UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| | | | | | | | |
| ☑ | | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 20212022
OR
| | | | | | | | |
| ☐ | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 1-38300
CANNAE HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
| | | | | | | | | | | | | | | | | | | | |
| Delaware | | 82-1273460 |
(State or other jurisdiction of
incorporation or organization) | | (I.R.S. Employer
Identification Number) |
| | | | | | | |
| 1701 Village Center Circle, | | Las Vegas, | | Nevada | | 89134 |
| (Address of principal executive offices) | | (Zip Code) |
(702) 323-7330
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
| Title of Each Class | | Trading Symbol | | Name of Each Exchange on Which Registered |
| Cannae Common Stock, $0.0001 par value | | CNNE | | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer," “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Large Accelerated Filer | ☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☑
As of July 31, 202129, 2022 there were 88,926,85780,140,436 shares of the Registrant's common stock outstanding.
FORM 10-Q
QUARTERLY REPORT
Quarter Ended June 30, 20212022
TABLE OF CONTENTS
Part I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
CANNAE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
| | | | June 30,
2021 | | December 31,
2020 | | June 30,
2022 | | December 31,
2021 |
| ASSETS | ASSETS | ASSETS |
| Current assets: | Current assets: | | | | Current assets: | | | |
| Cash and cash equivalents | Cash and cash equivalents | $ | 271.2 | | | $ | 724.7 | | Cash and cash equivalents | $ | 100.6 | | | $ | 85.8 | |
| Fixed maturity securities available for sale, at fair value | 0 | | | 35.2 | | |
| | Other current assets | Other current assets | 40.9 | | | 84.3 | | Other current assets | 28.0 | | | 35.8 | |
| | Assets held for sale - see Note J | 104.4 | | | 0 | | |
| | Total current assets | Total current assets | 416.5 | | | 844.2 | | Total current assets | 128.6 | | | 121.6 | |
| Investments in unconsolidated affiliates | | Investments in unconsolidated affiliates | 2,309.6 | | | 2,261.3 | |
| Equity securities, at fair value | Equity securities, at fair value | 1,169.1 | | | 1,799.1 | | Equity securities, at fair value | 282.5 | | | 1,045.1 | |
| Investments in unconsolidated affiliates | 1,988.7 | | | 1,453.0 | | |
| Lease assets | Lease assets | 178.1 | | | 202.3 | | Lease assets | 163.3 | | | 172.0 | |
| Property and equipment, net | Property and equipment, net | 102.5 | | | 145.8 | | Property and equipment, net | 91.6 | | | 100.6 | |
| Deferred tax asset | | Deferred tax asset | 85.8 | | | — | |
| Goodwill | | Goodwill | 53.4 | | | 53.4 | |
| Other intangible assets, net | Other intangible assets, net | 28.6 | | | 51.8 | | Other intangible assets, net | 25.2 | | | 26.9 | |
| Goodwill | 53.4 | | | 53.4 | | |
| | Other long term investments and non-current assets | Other long term investments and non-current assets | 502.7 | | | 63.8 | | Other long term investments and non-current assets | 48.1 | | | 108.7 | |
| | Total assets | Total assets | $ | 4,439.6 | | | $ | 4,613.4 | | Total assets | $ | 3,188.1 | | | $ | 3,889.6 | |
| LIABILITIES AND EQUITY | LIABILITIES AND EQUITY | LIABILITIES AND EQUITY |
| Current liabilities: | Current liabilities: | | | Current liabilities: | | |
| Accounts payable and other accrued liabilities, current | Accounts payable and other accrued liabilities, current | $ | 161.0 | | | $ | 93.2 | | Accounts payable and other accrued liabilities, current | $ | 76.9 | | | $ | 105.6 | |
| Income taxes payable | | Income taxes payable | 59.3 | | | 24.7 | |
| Lease liabilities, current | Lease liabilities, current | 23.5 | | | 26.2 | | Lease liabilities, current | 23.5 | | | 23.8 | |
| Income taxes payable | 48.9 | | | 47.4 | | |
| Deferred revenue | Deferred revenue | 15.6 | | | 23.9 | | Deferred revenue | 16.1 | | | 23.1 | |
| Notes payable, current | Notes payable, current | 26.8 | | | 11.3 | | Notes payable, current | 10.8 | | | 2.3 | |
| Liabilities held for sale - see Note J | 43.1 | | | 0 | | |
| | Total current liabilities | Total current liabilities | 318.9 | | | 202.0 | | Total current liabilities | 186.6 | | | 179.5 | |
| Lease liabilities, long term | Lease liabilities, long term | 171.2 | | | 195.6 | | Lease liabilities, long term | 156.5 | | | 166.1 | |
| Notes payable, long term | | Notes payable, long term | 95.9 | | | 14.1 | |
| Deferred tax liability | Deferred tax liability | 243.3 | | | 325.3 | | Deferred tax liability | — | | | 143.8 | |
| | Notes payable, long term | 24.7 | | | 52.2 | | |
| | Accounts payable and other accrued liabilities, long term | Accounts payable and other accrued liabilities, long term | 48.0 | | | 53.1 | | Accounts payable and other accrued liabilities, long term | 43.0 | | | 45.0 | |
| | Total liabilities | Total liabilities | 806.1 | | | 828.2 | | Total liabilities | 482.0 | | | 548.5 | |
| Commitments and contingencies - see Note G | 0 | | 0 | |
| Commitments and contingencies - see Note F | | Commitments and contingencies - see Note F | 0 | | 0 |
| Equity: | Equity: | | | Equity: | | |
| Cannae common stock, 0.0001 par value; authorized 115,000,000 shares as of June 30, 2021 and December 31, 2020; outstanding of 89,126,857 and 91,651,257 shares as of June 30, 2021 and December 31, 2020, respectively, and issued of 92,395,733 and 92,391,965 shares as of June 30, 2021 and December 31, 2020, respectively | 0 | | | 0 | | |
| Preferred stock, 0.0001 par value; authorized 10,000,000 shares; issued and outstanding, 0ne as of June 30, 2021 and December 31, 2020 | 0 | | | 0 | | |
| Cannae common stock, 0.0001 par value; authorized 115,000,000 shares as of June 30, 2022 and December 31, 2021; outstanding of 80,140,436 and 86,886,034 shares as of June 30, 2022 and December 31, 2021, respectively, and issued of 92,490,514 and 92,460,514 shares as of June 30, 2022 and December 31, 2021, respectively | | Cannae common stock, 0.0001 par value; authorized 115,000,000 shares as of June 30, 2022 and December 31, 2021; outstanding of 80,140,436 and 86,886,034 shares as of June 30, 2022 and December 31, 2021, respectively, and issued of 92,490,514 and 92,460,514 shares as of June 30, 2022 and December 31, 2021, respectively | — | | | — | |
| Preferred stock, 0.0001 par value; authorized 10,000,000 shares; issued and outstanding, none as of June 30, 2022 and December 31, 2021 | | Preferred stock, 0.0001 par value; authorized 10,000,000 shares; issued and outstanding, none as of June 30, 2022 and December 31, 2021 | — | | | — | |
| Retained earnings | Retained earnings | 1,873.1 | | | 1,929.8 | | Retained earnings | 1,131.9 | | | 1,642.8 | |
| Additional paid-in capital | Additional paid-in capital | 1,880.8 | | | 1,875.8 | | Additional paid-in capital | 1,913.5 | | | 1,888.3 | |
| Less: Treasury stock, 3,268,876 and 740,708 shares as of June 30, 2021 and December 31, 2020, respectively, at cost | (110.8) | | | (21.1) | | |
| Less: Treasury stock, 12,350,078 and 5,574,480 shares as of June 30, 2022 and December 31, 2021, respectively, at cost | | Less: Treasury stock, 12,350,078 and 5,574,480 shares as of June 30, 2022 and December 31, 2021, respectively, at cost | (327.2) | | | (188.6) | |
| Accumulated other comprehensive loss | Accumulated other comprehensive loss | (15.8) | | | (4.9) | | Accumulated other comprehensive loss | (14.8) | | | (7.2) | |
| Total Cannae shareholders' equity | Total Cannae shareholders' equity | 3,627.3 | | | 3,779.6 | | Total Cannae shareholders' equity | 2,703.4 | | | 3,335.3 | |
| Noncontrolling interests | Noncontrolling interests | 6.2 | | | 5.6 | | Noncontrolling interests | 2.7 | | | 5.8 | |
| Total equity | Total equity | 3,633.5 | | | 3,785.2 | | Total equity | 2,706.1 | | | 3,341.1 | |
| Total liabilities and equity | Total liabilities and equity | $ | 4,439.6 | | | $ | 4,613.4 | | Total liabilities and equity | $ | 3,188.1 | | | $ | 3,889.6 | |
See Notes to Condensed Consolidated Financial Statements
CANNAE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
| | | Three months ended June 30, | | Six months ended June 30, | | Three months ended June 30, | | Six months ended June 30, |
| | | 2021 | | 2020 | | 2021 | | 2020 | | 2022 | | 2021 | | 2022 | | 2021 |
| | Revenues: | Revenues: | | | | Revenues: | | | |
| Restaurant revenue | Restaurant revenue | $ | 189.9 | | | $ | 99.4 | | | $ | 357.2 | | | $ | 269.3 | | Restaurant revenue | $ | 166.7 | | | $ | 189.9 | | | $ | 328.8 | | | $ | 357.2 | |
| Other operating revenue | Other operating revenue | 12.5 | | | 3.2 | | | 17.1 | | | 6.3 | | Other operating revenue | 7.8 | | | 12.5 | | | 13.1 | | | 17.1 | |
| Total operating revenues | Total operating revenues | 202.4 | | | 102.6 | | | 374.3 | | | 275.6 | | Total operating revenues | 174.5 | | | 202.4 | | | 341.9 | | | 374.3 | |
| Operating expenses: | Operating expenses: | | Operating expenses: | |
| Cost of restaurant revenue | Cost of restaurant revenue | 160.3 | | | 100.8 | | | 308.0 | | | 253.9 | | Cost of restaurant revenue | 147.9 | | | 160.3 | | | 293.3 | | | 308.0 | |
