Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Common stock, par value $0.0001 per share
|
|
GRPN
|
|
NASDAQ Global Select Market
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
567,285
|
|
|
$
|
841,021
|
|
Accounts receivable, net
|
56,094
|
|
|
69,493
|
|
||
Prepaid expenses and other current assets
|
81,667
|
|
|
88,115
|
|
||
Total current assets
|
705,046
|
|
|
998,629
|
|
||
Property, equipment and software, net
|
133,071
|
|
|
143,117
|
|
||
Right-of-use assets - operating leases, net
|
112,133
|
|
|
—
|
|
||
Goodwill
|
319,557
|
|
|
325,491
|
|
||
Intangible assets, net
|
36,497
|
|
|
45,401
|
|
||
Investments
|
38,124
|
|
|
108,515
|
|
||
Other non-current assets
|
26,274
|
|
|
20,989
|
|
||
Total Assets
|
$
|
1,370,702
|
|
|
$
|
1,642,142
|
|
Liabilities and Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
21,485
|
|
|
$
|
38,359
|
|
Accrued merchant and supplier payables
|
428,177
|
|
|
651,781
|
|
||
Accrued expenses and other current liabilities
|
239,104
|
|
|
267,034
|
|
||
Total current liabilities
|
688,766
|
|
|
957,174
|
|
||
Convertible senior notes, net
|
211,441
|
|
|
201,669
|
|
||
Operating lease obligations
|
118,408
|
|
|
—
|
|
||
Other non-current liabilities
|
50,961
|
|
|
100,688
|
|
||
Total Liabilities
|
1,069,576
|
|
|
1,259,531
|
|
||
Commitments and contingencies (see Note 7)
|
|
|
|
||||
Stockholders' Equity
|
|
|
|
||||
Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized; 769,175,284 shares issued and 563,292,929 shares outstanding at September 30, 2019; 760,939,440 shares issued and 569,084,312 shares outstanding at December 31, 2018
|
76
|
|
|
76
|
|
||
Additional paid-in capital
|
2,294,000
|
|
|
2,234,560
|
|
||
Treasury stock, at cost, 205,882,355 and 191,855,128 shares at September 30, 2019 and December 31, 2018
|
(922,666
|
)
|
|
(877,491
|
)
|
||
Accumulated deficit
|
(1,109,917
|
)
|
|
(1,010,499
|
)
|
||
Accumulated other comprehensive income (loss)
|
38,877
|
|
|
34,602
|
|
||
Total Groupon, Inc. Stockholders' Equity
|
300,370
|
|
|
381,248
|
|
||
Noncontrolling interests
|
756
|
|
|
1,363
|
|
||
Total Equity
|
301,126
|
|
|
382,611
|
|
||
Total Liabilities and Equity
|
$
|
1,370,702
|
|
|
$
|
1,642,142
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Service
|
$
|
268,080
|
|
|
$
|
289,214
|
|
|
$
|
831,510
|
|
|
$
|
886,663
|
|
Product
|
227,532
|
|
|
303,669
|
|
|
775,089
|
|
|
950,156
|
|
||||
Total revenue
|
495,612
|
|
|
592,883
|
|
|
1,606,599
|
|
|
1,836,819
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Service
|
28,947
|
|
|
29,792
|
|
|
86,169
|
|
|
91,167
|
|
||||
Product
|
188,725
|
|
|
257,102
|
|
|
644,342
|
|
|
791,120
|
|
||||
Total cost of revenue
|
217,672
|
|
|
286,894
|
|
|
730,511
|
|
|
882,287
|
|
||||
Gross profit
|
277,940
|
|
|
305,989
|
|
|
876,088
|
|
|
954,532
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Marketing
|
74,976
|
|
|
92,717
|
|
|
257,296
|
|
|
286,051
|
|
||||
Selling, general and administrative
|
198,327
|
|
|
160,249
|
|
|
619,099
|
|
|
676,318
|
|
||||
Total operating expenses
|
273,303
|
|
|
252,966
|
|
|
876,395
|
|
|
962,369
|
|
||||
Income (loss) from operations
|
4,637
|
|
|
53,023
|
|
|
(307
|
)
|
|
(7,837
|
)
|
||||
Other income (expense), net
|
(17,253
|
)
|
|
(4,860
|
)
|
|
(92,602
|
)
|
|
(39,832
|
)
|
||||
Income (loss) from continuing operations before provision (benefit) for income taxes
|
(12,616
|
)
|
|
48,163
|
|
|
(92,909
|
)
|
|
(47,669
|
)
|
||||
Provision (benefit) for income taxes
|
2,069
|
|
|
988
|
|
|
591
|
|
|
205
|
|
||||
Income (loss) from continuing operations
|
(14,685
|
)
|
|
47,175
|
|
|
(93,500
|
)
|
|
(47,874
|
)
|
||||
Income (loss) from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
2,162
|
|
|
—
|
|
||||
Net income (loss)
|
(14,685
|
)
|
|
47,175
|
|
|
(91,338
|
)
|
|
(47,874
|
)
|
||||
Net income attributable to noncontrolling interests
|
(2,000
|
)
|
|
(2,560
|
)
|
|
(8,080
|
)
|
|
(9,433
|
)
|
||||
Net income (loss) attributable to Groupon, Inc.
|
$
|
(16,685
|
)
|
|
$
|
44,615
|
|
|
$
|
(99,418
|
)
|
|
$
|
(57,307
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.03
|
)
|
|
$
|
0.08
|
|
|
$
|
(0.18
|
)
|
|
$
|
(0.10
|
)
|
Discontinued operations
|
—
|
|
|
—
|
|
|
0.01
|
|
—
|
|
|||||
Basic and diluted net income (loss) per share
|
$
|
(0.03
|
)
|
|
$
|
0.08
|
|
|
$
|
(0.17
|
)
|
|
$
|
(0.10
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
566,971,238
|
|
|
568,634,988
|
|
|
568,339,335
|
|
|
565,227,625
|
|
||||
Diluted
|
566,971,238
|
|
|
576,379,421
|
|
|
568,339,335
|
|
|
565,227,625
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(14,685
|
)
|
|
$
|
47,175
|
|
|
$
|
(91,338
|
)
|
|
$
|
(47,874
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss) from continuing operations:
|
|
|
|
|
|
|
|
||||||||
Net change in unrealized gain (loss) on foreign currency translation adjustments
|
4,439
|
|
|
(72
|
)
|
|
4,426
|
|
|
1,166
|
|
||||
Net change in unrealized gain (loss) on available-for-sale securities (net of tax effect of ($16) and $46 for the three months ended September 30, 2019 and 2018, and ($51) and $60 for the nine months ended September 30, 2019 and 2018)
|
(47
|
)
|
|
94
|
|
|
(151
|
)
|
|
(842
|
)
|
||||
Other comprehensive income (loss) from continuing operations
|
4,392
|
|
|
22
|
|
|
4,275
|
|
|
324
|
|
||||
Other comprehensive income (loss) from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other comprehensive income (loss)
|
4,392
|
|
|
22
|
|
|
4,275
|
|
|
324
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income (loss)
|
(10,293
|
)
|
|
47,197
|
|
|
(87,063
|
)
|
|
(47,550
|
)
|
||||
Comprehensive income (loss) attributable to noncontrolling interest
|
(2,000
|
)
|
|
(2,560
|
)
|
|
(8,080
|
)
|
|
(9,433
|
)
|
||||
Comprehensive income (loss) attributable to Groupon, Inc.
|
$
|
(12,293
|
)
|
|
$
|
44,637
|
|
|
$
|
(95,143
|
)
|
|
$
|
(56,983
|
)
|
|
Groupon, Inc. Stockholders' Equity
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Treasury Stock
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Groupon, Inc. Stockholders' Equity
|
|
Non-controlling Interests
|
|
Total Equity
|
||||||||||||||||||||||
|
Shares
|
|
Amount
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||||||||||
Balance at December 31, 2018
|
760,939,440
|
|
|
$
|
76
|
|
|
$
|
2,234,560
|
|
|
(191,855,128
|
)
|
|
$
|
(877,491
|
)
|
|
$
|
(1,010,499
|
)
|
|
$
|
34,602
|
|
|
$
|
381,248
|
|
|
$
|
1,363
|
|
|
$
|
382,611
|
|
Comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42,487
|
)
|
|
3,313
|
|
|
(39,174
|
)
|
|
3,479
|
|
|
(35,695
|
)
|
||||||||
Exercise of stock options
|
12,500
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
||||||||
Vesting of restricted stock units and performance share units
|
4,160,415
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Shares issued under employee stock purchase plan
|
719,297
|
|
|
—
|
|
|
1,998
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,998
|
|
|
—
|
|
|
1,998
|
|
||||||||
Tax withholdings related to net share settlements of stock-based compensation awards
|
(1,585,728
|
)
|
|
—
|
|
|
(5,681
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,681
|
)
|
|
—
|
|
|
(5,681
|
)
|
||||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,407,995
|
)
|
|
(15,055
|
)
|
|
—
|
|
|
—
|
|
|
(15,055
|
)
|
|
—
|
|
|
(15,055
|
)
|
||||||||
Stock-based compensation on equity-classified awards
|
—
|
|
|
—
|
|
|
17,731
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,731
|
|
|
—
|
|
|
17,731
|
|
||||||||
Distributions to noncontrolling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,521
|
)
|
|
(3,521
|
)
|
||||||||
Balance at March 31, 2019
|
764,245,924
|
|
|
76
|
|
|
2,248,616
|
|
|
(196,263,123
|
)
|
|
(892,546
|
)
|
|
(1,052,986
|
)
|
|
37,915
|
|
|
341,075
|
|
|
1,321
|
|
|
342,396
|
|
||||||||
Comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40,246
|
)
|
|
(3,430
|
)
|
|
(43,676
|
)
|
|
2,601
|
|
|
(41,075
|
)
|
||||||||
Exercise of stock options
|
30,000
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
32
|
|
||||||||
Vesting of restricted stock units and performance share units
|
4,404,213
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Tax withholdings related to net share settlements of stock-based compensation awards
|
(1,524,402
|
)
|
|
—
|
|
|
(5,387
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,387
|
)
|
|
—
|
|
|
(5,387
|
)
|
||||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,228,148
|
)
|
|
(15,053
|
)
|
|
—
|
|
|
—
|
|
|
(15,053
|
)
|
|
—
|
|
|
(15,053
|
)
|
||||||||
Stock-based compensation on equity-classified awards
|
—
|
|
|
—
|
|
|
28,339
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,339
|
|
|
—
|
|
|
28,339
|
|
||||||||
Distributions to noncontrolling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,113
|
)
|
|
(3,113
|
)
|
||||||||
Balance at June 30, 2019
|
767,155,735
|
|
|
76
|
|
|
2,271,600
|
|
|
(200,491,271
|
)
|
|
(907,599
|
)
|
|
(1,093,232
|
)
|
|
34,485
|
|
|
305,330
|
|
|
809
|
|
|
306,139
|
|
||||||||
Comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,685
|
)
|
|
4,392
|
|
|
(12,293
|
)
|
|
2,000
|
|
|
(10,293
|
)
|
||||||||
Vesting of restricted stock units and performance share units
|
1,986,101
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Shares issued under employee stock purchase plan
|
766,709
|
|
|
—
|
|
|
2,085
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,085
|
|
|
—
|
|
|
2,085
|
|
||||||||
Tax withholdings related to net share settlements of stock-based compensation awards
|
(733,261
|
)
|
|
—
|
|
|
(2,049
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,049
|
)
|
|
—
|
|
|
(2,049
|
)
|
||||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,391,084
|
)
|
|
(15,067
|
)
|
|
—
|
|
|
—
|
|
|
(15,067
|
)
|
|
—
|
|
|
(15,067
|
)
|
||||||||
Stock-based compensation on equity-classified awards
|
—
|
|
|
—
|
|
|
22,364
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,364
|
|
|
—
|
|
|
22,364
|
|
||||||||
Distributions to noncontrolling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,053
|
)
|
|
(2,053
|
)
|
||||||||
Balance at September 30, 2019
|
769,175,284
|
|
|
$
|
76
|
|
|
$
|
2,294,000
|
|
|
(205,882,355
|
)
|
|
$
|
(922,666
|
)
|
|
$
|
(1,109,917
|
)
|
|
$
|
38,877
|
|
|
$
|
300,370
|
|
|
$
|
756
|
|
|
$
|
301,126
|
|
|
Groupon, Inc. Stockholders' Equity
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Treasury Stock
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Groupon, Inc. Stockholders' Equity
|
|
Non-controlling Interests
|
|
Total Equity
|
||||||||||||||||||||||
|
Shares
|
|
Amount
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||||||||||
Balance at December 31, 2017
|
748,541,862
|
|
|
$
|
75
|
|
|
$
|
2,174,708
|
|
|
(188,602,242
|
)
|
|
$
|
(867,450
|
)
|
|
$
|
(1,088,204
|
)
|
|
$
|
31,844
|
|
|
$
|
250,973
|
|
|
$
|
872
|
|
|
$
|
251,845
|
|
Cumulative effect of change in accounting principle, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
88,945
|
|
|
—
|
|
|
88,945
|
|
|
—
|
|
|
88,945
|
|
||||||||
Reclassification for impact of U.S. tax rate change
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
|
161
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,888
|
)
|
|
(2,069
|
)
|
|
(8,957
|
)
|
|
4,093
|
|
|
(4,864
|
)
|
||||||||
Exercise of stock options
|
2,400
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||||||
Vesting of restricted stock units and performance share units
|
4,157,462
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Shares issued under employee stock purchase plan
|
746,773
|
|
|
—
|
|
|
2,434
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,434
|
|
|
—
|
|
|
2,434
|
|
||||||||
Shares issues to settle liability-classified awards
|
1,240,379
|
|
|
—
|
|
|
6,436
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,436
|
|
|
—
|
|
|
6,436
|
|
||||||||
Tax withholdings related to net share settlements of stock-based compensation awards
|
(2,024,590
|
)
|
|
—
|
|
|
(9,355
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,355
|
)
|
|
—
|
|
|
(9,355
|
)
|
||||||||
Stock-based compensation on equity-classified awards
|
—
|
|
|
—
|
|
|
18,240
