Attached files
| file | filename |
|---|---|
| 10-Q - 10-Q - Fidelity National Financial, Inc. | fnf09301610q.htm |
| EX-99.1 - EXHIBIT 99.1 - Fidelity National Financial, Inc. | exhibit991fnfgroup3q2016.htm |
| EX-32.2 - EXHIBIT 32.2 - Fidelity National Financial, Inc. | exhibit3223q2016.htm |
| EX-32.1 - EXHIBIT 32.1 - Fidelity National Financial, Inc. | exhibit3213q2016.htm |
| EX-31.2 - EXHIBIT 31.2 - Fidelity National Financial, Inc. | exhibit3123q2016.htm |
| EX-31.1 - EXHIBIT 31.1 - Fidelity National Financial, Inc. | exhibit3113q2016.htm |
EXHIBIT 99.2
Unaudited Attributed Financial Information for Fidelity National Financial Ventures Group Tracking Stock
The following tables present our assets, liabilities, revenue, expenses and cash flows that are attributed to our Fidelity National Financial Ventures business (“we,” “our,” "FNFV Group," or “FNFV”). The financial information in this Exhibit should be read in conjunction with our unaudited condensed consolidated financial statements for the period ended September 30, 2016 included in this Quarterly Report on Form 10-Q.
FNFV Group common stock is intended to reflect the separate performance of our FNFV Group. We own majority and minority equity investment stakes in a number of entities, including American Blue Ribbon Holdings, LLC ("ABRH"), Ceridian HCM, Inc. ("Ceridian"), and Digital Insurance, Inc. ("Digital Insurance").
FNFV Group is comprised of two operating segments as follows:
• | Restaurant Group. This segment consists of the operations of ABRH, in which we hold a 55% ownership interest. ABRH and its affiliates are the owners and operators of the O'Charley's, Ninety Nine Restaurants, Village Inn, Bakers Square, and Legendary Baking restaurant and food service concepts. This segment also included the results of operations of J. Alexander's, Inc. ("J. Alexander's") through the date it was distributed to FNFV shareholders, September 28, 2015, and the Max & Erma's concept, which was sold pursuant to an Asset Purchase Agreement on January 25, 2016. |
• | FNFV Corporate and Other. This segment primarily consists of our share in the operations of certain equity investments, including Ceridian, as well as consolidated investments, including Digital Insurance, in which we own 96%, and other smaller operations which are not title related. |
We have adopted certain expense allocation policies, each of which are reflected in the attributed financial information of the FNF Group (see Exhibit 99.1) and the FNFV Group. In general, corporate overhead is allocated to each group based upon the use of services by that group where practicable. Corporate overhead primarily includes costs of personnel and employee benefits, legal, accounting and auditing, insurance, investor relations and stockholder services and services related to FNF’s board of directors. We allocate in a similar manner a portion of costs of administrative shared services, such as information technology services. Where determinations based on use alone are not practical, we use other methods and criteria that we believe are equitable and that provide a reasonable estimate of the cost attributable to each group.
Notwithstanding the following attribution of assets, liabilities, revenue, expenses and cash flows to FNFV, Fidelity National Financial, Inc.'s ("FNF, Inc.") tracking stock structure does not affect the ownership or the respective legal title to FNF, Inc.'s assets or responsibility for FNF, Inc.'s liabilities. FNF, Inc. and its subsidiaries are each responsible for their respective liabilities. Holders of FNFV Group common stock are subject to risks associated with an investment in FNF, Inc. and all of its businesses, assets and liabilities. The issuance of FNFV Group common stock does not affect the rights of FNF, Inc.'s creditors or creditors of its subsidiaries. See "Item 1A. Risk Factors - Risks Relating to the Ownership of Our FNFV Group Common Stock due to our Tracking Stock Capitalization" in our Annual Report on Form 10-K for the year ended December 31, 2015 for further discussion of risks associated with our tracking stock structure.