| Personnel costs | Personnel costs | 24.4 | | | 23.3 | | | 36.4 | | | 52.5 | | Personnel costs | 16.0 | | | 24.4 | | | 37.1 | | | 36.4 | |
| Depreciation and amortization | Depreciation and amortization | 6.4 | | | 7.3 | | | 14.3 | | | 15.7 | | Depreciation and amortization | 6.2 | | | 6.4 | | | 12.0 | | | 14.3 | |
| Other operating expenses | Other operating expenses | 47.5 | | | 16.9 | | | 87.8 | | | 44.8 | | Other operating expenses | 31.4 | | | 47.5 | | | 102.1 | | | 87.8 | |
| Goodwill impairment | 0 | | | 0 | | | 0 | | | 7.7 | | |
| | Total operating expenses | Total operating expenses | 238.6 | | | 148.3 | | | 446.5 | | | 374.6 | | Total operating expenses | 201.5 | | | 238.6 | | | 444.5 | | | 446.5 | |
| Operating loss | Operating loss | (36.2) | | | (45.7) | | | (72.2) | | | (99.0) | | Operating loss | (27.0) | | | (36.2) | | | (102.6) | | | (72.2) | |
| Other income (expense): | Other income (expense): | | | | | | | | Other income (expense): | | | | | | | |
| Interest, investment and other income | Interest, investment and other income | 0.5 | | | 8.3 | | | 1.4 | | | 10.5 | | Interest, investment and other income | 0.1 | | | 0.5 | | | 0.1 | | | 1.4 | |
| Interest expense | Interest expense | (2.5) | | | (1.0) | | | (4.6) | | | (4.8) | | Interest expense | (2.6) | | | (2.5) | | | (5.0) | | | (4.6) | |
| Recognized gains (losses), net | 274.0 | | | 578.1 | | | (38.5) | | | 1,493.2 | | |
| Total other income (expense) | 272.0 | | | 585.4 | | | (41.7) | | | 1,498.9 | | |
| Earnings (loss) before income taxes and equity in (losses) earnings of unconsolidated affiliates | 235.8 | | | 539.7 | | | (113.9) | | | 1,399.9 | | |
| Income tax expense (benefit) | 49.3 | | | 131.1 | | | (12.7) | | | 300.5 | | |
| Earnings (loss) before equity in (losses) earnings of unconsolidated affiliates | 186.5 | | | 408.6 | | | (101.2) | | | 1,099.4 | | |
| Recognized (losses) gains, net | | Recognized (losses) gains, net | (193.6) | | | 274.0 | | | (458.8) | | | (38.5) | |
| Total other (expense) income | | Total other (expense) income | (196.1) | | | 272.0 | | | (463.7) | | | (41.7) | |
| (Loss) earnings before income taxes and equity in earnings of unconsolidated affiliates | | (Loss) earnings before income taxes and equity in earnings of unconsolidated affiliates | (223.1) | | | 235.8 | | | (566.3) | | | (113.9) | |
| Income tax (benefit) expense | | Income tax (benefit) expense | (66.5) | | | 49.3 | | | (128.4) | | | (12.7) | |
| (Loss) earnings before equity in (losses) earnings of unconsolidated affiliates | | (Loss) earnings before equity in (losses) earnings of unconsolidated affiliates | (156.6) | | | 186.5 | | | (437.9) | | | (101.2) | |
| Equity in (losses) earnings of unconsolidated affiliates | Equity in (losses) earnings of unconsolidated affiliates | (8.8) | | | 57.5 | | | 45.1 | | | 4.8 | | Equity in (losses) earnings of unconsolidated affiliates | (108.0) | | | (8.8) | | | (76.1) | | | 45.1 | |
| | Net earnings (loss) | 177.7 | | | 466.1 | | | (56.1) | | | 1,104.2 | | |
| Less: Net earnings (loss) attributable to non-controlling interests | 1.3 | | | (9.2) | | | 0.6 | | | (18.8) | | |
| Net earnings (loss) attributable to Cannae Holdings, Inc. common shareholders | $ | 176.4 | | | $ | 475.3 | | | $ | (56.7) | | | $ | 1,123.0 | | |
| Net (loss) earnings | | Net (loss) earnings | (264.6) | | | 177.7 | | | (514.0) | | | (56.1) | |
| Less: Net (loss) earnings attributable to noncontrolling interests | | Less: Net (loss) earnings attributable to noncontrolling interests | (1.3) | | | 1.3 | | | (3.1) | | | 0.6 | |
| Net (loss) earnings attributable to Cannae Holdings, Inc. common shareholders | | Net (loss) earnings attributable to Cannae Holdings, Inc. common shareholders | $ | (263.3) | | | $ | 176.4 | | | $ | (510.9) | | | $ | (56.7) | |
| | Earnings per share | Earnings per share | | | | | | | | Earnings per share | | | | | | | |
| Basic | Basic | | Basic | |
| | Net earnings (loss) per share | $ | 1.94 | | | $ | 5.88 | | | $ | (0.62) | | | $ | 14.06 | | |
| Net (loss) earnings per share | | Net (loss) earnings per share | $ | (3.15) | | | $ | 1.94 | | | $ | (6.03) | | | $ | (0.62) | |
| Diluted | Diluted | | | | | | | | Diluted | | | | | | | |
| | Net earnings (loss) per share | $ | 1.94 | | | $ | 5.87 | | | $ | (0.62) | | | $ | 14.00 | | |
| Net (loss) earnings per share | | Net (loss) earnings per share | $ | (3.15) | | | $ | 1.94 | | | $ | (6.03) | | | $ | (0.62) | |
| Weighted Average Shares Outstanding | Weighted Average Shares Outstanding | | | | | | | | Weighted Average Shares Outstanding | | | | | | | |
| Weighted average shares outstanding Cannae Holdings common stock, basic basis | Weighted average shares outstanding Cannae Holdings common stock, basic basis | 90.7 | | | 80.8 | | | 91.1 | | | 79.9 | | Weighted average shares outstanding Cannae Holdings common stock, basic basis | 83.5 | | | 90.7 | | | 84.7 | | | 91.1 | |
| Weighted average shares outstanding Cannae Holdings common stock, diluted basis | Weighted average shares outstanding Cannae Holdings common stock, diluted basis | 90.8 | | | 81.0 | | | 91.2 | | | 80.2 | | Weighted average shares outstanding Cannae Holdings common stock, diluted basis | 83.5 | | | 90.8 | | | 84.7 | | | 91.2 | |
See Notes to Condensed Consolidated Financial Statements
CANNAE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)LOSS
(In millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended June 30, | | Six months ended June 30, |
| | 2021 | | 2020 | | 2021 | | 2020 |
| Net earnings (loss) | $ | 177.7 | | | $ | 466.1 | | | $ | (56.1) | | | $ | 1,104.2 | |
| Other comprehensive (loss) earnings, net of tax: | | | | | | | |
| Unrealized gain on investments and other financial instruments, net (excluding investments in unconsolidated affiliates) (1) | 0 | | | 5.9 | | | 0.5 | | | 11.2 | |
| Unrealized gains (losses) of investments in unconsolidated affiliates (2) | 1.9 | | | (2.5) | | | (2.7) | | | (6.4) | |
| Reclassification adjustments for unrealized gains and losses on investments and other financial instruments, net of tax, (excluding investments in unconsolidated affiliates) included in net earnings (3) | (10.9) | | | 0 | | | (10.9) | | | 0 | |
| Reclassification adjustments for unrealized gains and losses of unconsolidated affiliates, net of tax, included in net earnings (4) | 1.9 | | | 0 | | | 2.2 | | | 44.3 | |
| Other comprehensive (loss) earnings | (7.1) | | | 3.4 | | | (10.9) | | | 49.1 | |
| Comprehensive earnings (loss) | 170.6 | | | 469.5 | | | (67.0) | | | 1,153.3 | |
| Less: Comprehensive earnings (loss) attributable to noncontrolling interests | 1.3 | | | (9.2) | | | 0.6 | | | (18.8) | |
| Comprehensive earnings (loss) attributable to Cannae Holdings, Inc. common shareholders | $ | 169.3 | | | $ | 478.7 | | | $ | (67.6) | | | $ | 1,172.1 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended June 30, | | Six months ended June 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| Net (loss) earnings | $ | (264.6) | | | $ | 177.7 | | | $ | (514.0) | | | $ | (56.1) | |
| Other comprehensive loss, net of tax: | | | | | | | |
| Unrealized gain on investments and other financial instruments, net (excluding investments in unconsolidated affiliates) (1) | — | | | — | | | — | | | 0.5 | |
| Unrealized (losses) gains of investments in unconsolidated affiliates (2) | (6.4) | | | 1.9 | | | (7.6) | | | (2.7) | |
| Reclassification adjustments for unrealized gains and losses on investments and other financial instruments, net of tax, (excluding investments in unconsolidated affiliates) included in net earnings (3) | — | | | (10.9) | | | — | | | (10.9) | |
| Reclassification adjustments for unrealized gains and losses of unconsolidated affiliates, net of tax, included in net earnings (4) | — | | | 1.9 | | | — | | | 2.2 | |
| Other comprehensive loss | (6.4) | | | (7.1) | | | (7.6) | | | (10.9) | |
| Comprehensive (loss) earnings | (271.0) | | | 170.6 | | | (521.6) | | | (67.0) | |
| Less: Comprehensive (loss) earnings attributable to noncontrolling interests | (1.3) | | | 1.3 | | | (3.1) | | | 0.6 | |
| Comprehensive (loss) earnings attributable to Cannae Holdings, Inc. common shareholders | $ | (269.7) | | | $ | 169.3 | | | $ | (518.5) | | | $ | (67.6) | |
(1)Net of income tax expense of $1.6$0.1 million for the six months ended June 30, 2021.
(2)Net of income tax (benefit) expense of $(1.7) million and $0.5 million for the three months ended June 30, 2020,2022 and $0.12021, respectively, and $(2.0) million and $3.0$(0.7) million for the six months ended June 30, 20212022 and 2020, respectively.
(2)Net of income tax expense (benefit) of $0.5 million and $(0.7) million for the three months ended June 30, 2021, and 2020, respectively, and $(0.7) million and $(1.7) million for the six months ended June 30, 2021 and 2020, respectively.
(3)Net of income tax benefit of $2.9 million for the three and six months ended June 30, 2021.
(4)Net of income tax expense of $0.5 million and $0.6 million for the three months ended June 30, 2021, and $0.6 million and $11.8 million for the six months ended June 30, 2021 and 2020, respectively.2021.