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,240
|
|
|
—
|
|
|
18,240
|
|
||||||||
Distributions to noncontrolling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,315
|
)
|
|
(3,315
|
)
|
||||||||
Balance at March 31, 2018
|
752,664,286
|
|
|
75
|
|
|
2,192,469
|
|
|
(188,602,242
|
)
|
|
(867,450
|
)
|
|
(1,006,308
|
)
|
|
29,936
|
|
|
348,722
|
|
|
1,650
|
|
|
350,372
|
|
||||||||
Comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(95,034
|
)
|
|
2,371
|
|
|
(92,663
|
)
|
|
2,780
|
|
|
(89,883
|
)
|
||||||||
Exercise of stock options
|
665,343
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
64
|
|
||||||||
Vesting of restricted stock units and performance share units
|
3,628,257
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Tax withholdings related to net share settlements of stock-based compensation awards
|
(1,151,259
|
)
|
|
—
|
|
|
(5,144
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,144
|
)
|
|
—
|
|
|
(5,144
|
)
|
||||||||
Stock-based compensation on equity-classified awards
|
—
|
|
|
—
|
|
|
19,353
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,353
|
|
|
—
|
|
|
19,353
|
|
||||||||
Distributions to noncontrolling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,625
|
)
|
|
(3,625
|
)
|
||||||||
Balance at June 30, 2018
|
755,806,627
|
|
|
76
|
|
|
2,206,741
|
|
|
(188,602,242
|
)
|
|
(867,450
|
)
|
|
(1,101,342
|
)
|
|
32,307
|
|
|
270,332
|
|
|
805
|
|
|
271,137
|
|
||||||||
Comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44,615
|
|
|
22
|
|
|
44,637
|
|
|
2,560
|
|
|
47,197
|
|
||||||||
Exercise of stock options
|
2,650
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||||||
Vesting of restricted stock units and performance share units
|
3,221,540
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Shares issued under employee stock purchase plan
|
874,288
|
|
|
—
|
|
|
3,200
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,200
|
|
|
—
|
|
|
3,200
|
|
||||||||
Tax withholdings related to net share settlements of stock-based compensation awards
|
(1,104,495
|
)
|
|
—
|
|
|
(4,531
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,531
|
)
|
|
—
|
|
|
(4,531
|
)
|
||||||||
Stock-based compensation on equity-classified awards
|
—
|
|
|
—
|
|
|
17,007
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,007
|
|
|
—
|
|
|
17,007
|
|
||||||||
Distributions to noncontrolling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,376
|
)
|
|
(2,376
|
)
|
||||||||
Balance at September 30, 2018
|
758,800,610
|
|
|
$
|
76
|
|
|
$
|
2,222,423
|
|
|
(188,602,242
|
)
|
|
$
|
(867,450
|
)
|
|
$
|
(1,056,727
|
)
|
|
$
|
32,329
|
|
|
$
|
330,651
|
|
|
$
|
989
|
|
|
$
|
331,640
|
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
Operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
(91,338
|
)
|
|
$
|
(47,874
|
)
|
Less: Income (loss) from discontinued operations, net of tax
|
2,162
|
|
|
—
|
|
||
Income (loss) from continuing operations
|
(93,500
|
)
|
|
(47,874
|
)
|
||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization of property, equipment and software
|
69,986
|
|
|
76,984
|
|
||
Amortization of acquired intangible assets
|
11,419
|
|
|
10,316
|
|
||
Stock-based compensation
|
62,517
|
|
|
50,670
|
|
||
Impairments of investments
|
—
|
|
|
10,156
|
|
||
Deferred income taxes
|
816
|
|
|
(6,575
|
)
|
||
(Gain) loss from changes in fair value of investments
|
68,971
|
|
|
8,312
|
|
||
Amortization of debt discount on convertible senior notes
|
9,772
|
|
|
8,822
|
|
||
Change in assets and liabilities, net of acquisitions and dispositions:
|
|
|
|
||||
Accounts receivable
|
12,581
|
|
|
20,217
|
|
||
Prepaid expenses and other current assets
|
2,591
|
|
|
(2,695
|
)
|
||
Accounts payable
|
(16,892
|
)
|
|
(16,034
|
)
|
||
Accrued merchant and supplier payables
|
(216,127
|
)
|
|
(214,748
|
)
|
||
Accrued expenses and other current liabilities
|
(62,728
|
)
|
|
(45,175
|
)
|
||
Other, net
|
20,476
|
|
|
14,663
|
|
||
Net cash provided by (used in) operating activities from continuing operations
|
(130,118
|
)
|
|
(132,961
|
)
|
||
Net cash provided by (used in) operating activities from discontinued operations
|
—
|
|
|
—
|
|
||
Net cash provided by (used in) operating activities
|
(130,118
|
)
|
|
(132,961
|
)
|
||
Investing activities
|
|
|
|
||||
Purchases of property and equipment and capitalized software
|
(51,854
|
)
|
|
(53,611
|
)
|
||
Proceeds from sale of intangible assets
|
—
|
|
|
1,500
|
|
||
Proceeds from sale of investment
|
—
|
|
|
8,594
|
|
||
Acquisition of business, net of acquired cash
|
—
|
|
|
(57,821
|
)
|
||
Acquisitions of intangible assets and other investing activities
|
(3,037
|
)
|
|
(17,147
|
)
|
||
Net cash provided by (used in) investing activities from continuing operations
|
(54,891
|
)
|
|
(118,485
|
)
|
||
Net cash provided by (used in) investing activities from discontinued operations
|
—
|
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
(54,891
|
)
|
|
(118,485
|
)
|
||
Financing activities
|
|
|
|
||||
Issuance costs for revolving credit agreement
|
(2,384
|
)
|
|
—
|
|
||
Payments for repurchases of common stock
|
(44,162
|
)
|
|
—
|
|
||
Taxes paid related to net share settlements of stock-based compensation awards
|
(13,975
|
)
|
|
(18,638
|
)
|
||
Proceeds from stock option exercises and employee stock purchase plan
|
4,123
|
|
|
5,710
|
|
||
Distributions to noncontrolling interest holders
|
(8,687
|
)
|
|
(9,316
|
)
|
||
Payments of finance lease obligations
|
(16,868
|
)
|
|
(25,289
|
)
|
||
Payments of contingent consideration related to acquisitions
|
—
|
|
|
(1,815
|
)
|
||
Net cash provided by (used in) financing activities
|
(81,953
|
)
|
|
(49,348
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash, including cash classified within current assets of discontinued operations
|
(9,153
|
)
|
|
(9,287
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash, including cash classified within current assets of discontinued operations
|
(276,115
|
)
|
|
(310,081
|
)
|
||
Less: Net increase (decrease) in cash classified within current assets of discontinued operations
|
—
|
|
|
—
|
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(276,115
|
)
|
|
(310,081
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period (1)
|
844,728
|
|
|
885,481
|
|
||
Cash, cash equivalents and restricted cash, end of period (1)
|
$
|
568,613
|
|
|
$
|
575,400
|
|
Non-cash investing and financing activities
|
|
|
|
||||
Continuing operations:
|
|
|
|
||||
Equipment acquired under capital lease arrangements (2)
|
$
|
3,865
|
|
|
$
|
13,789
|
|
Leasehold improvements funded by lessor
|
—
|
|
|
557
|
|
||
Liability for repurchases of common stock
|
(1,469
|
)
|
|
—
|
|
||
Increase (decrease) in liabilities related to purchases of property and equipment and capitalized software
|
(201
|
)
|
|
699
|
|
||
Contingent consideration liabilities incurred in connection with acquisition of business
|
—
|
|
|
1,589
|
|
||
Financing obligation incurred in connection with acquisition of business
|
—
|
|
|
8,604
|
|
(1)
|
The following table provides a reconciliation of cash, cash equivalents and restricted cash shown above to amounts reported within the condensed consolidated balance sheets as of September 30, 2019, December 31, 2018, September 30, 2018 and December 31, 2017 and amounts previously reported within the condensed consolidated balance sheet in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018 (in thousands):
|
|
September 30, 2019
|
|
December 31, 2018
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||
Cash and cash equivalents
|
$
|
567,285
|
|
|
$
|
841,021
|
|
|
$
|
572,358
|
|
|
$
|
880,129
|
|
Restricted cash included in prepaid expenses and other current assets
|
1,101
|
|
|
3,320
|
|
|
2,649
|
|
|
4,932
|
|
||||
Restricted cash included in other non-current assets
|
227
|
|
|
387
|
|
|
393
|
|
|
420
|
|
||||
Cash, cash equivalents and restricted cash
|
$
|
568,613
|
|
|
$
|
844,728
|
|
|
$
|
575,400
|
|
|
$
|
885,481
|
|
(2)
|
Please refer to Note 6, Leases, for supplemental cash flow information on our leasing obligations, as required by our adoption of ASU 2016-02, Leases ("Topic 842"), on January 1, 2019.
|
|
North America
|
|
International
|
|
Consolidated
|
||||||
Balance as of December 31, 2018
|
$
|
178,685
|
|
|
$
|
146,806
|
|
|
$
|
325,491
|
|
Foreign currency translation
|
—
|
|
|
(5,934
|
)
|
|
(5,934
|
)
|
|||
Balance as of September 30, 2019
|
$
|
178,685
|
|
|
$
|
140,872
|
|
|
$
|
319,557
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
Asset Category
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
||||||||||||
Customer relationships
|
$
|
16,200
|
|
|
$
|
15,750
|
|
|
$
|
450
|
|
|
$
|
16,200
|
|
|
$
|
11,700
|
|
|
$
|
4,500
|
|
Merchant relationships
|
20,913
|
|
|
7,047
|
|
|
13,866
|
|
|
21,554
|
|
|
4,105
|
|
|
17,449
|
|
||||||
Trade names
|
9,394
|
|
|
7,199
|
|
|
2,195
|
|
|
9,476
|
|
|
6,799
|
|
|
2,677
|
|
||||||
Developed technology
|
14,882
|
|
|
13,659
|
|
|
1,223
|
|
|
13,825
|
|
|
13,485
|
|
|
340
|
|
||||||
Patents
|
22,383
|
|
|
17,690
|
|
|
4,693
|
|
|
20,508
|
|
|
16,451
|
|
|
4,057
|
|
||||||
Other intangible assets
|
26,072
|
|
|
12,002
|
|
|
14,070
|
|
|
26,007
|
|
|
9,629
|
|
|
16,378
|
|
||||||
Total
|
$
|
109,844
|
|
|
$
|
73,347
|
|
|
$
|
36,497
|
|
|
$
|
107,570
|
|
|
$
|
62,169
|
|
|
$
|
45,401
|
|
Remaining amounts in 2019
|
$
|
2,843
|
|
2020
|
8,445
|
|
|
2021
|
7,336
|
|
|
2022
|
6,750
|
|
|
2023
|
5,613
|
|
|
Thereafter
|
5,510
|
|
|
Total
|
$
|
36,497
|
|
|
September 30, 2019
|
|
Percent Ownership of Voting Stock
|
|
December 31, 2018
|
|
Percent Ownership of Voting Stock
|
||||||||
Available-for-sale securities - redeemable preferred shares
|
$
|
10,138
|
|
|
19%
|
to
|
25%
|
|
$
|
10,340
|
|
|
19%
|
to
|
25%
|
Fair value option investments
|
4,931
|
|
|
10%
|
to
|
19%
|
|
73,902
|
|
|
10%
|
to
|
19%
|
||
Other equity investments
|
23,055
|
|
|
1%
|
to
|
19%
|
|
24,273
|
|
|
1%
|
to
|
19%
|
||
Total investments
|
$
|
38,124
|
|
|
|
|
|
|
$
|
108,515
|
|
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Amortized cost
|
$
|
9,961
|
|
|
$
|
9,961
|
|
Gross unrealized gain (loss)
|
177
|
|
|
379
|
|
||
Fair value
|
$
|
10,138
|
|
|
$
|
10,340
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Monster LP
|
$
|
—
|
|
|
$
|
(474
|
)
|
|
$
|
(69,408
|
)
|
|
$
|
(8,759
|
)
|
Nearbuy
|
14
|
|
|
230
|
|
|
437
|
|
|
447
|
|
||||
Total
|
$
|
14
|
|
|
$
|
(244
|
)
|
|
$
|
(68,971
|
)
|
|
$
|
(8,312
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue
|
$
|
131,188
|
|
|
$
|
93,625
|
|
|
$
|
383,204
|
|
|
$
|
265,009
|
|
Gross profit
|
9,854
|
|
|
6,344
|
|
|
27,261
|
|
|
20,155
|
|
||||
Loss before income taxes
|
(28,980
|
)
|
|
(32,162
|
)
|
|
(89,304
|
)
|
|
(101,029
|
)
|
||||
Net loss
|
(28,980
|
)
|
|
(32,162
|
)
|
|
(89,304
|
)
|
|
(101,029
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Interest income
|
$
|
1,959
|
|
|
$
|
1,513
|
|
|
$
|
5,810
|
|
|
$
|
4,858
|
|
Interest expense
|
(6,029
|
)
|
|
(5,713
|
)
|
|
(17,162
|
)
|
|
(16,434
|
)
|
||||
Changes in fair value of investments
|
14
|
|
|
(244
|
)
|
|
(68,971
|
)
|
|
(8,312
|
)
|
||||
Foreign currency gains (losses), net
|
(12,785
|
)
|
|
(1,033
|
)
|
|
(11,855
|
)
|
|
(12,168
|
)
|
||||
Impairments of investments
|
—
|
|
|
(112
|
)
|
|
—
|
|
|
(10,156
|
)
|
||||
Other
|
(412
|
)
|
|
729
|
|
|
(424
|
)
|
|
2,380
|
|
||||
Other income (expense), net
|
$
|
(17,253
|
)
|
|
$
|
(4,860
|
)
|
|
$
|
(92,602
|
)
|
|
$
|
(39,832
|
)
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Merchandise inventories
|
$
|
27,422
|
|
|
$
|
33,739
|
|
Prepaid expenses
|
31,865
|
|
|
28,209
|
|
||
Income taxes receivable
|
6,875
|
|
|
6,717
|
|
||
Other
|
15,505
|
|
|
19,450
|
|
||
Total prepaid expenses and other current assets
|
$
|
81,667
|
|
|
$
|
88,115
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Accrued merchant payables
|
$
|
308,269
|
|
|
$
|
371,279
|
|
Accrued supplier payables (1)
|
119,908
|
|
|
280,502
|
|
||
Total accrued merchant and supplier payables
|
$
|
428,177
|
|
|
$
|
651,781
|
|
(1)
|
Amounts include payables to suppliers of inventories and providers of shipping and fulfillment services.