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FIDELITY NATIONAL FINANCIAL VENTURES GROUP
Balance Sheet Information
(In millions, except share data)
September 30, 2016 | December 31, 2015 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Investments: | |||||||
Fixed maturity securities available for sale, at fair value | $ | 22 | $ | — | |||
Equity securities available for sale, at fair value | 41 | 36 | |||||
Investments in unconsolidated affiliates | 458 | 396 | |||||
Other long-term investments | 23 | 27 | |||||
Short-term investments | 95 | 244 | |||||
Total investments | 639 | 703 | |||||
Cash and cash equivalents | 18 | 31 | |||||
Trade and notes receivables, net of allowance | 46 | 43 | |||||
Goodwill | 196 | 188 | |||||
Prepaid expenses and other assets | 61 | 64 | |||||
Capitalized software, net | 12 | 11 | |||||
Other intangible assets, net | 178 | 166 | |||||
Property and equipment, net | 252 | 233 | |||||
Deferred tax asset | 88 | 75 | |||||
Total assets | $ | 1,490 | $ | 1,514 | |||
LIABILITIES AND EQUITY | |||||||
Liabilities: | |||||||
Accounts payable and other accrued liabilities | $ | 180 | $ | 191 | |||
Income taxes payable | 14 | 6 | |||||
Deferred revenue | 12 | 24 | |||||
Notes payable | 227 | 200 | |||||
Due to affiliates | 17 | 10 | |||||
Total liabilities | 450 | 431 | |||||
Equity: | |||||||
FNFV Group common stock, $0.0001 par value; authorized 113,000,000 shares as of September 30, 2016 and December 31, 2015; outstanding of 66,636,822 and 72,217,882 as of September 30, 2016 and December 31, 2015, respectively, and issued of 80,581,675 and 80,581,466 as of September 30, 2016 and December 31, 2015, respectively | — | — | |||||
Additional paid-in capital | 1,161 | 1,156 | |||||
Retained earnings (deficit) | 1 | (3 | ) | ||||
Accumulated other comprehensive loss | (69 | ) | (76 | ) | |||
Less: treasury stock, 13,944,853 and 8,363,584 shares as of September 30, 2016 and December 31, 2015, respectively | (170 | ) | (108 | ) | |||
Total Fidelity National Financial Ventures shareholders’ equity | 923 | 969 | |||||
Noncontrolling interests | 117 | 114 | |||||
Total equity | 1,040 | 1,083 | |||||
Total liabilities and equity | $ | 1,490 | $ | 1,514 | |||
See Notes to Unaudited Attributed Financial Information for FNFV
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FIDELITY NATIONAL FINANCIAL VENTURES GROUP
Statements of Operations Information
(In millions, except per share data)
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
Revenues: | |||||||||||||||
Operating revenue | $ | 319 | $ | 378 | $ | 982 | $ | 1,256 | |||||||
Interest and investment income | 1 | 1 | 3 | 2 | |||||||||||
Realized gains and losses, net | (1 | ) | (10 | ) | 11 | (11 | ) | ||||||||
Total revenues | 319 | 369 | 996 | 1,247 | |||||||||||
Expenses: | |||||||||||||||
Personnel costs | 42 | 39 | 120 | 115 | |||||||||||
Other operating expenses | 25 | 24 | 80 | 147 | |||||||||||
Cost of restaurant revenue | 237 | 302 | 727 | 921 | |||||||||||
Depreciation and amortization | 15 | 17 | 45 | 51 | |||||||||||
Interest expense | 4 | 3 | 8 | 6 | |||||||||||
Total expenses | 323 | 385 | 980 | 1,240 | |||||||||||
(Loss) earnings from continuing operations before income taxes and equity in losses of unconsolidated affiliates | (4 | ) | (16 | ) | 16 | 7 | |||||||||
Income tax benefit | (7 | ) | (14 | ) | (5 | ) | (18 | ) | |||||||
Earnings (loss) from continuing operations before equity in losses of unconsolidated affiliates | 3 | (2 | ) | 21 | 25 | ||||||||||
Equity in losses of unconsolidated affiliates | (11 | ) | (21 | ) | (16 | ) | (20 | ) | |||||||
Net (loss) earnings | (8 | ) | (23 | ) | 5 | 5 | |||||||||
Less: Net (loss) earnings attributable to non-controlling interests | (1 | ) | (5 | ) | 1 | 13 | |||||||||
Net (loss) earnings attributable to FNFV Group common shareholders | $ | (7 | ) | $ | (18 | ) | $ | 4 | $ | (8 | ) | ||||
Earnings Per Share | |||||||||||||||
Basic | |||||||||||||||