See Notes to Condensed Consolidated Financial Statements
CANNAE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In millions)
(Unaudited)
| | | | Common Stock | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comp (Loss) Earnings | | Treasury Stock | | Non-controlling
Interests | | Total
Equity | | Common Stock | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comp (Loss) Earnings | | Treasury Stock | | Non-controlling
Interests | | Total
Equity |
| | | Shares | | $ | | Shares | | $ | | | Shares | | $ | | Shares | | $ | |
| | | | | | | | | | | | | |
| Balance, March 31, 2020 | 79.7 | | | $ | 0 | | | $ | 1,406.1 | | | $ | 791.3 | | | $ | (0.2) | | | 0.6 | | | $ | (16.7) | | | $ | 24.5 | | | $ | 2,205.0 | | |
| Equity offering, net of offering costs | 12.7 | | | — | | | 455.0 | | | — | | | — | | | — | | | — | | | — | | | 455.0 | | |
| Balance, March 31, 2021 | | Balance, March 31, 2021 | 92.4 | | | $ | — | | | $ | 1,878.3 | | | $ | 1,696.7 | | | $ | (8.7) | | | 0.7 | | | $ | (21.1) | | | $ | 5.1 | | | $ | 3,550.3 | |
| | Other comprehensive earnings — unrealized gain on investments and other financial instruments, net of tax | — | | | — | | | — | | | — | | | 5.9 | | | — | | | — | | | — | | | 5.9 | | |
| Other comprehensive earnings — unrealized losses of investments in unconsolidated affiliates, net of tax | — | | | — | | | — | | | — | | | (2.5) | | | — | | | — | | | — | | | (2.5) | | |
| | Sale of noncontrolling interest in consolidated subsidiary | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 0.6 | | | 0.6 | | |
| Treasury stock repurchases | — | | | — | | | — | | | — | | | — | | | 0.1 | | | (3.6) | | | — | | | (3.6) | | |
| Stock-based compensation, consolidated subsidiaries | — | | | — | | | 1.1 | | | — | | | — | | | — | | | — | | | — | | | 1.1 | | |
| Contribution of CSA services from FNF | — | | | — | | | 0.3 | | | — | | | — | | | — | | | — | | | — | | | 0.3 | | |
| Stock-based compensation, unconsolidated affiliates | — | | | — | | | 5.9 | | | — | | | — | | | — | | | — | | | — | | | 5.9 | | |
| | Net earnings (loss) | — | | | — | | | — | | | 475.3 | | | — | | | — | | | — | | | (9.2) | | | 466.1 | | |
| Balance, June 30, 2020 | 92.4 | | | $ | 0 | | | $ | 1,868.4 | | | $ | 1,266.6 | | | $ | 3.2 | | | 0.7 | | | $ | (20.3) | | | $ | 15.9 | | | $ | 3,133.8 | | |
| | Balance, March 31, 2021 | 92.4 | | | $ | 0 | | | $ | 1,878.3 | | | $ | 1,696.7 | | | $ | (8.7) | | | 0.7 | | | $ | (21.1) | | | $ | 5.1 | | | $ | 3,550.3 | | |
| | Other comprehensive earnings — unrealized losses of investments in unconsolidated affiliates, net of tax | Other comprehensive earnings — unrealized losses of investments in unconsolidated affiliates, net of tax | — | | | — | | | — | | | — | | | 1.9 | | | — | | | — | | | — | | | 1.9 | | Other comprehensive earnings — unrealized losses of investments in unconsolidated affiliates, net of tax | — | | | — | | | — | | | — | | | 1.9 | | | — | | | — | | | — | | | 1.9 | |
| Reclassification adjustments for unrealized gains and losses on investments and other financial instruments, net of tax, (excluding investments in unconsolidated affiliates) included in net earnings | Reclassification adjustments for unrealized gains and losses on investments and other financial instruments, net of tax, (excluding investments in unconsolidated affiliates) included in net earnings | — | | | — | | | — | | | — | | | (10.9) | | | — | | | — | | | — | | | (10.9) | | Reclassification adjustments for unrealized gains and losses on investments and other financial instruments, net of tax, (excluding investments in unconsolidated affiliates) included in net earnings | — | | | — | | | — | | | — | | | (10.9) | | | — | | | — | | | — | | | (10.9) | |
| Reclassification adjustments for unrealized gains and losses on unconsolidated affiliates, net of tax, included in net loss | — | | | — | | | — | | | — | | | 1.9 | | | — | | | — | | | — | | | 1.9 | | |
| Reclassification adjustments for unrealized gains and losses on unconsolidated affiliates, net of tax, included in net earnings | | Reclassification adjustments for unrealized gains and losses on unconsolidated affiliates, net of tax, included in net earnings | — | | | — | | | — | | | — | | | 1.9 | | | — | | | — | | | — | | | 1.9 | |
| | | Treasury stock repurchases | Treasury stock repurchases | — | | | — | | | — | | | — | | | — | | | 2.5 | | | (89.7) | | | — | | | (89.7) | | Treasury stock repurchases | — | | | — | | | — | | | — | | | — | | | 2.5 | | | (89.7) | | | — | | | (89.7) | |
| Stock-based compensation, consolidated subsidiaries | Stock-based compensation, consolidated subsidiaries | — | | | — | | | 0.6 | | | — | | | — | | | — | | | — | | | — | | | 0.6 | | Stock-based compensation, consolidated subsidiaries | — | | | — | | | 0.6 | | | — | | | — | | | — | | | — | | | — | | | 0.6 | |
| | Stock-based compensation, unconsolidated affiliates | Stock-based compensation, unconsolidated affiliates | — | | | — | | | 1.9 | | | — | | | — | | | — | | | — | | | — | | | 1.9 | | Stock-based compensation, unconsolidated affiliates | — | | | — | | | 1.9 | | | — | | | — | | | — | | | — | | | — | | | 1.9 | |
| Subsidiary dividends paid to noncontrolling interests | Subsidiary dividends paid to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (0.2) | | | (0.2) | | Subsidiary dividends paid to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (0.2) | | | (0.2) | |
| Net earnings | Net earnings | — | | | — | | | — | | | 176.4 | | | — | | | — | | | — | | | 1.3 | | | 177.7 | | Net earnings | — | | | — | | | — | | | 176.4 | | | — | | | — | | | — | | | 1.3 | | | 177.7 | |
| Balance, June 30, 2021 | Balance, June 30, 2021 | 92.4 | | | $ | 0 | | | $ | 1,880.8 | | | $ | 1,873.1 | | | $ | (15.8) | | | 3.2 | | | $ | (110.8) | | | $ | 6.2 | | | $ | 3,633.5 | | Balance, June 30, 2021 | 92.4 | | | $ | — | | | $ | 1,880.8 | | | $ | 1,873.1 | | | $ | (15.8) | | | 3.2 | | | $ | (110.8) | | | $ | 6.2 | | | $ | 3,633.5 | |
| | Balance, March 31, 2022 | | Balance, March 31, 2022 | 92.5 | | | $ | — | | | $ | 1,894.4 | | | $ | 1,395.2 | | | $ | (8.4) | | | 7.6 | | | $ | (242.5) | | | $ | 4.0 | | | $ | 3,042.7 | |
| | Other comprehensive earnings — unrealized losses of investments in unconsolidated affiliates, net of tax | | Other comprehensive earnings — unrealized losses of investments in unconsolidated affiliates, net of tax | — | | | — | | | — | | | — | | | (6.4) | | | — | | | — | | | — | | | (6.4) | |
| | Treasury stock repurchases | | Treasury stock repurchases | — | | | — | | | — | | | — | | | — | | | 4.8 | | | (84.7) | | | — | | | (84.7) | |
| | Stock-based compensation, consolidated subsidiaries | | Stock-based compensation, consolidated subsidiaries | — | | | — | | | 0.4 | | | — | | | — | | | — | | | — | | | — | | | 0.4 | |
| | Stock-based compensation, unconsolidated affiliates | | Stock-based compensation, unconsolidated affiliates | — | | | — | | | 18.7 | | | — | | | — | | | — | | | — | | | — | | | 18.7 | |
| | Net loss | | Net loss | — | | | — | | | — | | | (263.3) | | | — | | | — | | | — | | | (1.3) | | | (264.6) | |
| Balance, June 30, 2022 | | Balance, June 30, 2022 | 92.5 | | | $ | — | | | $ | 1,913.5 | | | $ | 1,131.9 | | | $ | (14.8) | | | 12.4 | | | $ | (327.2) | | | $ | 2.7 | | | $ | 2,706.1 | |
See Notes to Condensed Consolidated Financial Statements
CANNAE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - CONTINUED
(In millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comp (Loss) Earnings | | Treasury Stock | | Non-controlling
Interests | | Total
Equity |
| | Shares | | $ | | | | | Shares | | $ | | |
| | | | | | |
| Balance, December 31, 2020 | 92.4 | | | $ | — | | | $ | 1,875.8 | | | $ | 1,929.8 | | | $ | (4.9) | | | 0.7 | | | $ | (21.1) | | | $ | 5.6 | | | $ | 3,785.2 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Other comprehensive earnings — unrealized gain on investments and other financial instruments, net of tax | — | | | — | | | — | | | — | | | 0.5 | | | — | | | — | | | — | | | 0.5 | |
| Other comprehensive earnings — unrealized losses of investments in unconsolidated affiliates, net of tax | — | | | — | | | — | | | — | | | (2.7) | | | — | | | — | | | — | | | (2.7) | |
| Reclassification adjustments for unrealized gains and losses on investments and other financial instruments, net of tax, (excluding investments in unconsolidated affiliates) included in net earnings | — | | | — | | | — | | | — | | | (10.9) | | | — | | | — | | | — | | | (10.9) | |
| Reclassification adjustments for unrealized gains and losses on unconsolidated affiliates, net of tax, included in net earnings | — | | | — | | | — | | | — | | | 2.2 | | | | | | | — | | | 2.2 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Treasury stock repurchases | — | | | — | | | — | | | — | | | — | | | 2.5 | | | (89.7) | | | — | | | (89.7) | |
| Stock-based compensation, consolidated subsidiaries | — | | | — | | | 1.3 | | | — | | | — | | | — | | | — | | | — | | | 1.3 | |
| | | | | | | | | | | | | | | | | |
| Stock-based compensation, unconsolidated affiliates | — | | | — | | | 3.7 | | | — | | | — | | | — | | | — | | | — | | | 3.7 | |
| | | | | | | | | | | | | | | | | |
| Net (loss) earnings | — | | | — | | | — | | | (56.7) | | | — | | | — | | | — | | | 0.6 | | | (56.1) | |
| Balance, June 30, 2021 | 92.4 | | | $ | — | | | $ | 1,880.8 | | | $ | 1,873.1 | | | $ | (15.8) | | | 3.2 | | | $ | (110.8) | | | $ | 6.2 | | | $ | 3,633.5 | |
| | | | | | | | | | | | | | | | | |
| Balance, December 31, 2021 | 92.4 | | | $ | — | | | $ | 1,888.3 | | | $ | 1,642.8 | | | $ | (7.2) | | | 5.6 | | | $ | (188.6) | | | $ | 5.8 | | | $ | 3,341.1 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Other comprehensive earnings — unrealized losses of investments in unconsolidated affiliates, net of tax | — | | | — | | | — | | | — | | | (7.6) | | | — | | | — | | | — | | | (7.6) | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Treasury stock repurchases | — | | | — | | | — | | | — | | | — | | | 6.8 | | | (138.6) | | | — | | | (138.6) | |
| Issuance of restricted stock | 0.1 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Stock-based compensation, consolidated subsidiaries | — | | | — | | | 0.7 | | | — | | | — | | | — | | | — | | | — | | | 0.7 | |
| | | | | | | | | | | | | | | | | |
| Stock-based compensation, unconsolidated affiliates | — | | | — | | | 24.5 | | | — | | | — | | | — | | | — | | | — | | | 24.5 | |
| | | | | | | | | | | | | | | | | |
| Net loss | — | | | — | | | — | | | (510.9) | | | — | | | — | | | — | | | (3.1) | | | (514.0) | |
| Balance, June 30, 2022 | 92.5 | | | $ | — | | | $ | 1,913.5 | | | $ | 1,131.9 | | | $ | (14.8) | | | 12.4 | | | $ | (327.2) | | | $ | 2.7 | | | $ | 2,706.1 | |
See Notes to Condensed Consolidated Financial Statements
CANNAE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY- CONTINUED
(In millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comp (Loss) Earnings | | Treasury Stock | | Non-controlling
Interests | | Total
Equity |
| | Shares | | $ | | | | | Shares | | $ | | |
| | | | | | |
| Balance, December 31, 2019 | 79.7 | | | $ | 0 | | | $ | 1,396.7 | | | $ | 143.6 | | | $ | (45.9) | | | 0.2 | | | $ | (5.9) | | | $ | 41.3 | | | $ | 1,529.8 | |
| Equity offering, net of offering costs | 12.7 | | | — | | | 455.0 | | | — | | | — | | | — | | | — | | | — | | | 455.0 | |
| | | | | | | | | | | | | | | | | |
| Other comprehensive earnings — unrealized gain on investments and other financial instruments, net of tax | — | | | — | | | — | | | — | | | 11.2 | | | — | | | — | | | — | | | 11.2 | |
| Other comprehensive earnings — unrealized losses of investments in unconsolidated affiliates, net of tax | — | | | — | | | — | | | — | | | (6.4) | | | — | | | — | | | — | | | (6.4) | |
| Reclassification adjustments for unrealized gains and losses on investments and other financial instruments, net of tax, (excluding investments in unconsolidated affiliates) included in net earnings | — | | | — | | | — | | | — | | | 44.3 | | | — | | | — | | | — | | | 44.3 | |