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Refunds reserve
|
$
|
18,083
|
|
|
$
|
27,957
|
|
Compensation and benefits
|
62,664
|
|
|
56,173
|
|
||
Accrued marketing
|
22,450
|
|
|
39,094
|
|
||
Customer credits
|
16,362
|
|
|
15,118
|
|
||
Income taxes payable
|
4,337
|
|
|
8,987
|
|
||
Deferred revenue
|
15,993
|
|
|
25,452
|
|
||
Current portion of lease obligations (1)
|
40,399
|
|
|
17,207
|
|
||
Other
|
58,816
|
|
|
77,046
|
|
||
Total accrued expenses and other current liabilities
|
$
|
239,104
|
|
|
$
|
267,034
|
|
(1)
|
Current portion of lease obligations as of September 30, 2019 includes $25.0 million of additional lease obligations that were recognized on January 1, 2019 as a result of the adoption of Topic 842. Refer to Note 6, Leases, for additional information.
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Contingent income tax liabilities
|
$
|
32,440
|
|
|
$
|
39,858
|
|
Deferred rent (1)
|
—
|
|
|
32,186
|
|
||
Deferred income taxes
|
4,403
|
|
|
6,619
|
|
||
Other
|
14,118
|
|
|
22,025
|
|
||
Total other non-current liabilities
|
$
|
50,961
|
|
|
$
|
100,688
|
|
(1)
|
Non-current operating lease liabilities as of September 30, 2019 are included within Operating lease obligations on the condensed consolidated balance sheet as a result of the adoption of Topic 842 on January 1, 2019. Refer to Note 6, Leases, for additional information.
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Liability component:
|
|
|
|
||||
Principal amount
|
$
|
250,000
|
|
|
$
|
250,000
|
|
Less: debt discount
|
(38,559
|
)
|
|
(48,331
|
)
|
||
Net carrying amount of liability component
|
$
|
211,441
|
|
|
$
|
201,669
|
|
|
|
|
|
||||
Net carrying amount of equity component
|
$
|
67,014
|
|
|
$
|
67,014
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Contractual interest (3.25% of the principal amount per annum)
|
$
|
2,032
|
|
|
$
|
2,032
|
|
|
$
|
6,096
|
|
|
$
|
6,096
|
|
Amortization of debt discount
|
3,341
|
|
|
3,016
|
|
|
9,772
|
|
|
8,822
|
|
||||
Total
|
$
|
5,373
|
|
|
$
|
5,048
|
|
|
$
|
15,868
|
|
|
$
|
14,918
|
|
|
September 30, 2019
|
||
Right-of-use assets - operating leases
|
$
|
130,757
|
|
Right-of-use assets - finance leases (1)
|
31,255
|
|
|
Total right-of-use assets, gross
|
162,012
|
|
|
Less: accumulated depreciation and amortization
|
(29,964
|
)
|
|
Right-of-use assets, net
|
$
|
132,048
|
|
(1)
|
Right-of-use assets for finance leases are included in Property, equipment and software, net on the condensed consolidated balance sheet.
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||
Financing lease cost:
|
|
|
|
||||
Amortization of right-of-use assets
|
$
|
3,492
|
|
|
$
|
16,247
|
|
Interest on lease liabilities
|
243
|
|
|
816
|
|
||
Total finance lease cost
|
3,735
|
|
|
17,063
|
|
||
Operating lease cost
|
8,573
|
|
|
25,784
|
|
||
Variable lease cost
|
2,410
|
|
|
6,319
|
|
||
Short-term lease cost
|
52
|
|
|
262
|
|
||
Sublease income, gross
|
(1,248
|
)
|
|
(3,872
|
)
|
||
Total lease cost
|
$
|
13,522
|
|
|
$
|
45,556
|
|
|
Finance Leases
|
|
Operating Leases
|
||||
Remaining in 2019
|
$
|
2,056
|
|
|
$
|
10,003
|
|
2020
|
9,611
|
|
|
36,609
|
|
||
2021
|
5,261
|
|
|
34,416
|
|
||
2022
|
715
|
|
|
33,579
|
|
||
2023
|
12
|
|
|
25,130
|
|
||
Thereafter
|
—
|
|
|
33,103
|
|
||
Total minimum lease payments
|
17,655
|
|
|
172,840
|
|
||
Less: Amount representing interest
|
(863
|
)
|
|
(22,972
|
)
|
||
Present value of net minimum lease payments
|
16,792
|
|
|
149,868
|
|
||
Less: Current portion of lease obligations
|
(8,939
|
)
|
|
(31,460
|
)
|
||
Total long-term lease obligations
|
$
|
7,853
|
|
|
$
|
118,408
|
|
|
Subleases
|
||
Remaining in 2019
|
$
|
1,246
|
|
2020
|
5,027
|
|
|
2021
|
5,065
|
|
|
2022
|
5,103
|
|
|
2023
|
4,385
|
|
|
Thereafter
|
4,891
|
|
|
Total future sublease income
|
$
|
25,717
|
|
|
Nine Months Ended September 30, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from finance leases
|
$
|
(816
|
)
|
Operating cash flows from operating leases
|
(25,121
|
)
|
|
Financing cash flows from finance leases
|
(16,868
|
)
|
|
Right-of-use assets obtained in exchange for lease liabilities:
|
|
||
Finance leases
|
3,865
|
|
|
Operating leases
|
23,123
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Cost of revenue
|
$
|
405
|
|
|
$
|
419
|
|
|
$
|
1,163
|
|
|
$
|
1,103
|
|
Marketing
|
1,671
|
|
|
1,854
|
|
|
4,586
|
|
|
5,411
|
|
||||
Selling, general and administrative
|
17,467
|
|
|
12,753
|
|
|
56,768
|
|
|
44,056
|
|
||||
Other income (expense), net
|
—
|
|
|
—
|
|
|
—
|
|
|
100
|
|
||||
Total stock-based compensation expense
|
$
|
19,543
|
|
|
$
|
15,026
|
|
|
$
|
62,517
|
|
|
$
|
50,670
|
|
|
Restricted Stock Units
|
|
Weighted-Average Grant Date Fair Value (per unit)
|
|||
Unvested at December 31, 2018
|
26,623,432
|
|
|
$
|
4.47
|
|
Granted
|
25,446,060
|
|
|
3.52
|
|
|
Vested
|
(9,773,156
|
)
|
|
4.37
|
|
|
Forfeited
|
(9,511,750
|
)
|
|
4.17
|
|
|
Unvested at September 30, 2019
|
32,784,586
|
|
|
3.84
|
|
|
Performance Share Units
|
|
Weighted-Average Grant Date Fair Value (per unit)
|
|
Market-based Performance Share Units
|
|
Weighted-Average Grant Date Fair Value (per unit)
|
||||||
Unvested at December 31, 2018
|
3,431,918
|
|
|
$
|
4.90
|
|
|
—
|
|
|
$
|
—
|
|
Granted
|
4,640,467
|
|
|
3.89
|
|
|
8,486,708
|
|
|
3.03
|
|
||
Vested
|
(777,573
|
)
|
|
4.88
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
(3,124,591
|
)
|
|
4.64
|
|
|
(1,666,667
|
)
|
|
3.03
|
|
||
Unvested at September 30, 2019
|
4,170,221
|
|
|
3.98
|
|
|
6,820,041
|
|
|
3.03
|
|
||
|
|
|
|
|
|
|
|
||||||
Maximum shares issuable upon vesting at September 30, 2019
|
7,980,870
|
|
|
|
|
6,820,041
|
|
|
|
|
Options
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Term (in years)
|
|
Aggregate Intrinsic Value (in thousands) (1)
|
|||||
Outstanding and exercisable at December 31, 2018
|
212,787
|
|
|
$
|
1.80
|
|
|
1.37
|
|
$
|
298
|
|
Exercised
|
(42,500
|
)
|
|
0.96
|
|
|
|
|
|
|||
Forfeited
|
(2,050
|
)
|
|
1.68
|
|
|
|
|
|
|||
Outstanding and exercisable at September 30, 2019
|
168,237
|
|
|
$
|
1.95
|
|
|
0.67
|
|
$
|
119
|
|
(1)
|
The aggregate intrinsic value of options outstanding and exercisable represents the total pretax intrinsic value (the difference between the fair value of our stock on the last day of each period and the exercise price, multiplied by the number of options where the fair value exceeds the exercise price) that would have been received by the option holders had all option holders exercised their options as of September 30, 2019 and December 31, 2018.
|
|
Customer Credits
|
||
Balance as of December 31, 2018
|
$
|
15,118
|
|
Credits issued
|
85,053
|
|
|
Credits redeemed (1)
|
(74,974
|
)
|
|
Breakage revenue recognized
|
(8,617
|
)
|
|
Foreign currency translation
|
(218
|
)
|
|
Balance as of September 30, 2019
|
$
|
16,362
|
|
(1)
|
Customer credits can be redeemed through our online marketplaces for goods or services provided by a third-party merchant or for merchandise inventory sold by us. When customer credits are redeemed for goods or services provided by a third-party merchant, service revenue is recognized on a net basis as the difference between the carrying amount of the customer credit liability derecognized and the amount due to the merchant for the related transaction. When customer credits are redeemed for merchandise inventory sold by us, product revenue is recognized on a gross basis equal to the amount of the customer credit liability derecognized. Customer credits are typically used within one year of issuance.
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Prepaid expenses and other current assets
|
$
|
2,185
|
|
|
$
|
2,923
|
|
Other non-current assets
|
10,449
|
|
|
11,285
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Amortization of deferred contract acquisition costs
|
$
|
5,010
|
|
|
$
|
6,151
|
|
|
$
|
15,549
|
|
|
$
|
19,450
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Provision (benefit) for income taxes
|
$
|
2,069
|
|
|
$
|
988
|
|
|
$
|
591
|
|
|
$
|
205
|
|
Income (loss) from continuing operations before provision (benefit) for income taxes
|
(12,616
|
)
|
|
48,163
|
|
|
(92,909
|
)
|
|
(47,669
|
)
|
|
|
|
Fair Value Measurement at Reporting Date Using
|
||||||||||||
|
September 30, 2019
|
|
Quoted Prices in Active Markets for
Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Fair value option investments
|
$
|
4,931
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,931
|
|
Available-for-sale securities - redeemable preferred shares
|
10,138
|
|
|
—
|
|
|
—
|
|
|
10,138
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
1,207
|
|
|
—
|
|
|
—
|
|
|
1,207
|
|
|
|
|
Fair Value Measurement at Reporting Date Using
|
||||||||||||
|
December 31, 2018
|
|
Quoted Prices in Active Markets for
Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Fair value option investments
|
$
|
73,902
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
73,902
|
|
Available-for-sale securities - redeemable preferred shares
|
10,340
|
|
|
—
|
|
|
—
|
|
|
10,340
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
1,529
|
|
|
—
|
|
|
—
|
|
|
1,529
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fair value option investments:
|
|
|
|
|
|
|
|
||||||||
Beginning Balance
|
$
|
4,917
|
|
|
$
|
74,898
|
|
|
$
|
73,902
|
|
|
$
|
82,966
|
|
Total gains (losses) included in earnings
|
14
|
|
|
(244
|
)
|
|
(68,971
|
)
|
|
(8,312
|
)
|
||||
Ending Balance
|
$
|
4,931
|
|
|
$
|
74,654
|
|
|
$
|
4,931
|
|
|
$
|
74,654
|
|
Unrealized gains (losses) still held (1)
|
$
|
14
|
|
|
$
|
(244
|
)
|
|
$
|
(68,971
|
)
|
|
$
|
(8,312
|
)
|
Available-for-sale securities
|
|
|
|
|
|
|
|
||||||||
Convertible debt securities:
|
|
|
|
|
|
|
|
||||||||
Beginning Balance
|
$
|
—
|
|
|
$
|
10,236
|
|
|
$
|
—
|
|
|
$
|
11,354
|
|
Proceeds from sale of convertible debt security
|
—
|
|
|
(8,594
|
)
|
|
—
|
|
|
(8,594
|
)
|
||||
Transfer to other equity investment upon conversion of convertible debt security
|
—
|
|
|
(1,500
|
)
|
|
—
|
|
|
(4,008
|
)
|
||||
Total gains (losses) included in other comprehensive income (loss)
|
—
|
|
|
(106
|
)
|
|
—
|
|
|
(1,148
|
)
|
||||
Total gains (losses) included in earnings (2)
|
—
|
|
|
(36
|
)
|
|
—
|
|
|
2,396
|
|
||||
Ending Balance
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Unrealized gains (losses) still held (1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Redeemable preferred shares:
|
|
|
|
|
|
|
|
||||||||
Beginning Balance
|
$
|
10,201
|
|
|
$
|
9,961
|
|
|
$
|
10,340
|
|
|
$
|
15,431
|
|
Total gains (losses) included in other comprehensive income (loss)
|
(63
|
)
|
|
246
|
|
|
(202
|
)
|
|
246
|
|
||||
Impairments included in earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,470
|
)
|
||||
Ending Balance
|
$
|
10,138
|
|
|
$
|
10,207
|
|
|
$
|
10,138
|
|
|
$
|
10,207
|
|
Unrealized gains (losses) still held (1)
|
$
|
(63
|
)
|
|
$
|
246
|
|
|
$
|
(202
|
)
|
|
$
|
(5,224
|
)
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent Consideration:
|
|
|
|
|
|
|
|
||||||||
Beginning Balance
|
$
|
1,239
|
|
|
$
|
1,542
|
|
|
$
|
1,529
|
|
|
$
|
—
|
|
Issuance of contingent consideration in connection with acquisition
|
—
|
|
|
—
|
|
|
—
|
|
|
1,589
|
|
||||
Settlements of contingent consideration liabilities
|
—
|
|
|
—
|
|
|
(312
|
)
|
|
—
|
|
||||
Total losses (gains) included in earnings
|
6
|
|
|
21
|
|
|
33
|
|
|
35
|
|
||||
Foreign currency translation
|
(38
|
)
|
|
(20
|
)
|
|
(43
|
)
|
|
(81
|
)
|
||||
Ending Balance
|
$
|
1,207
|
|
|
$
|
1,543
|
|
|
$
|
1,207
|
|
|
$
|
1,543
|
|
Unrealized gains (losses) still held (1)
|
$
|
6
|
|
|
$
|
21
|
|
|
$
|
33
|
|
|
$
|
35
|
|
(1)
|
Represents the unrealized gains or losses recorded in earnings and/or other comprehensive income (loss) during the period for assets and liabilities classified as Level 3 that are still held (or outstanding) at the end of the period.
