure to satisfy certain covenants, cross-default and cross-acceleration to other material debt for borrowed money, the occurrence of a change of control and specified events of bankruptcy and insolvency.

The proceeds of the Credit Facility were intended to be used for working capital and general corporate purposes of J2 Cloud and its subsidiaries, including to finance certain permitted acquisitions and capital expenditures in accordance with the terms of the Credit Agreement.

As of September 30, 2020, there were no amounts outstanding under the Credit Facility.

On October 7, 2020, the Company provided notice of termination of the Credit Agreement (see Note 18 - Subsequent Events).

Non-Income Related Taxes

6 unchanged sentences

Each quarter the Company updates its estimated annual effective tax rate and, if the estimate changes, makes a cumulative adjustment.

The Company’s effective tax rate was 26.7 % and 28.1 % for the three months ended June 30, 2020 and 2019, respectively, and 37.1 % and 15.0 % for the six months ended June 30, 2020 and 2019, respectively.

The Company’s increased rate during the six months ended June 30, 2020 is primarily a result of an increase in tax expense to establish a valuation allowance on deferred tax assets related to the impairment of certain investments.

In addition, during the six months ended June 30, 2019, the Company had a decrease in the effective rate as a result of a reduction in its reserve for uncertain tax positions with no similar event for the six months ended June 30, 2020.

(Loss) income before income taxes included income from domestic operations of $( 2.5 ) million and $ 4.0 million for the six months ended June 30, 2020 and 2019, respectively, and income from foreign operations of $ 69.0 million and $ 68.3 million for the six months ended June 30, 2020 and 2019, respectively.

As of June 30, 2020 and December 31, 2019, the Company had $ 57.6 million and $ 52.5 million, respectively, in liabilities for uncertain income tax positions.

The Company’s effective tax rate was 28.3 % and 17.0 % for the three months ended September 30, 2020 and 2019, respectively, and 32.2 % and 15.7 % for the nine months ended September 30, 2020 and 2019, respectively.

The Company’s increased rate during the nine months ended September 30, 2020 is primarily a result of an increase in tax expense to establish a valuation allowance on deferred tax assets related to the impairment of certain investments.

In addition, during the nine months ended September 30, 2019, the Company had a decrease in the effective rate as a result of a reduction in its reserve for uncertain tax positions with no similar event for the nine months ended September 30, 2020.

Income before income taxes included income from domestic operations of $ 32.2 million and $ 34.6 million for the nine months ended September 30, 2020 and 2019, respectively, and income from foreign operations of $ 120.2 million and $ 78.9 million for the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020 and December 31, 2019, the Company had $ 60.2 million and $ 52.5 million, respectively, in liabilities for uncertain income tax positions.

Accrued interest and penalties related to unrecognized tax benefits are recognized in income tax expense on the Company’s consolidated statement of operations.

Cash paid for income taxes net of refunds received was $ 8.9 million and $ 22.4 million for the six months ended June 30, 2020 and 2019, respectively.

Cash paid for income taxes net of refunds received was $ 33.5 million and $ 38.2 million for the nine months ended September 30, 2020 and 2019, respectively.

Certain taxes are prepaid during the year and, where appropriate, included within prepaid expenses and other current assets on the Condensed Consolidated Balance Sheet.

The Company’s prepaid taxes were $ 3.7 million and $ 3.7 million at June 30, 2020 and December 31, 2019, respectively.

The Company’s prepaid taxes were zero and $ 3.7 million at September 30, 2020 and December 31, 2019, respectively.

Income Tax Audits :

1 unchanged sentence

Internal Revenue Service (“IRS”) for its 2012 through 2016 tax years.

As of June 30, 2020, the audits are ongoing.

As of September 30, 2020, the audits are ongoing.

J2 Global is under income tax audit by the California Franchise Tax Board (the “FTB”) for its tax years 2012 and 2013.