| Restaurant Group reorganization and deconsolidation of Legendary Baking and VIBSQ | — | | | — | | | 5.2 | | | — | | | — | | | — | | | — | | | (10.3) | | | (5.1) | |
| | | | | | | | | | | | | | | | | |
| Sale of noncontrolling interest in consolidated subsidiary | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 3.7 | | | 3.7 | |
| Treasury stock repurchases | — | | | — | | | — | | | — | | | — | | | 0.5 | | | (14.4) | | | — | | | (14.4) | |
| Stock-based compensation, consolidated subsidiaries | — | | | — | | | 2.2 | | | — | | | — | | | — | | | — | | | — | | | 2.2 | |
| Contribution of CSA services from FNF | — | | | — | | | 0.7 | | | — | | | — | | | — | | | — | | | — | | | 0.7 | |
| Stock-based compensation, unconsolidated affiliates | — | | | — | | | 8.6 | | | — | | | — | | | — | | | — | | | — | | | 8.6 | |
| | | | | | | | | | | | | | | | | |
| Net earnings (loss) | — | | | — | | | — | | | 1,123.0 | | | — | | | — | | | — | | | (18.8) | | | 1,104.2 | |
| Balance, June 30, 2020 | 92.4 | | | $ | 0 | | | $ | 1,868.4 | | | $ | 1,266.6 | | | $ | 3.2 | | | 0.7 | | | $ | (20.3) | | | $ | 15.9 | | | $ | 3,133.8 | |
| | | | | | | | | | | | | | | | | |
| Balance, December 31, 2020 | 92.4 | | | $ | 0 | | | $ | 1,875.8 | | | $ | 1,929.8 | | | $ | (4.9) | | | 0.7 | | | $ | (21.1) | | | $ | 5.6 | | | $ | 3,785.2 | |
| | | | | | | | | | | | | | | | | |
| Other comprehensive earnings — unrealized gain on investments and other financial instruments, net of tax | — | | | — | | | — | | | — | | | 0.5 | | | — | | | — | | | — | | | 0.5 | |
| Other comprehensive earnings — unrealized losses of investments in unconsolidated affiliates, net of tax | — | | | — | | | — | | | — | | | (2.7) | | | — | | | — | | | — | | | (2.7) | |
| Reclassification adjustments for unrealized gains and losses on investments and other financial instruments, net of tax, (excluding investments in unconsolidated affiliates) included in net earnings | — | | | — | | | — | | | — | | | (10.9) | | | — | | | — | | | — | | | (10.9) | |
| Reclassification adjustments for unrealized gains and losses on unconsolidated affiliates, net of tax, included in net loss | — | | | — | | | — | | | — | | | 2.2 | | | — | | | — | | | — | | | 2.2 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Treasury stock repurchases | — | | | — | | | — | | | — | | | — | | | 2.5 | | | (89.7) | | | — | | | (89.7) | |
| Stock-based compensation, consolidated subsidiaries | — | | | — | | | 1.3 | | | — | | | — | | | — | | | — | | | — | | | 1.3 | |
| | | | | | | | | | | | | | | | | |
| Stock-based compensation, unconsolidated affiliates | — | | | — | | | 3.7 | | | — | | | — | | | — | | | — | | | — | | | 3.7 | |
| Subsidiary dividends paid to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Net (loss) earnings | — | | | — | | | — | | | (56.7) | | | — | | | — | | | — | | | 0.6 | | | (56.1) | |
| Balance, June 30, 2021 | 92.4 | | | $ | 0 | | | $ | 1,880.8 | | | $ | 1,873.1 | | | $ | (15.8) | | | 3.2 | | | $ | (110.8) | | | $ | 6.2 | | | $ | 3,633.5 | |
See Notes to Condensed Consolidated Financial Statements
CANNAE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
| | | | Six months ended June 30, | | Six months ended June 30, |
| | | |
| | | 2021 | | 2020 | | 2022 | | 2021 |
| | | | | | | | | |
| Cash flows from operating activities: | Cash flows from operating activities: | | Cash flows from operating activities: | |
| Net (loss) earnings | $ | (56.1) | | | $ | 1,104.2 | | |
| Adjustments to reconcile net (loss) earnings to net cash used in operating activities: | | |
| Net loss | | Net loss | $ | (514.0) | | | $ | (56.1) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | | Adjustments to reconcile net loss to net cash used in operating activities: | |
| Depreciation and amortization | Depreciation and amortization | 14.3 | | | 15.7 | | Depreciation and amortization | 12.0 | | | 14.3 | |
| Equity in earnings of unconsolidated affiliates | Equity in earnings of unconsolidated affiliates | (45.1) | | | (4.8) | | Equity in earnings of unconsolidated affiliates | 76.1 | | | (45.1) | |
| Distributions from investments in unconsolidated affiliates | Distributions from investments in unconsolidated affiliates | 5.1 | | | 0.5 | | Distributions from investments in unconsolidated affiliates | 14.7 | | | 5.1 | |
| Recognized losses (gains) and asset impairments, net | 38.5 | | | (1,481.3) | | |
| Recognized losses and asset impairments, net | | Recognized losses and asset impairments, net | 459.8 | | | 38.5 | |
| Lease asset amortization | Lease asset amortization | 10.6 | | | 11.7 | | Lease asset amortization | 10.3 | | | 10.6 | |
| Stock-based compensation cost | Stock-based compensation cost | 1.3 | | | 2.2 | | Stock-based compensation cost | 0.7 | | | 1.3 | |
| Non-cash carried interest expense | | Non-cash carried interest expense | 31.8 | | | — | |
| Changes in assets and liabilities, net of effects from acquisitions: | Changes in assets and liabilities, net of effects from acquisitions: | | Changes in assets and liabilities, net of effects from acquisitions: | |
| | Net decrease (increase) in other assets | 31.3 | | | (23.9) | | |
| Net decrease in other assets | | Net decrease in other assets | 11.9 | | | 31.3 | |
| Net decrease in lease liabilities | Net decrease in lease liabilities | (12.7) | | | (15.4) | | Net decrease in lease liabilities | (12.4) | | | (12.7) | |
| Net increase in accounts payable, accrued liabilities, deferred revenue and other liabilities | 23.7 | | | 9.6 | | |
| Net (decrease) increase in accounts payable, accrued liabilities, deferred revenue and other liabilities | | Net (decrease) increase in accounts payable, accrued liabilities, deferred revenue and other liabilities | (30.8) | | | 23.7 | |
| Net change in income taxes | Net change in income taxes | (78.1) | | | 300.2 | | Net change in income taxes | (193.1) | | | (78.1) | |
| Net cash used in operating activities | Net cash used in operating activities | (67.2) | | | (81.3) | | Net cash used in operating activities | (133.0) | | | (67.2) | |
| Cash flows from investing activities: | Cash flows from investing activities: | | | | Cash flows from investing activities: | | | |
| Proceeds from sale of investment securities and investments in unconsolidated affiliates | 2.5 | | | 0 | | |
| | Proceeds from partial sale of Ceridian shares | Proceeds from partial sale of Ceridian shares | 175.0 | | | 522.0 | | Proceeds from partial sale of Ceridian shares | 285.7 | | | 175.0 | |
| Proceeds from partial sale of D&B shares | Proceeds from partial sale of D&B shares | 186.0 | | | 0 | | Proceeds from partial sale of D&B shares | — | | | 186.0 | |
| Additions to property and equipment and other intangible assets | Additions to property and equipment and other intangible assets | (4.9) | | | (16.2) | | Additions to property and equipment and other intangible assets | (7.6) | | | (4.9) | |
| Collections of notes receivable | Collections of notes receivable | 1.6 | | | 0 | | Collections of notes receivable | 0.9 | | | 1.6 | |
| Additions to notes receivable | Additions to notes receivable | (12.5) | | | (15.7) | | Additions to notes receivable | — | | | (12.5) | |
| Proceeds from sales of property and equipment | Proceeds from sales of property and equipment | 10.3 | | | 0 | | Proceeds from sales of property and equipment | — | | | 10.3 | |
| Proceeds from sale of investments in unconsolidated affiliates and other long term investments | | Proceeds from sale of investments in unconsolidated affiliates and other long term investments | 172.6 | | | 2.5 | |
| | Investment in System1 | | Investment in System1 | (246.5) | | | — | |
| Investment in Paysafe, net of subscription fees earned | | Investment in Paysafe, net of subscription fees earned | — | | | (494.4) | |
| Investments in Alight, net of subscription fees earned | | Investments in Alight, net of subscription fees earned | — | | | (400.0) | |
| | Investments in Paysafe, net of subscription fees | (494.4) | | | 0 | | |
| Funding of Alight Subscription Agreement and FTAC FPA - see Note A | (400.0) | | | 0 | | |
| Purchase of warrants of Austerlitz II | (29.6) | | | 0 | | |
| Purchase of AAII Warrants | | Purchase of AAII Warrants | — | | | (29.6) | |
| Additional investments in unconsolidated affiliates | Additional investments in unconsolidated affiliates | (38.4) | | | (306.8) | | Additional investments in unconsolidated affiliates | — | | | (38.4) | |
| Cash proceeds from settlement of fixed maturity securities and equity in Colt | Cash proceeds from settlement of fixed maturity securities and equity in Colt | 38.7 | | | 0 | | Cash proceeds from settlement of fixed maturity securities and equity in Colt | — | | | 38.7 | |
| | Cash deconsolidated through the Blue Ribbon Reorganization | 0 | | | (1.1) | | |
| Purchases of other long term investments | | Purchases of other long term investments | (3.4) | | | — | |
| | Distributions from investments in unconsolidated affiliates | Distributions from investments in unconsolidated affiliates | 281.1 | | | 0.5 | | Distributions from investments in unconsolidated affiliates | — | | | 281.1 | |
| Net purchases of short-term investment securities | 0 | | | (99.4) | | |
| | Net other investing activities | Net other investing activities | 2.6 | | | 0 | | Net other investing activities | — | | | 2.6 | |
| | Net cash (used in) provided by investing activities | (282.0) | | | 83.3 | | |
| Net cash provided by (used in) investing activities | | Net cash provided by (used in) investing activities | 201.7 | | | (282.0) | |
| Cash flows from financing activities: | Cash flows from financing activities: | | | | Cash flows from financing activities: | | | |
| Borrowings | Borrowings | 6.7 | | | 35.0 | | Borrowings | 305.7 | | | 6.7 | |
| Debt service payments | Debt service payments | (19.0) | | | (92.3) | | Debt service payments | (213.8) | | | (19.0) | |
| Subsidiary distributions paid to noncontrolling interest shareholders | 0.1 | | | 3.7 | | |
| Proceeds from equity offering, net of offering costs | 0 | | | 455.0 | | |
| Sale of noncontrolling interest in consolidated subsidiary | | Sale of noncontrolling interest in consolidated subsidiary | — | | | 0.1 | |
| | | Treasury stock repurchases | Treasury stock repurchases | (88.0) | | | (14.4) | | Treasury stock repurchases | (145.8) | | | (88.0) | |
| | Net cash (used in) provided by financing activities | (100.2) | | | 387.0 | | |
| Net (decrease) increase in cash and cash equivalents | (449.4) | | | 389.0 | | |
| Cash and cash equivalents classified as held for sale - see Note J | (4.1) | | | 0 | | |
| Net cash used in financing activities | | Net cash used in financing activities | (53.9) | | | (100.2) | |
| Net increase (decrease) in cash and cash equivalents | | Net increase (decrease) in cash and cash equivalents | 14.8 | | | (449.4) | |
| Cash and cash equivalents classified as held for sale | | Cash and cash equivalents classified as held for sale | — | | | (4.1) | |
| Cash and cash equivalents at beginning of period | Cash and cash equivalents at beginning of period | 724.7 | | | 533.7 | | Cash and cash equivalents at beginning of period | 85.8 | | | 724.7 | |
| Cash and cash equivalents at end of period | Cash and cash equivalents at end of period | $ | 271.2 | | | $ | 922.7 | | Cash and cash equivalents at end of period | $ | 100.6 | | | $ | 271.2 | |
See Notes to Condensed Consolidated Financial Statements
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note A — Basis of Financial Statements
The following describes the significant accounting policies of Cannae Holdings, Inc. and its subsidiaries (collectively, “we,” “us,” “our,” "Cannae," "CNNE," or the "Company”), which have been followed in preparing the accompanying Condensed Consolidated Financial Statements.