|
(2)
|
Represents a gain at maturity of a previously impaired convertible debt security, accretion of interest income and changes in the fair value of an embedded derivative.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Basic and diluted net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Numerator
|
|
|
|
|
|
|
|
||||||||
Net income (loss) - continuing operations
|
$
|
(14,685
|
)
|
|
$
|
47,175
|
|
|
$
|
(93,500
|
)
|
|
$
|
(47,874
|
)
|
Less: Net income (loss) attributable to noncontrolling interests
|
2,000
|
|
|
2,560
|
|
|
8,080
|
|
|
9,433
|
|
||||
Net income (loss) attributable to common stockholders - continuing operations
|
(16,685
|
)
|
|
44,615
|
|
|
(101,580
|
)
|
|
(57,307
|
)
|
||||
Net income (loss) attributable to common stockholders - discontinued operations
|
—
|
|
|
—
|
|
|
2,162
|
|
|
—
|
|
||||
Net income (loss) attributable to common stockholders
|
$
|
(16,685
|
)
|
|
$
|
44,615
|
|
|
$
|
(99,418
|
)
|
|
$
|
(57,307
|
)
|
Denominator
|
|
|
|
|
|
|
|
||||||||
Shares used in computation of basic net income (loss) per share
|
566,971,238
|
|
|
568,634,988
|
|
|
568,339,335
|
|
|
565,227,625
|
|
||||
Weighted-average effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Stock options
|
—
|
|
|
171,662
|
|
|
—
|
|
|
—
|
|
||||
Restricted stock units
|
—
|
|
|
7,344,425
|
|
|
—
|
|
|
—
|
|
||||
Employee stock purchase plan
|
—
|
|
|
228,346
|
|
|
—
|
|
|
—
|
|
||||
Shares used in computation of diluted net income (loss) per share
|
566,971,238
|
|
|
576,379,421
|
|
|
568,339,335
|
|
|
565,227,625
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.03
|
)
|
|
$
|
0.08
|
|
|
$
|
(0.18
|
)
|
|
$
|
(0.10
|
)
|
Discontinued operations
|
—
|
|
|
—
|
|
|
0.01
|
|
—
|
|
|||||
Basic and diluted net income (loss) per share
|
$
|
(0.03
|
)
|
|
$
|
0.08
|
|
|
$
|
(0.17
|
)
|
|
$
|
(0.10
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Restricted stock units
|
35,378,166
|
|
|
12,462,410
|
|
|
33,148,939
|
|
|
31,072,428
|
|
Other stock-based compensation awards
|
1,561,105
|
|
|
16,000
|
|
|
1,630,902
|
|
|
2,073,802
|
|
Convertible senior notes
|
46,296,300
|
|
|
46,296,300
|
|
|
46,296,300
|
|
|
46,296,300
|
|
Warrants
|
46,296,300
|
|
|
46,296,300
|
|
|
46,296,300
|
|
|
46,296,300
|
|
Total
|
129,531,871
|
|
|
105,071,010
|
|
|
127,372,441
|
|
|
125,738,830
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
North America
|
|
|
|
|
|
|
|
||||||||
Service revenue:
|
|
|
|
|
|
|
|
||||||||
Local
|
$
|
175,140
|
|
|
$
|
180,059
|
|
|
$
|
532,599
|
|
|
$
|
553,340
|
|
Goods
|
3,000
|
|
|
4,021
|
|
|
9,841
|
|
|
12,691
|
|
||||
Travel
|
13,680
|
|
|
17,217
|
|
|
48,746
|
|
|
57,189
|
|
||||
Total service revenue
|
191,820
|
|
|
201,297
|
|
|
591,186
|
|
|
623,220
|
|
||||
Product revenue - Goods
|
111,776
|
|
|
159,854
|
|
|
394,235
|
|
|
511,451
|
|
||||
Total North America revenue (1)
|
303,596
|
|
|
361,151
|
|
|
985,421
|
|
|
1,134,671
|
|
||||
|
|
|
|
|
|
|
|
||||||||
International
|
|
|
|
|
|
|
|
||||||||
Service revenue:
|
|
|
|
|
|
|
|
||||||||
Local
|
65,440
|
|
|
75,946
|
|
|
208,625
|
|
|
221,949
|
|
||||
Goods
|
2,817
|
|
|
2,584
|
|
|
6,882
|
|
|
10,965
|
|
||||
Travel
|
8,003
|
|
|
9,387
|
|
|
24,817
|
|
|
30,529
|
|
||||
Total service revenue
|
76,260
|
|
|
87,917
|
|
|
240,324
|
|
|
263,443
|
|
||||
Product revenue - Goods
|
115,756
|
|
|
143,815
|
|
|
380,854
|
|
|
438,705
|
|
||||
Total International revenue (1)
|
$
|
192,016
|
|
|
$
|
231,732
|
|
|
$
|
621,178
|
|
|
$
|
702,148
|
|
(1)
|
North America includes revenue from the United States of $297.9 million and $352.3 million for the three months ended September 30, 2019 and 2018 and $965.9 million and $1,108.8 million for the nine months ended September 30, 2019 and 2018. International includes revenue from the United Kingdom of $69.4 million and $94.0 million for the three months ended September 30, 2019 and 2018 and $221.8 million and $268.5 million for the nine months ended September 30, 2019 and 2018. There were no other individual countries that represented more than 10% of consolidated total revenue for the three and nine months ended September 30, 2019 and 2018. Revenue is attributed to individual countries based on the location of the customer.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
North America
|
|
|
|
|
|
|
|
||||||||
Service gross profit:
|
|
|
|
|
|
|
|
||||||||
Local
|
$
|
155,032
|
|
|
$
|
159,379
|
|
|
$
|
473,787
|
|
|
$
|
491,420
|
|
Goods
|
2,280
|
|
|
3,634
|
|
|
7,838
|
|
|
10,565
|
|
||||
Travel
|
10,717
|
|
|
13,801
|
|
|
38,791
|
|
|
46,106
|
|
||||
Total service gross profit
|
168,029
|
|
|
176,814
|
|
|
520,416
|
|
|
548,091
|
|
||||
Product gross profit - Goods
|
24,046
|
|
|
27,234
|
|
|
80,045
|
|
|
95,008
|
|
||||
Total North America gross profit
|
192,075
|
|
|
204,048
|
|
|
600,461
|
|
|
643,099
|
|
||||
|
|
|
|
|
|
|
|
||||||||
International
|
|
|
|
|
|
|
|
||||||||
Service gross profit:
|
|
|
|
|
|
|
|
||||||||
Local
|
61,183
|
|
|
71,639
|
|
|
195,941
|
|
|
209,214
|
|
||||
Goods
|
2,589
|
|
|
2,320
|
|
|
6,241
|
|
|
9,972
|
|
||||
Travel
|
7,332
|
|
|
8,649
|
|
|
22,743
|
|
|
28,219
|
|
||||
Total service gross profit
|
71,104
|
|
|
82,608
|
|
|
224,925
|
|
|
247,405
|
|
||||
Product gross profit - Goods
|
14,761
|
|
|
19,333
|
|
|
50,702
|
|
|
64,028
|
|
||||
Total International gross profit
|
$
|
85,865
|
|
|
$
|
101,941
|
|
|
$
|
275,627
|
|
|
$
|
311,433
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Income (loss) from operations (1) (2) (3):
|
|
|
|
|
|
|
|
||||||||
North America
|
$
|
15,691
|
|
|
$
|
51,004
|
|
|
$
|
20,655
|
|
|
$
|
(19,380
|
)
|
International
|
(11,054
|
)
|
|
2,019
|
|
|
(20,962
|
)
|
|
11,543
|
|
||||
Total income (loss) from operations
|
$
|
4,637
|
|
|
$
|
53,023
|
|
|
$
|
(307
|
)
|
|
$
|
(7,837
|
)
|
(1)
|
Includes stock-based compensation of $16.8 million and $13.8 million for North America and $2.7 million and $1.2 million for International for the three months ended September 30, 2019 and 2018 and $55.7 million and $46.7 million for North America and $6.8 million and $3.9 million for International for the nine months ended September 30, 2019 and 2018.
|
(2)
|
Includes acquisition-related (benefit) expense, net of $0.7 million for International for the nine months ended September 30, 2018.
|
(3)
|
The three months ended September 30, 2018 includes a $40.4 million benefit for North America related to the settlement of the IBM patent litigation and the nine months ended September 30, 2018 includes a $34.6 million charge for North America related to the IBM patent litigation.
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Total assets:
|
|
|
|
||||
North America (1)
|
$
|
883,200
|
|
|
$
|
958,412
|
|
International (1)
|
487,502
|
|
|
683,730
|
|
||
Consolidated total assets
|
$
|
1,370,702
|
|
|
$
|
1,642,142
|
|
(1)
|
North America contains assets from the United States of $861.2 million and $940.5 million as of September 30, 2019 and December 31, 2018. International contains assets from Ireland of $204.6 million as of December 31, 2018. Assets from Ireland were less than 10% of consolidated total assets as of September 30, 2019. There were no other individual countries that represented more than 10% of consolidated total assets as of September 30, 2019 and December 31, 2018.
|
•
|
Revenue is earned through product and service revenue transactions. We earn product revenue from direct sales of merchandise inventory in our Goods category and report product revenue on a gross basis as the purchase price received from the customer. We earn service revenue from transactions in which we generate commissions by selling goods or services on behalf of third-party merchants, primarily through sales of vouchers and similar transactions in which we collect the transaction price from the customer and remit a portion of that transaction price to the third-party merchant who will provide the related goods or services. We report service revenue from those transactions on a net basis as the purchase price collected from the customer less the portion of the purchase price that is payable to the third-party merchant. Service revenue also includes commissions we earn when customers make purchases with retailers using digital coupons accessed through our websites and mobile applications and from voucherless merchant offerings in which customers earn cash back on their credit card statements when they transact with third-party merchants.
|
•
|
Gross profit reflects the net margin we earn after deducting our cost of revenue from our revenue. Due to the lack of comparability between product revenue, which is reported on a gross basis, and service revenue, which primarily consists of transactions reported on a net basis, we believe that gross profit is an important measure for evaluating our performance.
|
•
|
Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) from continuing operations excluding income taxes, interest and other non-operating items, depreciation and amortization, stock-based compensation, acquisition-related expense (benefit), net and other special charges and credits, including items that are unusual in nature or infrequently occurring. For further information and a reconciliation to Income (loss) from continuing operations, refer to our discussion under Non-GAAP Financial Measures in the Results of Operations section.
|
•
|
Free cash flow is a non-GAAP financial measure that comprises net cash provided by (used in) operating activities from continuing operations less purchases of property and equipment and capitalized software. For further information and a reconciliation to Net cash provided by (used in) operating activities from continuing operations, refer to our discussion in the Liquidity and Capital Resources section.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue
|
$
|
495,612
|
|
|
$
|
592,883
|
|
|
$
|
1,606,599
|
|
|
$
|
1,836,819
|
|
Gross profit
|
277,940
|
|
|
305,989
|
|
|
876,088
|
|
|
954,532
|
|
||||
Adjusted EBITDA
|
49,997
|
|
|
56,369
|
|
|
143,473
|
|
|
165,207
|
|
||||
Free cash flow
|
891
|
|
|
(73,483
|
)
|
|
(181,972
|
)
|
|
(186,572
|
)
|
•
|
Gross billings is the total dollar value of customer purchases of goods and services. Gross billings is presented net of customer refunds, order discounts and sales and related taxes. The substantial majority of our service revenue transactions are comprised of sales of vouchers and similar transactions in which we collect the transaction price from the customer and remit a portion of the transaction price to the third-party merchant who will provide the related goods or services. For these transactions, gross billings differs from revenue reported in our condensed consolidated statements of operations, which is presented net of the merchant's share of the transaction price. For product revenue transactions, gross billings are equivalent to product revenue reported in our condensed consolidated statements of operations. Gross billings is an indicator of our growth and business performance as it measures the dollar volume of transactions generated through our marketplaces. Tracking gross billings on service revenue transactions also allows us to monitor the percentage of gross billings that we are able to retain after payments to merchants. However, management is primarily focused on optimizing the business for long-term gross profit and Adjusted EBITDA growth.
|
•
|
Active customers are unique user accounts that have made a purchase during the trailing twelve months ("TTM") either through one of our online marketplaces or directly with a merchant for which we earned a commission. We consider this metric to be an important indicator of our business performance as it helps us
|
•
|
Gross billings and gross profit per active customer are the TTM gross billings and gross profit generated per active customer. We use these metrics to evaluate trends in customer spend and in the average contribution to gross billings and gross profit on a per-customer basis.