Net (loss) earnings per share from continuing operations attributable to FNFV Group common shareholders | $ | (0.11 | ) | $ | (0.24 | ) | $ | 0.06 | $ | (0.10 | ) | ||||
Diluted | |||||||||||||||
Net (loss) earnings per share attributable to FNFV Group common shareholders | $ | (0.11 | ) | $ | (0.24 | ) | $ | 0.06 | $ | (0.10 | ) | ||||
Weighted average shares outstanding FNFV Group common stock, basic basis | 66 | 76 | 68 | 81 | |||||||||||
Weighted average shares outstanding FNFV Group common stock, diluted basis | 69 | 78 | 70 | 84 | |||||||||||
See Notes to Unaudited Attributed Financial Information for FNFV
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FIDELITY NATIONAL FINANCIAL VENTURES GROUP
Statement of Cash Flows Information
(In millions)
Nine months ended September 30, | |||||||
2016 | 2015 | ||||||
(Unaudited) | |||||||
Cash flows from operating activities: | |||||||
Net earnings | $ | 5 | $ | 5 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 45 | 51 | |||||
Equity in losses of unconsolidated affiliates | 16 | 20 | |||||
(Gain) loss on sales of investments and other assets, net | (11 | ) | 1 | ||||
Gain on sale of Cascade Timberlands | — | (12 | ) | ||||
Impairment of assets | — | 10 | |||||
Stock-based compensation cost | 5 | 7 | |||||
Changes in assets and liabilities, net of effects from acquisitions: | |||||||
Net (increase) decrease in trade receivables | (1 | ) | 5 | ||||
Net decrease in prepaid expenses and other assets | 3 | — | |||||
Net decrease in accounts payable, accrued liabilities, deferred revenue and other | (24 | ) | (40 | ) | |||
Net change in amount due to affiliates | 7 | 7 | |||||
Net change in income taxes | (9 | ) | (47 | ) | |||
Net cash provided by operating activities | 36 | 7 | |||||
Cash flows from investing activities: | |||||||
Proceeds from the sale of cost method and other investments | 36 | 6 | |||||
Additions to property and equipment and capitalized software | (44 | ) | (45 | ) | |||
Contributions to investments in unconsolidated affiliates | (67 | ) | (5 | ) | |||
Net proceeds from (purchases of) short-term investment securities | 149 | (8 | ) | ||||
Purchases of investment securities available for sale | (37 | ) | — | ||||
Distributions from investments in unconsolidated affiliates | 5 | 148 | |||||
Net other investing activities | (1 | ) | (4 | ) | |||
Acquisition of Compass/Prospective, net of cash acquired | — | (19 | ) | ||||
Proceeds from sale of Cascade Timberlands | — | 56 | |||||
Other acquisitions/disposals of businesses, net of cash acquired | (53 | ) | (17 | ) | |||
Net cash (used in) provided by investing activities | (12 | ) | 112 | ||||
Cash flows from financing activities: | |||||||
Borrowings | 45 | 123 | |||||
Debt service payments | (18 | ) | (10 | ) | |||
Payment for withholding taxes on stock-based compensation for shares withheld from participants and in treasury | (2 | ) | — | ||||
Subsidiary dividends paid to non-controlling interest shareholders | (1 | ) | — | ||||
Equity and debt issuance costs | — | (1 | ) | ||||
Purchases of treasury stock | (61 | ) | (251 | ) | |||
Net cash used in financing activities | (37 | ) | (139 | ) | |||
Net decrease in cash and cash equivalents | (13 | ) | (20 | ) | |||
Cash and cash equivalents at beginning of period | 31 | 39 | |||||
Cash and cash equivalents at end of period | $ | 18 | $ | 19 | |||
See Notes to Unaudited Attributed Financial Information for FNFV
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Notes to Unaudited Attributed Financial Information for Fidelity National Financial Ventures Group
Period Ended September 30, 2016
(unaudited)
Note A. Basis of Presentation
Description of the Business
Through our FNFV group, we own majority and minority equity investment stakes in a number of entities, including American Blue Ribbon Holdings, LLC ("ABRH"), Ceridian HCM, Inc. ("Ceridian") and Digital Insurance, Inc. ("Digital Insurance") and Del Frisco's Restaurant Group ("Del Frisco's", NYSE: DFRG).