Description of the Business
We primarily acquire interests in operating companies and are engaged in actively managing and operating a core group of those companies, which we are committed to supporting for the long-term. From time to time, we also seek to take meaningful equity ownership stakes where we have the ability to control or significantly influence quality companies, and investments, as well as making additional majoritywe bring the strength of our operational expertise to each of our subsidiaries. We are a long-term owner that secures control and minority equity portfolio investmentsgovernance rights of other companies primarily to engage in businesses,their lines of business and we have no preset time constraints dictating when we sell or dispose of our businesses. We believe that our long-term ownership and active involvement in order to achieve superior financial performancethe management and operations of companies helps maximize the value of these assets.those businesses for our shareholders. Our primary investmentsassets as of June 30, 20212022 include our minority ownership interests in Dun & Bradstreet Holdings, Inc. ("Dun & Bradstreet" or "D&B"), Ceridian HCM Holding, Inc. ("Ceridian"), Alight, Inc. ("Alight"), Paysafe Limited ("Paysafe"), Alight,Sightline Payments Holdings, LLC ("Sightline" or "Sightline Payments"), System1, Inc. ("Alight"System1"), Optimal Blue Holdco, LLC ("Optimal Blue"), and AmeriLife Group, LLC ("AmeriLife") and QOMPLX, Inc. ("QOMPLX"); majority equity ownership stakes in O'Charley's Holdings, LLC ("O'Charley's") and 99 Restaurants Holdings, LLC ("99 Restaurants"); and various other controlled portfolio companies and certain minority equity investments.ownership interests.
See Note HG for further discussion of the businesses comprising our reportable segments.
We conduct our business through our wholly-owned subsidiary Cannae Holdings, LLC ("Cannae LLC"), a Delaware limited liability company. Our board of directors ("Board") oversees the management of the Company, Cannae LLC and its businesses, and the performance of our external manager, Trasimene Capital Management, LLC (“Trasimene” or our “Manager”).
Principles of Consolidation and Basis of Presentation
The accompanying Condensed Consolidated Financial Statements are prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and the instructions to Form 10-Q and Article 10 of Regulation S-X and include the historical accounts as well as wholly-owned and majority-owned subsidiaries of the Company. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All adjustments made were of a normal, recurring nature. This report should be read in conjunction with our Annual Report on Form 10-K (our "Annual Report") for the year ended December 31, 2020.2021.
All intercompany profits, transactions and balances have been eliminated. Our investmentsownership interests in non-majority-owned partnerships and affiliates are accounted for usingunder the equity method.method of accounting or as equity securities. Earnings attributable to noncontrolling interests are recorded on the Condensed Consolidated Statements of Operations relating to majority-owned subsidiaries with the appropriate noncontrolling interest that represents the portion of equity not related to our ownershipmajority-owned subsidiaries' net earnings or loss that is owned by noncontrolling shareholders of such subsidiaries. Noncontrolling interest recorded on the Condensed Consolidated Balance Sheets represents the portion of equity owned by noncontrolling shareholders in each period.our consolidated subsidiaries.
Management Estimates
The preparation of these Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management include the fair value measurements (Note C). Actual results may differ from estimates.
Recent Developments
Ceridian
On May 20, 2021,In January 2022, we completed the sale of an aggregate of 2.0 million shares of common stock of Ceridian to brokers (the "Ceridian Share Sale") pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended ("Rule 144"). In connection with the Ceridian Share Sale,sale, we received aggregate proceeds of $175.0$173.3 million. As a result of the Ceridian Share Sale, we now own 12 million shares of Ceridian, which represents approximately 8.0% of its outstanding common stock as of June 30, 2021. Refer to Notes C and D for further discussion of our accounting for our investment in Ceridian and other equity securities.
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
Dun & Bradstreet
On January 8, 2021, D&B completed its acquisition of Bisnode Business Information Group AB (the "Bisnode Acquisition"). In connection with the Bisnode Acquisition, D&B issued an additional 6.2 million shares of its common stock, which resulted in a decrease in our ownership interest in D&B from approximately 18.1% to approximately 17.7%May 2022 and we recorded a gain of $18.6 million in the six months ended June 30, 2021.
On June 28, 2021,2022, we completed the sale of an aggregate of 8.5additional 2.0 million shares of common stock of D&B to a broker (the "D&B Share Sale") pursuant to Rule 144.Ceridian on the open market. In connection with the D&B Share Sale,such sales, we received aggregate proceeds of $186.0 million and recorded a gain of $111.1$112.5 million. As a result of the D&B Share Sale, we now own 68.1
We owned 6.0 million shares of D&B, which represents approximately 15.8% of its outstandingCeridian common stock as of June 30, 2021. 2022, which represented approximately 3.9% of its outstanding stock as of June 30, 2022.
Refer to Notes C and D for further discussion of our accounting for our investment in D&B.Ceridian and other equity securities.
AlightSystem1
On January 25, 2021, Foley Trasimene10, 2022, we entered into an amendment to the backstop facility agreement (the "S1 Backstop Agreement") pursuant to which our commitment to fund redemptions of shareholders of Trebia Acquisition Corp. ("FTAC"Trebia") in conjunction with its merger with System1 (the "Trebia System1 Business Combination") increased from $200.0 million to $250.0 million. Also on January 10, 2022, we entered into a business combination agreement with predecessor of Alight, a leading cloud-based provider of integrated digital human capital and business solutions, asan amended and restated April 29, 2021, bysponsor agreement with the sponsors of Trebia pursuant to which the sponsors will forfeit up to an additional Trebia 1,352,941 Class B ordinary shares to Trebia, and among FTAC, Alight and other parties thereto (the "FTAC Alight Business Combination"). Also on January 25, 2021,Trebia will issue to Cannae entered into an agreement to purchase 25 millionequal number of shares of Alight for $250.0 million as part of the private investment in public equity ("PIPE") raised in conjunction with the FTAC Alight Business Combination (the "Alight Subscription Agreement").
During the quarter ended June 30, 2021, Cannae funded the following investments in Alight: (a) $250.0 million pursuant to the Alight Subscription Agreement, (b) $150.0 million pursuant to a previously announced forward purchase agreement with FTAC (the "FTAC FPA") and (c) $52.4 million for the purchase of 5.2 million shares of FTAC on the open market (the "Purchased Shares"). Subsequent to June 30, 2021, we sold 1.0 million of the Purchased Shares for aggregate proceeds of $10.3 million.
As of June 30, 2021, our investments receivable pursuant to the Alight Subscription Agreement and FTAC FPA are included in Other long term investments and non-current assets and the Purchased Shares are included with our investment in the sponsor of FTAC in Investments in unconsolidated affiliates on our Condensed Consolidated Balance Sheet.
On July 2, 2021, FTAC completed the FTAC Alight Business Combination in accordance with the relevant business combination agreement. As a result, all outstanding shares of common stock of FTAC were converted into shares ofTrebia Class A common stock in connection with, and based upon the extent of, AlightCannae’s obligation with respect to the increase in our backstop commitment. Trebia was co-sponsored by entities affiliated with the chairman and we received 40 million sharesa member of class Aour board of directors ("Board"), William P. Foley II and Frank R. Martire, respectively.
On January 27, 2022, the Trebia System1 Business Combination was completed and System1 merged with and into Trebia, with System1 as the surviving corporation. Beginning on January 28, 2022, System1’s common stock Alight pursuant to the Alight Subscription Agreement and FTAC FPA. We also received an additional 1.5 million shares of class A common stock of Alight from the sponsor of FTAC. The newly combined company operates as Alight and is traded on the New York Stock Exchange ("NYSE") under the symbol ALIT.
As of July 2, 2021, Cannae, directly and indirectly through our 29% interest in 1 of the sponsors of FTAC, owns 50.4 million shares of Class A common stock of Alight which represents approximately 9.6% of the outstanding common equity of Alight and 8.0 million warrants to purchase 1 share of Alight class A common stock at $11.50 per share. We received a fee of $7.1 million on July 2, 2021 as consideration for our subscription and deal syndication.
Paysafe
On March 30, 2021, Foley Trasimene Acquisition Corp. II ("FTAC II") completed its previously announced merger with Paysafe Limited ("Paysafe"), a leading integrated payments platform (the "FTAC II Paysafe Merger"), in accordance with the agreement and plan of merger dated December 7, 2020. The newly combined company operates as Paysafe and is tradedbegan trading on the NYSE under the ticker symbol PSFE. The FTAC II Paysafe Merger was funded with"SST." Upon the cashcompletion of the Trebia System1 Business Combination, Cannae has invested a total of $248.3 million in System1, directly and indirectly owned 28.2 million of System1 common shares and indirectly owned 1.2 million warrants to purchase SST common shares (the "System1 Warrants").
On March 17, 2022, the trading price of System1 Class A common stock exceeded certain thresholds resulting in the conversion of System1's outstanding Class D common stock to Class A common stock. As a result, the 833,750 shares of System1 Class D common stock held by the sponsor of Trebia, Trasimene Trebia LP ("Trebia Sponsor"), in trust at FTAC II, forward purchase commitments, PIPE commitmentswhich the Company owns a 26.1% limited partnership interest converted to shares of System1 Class A common stock. Cannae's ratable portion of such shares is 217,500 shares.
On April 18, 2022, Trebia Sponsor exercised its System1 warrants on a cashless basis in exchange for System 1 Class A common stock. As a result, Cannae no longer has an indirect interest in any System1 warrants and has an indirect interest in an additional 0.5 million shares of System1 common stock held by Trebia Sponsor.
In April 2022 and May 2022, we sold an aggregate of 1.7 million shares of System1 common stock for aggregate proceeds of $22.7 million.
We account for our direct ownership of the common equity of Paysafe.System1 under the equity method of accounting. See Note D for further discussion of our accounting for our ownership of the common equity of System1.
As of the date of this Quarterly Report, we directly and indirectly own 27.2 million shares of System1 common stock representing an approximate 24.2% ownership interest.