1 unchanged sentence

In August 2018, the FTB notified the Company that it will commence an audit of tax years 2015 and 2016.

As of June 30, 2020, the audits are ongoing.

As of September 30, 2020, the audits are ongoing.

In June 2019, the New York State Department of Taxation and Finance (“NYS”) notified the Company that it will commence an audit for tax year 2015.

In April 2020, the NYS notified the Company that it will also commence an audit for tax years 2016 and 2017.

As of June 30, 2020, the audits are ongoing.

As of September 30, 2020, the audits are ongoing.

It is reasonably possible that these audits may conclude in the next 12 months and that the uncertain tax positions the Company has recorded in relation to these tax years may change compared to the liabilities recorded for these periods.

7 unchanged sentences

600,000 shares were repurchased under the share repurchase program in 2018 at an aggregate cost of $ 42.5 million and were subsequently retired in March 2019.

During the six month period ended June 30, 2020, the Company repurchased 1,000,000 shares under this program at an aggregate cost of $ 79.1 million, which were subsequently retired.

Cumulatively at June 30, 2020, 3.9 million shares were repurchased at an aggregate cost of $ 196.2 million (including an immaterial amount of commission fees).

During the nine month period ended September 30, 2020, the Company repurchased 1,140,819 shares under this program at an aggregate cost of $ 87.5 million, which were subsequently retired.

Cumulatively at September 30, 2020, 4.1 million shares were repurchased at an aggregate cost of $ 204.6 million (including an immaterial amount of commission fees).

In July 2016, the Company acquired and subsequently retired 935,231 shares of J2 Global common stock in connection with the acquisitions of Integrated Global Concepts, Inc.

As a result of the purchase of J2 Global common stock, the Company’s Board of Directors approved a reduction in the number of shares available for purchase under the 2012 Program by the same amount.

As a result of the acquired shares through acquisition and the purchase of J2 Global common stock through the Company’s share repurchase program, the number of shares available for purchase under the 2012 Program is 140,819 shares of J2 Global common stock.

Periodically, participants in J2 Global’s stock plans surrender to the Company shares of J2 Global stock to pay the exercise price or to satisfy tax withholding obligations arising upon the exercise of stock options or the vesting of restricted

During the three month period ended June 30, 2020, the Company purchased 24,947 shares from plan participants for this purpose.

As a result of the acquired shares through acquisition and the purchase of J2 Global common stock through the Company’s share repurchase program, no shares remain available for purchase under the 2012 Program.

On August 6, 2020, the Company’s Board of Directors approved a program authorizing the repurchase of up to 10 million shares of our common stock through August 6, 2025 (the “2020 Program”).

During the nine month period ended September 30, 2020, the Company repurchased 2,000,000 shares under this program at an aggregate cost of $ 141.8 million, which were subsequently retired.

Cumulatively at September 30, 2020, 2,000,000 shares were repurchased at an aggregate cost of $ 141.8 million (including an immaterial amount of commission fees).

During the three month period ended September 30, 2020, the Company purchased 4,424 shares from plan participants for this purpose.

The following is a summary of each dividend declared during fiscal year 2020 and 2019:

10 unchanged sentences

Options under the 2007 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the fair market value of J2 Global’s common stock on the date of grant for incentive stock options and not less than 85 % of the fair market value of J2 Global’s common stock on the date of grant for non-statutory stock options.

As of June 30, 2020, 53,811 shares underlying options and zero shares of restricted units were outstanding under the 2007 Plan.

As of September 30, 2020, 53,811 shares underlying options and zero shares of restricted units were outstanding under the 2007 Plan.

The 2007 Plan terminated on February 14, 2017.

2 unchanged sentences

Options under the 2015 Plan may be granted at exercise prices determined by the Board of Directors, provided that the exercise prices shall not be less than the higher of the par value or 100 % of the fair market value of J2 Global’s common stock subject to the option on the date the option is granted.

As of June 30, 2020, 423,000 shares underlying options and 210,814 shares of restricted stock units were outstanding under the 2015 Plan.