|
•
|
Units is the number of purchases during the reporting period, before refunds and cancellations, made either through one of our online marketplaces, a third-party marketplace, or directly with a merchant for which we earn a commission. We do not include purchases with retailers using digital coupons accessed through our websites and mobile applications in our units metric. We consider unit growth to be an important indicator of the total volume of business conducted through our marketplaces.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Gross billings
|
$
|
1,093,378
|
|
|
$
|
1,216,229
|
|
|
$
|
3,390,331
|
|
|
$
|
3,773,756
|
|
Units
|
35,754
|
|
|
39,450
|
|
|
108,270
|
|
|
121,824
|
|
||||
Gross billings per unit
|
$
|
30.58
|
|
|
$
|
30.83
|
|
|
$
|
31.31
|
|
|
$
|
30.98
|
|
|
Trailing Twelve Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
TTM Active customers (in thousands)
|
45,258
|
|
|
48,769
|
|
||
TTM Gross billings per active customer
|
$
|
106.49
|
|
|
$
|
109.82
|
|
TTM Gross profit per active customer
|
$
|
27.45
|
|
|
$
|
27.51
|
|
|
Three Months Ended September 30,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
|
|
|
|
|
|
|
|||||||
Service gross billings:
|
|
|
|
|
|
|
|
|||||||
Local
|
$
|
511,173
|
|
|
$
|
534,246
|
|
|
$
|
(23,073
|
)
|
|
(4.3
|
)%
|
Goods
|
21,300
|
|
|
24,503
|
|
|
(3,203
|
)
|
|
(13.1
|
)
|
|||
Travel
|
71,144
|
|
|
83,991
|
|
|
(12,847
|
)
|
|
(15.3
|
)
|
|||
Total service gross billings
|
603,617
|
|
|
642,740
|
|
|
(39,123
|
)
|
|
(6.1
|
)
|
|||
Product gross billings - Goods
|
111,776
|
|
|
159,854
|
|
|
(48,078
|
)
|
|
(30.1
|
)
|
|||
Total North America gross billings
|
715,393
|
|
|
802,594
|
|
|
(87,201
|
)
|
|
(10.9
|
)
|
|||
|
|
|
|
|
|
|
|
|||||||
International
|
|
|
|
|
|
|
|
|||||||
Service gross billings:
|
|
|
|
|
|
|
|
|||||||
Local
|
204,823
|
|
|
209,623
|
|
|
(4,800
|
)
|
|
(2.3
|
)
|
|||
Goods
|
13,308
|
|
|
14,041
|
|
|
(733
|
)
|
|
(5.2
|
)
|
|||
Travel
|
44,098
|
|
|
46,156
|
|
|
(2,058
|
)
|
|
(4.5
|
)
|
|||
Total service gross billings
|
262,229
|
|
|
269,820
|
|
|
(7,591
|
)
|
|
(2.8
|
)
|
|||
Product gross billings - Goods
|
115,756
|
|
|
143,815
|
|
|
(28,059
|
)
|
|
(19.5
|
)
|
|||
Total International gross billings
|
377,985
|
|
|
413,635
|
|
|
(35,650
|
)
|
|
(8.6
|
)
|
|||
Total gross billings
|
$
|
1,093,378
|
|
|
$
|
1,216,229
|
|
|
$
|
(122,851
|
)
|
|
(10.1
|
)
|
|
Three Months Ended September 30, 2019
|
||||||||||
|
At Avg. Q3 2018 Rates (1)
|
|
Exchange Rate Effect (2)
|
|
As Reported
|
||||||
Gross billings
|
$
|
1,110,431
|
|
|
$
|
(17,053
|
)
|
|
$
|
1,093,378
|
|
(1)
|
Represents the financial statement balances that would have resulted had exchange rates in the reporting period been the same as those in effect in the prior year period.
|
(2)
|
Represents the increase or decrease in the reported amount resulting from changes in exchange rates from those in effect in the prior year period.
|
|
Nine Months Ended September 30,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
|
|
|
|
|
|
|
|||||||
Service gross billings:
|
|
|
|
|
|
|
|
|||||||
Local
|
$
|
1,517,312
|
|
|
$
|
1,625,323
|
|
|
$
|
(108,011
|
)
|
|
(6.6
|
)%
|
Goods
|
60,833
|
|
|
78,883
|
|
|
(18,050
|
)
|
|
(22.9
|
)
|
|||
Travel
|
247,256
|
|
|
280,299
|
|
|
(33,043
|
)
|
|
(11.8
|
)
|
|||
Total service gross billings
|
1,825,401
|
|
|
1,984,505
|
|
|
(159,104
|
)
|
|
(8.0
|
)
|
|||
Product gross billings - Goods
|
394,235
|
|
|
511,451
|
|
|
(117,216
|
)
|
|
(22.9
|
)
|
|||
Total North America gross billings
|
2,219,636
|
|
|
2,495,956
|
|
|
(276,320
|
)
|
|
(11.1
|
)
|
|||
|
|
|
|
|
|
|
|
|||||||
International
|
|
|
|
|
|
|
|
|||||||
Service gross billings:
|
|
|
|
|
|
|
|
|||||||
Local
|
615,669
|
|
|
630,178
|
|
|
(14,509
|
)
|
|
(2.3
|
)
|
|||
Goods
|
34,787
|
|
|
56,473
|
|
|
(21,686
|
)
|
|
(38.4
|
)
|
|||
Travel
|
139,385
|
|
|
152,444
|
|
|
(13,059
|
)
|
|
(8.6
|
)
|
|||
Total service gross billings
|
789,841
|
|
|
839,095
|
|
|
(49,254
|
)
|
|
(5.9
|
)
|
|||
Product gross billings - Goods
|
380,854
|
|
|
438,705
|
|
|
(57,851
|
)
|
|
(13.2
|
)
|
|||
Total International gross billings
|
1,170,695
|
|
|
1,277,800
|
|
|
(107,105
|
)
|
|
(8.4
|
)
|
|||
Total gross billings
|
$
|
3,390,331
|
|
|
$
|
3,773,756
|
|
|
$
|
(383,425
|
)
|
|
(10.2
|
)
|
|
Nine Months Ended September 30, 2019
|
||||||||||
|
At Avg. Q3 2018 YTD Rates (1)
|
|
Exchange Rate Effect (2)
|
|
As Reported
|
||||||
Gross billings
|
$
|
3,462,952
|
|
|
$
|
(72,621
|
)
|
|
$
|
3,390,331
|
|
(1)
|
Represents the financial statement balances that would have resulted had exchange rates in the reporting period been the same as those in effect in the prior year period.
|
(2)
|
Represents the increase or decrease in the reported amount resulting from changes in exchange rates from those in effect in the prior year period.
|
|
Three Months Ended September 30,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
|
|
|
|
|
|
|
|||||||
Service revenue:
|
|
|
|
|
|
|
|
|||||||
Local
|
$
|
175,140
|
|
|
$
|
180,059
|
|
|
$
|
(4,919
|
)
|
|
(2.7
|
)%
|
Goods
|
3,000
|
|
|
4,021
|
|
|
(1,021
|
)
|
|
(25.4
|
)
|
|||
Travel
|
13,680
|
|
|
17,217
|
|
|
(3,537
|
)
|
|
(20.5
|
)
|
|||
Total service revenue
|
191,820
|
|
|
201,297
|
|
|
(9,477
|
)
|
|
(4.7
|
)
|
|||
Product revenue - Goods
|
111,776
|
|
|
159,854
|
|
|
(48,078
|
)
|
|
(30.1
|
)
|
|||
Total North America revenue
|
303,596
|
|
|
361,151
|
|
|
(57,555
|
)
|
|
(15.9
|
)
|
|||
|
|
|
|
|
|
|
|
|||||||
International
|
|
|
|
|
|
|
|
|||||||
Service revenue:
|
|
|
|
|
|
|
|
|||||||
Local
|
65,440
|
|
|
75,946
|
|
|
(10,506
|
)
|
|
(13.8
|
)
|
|||
Goods
|
2,817
|
|
|
2,584
|
|
|
233
|
|
|
9.0
|
|
|||
Travel
|
8,003
|
|
|
9,387
|
|
|
(1,384
|
)
|
|
(14.7
|
)
|
|||
Total service revenue
|
76,260
|
|
|
87,917
|
|
|
(11,657
|
)
|
|
(13.3
|
)
|
|||
Product revenue - Goods
|
115,756
|
|
|
143,815
|
|
|
(28,059
|
)
|
|
(19.5
|
)
|
|||
Total International revenue
|
192,016
|
|
|
231,732
|
|
|
(39,716
|
)
|
|
(17.1
|
)
|
|||
Total revenue
|
$
|
495,612
|
|
|
$
|
592,883
|
|
|
$
|
(97,271
|
)
|
|
(16.4
|
)
|
|
Three Months Ended September 30, 2019
|
||||||||||
|
At Avg. Q3 2018 Rates (1)
|
|
Exchange Rate Effect (2)
|
|
As Reported
|
||||||
Revenue
|
$
|
504,315
|
|
|
$
|
(8,703
|
)
|
|
$
|
495,612
|
|
(1)
|
Represents the financial statement balances that would have resulted had exchange rates in the reporting period been the same as those in effect in the prior year period.
|
(2)
|
Represents the increase or decrease in the reported amount resulting from changes in exchange rates from those in effect in the prior year period.
|
North America
|
|
International
|
|
Nine Months Ended September 30,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
|
|
|
|
|
|
|
|||||||
Service revenue:
|
|
|
|
|
|
|
|
|||||||
Local
|
$
|
532,599
|
|
|
$
|
553,340
|
|
|
$
|
(20,741
|
)
|
|
(3.7
|
)%
|
Goods
|
9,841
|
|
|
12,691
|
|
|
(2,850
|
)
|
|
(22.5
|
)
|
|||
Travel
|
48,746
|
|
|
57,189
|
|
|
(8,443
|
)
|
|
(14.8
|
)
|
|||
Total service revenue
|
591,186
|
|
|
623,220
|
|
|
(32,034
|
)
|
|
(5.1
|
)
|
|||
Product revenue - Goods
|
394,235
|
|
|
511,451
|
|
|
(117,216
|
)
|
|
(22.9
|
)
|
|||
Total North America revenue
|
985,421
|
|
|
1,134,671
|
|
|
(149,250
|
)
|
|
(13.2
|
)
|
|||
|
|
|
|
|
|
|
|
|||||||
International
|
|
|
|
|
|
|
|
|||||||
Service revenue:
|
|
|
|
|
|
|
|
|||||||
Local
|
208,625
|
|
|
221,949
|
|
|
(13,324
|
)
|
|
(6.0
|
)
|
|||
Goods
|
6,882
|
|
|
10,965
|
|
|
(4,083
|
)
|
|
(37.2
|
)
|
|||
Travel
|
24,817
|
|
|
30,529
|
|
|
(5,712
|
)
|
|
(18.7
|
)
|
|||
Total service revenue
|
240,324
|
|
|
263,443
|
|
|
(23,119
|
)
|
|
(8.8
|
)
|
|||
Product revenue - Goods
|
380,854
|
|
|
438,705
|
|
|
(57,851
|
)
|
|
(13.2
|
)
|
|||
Total International revenue
|
621,178
|
|
|
702,148
|
|
|
(80,970
|
)
|
|
(11.5
|
)
|
|||
Total revenue
|
$
|
1,606,599
|
|
|
$
|
1,836,819
|
|
|
$
|
(230,220
|
)
|
|
(12.5
|
)
|
|
Nine Months Ended September 30, 2019
|
||||||||||
|
At Avg. Q3 2018 YTD Rates (1)
|
|
Exchange Rate Effect (2)
|
|
As Reported
|
||||||
Revenue
|
$
|
1,645,767
|
|
|
$
|
(39,168
|
)
|
|
$
|
1,606,599
|
|
(1)
|
Represents the financial statement balances that would have resulted had exchange rates in the reporting period been the same as those in effect in the prior year period.
|
(2)
|
Represents the increase or decrease in the reported amount resulting from changes in exchange rates from those in effect in the prior year period.
|
North America
|
|
International
|
|
Three Months Ended September 30,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
|
|
|
|
|
|
|
|||||||
Service cost of revenue:
|
|
|
|
|
|
|
|
|||||||
Local
|
$
|
20,108
|
|
|
$
|
20,680
|
|
|
$
|
(572
|
)
|
|
(2.8
|
)%
|
Goods
|
720
|
|
|
387
|
|
|
333
|
|
|
86.0
|
|
|||
Travel
|
2,963
|
|
|
3,416
|
|
|
(453
|
)
|
|
(13.3
|
)
|
|||
Total service cost of revenue
|
23,791
|
|
|
24,483
|
|
|
(692
|
)
|
|
(2.8
|
)
|
|||
Product cost of revenue - Goods
|
87,730
|
|
|
132,620
|
|
|
(44,890
|
)
|
|
(33.8
|
)
|
|||
Total North America cost of revenue
|
111,521
|
|
|
157,103
|
|
|
(45,582
|
)
|
|
(29.0
|
)
|
|||
|
|
|
|
|
|
|
|
|||||||
International
|
|
|
|
|
|
|
|
|||||||
Service cost of revenue:
|
|
|
|
|
|
|
|
|||||||
Local
|
4,257
|
|
|
4,307
|
|
|
(50
|
)
|
|
(1.2
|
)
|
|||
Goods
|
228
|
|
|
264
|
|
|
(36
|
)
|
|
(13.6
|
)
|
|||
Travel
|
671
|
|
|
738
|
|
|
(67
|
)
|
|
(9.1
|
)
|
|||
Total service cost of revenue
|
5,156
|
|
|
5,309
|
|
|
(153
|
)
|
|
(2.9
|
)
|
|||
Product cost of revenue - Goods
|
100,995
|
|
|
124,482
|
|
|
(23,487
|
)
|
|
(18.9
|
)
|
|||
Total International cost of revenue
|
106,151
|
|
|
129,791
|
|
|
(23,640
|
)
|
|
(18.2
|
)
|
|||
Total cost of revenue
|
$
|
217,672
|
|
|
$
|
286,894
|
|
|
$
|
(69,222
|
)
|
|
(24.1
|
)
|
|
Three Months Ended September 30, 2019
|
||||||||||
|
At Avg. Q3 2018 Rates (1)
|
|
Exchange Rate Effect (2)
|
|
As Reported
|
||||||
Cost of revenue
|
$
|
222,461
|
|
|
$
|
(4,789
|
)
|
|
$
|
217,672
|
|
(1)
|
Represents the financial statement balances that would have resulted had exchange rates in the reporting period been the same as those in effect in the prior year period.