Optimal Blue
On February 15, 2022, we completed the disposition (the "Optimal Blue Disposition") of our ownership interests in Optimal Blue Holdco, LLC ("Optimal Blue") to Black Knight, Inc. ("Black Knight") pursuant to a purchase agreement dated as of February 15, 2022, by and among Black Knight, Cannae, and Optimal Blue, among others. In conjunction with the FTAC II Paysafe Merger,Optimal Blue Disposition, Cannae funded its previously announced investmentsreceived aggregate consideration of (y) $144.5 million in Paysafecash and (z) 21.8 million shares of (a) $350common stock, par value $0.0001 per share, of Dun & Bradstreet. Following the consummation of the Optimal Blue Disposition, Cannae no longer has any ownership interest in Optimal Blue. We recorded a gain of $313.0 million on the sale which is included in Recognized gains (losses), net on the Condensed Consolidated Statement of Operations for the six months ended June 30, 2022.
Dun & Bradstreet
On February 15, 2022, we received 21.8 million shares of D&B as partial consideration for the Optimal Blue Disposition. Subsequently, we transferred to our Manager 1.6 million of the D&B shares we received as part of our subscriptioncarried interest paid related to the PIPEOptimal Blue Disposition. Following the receipt of these additional shares of D&B and (b) $150payment of carried interest, we owned 88.3 million as partshares of our forward purchase agreement with FTAC II entered into on July 31, 2020. For Cannae’s total investment in PaysafeD&B which represented approximately 20.3% of $504.7 million, inclusive of our previous investment in the sponsor of FTAC II, Cannae received 54,294,395its outstanding common shares and 8,134,067 warrants of Paysafe (the "Paysafe Warrants"). Asstock as of June 30, 2021, Cannae, directly and indirectly through2022. See Note D for further discussion of our 15%accounting for our increased ownership interest in the sponsor of FTAC II, holds approximately 7.5% of the outstanding common equity of Paysafe. In connection with the investment in the PIPE, Paysafe paid Cannae a fee of $5.6 million as described in the agreement and plan of merger dated December 7, 2020, which was deducted from the basis of our investment.D&B.
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
We account for our investment in common equitySubsequent to June 30, 2022, we completed the sale of Paysafe as an equity method investment and the Paysafe Warrants as a derivative. See Note C and D for further discussion of our accounting for our investment in common equity and warrants of Paysafe.
Forward Purchases of Equity of Special Purpose Acquisition Companies
On February 25, 2021, we entered into a forward purchase agreement (the "Austerlitz I FPA") with Austerlitz Acquisition Corp. I (“Austerlitz I”), a special purpose acquisition company ("SPAC") whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with 1 or more businesses or entities (the "Austerlitz I Initial Business Combination"). Austerlitz I is co-sponsored by entities affiliated with the chairman of our Board of Directors ("Board"), William P. Foley II. Additionally, Cannae invested $1.6 million in the sponsor of Austerlitz I for a 10% indirect economic interest in the founder shares and warrants held by the sponsor. The Austerlitz I FPA was contingent upon the closing of the Austerlitz I Initial Business Combination.
On May 10, 2021, Austerlitz I entered into a Business Combination Agreement (the “WIL Business Combination Agreement”) by and among Austerlitz I, Wave Merger Sub Limited, an exempted company incorporated in Bermuda and a direct, wholly owned subsidiary of Austerlitz I (“Merger Sub”), and Wynn Interactive Ltd., an exempted company incorporated in Bermuda (“WIL”). The WIL Business Combination Agreement provides for, among other things, the consummation of certain transactions whereby WIL will become a wholly owned subsidiary of Austerlitz I (the “Austerlitz I-WIL Business Combination”).
In connection with the signing of the WIL Business Combination Agreement, we and Austerlitz I agreed to terminate the Austerlitz I FPA, and we entered into a backstop facility agreement (the “WIL Backstop Agreement”) whereby we agreed, subject to the other terms and conditions included therein, to subscribe for Austerlitz I Class A Ordinary Shares in order to fund redemptions by shareholders of Austerlitz I in connection with the Austerlitz I-WIL Business Combination, in an amount of up to $690.0 million (the “WIL Backstop Subscription”), in consideration for a placement fee of $3.5 million.
On February 25, 2021, we entered into a forward purchase agreement (the "Austerlitz II FPA" and together with the FTAC FPA, the "Forward Purchase Agreements") with Austerlitz Acquisition Corp. II (“Austerlitz II”), a SPAC whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with 1 or more businesses or entities (the "Austerlitz II Initial Business Combination"). Austerlitz II is co-sponsored by entities affiliated with William P. Foley II. Under the Austerlitz II FPA, we agreed to purchase an aggregate of 12,500,000 shares of Austerlitz II’s Class A common stock, plus an aggregate of 3,125,000 redeemable warrants to purchase 1 share of Austerlitz II's Class A common stock at $11.50 per share for an aggregate purchase price of $125.0 million in a private placement to occur concurrently with the closing of the Austerlitz II Initial Business Combination. Additionally, Cannae directly invested $29.6 million for a 20% indirect economic interest in the founder shares held by the sponsor and a direct interest in 19,733,333 private placement warrants of Austerlitz II (the "Austerlitz II Warrants") at the initial public offering. The Austerlitz II FPA is contingent upon the closing of the Austerlitz II Initial Business Combination.
On June 5, 2020, we entered into a forward purchase agreement (the "Trebia FPA") with Trebia Acquisition Corp. (“Trebia”), a SPAC incorporated as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with 1 or more businesses or entities (the "Trebia Initial Business Combination"). Trebia is co-sponsored by entities affiliated with the chairman and a member of our Board, William P. Foley II and Frank R. Martire, respectively.
On June 28, 2021, Trebia entered into a Business Combination Agreement by and among Trebia, S1 Holdco LLC, a Delaware limited liability company (“S1 Holdco”), System1 SS Protect Holdings, Inc., a Delaware corporation (“Protected”), and the other parties named therein (the "Trebia S1 Business Combination Agreement"). The Trebia S1 Business Combination Agreement provides for, among other things, the consummation of certain transactions whereby each of (i) System1, LLC, a Delaware limited liability company and the current operating subsidiary of S1 Holdco, and (ii) Protected.net Group Limited, a private limited company organized under the laws of the United Kingdom and the current operating subsidiary of Protected, will become subsidiaries of Trebia (the “Trebia S1 Business Combination”).
In connection with the signing of the Trebia S1 Business Combination Agreement, we and Trebia agreed to terminate the Trebia FPA, and we entered into a backstop facility agreement (the “S1 Backstop Agreement” and together with the WIL Backstop Agreement, the "Backstop Agreements") whereby we agreed, subject to the other terms and conditions included therein, to subscribe for Trebia Class A Common Stock in order to fund redemptions by shareholders of Trebia in connection with the Business Combination, in an amount of up to $200.0 million (the “S1 Backstop Subscription”). In connection with Cannae’s entry into the S1 Backstop Agreement, the sponsors of Trebia have agreed to forfeit up to 1,275,510 Trebia Class B Ordinary Shares (and Trebia has agreed to issue to Cannae a number of shares of Trebia Class A Common Stock equal to such forfeiture) as consideration in the event that the S1 Backstop Subscription is drawn due to redemptions.
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
Refer to Note C and E for further discussion of our accounting for the Forward Purchase Agreements, the Austerlitz II Warrants and the Backstop Agreements.
QOMPLX
On March 1, 2021, Tailwind Acquisition Corp. ("Tailwind") entered into a business combination agreement to merge with QOMPLX (the "Tailwind QOMPLX Merger"). Completion of the Tailwind QOMPLX Merger is expected to occur in 2021, subject to approval by Tailwind’s stockholders and the satisfaction or waiver of other customary closing conditions identified in the business combination agreement entered into by QOMPLX and Tailwind Acquisition Corp. The meeting to vote on the proposals described in Tailwind’s definitive proxy statement, filed with the Securities and Exchange Commission (the “SEC”) on June 25, 2021, relating to the Tailwind QOMPLX Merger is now scheduled to be held on August 17, 2021.
In conjunction with the Tailwind QOMPLX Merger, Cannae entered into an agreement to purchase 4.69.2 million shares of common stock of the combined company for $37.5 million as part ofD&B to a subscriptionbroker pursuant to the PIPE (the "Tailwind Subscription Agreement" and togetherRule 144. In connection with the sale, we received proceeds of $127.2 million.
Alight
In March 2022, the sponsor of Foley Trasimene Acquisition Corp. ("FTAC") distributed all of its interest in Alight Subscription Agreement, the "Subscription Agreements"). Additionally,to its limited partners, including Cannae. As a result, Cannae now directly holds all of its interest in March 2021, Cannae funded a convertible note to QOMPLX for $12.5 million that matures on March 3, 2022 (the "QOMPLX Note"). The principal and accrued interest on the QOMPLX Note is expected to convert into common sharesequity of the combined company at a price of $10 per common share upon consummation of the Tailwind QOMPLX Merger.
See Note C for further discussion of our accounting for the Tailwind Subscription Agreement asAlight. As of June 30, 2021.2022, Cannae directly holds approximately 9.7% of the outstanding common equity of Alight.
Restaurant GroupAmeriLife
In June 2022, AmeriLife announced an investment from Genstar Capital, a leading private equity firm. We expect to receive cash proceeds for a portion of our ownership interest in AmeriLife in the six months ended June 30, 2021, we commencedsecond half of 2022 and to retain a plan to sell or disposeportion of Legendary Baking Holdings I, LLC ("Legendary Baking") and VIBSQ Holdco, LLC ("VIBSQ") and their subsidiaries (the "Restaurant Dispositions"). We currently own 100% of Legendary Baking and VIBSQ.
On June 24, 2021, we entered into a membership purchase agreement for the sale of VIBSQ and its subsidiaries for $13.5 million. On July 30, 2021, we closed on the sale of VIBSQ.
See Note J for further discussion.our ownership interest.
Other Developments
On March 1,Effective February 26, 2021, we announced that our Board authorized a three-yearthree-year stock repurchase program effective February 26, 2021,(the "2021 Repurchase Program") under which the Company may repurchase up to 10 million shares of its common stock. Purchases may be made from time to time in the open market at prevailing prices or in privately negotiated transactions through February 26, 2024. The repurchase program does not obligate the Company to acquire any specific number of shares and may be suspended or terminated at any time. We repurchased 2,528,168 shares of CNNE common stock duringDuring the six months ended June 30, 20212022, we repurchased 6,775,598 shares of CNNE common stock for approximately $89.7$138.6 million in the aggregate, or an average of $35.49$20.46 per share. Subsequentshare, pursuant to June 30,the 2021 weRepurchase Program, of which 5,775,598 shares were repurchased from Fidelity National Financial, ("FNF") for an additional 200,000aggregate amount of $108.7 million.
On August 3, 2022, our Board authorized a new three-year stock repurchase program, (the "2022 Repurchase Program"), under which the Company may repurchase up to 10.0 million shares of CNNEits common stock for approximately $6.7 millionstock. Purchases may be made from time to time in the aggregate,open market at prevailing prices or an averagein privately negotiated transactions through August 3, 2025. The repurchase program does not obligate the Company to acquire any specific number of $33.74 per share.shares and may be suspended or terminated at any time.