As of September 30, 2020, 423,000 shares underlying options and 215,965 shares of restricted stock units were outstanding under the 2015 Plan.

All stock option grants are approved by “outside directors” within the meaning of Internal Revenue Code Section 162(m).

Stock Options

The following table represents stock option activity for the six months ended June 30, 2020:

The following table represents stock option activity for the nine months ended September 30, 2020:

Number of Shares Weighted-

3 unchanged sentences

Exercised ( 41,530 ) 22.92

Outstanding at June 30, 2020 476,811 $ 69.51 6.6 $ 1,820,971

Exercisable at June 30, 2020 176,811 $ 60.13 5.2 $ 1,820,971

Vested and expected to vest at June 30, 2020 388,971 $ 68.26 6.4 $ 1,820,971

The total intrinsic values of options exercised during the six months ended June 30, 2020 and 2019 were $ 3.0 million and $ 8.0 million, respectively.

The Company recognized $ 0.2 million and $ 0.2 million of compensation expense related to stock options for the three months ended June 30, 2020 and 2019, respectively, and $ 0.4 million and $ 0.5 million for the six months ended June 30, 2020 and 2019, respectively.

As of June 30, 2020 and December 31, 2019, unrecognized stock compensation related to non-vested stock options granted under each of the share-based compensation plans approximated $ 6.3 million and $ 6.8 million, respectively.

Outstanding at September 30, 2020 476,811 $ 69.51 6.4 $ 2,187,385

Exercisable at September 30, 2020 176,811 $ 60.13 4.9 $ 2,187,385

Vested and expected to vest at September 30, 2020 394,131 $ 68.35 6.2 $ 2,187,385

The total intrinsic values of options exercised during the nine months ended September 30, 2020 and 2019 were $ 3.0 million and $ 8.0 million, respectively.

The Company recognized $ 0.2 million and $ 0.2 million of compensation expense related to stock options for the three months ended September 30, 2020 and 2019, respectively, and $ 0.7 million and $ 0.7 million for the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020 and December 31, 2019, unrecognized stock compensation related to non-vested stock options granted under each of the share-based compensation plans approximated $ 6.1 million and $ 6.8 million, respectively.

Unrecognized stock compensation expense related to non-vested stock options granted under these plans is expected to be recognized ratably over a weighted-average period of 5.3 years (i.e., the remaining requisite service period).

6 unchanged sentences

The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors.

Estimated forfeiture rates were 11.52 % and 12.98 % as of June 30, 2020 and 2019, respectively.

Estimated forfeiture rates were 11.80 % and 13.21 % as of September 30, 2020 and 2019, respectively.

Restricted Stock and Restricted Stock Units

2 unchanged sentences

Vesting periods are approximately one year for awards to members of the Company’s Board of Directors, five years for senior staff (excluding market-based awards discussed below) and eight years for the Chief Executive Officer.

On May 7, 2020, the Board of Directors approved the contract modification of an insignificant number of shares of restricted stock awards whereby selected participants waived their right to receive dividends with respect to outstanding and unvested restricted shares under their restricted stock agreements.

There was no incremental compensation cost as a result of the modification.

Restricted Stock - Awards with Market Conditions

3 unchanged sentences

Stock-based compensation expense related to an award with a market condition will be recognized over the requisite service period using the graded-vesting method regardless of whether the market condition is satisfied, provided that the requisite service period has been completed.

During the six months ended June 30, 2020 and 2019, the Company awarded 82,112 and 74,051 market-based restricted stock awards, respectively.

The per share weighted average grant-date fair values of the market-based restricted stock awards granted during the six months ended June 30, 2020 and 2019 were $ 70.99 and $ 69.99 , respectively.

During the nine months ended September 30, 2020 and 2019, the Company awarded 82,112 and 74,051 market-based restricted stock awards, respectively.