|
(2)
|
Represents the increase or decrease in the reported amount resulting from changes in exchange rates from those in effect in the prior year period.
|
|
Nine Months Ended September 30,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
|
|
|
|
|
|
|
|||||||
Service cost of revenue:
|
|
|
|
|
|
|
|
|||||||
Local
|
$
|
58,812
|
|
|
$
|
61,920
|
|
|
$
|
(3,108
|
)
|
|
(5.0
|
)%
|
Goods
|
2,003
|
|
|
2,126
|
|
|
(123
|
)
|
|
(5.8
|
)
|
|||
Travel
|
9,955
|
|
|
11,083
|
|
|
(1,128
|
)
|
|
(10.2
|
)
|
|||
Total service cost of revenue
|
70,770
|
|
|
75,129
|
|
|
(4,359
|
)
|
|
(5.8
|
)
|
|||
Product cost of revenue - Goods
|
314,190
|
|
|
416,443
|
|
|
(102,253
|
)
|
|
(24.6
|
)
|
|||
Total North America cost of revenue
|
384,960
|
|
|
491,572
|
|
|
(106,612
|
)
|
|
(21.7
|
)
|
|||
|
|
|
|
|
|
|
|
|||||||
International
|
|
|
|
|
|
|
|
|||||||
Service cost of revenue:
|
|
|
|
|
|
|
|
|||||||
Local
|
12,684
|
|
|
12,735
|
|
|
(51
|
)
|
|
(0.4
|
)
|
|||
Goods
|
641
|
|
|
993
|
|
|
(352
|
)
|
|
(35.4
|
)
|
|||
Travel
|
2,074
|
|
|
2,310
|
|
|
(236
|
)
|
|
(10.2
|
)
|
|||
Total service cost of revenue
|
15,399
|
|
|
16,038
|
|
|
(639
|
)
|
|
(4.0
|
)
|
|||
Product cost of revenue - Goods
|
330,152
|
|
|
374,677
|
|
|
(44,525
|
)
|
|
(11.9
|
)
|
|||
Total International cost of revenue
|
345,551
|
|
|
390,715
|
|
|
(45,164
|
)
|
|
(11.6
|
)
|
|||
Total cost of revenue
|
$
|
730,511
|
|
|
$
|
882,287
|
|
|
$
|
(151,776
|
)
|
|
(17.2
|
)
|
|
Nine Months Ended September 30, 2019
|
||||||||||
|
At Avg. Q3 2018 YTD Rates (1)
|
|
Exchange Rate Effect (2)
|
|
As Reported
|
||||||
Cost of revenue
|
$
|
752,521
|
|
|
$
|
(22,010
|
)
|
|
$
|
730,511
|
|
(1)
|
Represents the financial statement balances that would have resulted had exchange rates in the reporting period been the same as those in effect in the prior year period.
|
(2)
|
Represents the increase or decrease in the reported amount resulting from changes in exchange rates from those in effect in the prior year period.
|
|
Three Months Ended September 30,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
|
|
|
|
|
|
|
|||||||
Service gross profit:
|
|
|
|
|
|
|
|
|||||||
Local
|
$
|
155,032
|
|
|
$
|
159,379
|
|
|
$
|
(4,347
|
)
|
|
(2.7
|
)%
|
Goods
|
2,280
|
|
|
3,634
|
|
|
(1,354
|
)
|
|
(37.3
|
)
|
|||
Travel
|
10,717
|
|
|
13,801
|
|
|
(3,084
|
)
|
|
(22.3
|
)
|
|||
Total service gross profit
|
168,029
|
|
|
176,814
|
|
|
(8,785
|
)
|
|
(5.0
|
)
|
|||
Product gross profit - Goods
|
24,046
|
|
|
27,234
|
|
|
(3,188
|
)
|
|
(11.7
|
)
|
|||
Total North America gross profit
|
192,075
|
|
|
204,048
|
|
|
(11,973
|
)
|
|
(5.9
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||||
International
|
|
|
|
|
|
|
|
|
||||||
Service gross profit:
|
|
|
|
|
|
|
|
|
||||||
Local
|
61,183
|
|
|
71,639
|
|
|
(10,456
|
)
|
|
(14.6
|
)
|
|||
Goods
|
2,589
|
|
|
2,320
|
|
|
269
|
|
|
11.6
|
|
|||
Travel
|
7,332
|
|
|
8,649
|
|
|
(1,317
|
)
|
|
(15.2
|
)
|
|||
Total service gross profit
|
71,104
|
|
|
82,608
|
|
|
(11,504
|
)
|
|
(13.9
|
)
|
|||
Product gross profit - Goods
|
14,761
|
|
|
19,333
|
|
|
(4,572
|
)
|
|
(23.6
|
)
|
|||
Total International gross profit
|
85,865
|
|
|
101,941
|
|
|
(16,076
|
)
|
|
(15.8
|
)
|
|||
Total gross profit
|
$
|
277,940
|
|
|
$
|
305,989
|
|
|
$
|
(28,049
|
)
|
|
(9.2
|
)
|
|
Three Months Ended September 30, 2019
|
||||||||||
|
At Avg. Q3 2018 Rates (1)
|
|
Exchange Rate Effect (2)
|
|
As Reported
|
||||||
Gross profit
|
$
|
281,854
|
|
|
$
|
(3,914
|
)
|
|
$
|
277,940
|
|
(1)
|
Represents the financial statement balances that would have resulted had exchange rates in the reporting period been the same as those in effect in the prior year period.
|
(2)
|
Represents the increase or decrease in the reported amount resulting from changes in exchange rates from those in effect in the prior year period.
|
|
Nine Months Ended September 30,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
|
|
|
|
|
|
|
|||||||
Service gross profit:
|
|
|
|
|
|
|
|
|||||||
Local
|
$
|
473,787
|
|
|
$
|
491,420
|
|
|
$
|
(17,633
|
)
|
|
(3.6
|
)%
|
Goods
|
7,838
|
|
|
10,565
|
|
|
(2,727
|
)
|
|
(25.8
|
)
|
|||
Travel
|
38,791
|
|
|
46,106
|
|
|
(7,315
|
)
|
|
(15.9
|
)
|
|||
Total service gross profit
|
520,416
|
|
|
548,091
|
|
|
(27,675
|
)
|
|
(5.0
|
)
|
|||
Product gross profit - Goods
|
80,045
|
|
|
95,008
|
|
|
(14,963
|
)
|
|
(15.7
|
)
|
|||
Total North America gross profit
|
600,461
|
|
|
643,099
|
|
|
(42,638
|
)
|
|
(6.6
|
)
|
|||
|
|
|
|
|
|
|
|
|||||||
International
|
|
|
|
|
|
|
|
|||||||
Service gross profit:
|
|
|
|
|
|
|
|
|||||||
Local
|
195,941
|
|
|
209,214
|
|
|
(13,273
|
)
|
|
(6.3
|
)
|
|||
Goods
|
6,241
|
|
|
9,972
|
|
|
(3,731
|
)
|
|
(37.4
|
)
|
|||
Travel
|
22,743
|
|
|
28,219
|
|
|
(5,476
|
)
|
|
(19.4
|
)
|
|||
Total service gross profit
|
224,925
|
|
|
247,405
|
|
|
(22,480
|
)
|
|
(9.1
|
)
|
|||
Product gross profit - Goods
|
50,702
|
|
|
64,028
|
|
|
(13,326
|
)
|
|
(20.8
|
)
|
|||
Total International gross profit
|
275,627
|
|
|
311,433
|
|
|
(35,806
|
)
|
|
(11.5
|
)
|
|||
Total gross profit
|
$
|
876,088
|
|
|
$
|
954,532
|
|
|
$
|
(78,444
|
)
|
|
(8.2
|
)
|
|
Nine Months Ended September 30, 2019
|
||||||||||
|
At Avg. Q3 2018 YTD Rates (1)
|
|
Exchange Rate Effect (2)
|
|
As Reported
|
||||||
Gross profit
|
$
|
893,246
|
|
|
$
|
(17,158
|
)
|
|
$
|
876,088
|
|
(1)
|
Represents the financial statement balances that would have resulted had exchange rates in the reporting period been the same as those in effect in the prior year period.
|
(2)
|
Represents the increase or decrease in the reported amount resulting from changes in exchange rates from those in effect in the prior year period.
|
|
Three Months Ended September 30,
|
|||||||||||||||||||
|
2019
|
|
% of Gross Profit
|
|
2018
|
|
% of Gross Profit
|
|
$ Change
|
|
% Change
|
|||||||||
Marketing:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
North America
|
$
|
45,223
|
|
|
23.5
|
%
|
|
$
|
60,296
|
|
|
29.5
|
%
|
|
$
|
(15,073
|
)
|
|
(25.0
|
)%
|
International
|
29,753
|
|
|
34.7
|
|
|
32,421
|
|
|
31.8
|
|
|
(2,668
|
)
|
|
(8.2
|
)
|
|||
Total marketing
|
$
|
74,976
|
|
|
27.0
|
|
|
$
|
92,717
|
|
|
30.3
|
|
|
$
|
(17,741
|
)
|
|
(19.1
|
)
|
|
Nine Months Ended September 30,
|
|||||||||||||||||||
|
2019
|
|
% of Gross Profit
|
|
2018
|
|
% of Gross Profit
|
|
$ Change
|
|
% Change
|
|||||||||
Marketing:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
North America
|
$
|
162,132
|
|
|
27.0
|
%
|
|
$
|
198,149
|
|
|
30.8
|
%
|
|
$
|
(36,017
|
)
|
|
(18.2
|
)%
|
International
|
95,164
|
|
|
34.5
|
|
|
87,902
|
|
|
28.2
|
|
|
7,262
|
|
|
8.3
|
|
|||
Total marketing
|
$
|
257,296
|
|
|
29.4
|
|
|
$
|
286,051
|
|
|
30.0
|
|
|
$
|
(28,755
|
)
|
|
(10.1
|
)
|
|
Three Months Ended September 30,
|
|||||||||||||||||||
|
2019
|
|
% of Gross Profit
|
|
2018
|
|
% of Gross Profit
|
|
$ Change
|
|
% Change
|
|||||||||
Selling, general and administrative
|
$
|
198,327
|
|
|
71.4
|
%
|
|
$
|
160,249
|
|
|
52.4
|
%
|
|
$
|
38,078
|
|
|
23.8
|
%
|
•
|
a $3.9 million favorable impact from year-over-year changes in foreign currency exchange rates; and
|
•
|
decreases in compensation-related costs, facilities costs and other general expenses.
|
|
Nine Months Ended September 30,
|
|||||||||||||||||||
|
2019
|
|
% of Gross Profit
|
|
2018
|
|
% of Gross Profit
|
|
$ Change
|
|
% Change
|
|||||||||
Selling, general and administrative
|
$
|
619,099
|
|
|
70.7
|
%
|
|
$
|
676,318
|
|
|
70.9
|
%
|
|
$
|
(57,219
|
)
|
|
(8.5
|
)%
|
•
|
a $75.0 million charge recorded in the second quarter 2018 as a result of a jury award related to a patent litigation case with IBM. That charge was subsequently reduced by $40.4 million in the third quarter 2018 upon execution of settlement and license agreements with IBM;
|
•
|
a $15.1 million favorable impact from year-over-year changes in foreign currency exchange rates; and
|
•
|
decreases in compensation-related costs, facilities costs, system costs and other general expenses.
|
|
Three Months Ended September 30,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Income (loss) from operations
|
|
|
|
|
|
|
|
|||||||
North America
|
$
|
15,691
|
|
|
$
|
51,004
|
|
|
$
|
(35,313
|
)
|
|
(69.2
|
)%
|
International
|
(11,054
|
)
|
|
2,019
|
|
|
(13,073
|
)
|
|
(647.5
|
)
|
|||
Total income (loss) from operations
|
$
|
4,637
|
|
|
$
|
53,023
|
|
|
$
|
(48,386
|
)
|
|
(91.3
|
)
|
|
Nine Months Ended September 30,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Income (loss) from operations
|
|
|
|
|
|
|
|
|||||||
North America
|
$
|
20,655
|
|
|
$
|
(19,380
|
)
|
|
$
|
40,035
|
|
|
206.6
|
%
|
International
|
(20,962
|
)
|
|
11,543
|
|
|
(32,505
|
)
|
|
(281.6
|
)
|
|||
Total income (loss) from operations
|
$
|
(307
|
)
|
|
$
|
(7,837
|
)
|
|
$
|
7,530
|
|
|
96.1
|
|
|
Three Months Ended September 30,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Other income (expense), net
|
$
|
(17,253
|
)
|
|
$
|
(4,860
|
)
|
|
$
|
(12,393
|
)
|
|
(255.0
|
)%
|
•
|
$6.0 million of interest expense primarily related to interest on our convertible notes. See Item 1, Note 5, Financing Arrangements, for additional information; and
|
•
|
$12.8 million in foreign currency losses, which primarily resulted from intercompany balances with our subsidiaries that are denominated in foreign currencies.
|
•
|
$5.7 million of interest expense primarily related to interest on our convertible notes. See Item 1, Note 5, Financing Arrangements, for additional information; and
|
•
|
$1.0 million in foreign currency losses, which primarily resulted from intercompany balances with our subsidiaries that are denominated in foreign currencies.