On March 31, 2021,As previously disclosed on June 24, 2022, we closed onsigned a $32.0 millionnon-binding letter of intent to invest in Eagle Football Holdings LLC ("Eagle"). Cannae and other third-party investors intend to each make an investment in Sightline Payments LLC ("Sightline"),Eagle in a fintech company that enables cashless, mobileform to be negotiated by all parties and omni-channel payment solutions for the gaming, lottery, sports betting, entertainment and hospitality businesses.subject to final documentation. The investment represented 5.1%will be used to acquire soccer clubs and to establish Eagle as a leading multi-club owner and operator of global football clubs. In connection with the outstanding membershipcontemplated investment in Eagle, Cannae provided a debt commitment letter to John Textor, an individual, pursuant to which Cannae committed to provide a credit facility of up to a maximum principal amount of €523.0 million (the "Eagle Commitment") in connection with Eagle’s contemplated acquisition of equity interests in Sightline at the time of the transaction and is accounted for using the equity method. See Note C and D for further discussion of the Company's accounting for investments in unconsolidated affiliates.
During the six months ended June 30, 2021, we received distributions of $280.6 million from our joint venture (the "Senator JV"Olympique Lyonnais Groupe SA ("Olympique Lyonnais") with affiliates of Senator Investment Group, LP. We have no further material ownership. The credit facility will be secured by Mr. Textor’s and/or Eagle’s interest in the Senator JV.
On May 21, 20201, Ceska zbrojovka Group SE (“CZG”) acquired 100%Olympique Lyonnais and Palace Holdco UK Limited (parent entity of Crystal Palace Football Club), and personally guaranteed by Mr. Textor. Some or all of the outstanding equity of Colt Holdings, LLC ("Colt"). In conjunction with the transaction, we received $37.3 million for our holdings of Colt corporate debt securities, including accrued interest thereon, $1.4 million for ourcredit facility may be converted into equity in Colt and expectEagle on terms to receive $0.4 millionbe agreed. If the credit facility is funded, Cannae expects to syndicate a substantial majority of cash and $3.6 million of CZG equity securities for our holdings of Colt equity in October 2021. We recorded a gain of $20.3 million on the transaction, inclusive of $10.9 million (net of $2.9 million of deferred taxes) of gains reclassified from other comprehensive earnings. We have the opportunityits commitment to receive additional equity securities of CZG contingent on future operating results of Colt. Subsequent to the transaction, we have no further ownership interest in Colt debt or equity securities.
In the quarter ended June 30, 2021, we commenced a plan to sell Rock Creek Idaho Holdings, LLC ("RC", the "RC Disposition" and together with the Restaurant Dispositions, the "Dispositions"). We expect to consummate the sale of RC in fiscal year 2021. See Note J for further discussion of our accounting for RC.
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
third-party investors.Related Party Transactions
During the three and six months ended June 30, 2021 and 2020,2022, we incurred $15.7$10.6 million and $8.6$21.2 million, respectively, of management fee expenses payable to our Manager, and induring the three and six months ended June 30, 2021, we incurred $8.2 million and $15.7 million, respectively, of management fee expenses payable to our Manager. During the three and six months ended June 30, 2022, we incurred $2.2 million and $47.4 million, respectively, of carried interest expense related to disposition of certain of the Company's assets and ownership interests. During the three and six months ended June 30, 2021, we incurred $20.3 million and $37.4 million, respectively, of carried interest expense related to monetization of thecertain Company's investments, whichinvestments. These expenses are recorded in Other operating expenses on our Condensed Consolidated Statement of Operations.
Earnings Per Share
Basic earnings per share, as presented on the Condensed Consolidated Statement of Operations, is computed by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding during the period.
In periods when earnings are positive, diluted earnings per share is calculated by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding plus the impact of assumed conversions
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
of potentially dilutive securities. For periods when we recognize a net loss, diluted loss per share is equal to basic loss per share as the impact of assumed conversions of potentially dilutive securities is considered to be antidilutive. We have granted certain shares of restricted stock that have been treated as common share equivalents for purposes of calculating diluted earnings per share for periods in which positive earnings have been reported.
Instruments that provide the ability to purchase shares of our common stock that are antidilutive are excluded from the computation of diluted earnings per share. For the three and six months ended June 30, 2021 and 2020,2022, there were 00.1 million antidilutive shares of restricted stock outstanding that were excluded from the calculation of diluted earnings per share. For the three and six months ended June 30, 2021, there were no antidilutive shares of restricted stock outstanding that were excluded from the calculation of diluted earnings per share.
Income Tax
Our effective tax rate was 20.9%29.8% and 24.3%20.9% in the three months ended June 30, 20212022 and 2020,2021, respectively, and 11.2%22.7% and 21.5%11.2% in the six months ended June 30, 20212022 and 2020,2021, respectively. The decreasechange in the effective tax rate in both the three and six-month periodsperiod ended June 30, 20212022 compared to the corresponding prior year periodsperiod was primarily attributable to the varying impact of equity in (losses) earnings (losses) of unconsolidated affiliates on earnings (loss) before taxes.income tax (benefit) expense.
We have a Deferred tax liabilityasset of $243.3$85.8 million as of June 30, 20212022 and liability of $325.3$143.8 million as of December 31, 2020.2021. The $82.0$229.6 million change in deferred taxes in the six months ended June 30, 20212022 is primarily attributable to the tax impactsales of Ceridian shares during the recognized gains orsix months ended June 30, 2022, the mark to market losses recorded on Ceridian and other securities, and the change in fairimpairment recorded to the value of Ceridian and the Forward Purchase Agreements, partially offset by the tax impact of equityour ownership in earnings of unconsolidated affiliates.
Restricted Cash
Our Restaurant Group is required to hold cash collateralizing its outstanding letters of credit. Included in Cash and cash equivalents on our Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020 is $12.9 million and $12.5 million, respectively, of such restricted cash.
Distributions from Unconsolidated Affiliates
We classify distributions received from unconsolidated affiliates in our Condensed Consolidated Statements of Cash Flows using the cumulative earnings approach. Under the cumulative earnings approach, distributions are considered returns on investment and classified as cash inflows from operating activities unless the Company’s cumulative distributions from an investee received in prior periods exceed the cumulative equity in earnings of such investee. When cumulative distributions from an investee exceed cumulative equity in earnings of the investee, such excess is considered a return of investment and is classified as a cash inflow from investing activities.Paysafe.
Recent Accounting Pronouncements
We have completed our evaluation of the recently issued accounting pronouncements and we did not identify any that are expected to, if currently adopted, have a material impact on our Condensed Consolidated Financial Statements.
Immaterial Out-of-Period CorrectionChange in Accounting Principle
We historically accounted for our investment and proportionate share of losses in Alight utilizing a three-month reporting lag due to timeliness considerations. In connection with the preparationsecond quarter of our Condensed Consolidated Financial Statements2022, the Company was able to obtain financial information for the quarter ended June 30, 2021, we recorded out-of-period adjustments pertaining to our valuation of the Alight Subscription Agreementon a more timely basis and Tailwind Subscription Agreement and resulting recognized gain. We also recorded out-of-period adjustments pertaining to our valuation of the portion ofbegan recording our investment in Paysafe indirectly held throughAlight on a current basis as opposed to the previous three-month lag. The elimination of the three-month reporting lag for our equity investment in Alight did not result in any material adjustments to the sponsorcurrent or prior periods.
Note B — Revenue Recognition
Disaggregation of FTAC II and resulting equity in earnings of unconsolidated affiliates in the three months ended June 30, 2021. All of these out-of-period adjustments related to amounts that should have been recorded in the three months ended March 31, 2021.Revenue
Our revenue consists of:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Three Months Ended June 30, | | Six months ended June 30, |
| | | | 2022 | | 2021 | | 2022 | | 2021 |
| Revenue Stream | | Segment | | Total Revenue |
| Restaurant revenue: | | | | (in millions) |
| Restaurant sales | | Restaurant Group | | $ | 166.5 | | | $ | 180.5 | | | $ | 328.2 | | | $ | 338.6 | |
| Bakery sales | | Restaurant Group | | — | | | 8.4 | | | 0.3 | | | 16.6 | |
| Franchise and other | | Restaurant Group | | 0.2 | | | 1.0 | | | 0.3 | | | 2.0 | |
| Total restaurant revenue | | | | 166.7 | | | 189.9 | | | 328.8 | | | 357.2 | |
| Other operating revenue: | | | | | | | | | | |
| Real estate and resort | | Corporate and other | | 7.7 | | | 11.5 | | | 12.6 | | | 15.6 | |
| Other | | Corporate and other | | 0.1 | | | 1.0 | | | 0.5 | | | 1.5 | |
| Total other operating revenue | | | | 7.8 | | | 12.5 | | | 13.1 | | | 17.1 | |
| Total operating revenues | | | | $ | 174.5 | | | $ | 202.4 | | | $ | 341.9 | | | $ | 374.3 | |
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
The out-of-period adjustments had the following effect on our results of operations and financial condition as of and for the three months ended June 30, 2021:
i.an increase in Recognized gains (losses), net of $13.2 million,
ii.an increase in Equity in (losses) earnings of unconsolidated affiliates of $6.9 million,
iii.an increase in Income tax expense (benefit) of $4.2 million,
iv.an increase in Net earnings (loss) attributable to Cannae Holdings, Inc. common shareholders of $15.9 million, and
v.an increase in Net earnings (loss) per share of $0.17
The Company has evaluated these out-of-period adjustments and has concluded that the amounts are not material in relation to the estimated full year results for the year ending December 31, 2021 or the trend of earnings.
Note B — Revenue Recognition
Disaggregation of Revenue
Our revenue consists of:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Three months ended June 30, | | Six months ended June 30, |
| | | | 2021 | | 2020 | | 2021 | | 2020 |
| Revenue Stream | | Segment | | Total Revenue |
| Restaurant revenue: | | | | (in millions) |
| Restaurant sales | | Restaurant Group | | $ | 180.5 | | | $ | 99.3 | | | $ | 338.6 | | | $ | 266.3 | |
| Bakery sales | | Restaurant Group | | 8.4 | | | 0 | | | 16.6 | | | 2.2 | |
| Franchise and other | | Restaurant Group | | 1.0 | | | 0.1 | | | 2.0 | | | 0.8 | |
| Total restaurant revenue | | | | 189.9 | | | 99.4 | | | 357.2 | | | 269.3 | |
| Other operating revenue: | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Real estate and resort | | Corporate and other | | 11.5 | | | 3.0 | | | 15.6 | | | 5.8 | |
| Other | | Corporate and other | | 1.0 | | | 0.2 | | | 1.5 | | | 0.5 | |
| Total other operating revenue | | | | 12.5 | | | 3.2 | | | 17.1 | | | 6.3 | |
| Total operating revenues | | | | $ | 202.4 | | | $ | 102.6 | | | $ | 374.3 | | | $ | 275.6 | |
Restaurant revenue consists of restaurant sales, bakery sales,operations, and, to a lesser extent, franchise revenue and other revenue. Restaurant sales include food and beverage sales and gift card breakage, are net of applicable state and local sales taxes and discounts, and are recognized at a point in time as services are performed and goods are provided.
Revenue from bakery operations is recognized at a point in time in the period during which the products are shipped and control transfers to the customer.