The per share weighted average grant-date fair values of the market-based restricted stock awards granted during the nine months ended September 30, 2020 and 2019 were $ 70.99 and $ 69.99 , respectively.

The weighted-average fair values of market-based restricted stock awards granted have been estimated utilizing the following assumptions:

June 30, 2020 June 30, 2019

September 30, 2020 September 30, 2019

Underlying stock price at valuation date $ 91.17 $ 84.58

1 unchanged sentence

Risk-free interest rate 0.7 % 2.53 %

Restricted stock award activity for the six months ended June 30, 2020 is set forth below:

Restricted stock award activity for the nine months ended September 30, 2020 is set forth below:

Shares Weighted-Average

3 unchanged sentences

Canceled ( 11,460 ) 78.88

Nonvested at June 30, 2020 858,863 $ 63.32

Restricted stock unit award activity for the six months ended June 30, 2020 is set forth below:

Nonvested at September 30, 2020 833,471 $ 62.91

Restricted stock unit award activity for the nine months ended September 30, 2020 is set forth below:

Shares Weighted-Average

4 unchanged sentences

Canceled ( 5,297 )

Outstanding at June 30, 2020 210,814 4.1 $ 13,325,553

Vested and expected to vest at June 30, 2020 133,910 3.4 $ 8,464,473

The Company recognized $ 5.7 million and $ 6.4 million of compensation expense related to restricted stock, restricted stock units and market-based restricted stock for the three months ended June 30, 2020 and 2019, respectively, and $ 11.3 million and $ 10.8 million for the six months ended June 30, 2020 and 2019, respectively.

As of June 30, 2020 and December 31, 2019, the Company had unrecognized share-based compensation cost of approximately $ 49.3 million and $ 46.1 million, respectively, associated with these awards.

Outstanding at September 30, 2020 215,965 3.8 $ 14,949,097

Vested and expected to vest at September 30, 2020 140,841 3.1 $ 9,748,995

The Company recognized $ 5.1 million and $ 5.9 million of compensation expense related to restricted stock, restricted stock units and market-based restricted stock for the three months ended September 30, 2020 and 2019, respectively, and $ 16.4 million and $ 16.7 million for the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020 and December 31, 2019, the Company had unrecognized share-based compensation cost of approximately $ 44.0 million and $ 46.1 million, respectively, associated with these awards.

This cost is expected to be recognized over a weighted-average period of 4.4 years for awards and 4.7 years for units.

11 unchanged sentences

The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors.

Estimated forfeiture rates were 16.50 % and 0.78 % as of June 30, 2020 and 2019, respectively.

Estimated forfeiture rates were 16.50 % and 0.78 % as of September 30, 2020 and 2019, respectively.

The increase in forfeiture rate comes as a result of the Purchase Plan being offered to all employees regardless of employment location.

For the six months ended June 30, 2020 and 2019, 53,694 shares and 32,154 shares were purchased under the Purchase Plan, respectively.

Cash received upon the issuance of J2 Global common stock under the Purchase Plan was $ 3.3 million and $ 2.0 million for the six months ended June 30, 2020 and 2019, respectively.

As of June 30, 2020, 1,469,874 shares were available under the Purchase Plan for future issuance.

The Company recognized $ 0.6 million and $ 0.3 million of compensation expense related to the Purchase Plan for the three months ended June 30, 2020 and 2019, respectively, and $ 1.1 million and $ 0.6 million for the six months ended June 30, 2020 and 2019, respectively.

For the nine months ended September 30, 2020 and 2019, 53,694 shares and 32,154 shares were purchased under the Purchase Plan, respectively.

Cash received upon the issuance of J2 Global common stock under the Purchase Plan was $ 3.3 million and $ 2.0 million for the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020, 1,469,874 shares were available under the Purchase Plan for future issuance.

The Company recognized $ 0.5 million and $ 0.3 million of compensation expense related to the Purchase Plan for the three months ended September 30, 2020 and 2019, respectively, and $ 1.5 million and $ 1.0 million for the nine months ended September 30, 2020 and 2019, respectively.