Recent Developments
On May 2, 2016, we purchased certain shares of common and preferred stock of Ceridian Holding, LLC, the ultimate parent of Ceridian, from third-party minority interest holders for $17 million. As a result of this purchase, our ownership of Ceridian increased from 32% to 33%.
On March 30, 2016, Ceridian HCM Holding, Inc., a wholly-owned subsidiary of Ceridian, completed its offering (the "Offering") of senior convertible preferred shares for aggregate proceeds of $150 million. As part of the Offering, FNF purchased a number of shares equal to its pro-rata ownership in Ceridian for $47 million. FNF's ownership percentage in Ceridian did not change as a result of the transaction.
On February 18, 2016 our Board of Directors approved a new FNFV Group three-year stock repurchase program, effective March 1, 2016, under which we may repurchase up to 15 million shares of FNFV Group common stock. Purchases may be made from time to time by us in the open market at prevailing market prices or in privately negotiated transactions through February 28, 2019.
Earnings Per Share
Included in the calculation of diluted earnings per share are convertible senior notes (the “Notes”) issued on August 2, 2011 by Fidelity National Financial, Inc. Under the terms of the indenture, if converted, a portion of the settlement may include shares of FNFV common stock. As the debt is the obligation of FNF Group, if FNF were to settle a portion of the Notes with FNFV common stock, FNF Group would reimburse FNFV Group for the shares issued upon settlement.
Note B. Investments in Consolidated and Unconsolidated Affiliates
The following table provides information about our investments in consolidated and unconsolidated affiliates attributable to FNFV, including allocations of certain corporate assets and liabilities primarily related to taxes:
September 30, 2016 | December 31, 2015 | ||||||
Majority Owned Subsidiaries consolidated into the results of FNFV: | |||||||
American Blue Ribbon Holdings, LLC | $ | 173 | $ | 169 | |||
Digital Insurance, LLC | 75 | 73 | |||||
Minority Owned Subsidiaries or other ventures: | |||||||
Ceridian/Fleetcor (33% minority equity interest) | 432 | 363 | |||||
Del Frisco's Restaurant Group | 42 | 34 | |||||
Holding Company cash and short term investments | 99 | 245 | |||||
Financial investments | 26 | 44 | |||||
Real estate investments | 48 | 35 | |||||
Other ventures | 28 | 6 | |||||
Total FNFV Book Value | $ | 923 | $ | 969 | |||
Note C. FNFV Common Stock
FNFV Group common stock has voting and redemption rights. Holders of FNFV Group common stock are entitled to one vote for each share of such stock held. Holders of FNFV Group common stock will vote as one class with holders of FNF Group common stock on all matters that are submitted to a vote of its stockholders unless a separate class vote is required by the terms of the current charter or Delaware law. In connection with certain dispositions of FNFV Group assets, the FNF board of directors may determine to seek approval of the holders of FNFV common stock, voting together as a separate class, to avoid effecting a mandatory dividend, redemption or conversion under the restated charter.
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FNF may not redeem outstanding shares of FNFV Group common stock for shares of common stock of a subsidiary that holds assets and liabilities attributed to the FNFV Group unless its board of directors seeks and receives the approval to such redemption of holders of FNFV common stock, voting together as a separate class, and, if such subsidiary also holds assets and liabilities of the FNF Group, the approval of holders of FNF Group common stock to the corresponding FNF Group common stock redemption, with each affected group voting as a separate class. FNF can convert each share of FNFV Group common stock into a number of shares of the FNF Group common stock at a ratio that provides FNFV stockholders with the applicable Conversion Premium to which they are entitled.
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