|
|
Nine Months Ended September 30,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Other income (expense), net
|
$
|
(92,602
|
)
|
|
$
|
(39,832
|
)
|
|
$
|
(52,770
|
)
|
|
(132.5
|
)%
|
•
|
$69.0 million of net losses on our fair value option investments. See Item 1, Note 3, Investments, for additional information;
|
•
|
$17.2 million of interest expense primarily related to interest on our convertible notes. See Item 1, Note 5, Financing Arrangements, for additional information; and
|
•
|
$11.9 million in foreign currency losses, which primarily resulted from intercompany balances with our subsidiaries that are denominated in foreign currencies.
|
•
|
$16.4 million of interest expense primarily related to interest on our convertible notes. See Item 1, Note 5, Financing Arrangements, for additional information;
|
•
|
$12.2 million in foreign currency losses, which primarily resulted from intercompany balances with our subsidiaries that are denominated in foreign currencies;
|
•
|
$10.2 million of impairments of minority investments. See Item 1, Note 3, Investments, for additional information; and
|
•
|
$8.3 million of losses on fair value option investments. See Item 1, Note 3, Investments, for additional information.
|
|
Three Months Ended September 30,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Provision (benefit) for income taxes
|
$
|
2,069
|
|
|
$
|
988
|
|
|
$
|
1,081
|
|
|
109.4
|
%
|
Effective tax rate
|
(16.4
|
)%
|
|
2.1
|
%
|
|
|
|
|
|
Nine Months Ended September 30,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Provision (benefit) for income taxes
|
$
|
591
|
|
|
$
|
205
|
|
|
$
|
386
|
|
|
188.3
|
%
|
Effective tax rate
|
(0.6
|
)%
|
|
(0.4
|
)%
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Income (loss) from continuing operations
|
$
|
(14,685
|
)
|
|
$
|
47,175
|
|
|
$
|
(93,500
|
)
|
|
$
|
(47,874
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|||||||
Stock-based compensation (1)
|
19,543
|
|
|
15,026
|
|
|
62,517
|
|
|
50,570
|
|
||||
Depreciation and amortization
|
25,873
|
|
|
28,685
|
|
|
81,405
|
|
|
87,300
|
|
||||
Acquisition-related expense (benefit), net
|
5
|
|
|
—
|
|
|
33
|
|
|
655
|
|
||||
Restructuring charges
|
(61
|
)
|
|
35
|
|
|
(175
|
)
|
|
(81
|
)
|
||||
IBM patent litigation
|
—
|
|
|
(40,400
|
)
|
|
—
|
|
|
34,600
|
|
||||
Other (income) expense, net
|
17,253
|
|
|
4,860
|
|
|
92,602
|
|
|
39,832
|
|
||||
Provision (benefit) for income taxes
|
2,069
|
|
|
988
|
|
|
591
|
|
|
205
|
|
||||
Total adjustments
|
64,682
|
|
|
9,194
|
|
|
236,973
|
|
|
213,081
|
|
||||
Adjusted EBITDA
|
$
|
49,997
|
|
|
$
|
56,369
|
|
|
$
|
143,473
|
|
|
$
|
165,207
|
|
(1)
|
Represents stock-based compensation expense recorded within Selling, general and administrative, Cost of revenue and Marketing.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Cash provided by (used in):
|
|
|
|
|
|
|
|
||||||||
Operating activities
|
$
|
18,584
|
|
|
$
|
(57,389
|
)
|
|
$
|
(130,118
|
)
|
|
$
|
(132,961
|
)
|
Investing activities
|
(19,541
|
)
|
|
(22,389
|
)
|
|
(54,891
|
)
|
|
(118,485
|
)
|
||||
Financing activities
|
(22,595
|
)
|
|
(9,720
|
)
|
|
(81,953
|
)
|
|
(49,348
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net cash provided by (used in) operating activities from continuing operations
|
$
|
18,584
|
|
|
$
|
(57,389
|
)
|
|
$
|
(130,118
|
)
|
|
$
|
(132,961
|
)
|
Purchases of property and equipment and capitalized software from continuing operations
|
(17,693
|
)
|
|
(16,094
|
)
|
|
(51,854
|
)
|
|
(53,611
|
)
|
||||
Free cash flow
|
$
|
891
|
|
|
$
|
(73,483
|
)
|
|
$
|
(181,972
|
)
|
|
$
|
(186,572
|
)
|
Date
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under Program
|
||||||
July 1-31, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
260,000,005
|
|
August 1-31, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
260,000,005
|
|
||
September 1-30, 2019
|
|
5,391,084
|
|
|
2.79
|
|
|
5,391,084
|
|
|
245,000,007
|
|
||
Total
|
|
5,391,084
|
|
|
$
|
2.79
|
|
|
5,391,084
|
|
|
$
|
245,000,007
|
|
Date
|
|
Total Number of Shares Purchased (1)
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under Program
|
|||||
July 1-31, 2019
|
|
158,105
|
|
|
$
|
2.99
|
|
|
—
|
|
|
—
|
|
August 1-31, 2019
|
|
78,698
|
|
|
2.41
|
|
|
—
|
|
|
—
|
|
|
September 1-30, 2019
|
|
496,458
|
|
|
2.79
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
733,261
|
|
|
$
|
2.79
|
|
|
—
|
|
|
—
|
|
(1)
|
Total number of shares delivered to us by employees to satisfy the mandatory tax withholding requirement upon vesting of stock-based compensation awards.
|
Exhibit
Number
|
|
Description
|
10.1**
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
101.INS ***
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
104 ***
|
|
Cover Page Interactive Data File
|
GROUPON, INC.
|
|||
By:
|
|
/s/ Melissa Thomas
|
|
|
|
Name:
|
Melissa Thomas
|
|
|
Title:
|
Interim Chief Financial Officer
|
1.
|
Definitions. As used in this Agreement, the following terms shall have the respective meanings set forth below:
|
A.
|
“Board” means the Board of Directors of the Company.
|
B.
|
“Cause” means:
|
i.
|
the Executive’s material failure to perform his or her reasonably assigned duties as an employee (other than a failure resulting from the Executive’s disability) after written notice of such failure from the Company describing the failure to perform such duties and a reasonable time to cure of at least thirty (30) days;
|
ii.
|
the Executive’s engaging in any intentional act of fraud, theft, dishonesty, or falsification with respect to the Company;
|
iii.
|
the Executive’s conviction (including a plea of guilty or nolo contendere) of (a) a felony, (b) a crime of moral turpitude, or (c) a criminal act that prevents the Executive from performing his or her duties with the Company;
|
iv.
|
the Executive engaging in gross misconduct or willfully violating the Company’s Code of Business Conduct or other material written policies of the Company, including without limitation policies relating to anti-harassment and hostile work environment, insider trading, conflicts of interest, or the treatment of confidential information where such conduct or violation is not cured, if able to be cured within the Company’s discretion, within ten (10) days of written notice thereof by the Company; or
|
v.
|
the Executive’s violation of any federal or state law or regulation applicable to the business of the Company.
|
C.
|
“Change in Control” means the occurrence of either of the following events:
|
i.
|
an Ownership Change Event or a series of related Ownership Change Events (collectively, a “Transaction”) in which the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding securities entitled to vote generally in the election of Board members or, in the case of an Ownership Change Event described in clause (iii) of the definition of Ownership Change Event, the entity
|
ii.
|
approval by the stockholders of a plan of complete liquidation or dissolution of the Company;
|
D.
|
“Change in Control Termination” means an Eligible Termination that occurs during the 24 month period beginning on the date of a Change in Control. A Change in Control Termination also includes an Eligible Termination in circumstances where (i) a Change in Control occurs, and (ii) the Executive’s employment with the Company was terminated in an Eligible Termination without Cause within six (6) months prior to the date on which the Change in Control occurs.
|
E.
|
“Code” means the Internal Revenue Code of 1986, as amended.
|
F.
|
“Company” means Groupon, Inc., a Delaware corporation.
|
G.
|
“Covered Equity-Based Award” means a Stock Option, restricted stock unit, performance share unit, or other equity-based award granted under the Incentive Plan; provided, however, that “Covered Equity-Based Award” will not include [As applicable: the Special Stock Price PSUs] or any [other] awards made under award agreements that expressly state that they are not subject to this Agreement.
|
H.
|
“Eligible Termination” means the Executive’s “separation from service” (within the meaning of Section 409A) with the Company and its subsidiaries that is (i) an involuntary termination of employment by the Company without Cause, or (ii) a resignation for Good Reason. An Eligible Termination does not include a termination of employment (a) by the Company for Cause, (b) by the Executive other than for Good Reason, (c) as a result of the Executive’s death, or (d) by the Company due to the Executive’s absence from the Executive’s duties with the Company on a full-time basis for at least 180 consecutive days as a result of the Executive’s incapacity due to physical or mental illness. An Eligible Termination also does not include a termination of employment occurring upon a sale of all or part of the business in which the Executive is employed, a merger or other combination, spin-off, reorganization or liquidation, dissolution or other winding up or other similar transaction involving the Company, in any such case where an offer of comparable employment is made to the Executive by the purchaser, acquirer or successor or surviving entity (including a third-party vendor) concurrently with his or her termination.
|
I.
|
“Good Reason” means, without the Executive’s express written consent, the occurrence of any of the following events:
|
i.
|
[For the Interim Chief Financial Officer only: other than in connection with Executive’s voluntary or involuntary relinquishment of the role of interim chief financial officer and resuming the role in which she only serves as chief accounting officer of the Company in connection with the appointment of a permanent chief financial officer of the Company (other than the Executive),] a material adverse change in the nature or scope of the Executive’s authority, powers, functions, duties, responsibilities, or reporting relationship
|
ii.
|
a material reduction by the Company in the Executive’s rate of annual base salary;
|
iii.
|
[For the Interim Chief Financial Officer only: other than the cessation of the monthly stipend awarded to the Executive upon her appointment as the interim chief financial officer of the Company in connection with the appointment of a permanent chief financial officer of the Company,] the failure of the Company to continue any material compensation plan in which the Executive is participating, unless the Executive is permitted to participate in other plans providing the Executive with substantially comparable compensation-related benefits, or the taking of any action by the Company which would adversely affect the Executive’s participation in or materially reduce the Executive’s compensation-related benefits under any such plan;
|
iv.
|
a change in the Executive’s primary employment location to a location that is more than 50 miles from the primary location of the Executive’s employment immediately before such change; or
|
v.
|
the failure of the Company to obtain from any successor or transferee of the Company an express written and unconditional assumption of the Company’s obligations under this Agreement, as further described in Section 5.C(ii) of this Agreement.
|
J.
|
“Incentive Plan” means the Groupon, Inc. 2011 Incentive Plan, as amended from time to time.
|
K.
|
“Incumbent Director” means a director who either (i) is a member of the Board as of the Effective Date or (ii) is elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but excluding a director who was elected or nominated in connection with an actual or threatened proxy contest relating to the election of directors of the Company).
|
L.
|
“Multi-Year PSUs” means Covered Equity-Based Awards that are performance based awards granted with a one-year performance period and subsequent service requirements.
|
M.
|
“Ownership Change Event” means the occurrence of any of the following with respect to the Company: (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of securities of the Company representing more than fifty percent (50%) of the total combined voting power of the Company’s then‑outstanding securities entitled to vote generally in the election of Board members; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company (other than a sale, exchange or transfer to one or more subsidiaries).
|
N.
|
“Section 409A” means Section 409A of the Code and the regulations thereunder.
|
O.
|
“Single-Year PSUs” means Covered Equity-Based Awards that are performance based awards granted with a one-year performance period and no subsequent service requirement.
|
P.
|
[“Special Stock Price PSU Agreement” means an agreement pursuant to which Special Stock Price PSUs are granted, substantially the form attached hereto as Attachment B.]
|
Q.
|
[“Special Stock Price PSUs” means the 2019 Supplemental PSU Awards granted by the Company for which the relevant performance condition consists of achievement of a specified average closing price per share for any period of 30 consecutive trading days, which shall not be subject to this Agreement other than (i) with respect to certain defined terms as incorporated into the Special Stock Price PSU Agreement and (ii) Section 2.D(iii) of this Agreement.]
|
R.
|
“Stock Option” means a stock option granted under the Incentive Plan.
|
S.
|
“Termination Date” means the date on which an Executive experiences an Eligible Termination.
|
T.
|
“Time-Based Awards” means Covered Equity-Based Awards whose vesting is based solely on continued service over time (e.g., restricted stock units).
|
2.
|
Severance Benefits.
|
A.
|
Eligibility. The provisions of this Section 2 apply only if (i) the Executive experiences an Eligible Termination, (ii) the Executive executes and remains in compliance with the Confidentiality, Intellectual Property and Restrictive Covenants Agreement (the “CIPRA”) or an equivalent agreement that includes Non-Compete (excluding California Executives), Nonsolicitation and No-Hire clauses and (iii) the Executive executes a standard mutual separation agreement containing, among other provisions, a release of claims in substantially the form attached hereto as Attachment A (a “Release”) within the time period required under such standard mutual separation agreement not to exceed forty-five (45) days following the Termination Date, and such Release becomes effective and no longer subject to revocation within 60 days of the Termination Date.
|
B.
|
Basic Cash Severance Payment. Upon an Eligible Termination, the Company shall pay the Executive in a lump sum on the 60th day after the Termination Date (the “Payment Date”) an amount equal to twelve (12) months of the Executive’s annual base salary from the Company and its subsidiaries to the extent not theretofore paid [For the Interim Chief Financial Officer only:, as well as an amount equal to twelve (12) months of the monthly stipend awarded to the Executive upon her appointment as interim chief financial officer of the Company, to the extent such monthly stipend is still in effect on the Termination Date.] Upon a Change in Control Termination, the Company shall pay the Executive, in addition to the payment provided for in the preceding sentence, in a lump sum on the Payment Date, or, if later, on the 20th day after the date on which a Change in Control occurs, an amount equal to the Executive’s target annual cash incentive award for the year of such Change in Control Termination (to the extent not theretofore paid) multiplied by a fraction, the numerator of which is the number of days of Executive’s employment during the calendar year of such Change in Control Termination, and the denominator of which is the number of days in the calendar year in which the Change in Control Termination occurs.