The compensation expense related to the Purchase Plan has been estimated utilizing the following assumptions:

June 30, 2020 June 30, 2019

September 30, 2020 September 30, 2019

Risk-free interest rate 0.13 % 2.43 %

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

17 unchanged sentences

(b) Represents the incremental shares issuable upon conversion of the 3.25 % Convertible Notes due June 15, 2029 and 1.75 % Convertible Notes due November 1, 2026 by applying the treasury stock method when the average stock price exceeds the conversion price of the Convertible Notes (see Note 9 - Debt).

For the three and six months ended June 30, 2020 and 2019, there were zero options outstanding, respectively, which were excluded from the computation of diluted earnings per share because the exercise prices were greater than the average market price of the common stock.

For the three months ended September 30, 2020 and 2019, there were 423,000 and zero options outstanding, respectively, and for the nine months ended September 30, 2020 and 2019, there were zero options outstanding, respectively, which were excluded from the computation of diluted earnings per share because the exercise prices were greater than the average market price of the common stock.

Segment Information

In accordance with ASC Topic 280, Segment Reporting:

(Topic 280), the Company’s businesses are based on the organizational structure used by the chief operating decision maker (“CODM”) for making operating and investment decisions

and for assessing performance.

(Topic 280), the Company’s businesses are based on the organizational structure used by the chief operating decision maker (“CODM”) for making operating and investment decisions and for assessing performance.

The CODM views the Company as two businesses:

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

1 unchanged sentence

Fax and Martech $ 98,044 $ 95,300 $ 286,687 $ 284,151

$ 93,976 $ 95,567 $ 188,643 $ 188,850

Voice, Backup, Security, and CPP 72,204 75,863 220,403 208,389

73,082 73,565 148,199 132,527

Cloud Services Total 170,248 171,163 507,090 492,540

6 unchanged sentences

Fax and Martech $ 81,435 $ 79,590 $ 238,149 $ 239,915

$ 77,245 $ 81,141 $ 156,714 $ 160,326

Voice, Backup, Security, and CPP 50,392 53,333 152,733 145,304

50,386 51,393 102,341 91,970

Cloud Services Total 131,827 132,923 390,882 385,219

12 unchanged sentences

Digital Media (3)

143,312 144,023 410,109 402,349

Elimination of inter-segment direct costs ( 56 ) ( 17 ) ( 200 ) ( 114 )

7 unchanged sentences

Fax and Martech $ 52,821 $ 51,920 $ 149,028 $ 146,531

$ 48,456 $ 49,686 $ 96,207 $ 94,637

Voice, Backup, Security, and CPP 12,936 9,025 34,442 35,295

13,523 12,661 21,506 26,244

Cloud Services Total 65,757 60,945 183,470 181,826

4 unchanged sentences

Total income from operations $ 77,438 $ 59,359 $ 205,725 $ 166,835

(1) The Company reclassified certain intercompany revenue and expenses within the six months ended June 30, 2020 and three and six months ending June 30, 2019 for Cloud Services in order to better align with a stand-alone presentation.

(1) Corporate includes costs associated with general and administrative and other expenses that are managed on a global basis and that are not directly attributable to any particular segment.

(2) Direct costs for each segment include other operating expenses that are directly attributable to the segment, such as employee compensation expense, local sales and marketing expenses, engineering and network operations expense, depreciation and amortization and other administrative expenses.

(3) Beginning in the third quarter of 2020, certain expenses associated with the Corporate entity that were previously allocated to the Cloud Services business and the Digital Media business for shared costs incurred by the Corporate entity were no longer allocated.

The CODM does not use Balance Sheet and Cash Flow information in connection with operating and investment decisions other than as presented for Cloud Services and Digital Media.

Accordingly, the following segment information is presented for Cloud Services and Digital Media.