|
C.
|
Additional Cash Severance Payment. If on the Payment Date the Executive is enrolled in continuation coverage under Part 6 of Subtitle B of Title I of the Employee Retirement Income Security Act of 1974, as amended (“COBRA”) under the Company’s group health plan, the Company shall pay the Executive in a lump sum on the Payment Date an amount equal to the monthly COBRA premium applicable to the Executive as of the Payment Date multiplied by the number of months for which the Executive is entitled to payment under Section 2.B above. Notwithstanding the foregoing, this Section 2.C shall cease to apply as of the effective date of any regulation or other guidance under which payment of such component would be deemed to violate any nondiscrimination requirements under the Patient Protection and Affordable Care Act.
|
D.
|
Equity Award Vesting Acceleration.
|
i.
|
Upon an Eligible Termination that is not a Change in Control Termination, the vesting and exercisability of the Executive’s Covered Equity-Based Awards shall be accelerated to the extent provided in Exhibit 1.
|
ii.
|
Upon a Change in Control Termination, the vesting and exercisability of the Executive’s Covered Equity-Based Awards shall be accelerated to the extent provided in Exhibit 2.
|
iii.
|
[If the Executive is entitled to vesting of Special Stock Price PSUs following certain qualifying terminations of employment as set forth in Sections 7 and 8(d) of the Special Stock Price PSU Agreement, then the terms of the Special Stock Price PSU Agreement shall exclusively govern the treatment thereof; provided, however, that, notwithstanding anything in the Special Stock Price PSU Agreement to the contrary, the Executive must execute a standard mutual separation agreement containing, among other provisions, a Release, within the time period required under such standard mutual separation agreement not to exceed forty-five (45) days following the applicable Vesting Date (as defined in the Special Stock Price PSU Agreement), and such Release must become effective and no longer subject to revocation within 60 days of such Vesting Date in order for the Executive to receive any settlement in respect of such Special Stock Price PSUs under the Special Stock Price PSU Agreement.]
|
3.
|
Additional Change in Control Provisions.
|
A.
|
Obligations of the Executive. The Executive agrees that in the event any person or group attempts a Change in Control, the Executive shall not voluntarily leave the employ of the Company without Good Reason (i) until such attempted Change in Control terminates or (ii) if a Change in Control shall occur, until ninety (90) days following such Change in Control.
|
B.
|
Section 4999 Excise Tax.
|
i.
|
Anything in this Agreement to the contrary notwithstanding, in the event it is determined that (a) any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Company (or any of its subsidiaries) or any entity that effectuates a Change in Control (or any of its affiliated entities) to or for the benefit of the Executive (whether pursuant to this Agreement or otherwise) (the “Payments”) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), and (b) the reduction of the amounts payable to the Executive under this Agreement to the maximum amount that could be paid to the Executive without giving rise to the Excise Tax (the “Safe Harbor Cap”) would provide the Executive with a greater after-tax amount than if such amounts were not reduced, then the amounts payable to the Executive under this Agreement shall be reduced (but not below zero) to the Safe Harbor Cap. The reduction of the amounts payable hereunder, if applicable, shall be made to the extent necessary in the following order: (1) the acceleration of vesting of stock options with an exercise price that exceeds the then fair market value of the stock subject to the award and of other equity awards, provided that such the value of such acceleration is not permitted to be determined under Treasury Regulation Section 1.280G-1, Q/A-24(c); (2) the payment under Sections 2.B and 2.C; (3) any equity awards accelerated pursuant to Section 2.D or otherwise valued at full value, provided that the value of such acceleration is not permitted to be determined under Treasury Regulation Section 1.280G-1, Q/A-24(c); (4) the acceleration of vesting of stock options with an exercise price that exceeds the then fair market value of the stock subject to the award and other equity awards, provided that the value of such acceleration is permitted to be determined under Treasury Regulation Section 1.280G-1, Q/A-24(c); and (5) the acceleration of vesting of all other stock options and equity awards on a basis resulting in the highest amount retained by the Executive. For purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a greater after-tax result to the Executive, no amounts payable under this Agreement shall be reduced pursuant to this provision.
|
ii.
|
All determinations required to be made under this Section 3.B shall be made by the public accounting firm that is retained by the Company as of the date immediately prior to the Change in Control (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Company or the Executive that there has been a Payment, or such earlier time as is requested by the Company. Notwithstanding the foregoing, in the event (a) the Board shall determine prior to the Change in Control that the Accounting Firm is precluded from
|
iii.
|
If it is established pursuant to a final determination of a court or an Internal Revenue Service (the “IRS”) proceeding which has been finally and conclusively resolved, that Payments have been made to, or provided for the benefit of, the Executive by the Company which are in excess of the limitations provided in this Section (referred to hereinafter as an “Excess Payment”), the Executive shall repay the Excess Payment to the Company on demand, together with interest on the Excess Payment at the applicable federal rate (as defined in Section 1274(d) of the Code) from the date of the Executive’s receipt of such Excess Payment until the date of such repayment. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the determination, it is possible that Payments which will not have been made by the Company should have been made (an “Underpayment”), consistent with the calculations required to be made under this Section. In the event that it is determined (a) by the Accounting Firm, the Company (which shall include the position taken by the Company, or together with its consolidated group, on its federal income tax return) or the IRS or (b) pursuant to a determination by a court, that an Underpayment has occurred, the Company shall pay an amount equal to such Underpayment to the Executive within ten (10) days of such determination together with interest on such amount at the applicable federal rate from the date such amount would have been paid to the Executive until the date of payment. The Executive shall cooperate, to the extent the Executive’s expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the IRS in connection with the Excise Tax or the determination of the Excess Payment. Notwithstanding the foregoing, in the event that amounts payable under this Agreement were reduced pursuant to Section 3.B(i) and the present value of any Payment is subsequently re-determined by the Accounting Firm within the context of Treasury Regulation Section 1.280G-1 Q/A 33 that reduces the value of the Payment, the Company shall promptly pay to Executive any amounts payable under this Agreement that were not previously paid solely as a result of Section 5.A, subject to the Safe Harbor Cap.
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iv.
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A payment or reimbursement of expenses described in this Section 3 shall be made promptly and in no event later than December 31 of the year following the year in which such expenses were incurred, any reimbursement of expenses incurred due to a tax audit or litigation shall be made no later than the end of the calendar year immediately following the calendar year in which the taxes that are the subject of the audit or litigation are remitted to the taxing authority, or, if no taxes are to be remitted, the end of the calendar year following the calendar year in which the audit or litigation is completed, and the amount of such expenses eligible for payment or reimbursement in any year shall not affect the amount of such expenses eligible for payment or reimbursement in any other year nor shall such right to payment or reimbursement be subject to liquidation or exchange for another benefit.
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4.
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Section 409A.
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A.
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In General. The parties intend that this Agreement and the benefits provided hereunder be interpreted and construed to comply with Section 409A to the extent applicable thereto. Notwithstanding any provision of this Agreement to the contrary, this Agreement shall be interpreted and construed consistent with this intent, provided that the Company shall not be required to assume any increased economic burden in connection therewith. Although the Company intends to administer this Agreement so that it will comply with the requirements of Section 409A, the Company does not represent or warrant that this Agreement will comply with Section 409A or any other provision of federal, state, local or non-United States law.
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B.
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Prohibition on Acceleration of Payments. The time or schedule of any payment or amount scheduled to be paid pursuant to the terms of this Agreement, or pursuant to the terms of any other employment agreement or compensation arrangement entered into between the Executive and the Company or any of its subsidiaries, may not be accelerated hereunder, or under any such other employment agreement or other compensation arrangement, except as permitted under Section 409A.
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C.
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Delay Period. In the event that any payment or distribution or portion of any payment or distribution to be made to the Executive hereunder cannot be characterized as a “short-term deferral” for purposes of Section 409A and is not otherwise exempt from the provisions of Section 409A, and the Executive is determined to be a “specified employee” under Section 409A, such portion of the payment shall be delayed until the earlier to occur of the Executive’s death or the date that is six (6) months after the Executive’s termination of employment with the Company and its subsidiaries (the “Delay Period”). Upon the expiration of the Delay Period, the payments delayed pursuant to this Section 4.C shall be paid to the Executive in a lump sum, and any remaining payments due under this Agreement shall be payable in accordance with their original payment schedule.
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5.
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Miscellaneous.
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A.
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Withholding Taxes. The Company may withhold from all payments due to the Executive hereunder all taxes which, by applicable federal, state, local or other law, the Company is required to withhold therefrom.
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B.
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Scope of Agreement. Nothing in this Agreement shall be deemed to entitle the Executive to continued employment with the Company or its subsidiaries.
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C.
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Successors; Binding Agreement.
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i.
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This Agreement shall not be terminated by any merger or consolidation of the Company whereby the Company is or is not the surviving or resulting corporation or as a result of any transfer of all or substantially all of the assets of the Company. In the event of any such merger, consolidation or transfer of assets, the provisions of this Agreement shall be binding upon the surviving or resulting corporation or the person or entity to which such assets are transferred.
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ii.
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The Company agrees that concurrently with any merger, consolidation or transfer of assets referred to in Section 5.C(i), it will cause any successor or transferee unconditionally to assume, by written instrument delivered to the Executive, all of the obligations of the Company hereunder.
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iii.
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This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amounts would be payable to the Executive hereunder had the Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to such person or persons appointed in writing by the Executive to receive such amounts or, if no person is so appointed, to the Executive’s estate.
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D.
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Notices.
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i.
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For purposes of this Agreement, all notices and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given when delivered or five (5) days after deposit in the United States mail, certified and return receipt requested, postage prepaid, addressed (a) if to the Executive, to the last known residential address on file for the Executive with the Company, and if to the Company, [For the applicable executives: attention General Counsel, with a copy to the Secretary] [For the General Counsel only:
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ii.
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A written notice of the Executive’s Termination Date by the Company or the Executive, as the case may be, to the other, shall (a) indicate the specific termination provision in this Agreement relied upon, (b) to the extent applicable, set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (c) specify the Termination Date (which date shall be not less than fifteen (15) days after the giving of such notice). The failure by the Executive or the Company to set forth in such notice any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.
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E.
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Governing Law; Validity. The interpretation, construction and performance of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Illinois without regard to the principle of conflicts of laws. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which other provisions shall remain in full force and effect.
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F.
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Counterparts. This Agreement may be executed in two counterparts, each of which shall be deemed to be an original and both of which together shall constitute one and the same instrument.
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G.
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Entire Agreement. Except to the extent expressly provided herein, this Agreement constitutes the entire understanding between the parties with respect to the Executive’s severance pay and benefits in the event of a termination of the Executive’s employment with the Company and supersedes any other agreement, whether written or unwritten, with respect thereto.
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6.
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Full Settlement; Resolution of Disputes.
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A.
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The Company’s obligation to make any payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others.
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B.
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If there shall be any dispute between the Company and the Executive in the event of any termination of the Executive’s employment, then unless and until there is a final, nonappealable judgment by a court of competent jurisdiction declaring that such termination was for Cause or that the Company is not otherwise obligated to pay any amount or provide any benefit to the Executive under Section 2, the Company shall pay all amounts, and provide all benefits, to the Executive that the Company would be required to pay or provide pursuant to Section 2 as though such termination were by the Company without Cause or by the Executive with Good Reason; provided, however, that the Company shall not be required to pay any disputed amounts pursuant to this Section 6.B except upon receipt of an undertaking by or on behalf of the Executive to repay all such amounts to which the Executive is ultimately adjudged by such court not to be entitled.
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C.
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If any contest or dispute shall arise under this Agreement involving termination of the Executive’s employment with the Company or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, the Company shall reimburse the Executive, on a current basis, for all legal fees and expenses, if any, incurred by the Executive in connection with such contest or dispute; provided, however, that in the event the resolution of any such contest or dispute includes a finding denying, in total, the Executive’s claims in such contest or dispute, the Executive shall be required to reimburse the Company, over a period of twelve (12) months from the date of such resolution, for all sums advanced to the Executive pursuant to this Section 6.C. Payment or reimbursement of expenses described in this Section 6.C shall be made promptly and in no event later than December 31 of the year following the year in which such expenses were incurred, and the amount of such expenses eligible for payment or reimbursement in any year shall not affect the amount of such expenses eligible for payment or reimbursement in any other year nor shall the right to payment or reimbursement be subject to liquidation or exchange for another benefit.
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7.
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Agreement Modification, Waiver, or Termination.
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A.
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Subject to Section 7.B, no provision of this Agreement may be modified or waived unless such modification or waiver is agreed to in writing and signed by the Executive and by a duly authorized officer of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. Failure by the Executive or the Company to insist upon strict compliance with any provision of this Agreement or to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
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B.
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The Company shall have the right prior to a Change in Control, in its sole discretion, pursuant to action by the Board, to approve the termination of this Agreement, which termination shall not become effective until the date fixed by the Board for such termination, which date shall be at least 120 days after notice thereof is given by the Company to the Executive in accordance with Section 5.D; provided, however, that no such action shall be taken by the Board during any period of time when the Board has knowledge that any person has taken steps reasonably calculated to effect a Change in Control until, in the opinion of the Board, such person has abandoned or terminated its efforts to effect a Change in Control; and provided, further, that in no event shall this Agreement be terminated during the 24-month period commencing on the date of a Change in Control.
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2.
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Each of the Executive’s vested Stock Options shall remain exercisable following the Termination Date until the expiration of the term of the Stock Option (as set forth in the Stock Option agreement).
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3.
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Notwithstanding anything to the contrary in this Exhibit 1, the timing of payment of any Covered Equity-Based Award that provides for the “deferral of compensation” (as such term is defined under Section 409A) may not be accelerated except as otherwise permitted under Section 409A.
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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