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Cloud Services $ 1,481,866 $ 1,466,969

$ 1,477,190 $ 1,466,969

Digital Media 1,450,894 1,561,024

2 unchanged sentences

Total assets $ 3,342,993 $ 3,505,846

(1) Assets of $19.0 million, which were classified as held for sale, were included with Cloud Services at June 30, 2020 (see Note 6 - Assets Held For Sale).

Six Months Ended

Nine Months Ended

September 30,

Capital expenditures:

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

4 unchanged sentences

$ 356,976 $ 344,141 $ 1,020,353 $ 966,466

September 30,

2020 December 31,

2 unchanged sentences

All other countries 49,349 76,927

79,474 76,927

Total $ 672,539 $ 778,507

(1) Long-lived assets of $ 2.8 million, which were classified as assets held for sale, were included with foreign assets at June 30, 2020.

Accumulated Other Comprehensive Income

The following table summarizes the changes in accumulated balances of other comprehensive income (loss), net of tax, for the three months ended June 30, 2020 (in thousands):

The following table summarizes the changes in accumulated balances of other comprehensive income (loss), net of tax, for the three months ended September 30, 2020 (in thousands):

Unrealized Gains (Losses) on Investments Foreign Currency Translation Total

Beginning balance $ 270 $ ( 55,070 ) $ ( 54,800 )

Other comprehensive loss ( 163 ) ( 169 ) ( 332 )

Net current period other comprehensive loss ( 163 ) ( 169 ) ( 332 )

Other comprehensive income (loss) 8 ( 3,202 ) ( 3,194 )

Net current period other comprehensive income (loss) 8 ( 3,202 ) ( 3,194 )

Ending balance $ 278 $ ( 58,272 ) $ ( 57,994 )

The following table summarizes the changes in accumulated balances of other comprehensive income (loss), net of tax, for the six months ended June 30, 2020 (in thousands):

The following table summarizes the changes in accumulated balances of other comprehensive income (loss), net of tax, for the nine months ended September 30, 2020 (in thousands):

Unrealized Gains (Losses) on Investments Foreign Currency Translation Total

3 unchanged sentences

Ending balance $ 278 $ ( 58,272 ) $ ( 57,994 )

The following table provides details about reclassifications out of accumulated other comprehensive loss for the three and six months ended June 30, 2020 (in thousands):

The following table provides details about reclassifications out of accumulated other comprehensive loss for the three and nine months ended September 30, 2020 (in thousands):

Details about Accumulated Other Comprehensive Loss Components Amount Reclassified from Accumulated Other Comprehensive Loss Affected Line Item in the Statement of Operations

Three Months Ended

June 30, 2020 Six Months Ended

June 30, 2020

September 30, 2020 Nine Months Ended

September 30, 2020

Unrealized loss on available-for-sale investments $ — $ 698 Loss on investments, net

3 unchanged sentences

Subsequent Events

In July 2020, the Company repurchased 140,819 shares under its share repurchase program at an aggregate cost of $ 8.4 million, which were subsequently retired.

The July repurchase of shares completes the Company’s 2012 Program.

On August 6, 2020, the Company’s Board of Directors approved a program authorizing the repurchase of up to 10 million shares of the Company’s common stock through August 6, 2025.

On October 7, 2020, the Company issued $ 750 million aggregate principal amount of 4.625 % senior notes due 2030.

The total redemption payment will be $ 694.6 million, including an early redemption premium of $ 29.2 million and accrued and unpaid interest of $ 15.4 million.

In addition, on October 7, 2020, the Company provided notice of termination of its Credit Agreement dated as of January 7, 2019.

On October 28, 2020, the Company announced that it had completed its acquisition of leading savings destination RetailMeNot for approximately $ 420 million from Vericast, a premier marketing solutions company.

On November 2, 2020, in a cash transaction, the Company acquired all the issued capital of Inspired eLearning, a Texas-based platform for cybersecurity awareness and compliance training.

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