Franchise revenue and other revenue consist of development fees and royalties on sales by franchised units. Initial franchise fees are recognized as income upon commencement of the franchise operation and completion of all material services and conditions by the Company. Royalties are calculated as a percentage of the franchisee sales and recognized in the period in which the sales are generated. Revenue resulting from the sale of gift cards is recognized in the period in which the gift card is redeemed and is recorded as deferred revenue until recognized.
Other operating revenue consists of income generated by our resort operations, which includes sales of real estate, lodging rentals, food and beverage sales, and other income from various resort services offered. Revenue is recognized upon closing of the sale of real estate or once goods and services have been provided and billed to the customer.
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
Contract Balances
The following table provides information about trade receivables and deferred revenue:
| | | | June 30, | | December 31, | | June 30, | | December 31, |
| | | 2021 | | 2020 | | 2022 | | 2021 |
| | | (In millions) | | (In millions) |
| Trade receivables, net | Trade receivables, net | $ | 6.3 | | | $ | 17.6 | | Trade receivables, net | $ | 7.3 | | | $ | 17.7 | |
| | Deferred revenue (contract liabilities) | Deferred revenue (contract liabilities) | 15.6 | | | 23.9 | | Deferred revenue (contract liabilities) | 16.1 | | | 23.1 | |
Deferred revenue is recorded primarily for restaurant gift card sales. The unrecognized portion of such revenue is recorded as Deferred revenue in the Condensed Consolidated Balance Sheets. Revenue of $5.3$5.2 million and $9.4$7.6 million, respectively, was recognized in the three and six months ended June 30, 20212022 that was included in Deferred revenue at the beginning of the period. Revenue of $3.4$5.3 million and $13.9$9.4 million, respectively, was recognized in the three and six months ended June 30, 20202021 that was included in Deferred revenue at the beginning of the period.
There was no impairment related to contract balances.
Note C — Fair Value Measurements
The fair value hierarchy established by the accounting standards on fair value measurements includes three levels, which are based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. Financial assets and liabilities that are recorded in the Consolidated Balance Sheets are categorized based on the inputs to the valuation techniques as follows:
Level 1. Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that we have the ability to access.
Level 2. Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability.
Level 3. Financial assets and liabilities whose values are based on model inputs that are unobservable.
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
Recurring Fair Value Measurements
The following table presents our fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of June 30, 20212022 and December 31, 2020,2021, respectively:
| | | | June 30, 2021 | | | June 30, 2022 | |
| | | Level 1 | | Level 2 | | Level 3 | | Total | | | Level 1 | | Level 2 | | Level 3 | | Total | |
| | | (In millions) | | | (In millions) | |
| Assets: | Assets: | | | Assets: | | |
| Equity securities: | Equity securities: | | | Equity securities: | | |
| Ceridian | Ceridian | $ | 1,151.0 | | | $ | 0 | | | $ | 0 | | | $ | 1,151.0 | | | Ceridian | $ | 282.5 | | | $ | — | | | $ | — | | | $ | 282.5 | | |
| Forward Purchase Agreements | 0 | | | 0 | | | 8.1 | | | 8.1 | | | |
| Subscription Agreements | 0 | | | 0 | | | 7.9 | | | 7.9 | | | |
| | Other | 2.1 | | | 0 | | | 0 | | | 2.1 | | | |
| Total equity securities | 1,153.1 | | | 0 | | | 16.0 | | | 1,169.1 | | | |
| Other noncurrent assets: | | | |
| Backstop Agreements | 0 | | | 10.0 | | | 0 | | | 10.0 | | | |
| Paysafe Warrants | 17.9 | | | 0 | | | 0 | | | 17.9 | | | |
| Austerlitz II Warrants | 0 | | | 0 | | | 24.7 | | | 24.7 | | | |
| Total other noncurrent assets | 17.9 | | | 10.0 | | | 24.7 | | | 52.6 | | | |
| Total Assets | $ | 1,171.0 | | | $ | 10.0 | | | $ | 40.7 | | | $ | 1,221.7 | | | |
| Liabilities: | | | | | | | | | |
| | Other accrued liabilities, current | $ | 0 | | | $ | 3.6 | | | $ | 0 | | | $ | 3.6 | | | |
| | Total Liabilities | $ | 0 | | | $ | 3.6 | | | $ | 0 | | | $ | 3.6 | | | |
| | Total equity securities | | Total equity securities | 282.5 | | | — | | | — | | | 282.5 | | |
| Other noncurrent assets: | | Other noncurrent assets: | | |
| | Paysafe Warrants | | Paysafe Warrants | 2.2 | | | — | | | — | | | 2.2 | | |
| | AAII Warrants | | AAII Warrants | — | | | 2.4 | | | — | | | 2.4 | | |
| Total other noncurrent assets | | Total other noncurrent assets | 2.2 | | | 2.4 | | | — | | | 4.6 | | |
| Total Assets | | Total Assets | $ | 284.7 | | | $ | 2.4 | | | $ | — | | | $ | 287.1 | | |
|
| | | | December 31, 2020 | | December 31, 2021 |
| | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total |
| | | (In millions) | | (In millions) |
| | Fixed-maturity securities available for sale: | | | | | | | | |
| Corporate debt securities | $ | 0 | | | $ | 0 | | | $ | 35.2 | | | $ | 35.2 | | |
| | Equity securities: | Equity securities: | | Equity securities: | |
| Ceridian | Ceridian | 1,491.8 | | | 0 | | | 0 | | | 1,491.8 | | Ceridian | $ | 1,044.6 | | | $ | — | | | $ | — | | | $ | 1,044.6 | |
| Forward Purchase Agreements (as defined in Annual Report) | 0 | | | 0 | | | 136.1 | | | 136.1 | | |
| Paysafe Subscription Agreement | 0 | | | 0 | | | 169.6 | | | 169.6 | | |
| Other | Other | 1.6 | | | 0 | | | 0 | | | 1.6 | | Other | — | | | — | | | 0.5 | | | 0.5 | |
| Total equity securities | Total equity securities | $ | 1,493.4 | | | $ | 0 | | | $ | 305.7 | | | $ | 1,799.1 | | Total equity securities | 1,044.6 | | | — | | | 0.5 | | | 1,045.1 | |
| Other noncurrent assets: | | Other noncurrent assets: | |
| S1 Backstop Agreement | | S1 Backstop Agreement | — | | | 12.0 | | | — | | | 12.0 | |
| Paysafe Warrants | | Paysafe Warrants | 5.4 | | | — | | | — | | | 5.4 | |
| AAII Warrants | | AAII Warrants | — | | | 19.3 | | | — | | | 19.3 | |
| Total other noncurrent assets | | Total other noncurrent assets | 5.4 | | | 31.3 | | | — | | | 36.7 | |
| Total assets | Total assets | $ | 1,493.4 | | | $ | 0 | | | $ | 340.9 | | | $ | 1,834.3 | | Total assets | $ | 1,050.0 | | | $ | 31.3 | | | $ | 0.5 | | | $ | 1,081.8 | |
|
Fixed Maturity Securities
Our Level 3 fair value measurement for our fixed maturity securities available for sale are provided by a single third-party pricing service. Depending on security specific characteristics, either an income or a contingent claims approach was utilized in determining fair value of our Level 3 fixed-maturity securities available for sale. Discount rates are the primary unobservable inputs utilized for the securities valued using an income approach. The discount rates used are based on company-specific risk premiums, public company comparable securities, and leveraged loan indices. As discussed in Note A, as a result of the disposition of our Colt securities, we no longer have any Level 3 fixed-maturity securities available for sale as of June 30, 2021.
Equity SecuritiesAAII Warrants
The Forward Purchase Agreements and Subscription AgreementsAAII Warrants are accounted for at fair value pursuant to Accounting Standards Codification ("ASC")ASC Topic 321 Investment - Equity Securities815 Derivatives and Hedging. We utilizedThese private placement warrants are valued using the trading price of AAII's publicly traded warrants (NYSE: ASZ-WT) and are considered a Monte Carlo SimulationLevel 2 fair value measurement.
The following table presents a summary of the changes in determiningthe fair values of Level 3 assets measured on a recurring basis (in millions).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Three Months Ended June 30, 2021 |
| | | Corporate debt | | Forward Purchase | | Subscription | | AAII | | |
| | | | securities | | Agreements | | Agreements | | Warrants | | Total |
| Fair value, beginning of period | | | $ | 35.8 | | | $ | 13.9 | | | $ | 0.7 | | | $ | 36.1 | | | $ | 86.5 | |
| Recognized gain on settlement (1) | | | 1.5 | | | — | | | — | | | — | | | 1.5 | |
| Redemption of corporate debt securities | | | (37.3) | | | — | | | — | | | — | | | (37.3) | |
| Net valuation (loss) gain included in earnings (1) | | | — | | | (5.8) | | | 7.2 | | | (11.4) | | | (10.0) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Fair value, end of period | | | $ | — | | | $ | 8.1 | | | $ | 7.9 | | | $ | 24.7 | | | $ | 40.7 | |
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Six Months Ended June 30, 2021 |
| | | Corporate debt | | Forward Purchase | | Subscription | | AAII | | |
| | | | securities | | Agreements | | Agreements | | Warrants | | Total |
| Fair value, beginning of period | | | $ | 35.2 | | | $ | 136.1 | | | $ | 169.6 | | | $ | — | | | $ | 340.9 | |
Recognized gain on settlement (1) | | | 1.5 | | | — | | | — | | | — | | | 1.5 | |
| Settlement of corporate debt securities | | | (37.3) | | | — | | | — | | | — | | | (37.3) | |
Net valuation (loss) gain included in earnings (1) | | | — | | | (27.4) | | | 16.8 | | | (4.9) | | | (15.5) | |
| Reclassification to investments in unconsolidated affiliates and warrants | | | — | | | (100.6) | | | (178.5) | | | — | | | (279.1) | |
| Purchase of AAII Warrants | | | — | | | — | | | — | | | 29.6 | | | 29.6 | |
Net valuation gain included in other comprehensive earnings (2) | | | 0.6 | | | — | | | — | | | — | | | 0.6 | |
| Fair value, end of period | | | $ | — | | | $ | 8.1 | | | $ | 7.9 | | | $ | 24.7 | | | $ | 40.7 | |
the fair value of these agreements, which is considered to be a Level 3 fair value measurement. The Monte Carlo Simulation model simulates the current security price to a simulated date for the consummation of the underlying initial business combination based on probabilities of consummation. The values of the agreements are then calculated as the difference between the future simulated price and the fixed purchase prices for the underlying securities to be purchased pursuant to the Forward Purchase Agreements and the Subscription Agreements. The primary unobservable input utilized in determining the fair value of the Forward Purchase Agreements and Subscription Agreements is the probability of consummation of the business combinations of each underlying transaction. The probabilities assigned to the consummation of the Austerlitz II Initial Business Combination was 90% and the probability assigned to the consummation of the FTAC Alight Business Combination and the Tailwind QOMPLX Merger was 95%. Determination of such probabilities is based on a hybrid approach of both observed success rates of business combinations for SPACs and the sponsors of FTAC and Austerlitz II's track record for consummating similar transactions. The announced FTAC Alight Merger and Tailwind QOMPLX Merger were also considered in our determination of the probabilities. Based on the total fair value of the Forward Purchase Agreements and Subscription Agreements as of June 30, 2021, changes in the probabilities utilized will not result in a change in fair value that is significant or material to the Company's financial position or results of operations.
Austerlitz II Warrants
The Austerlitz II Warrants are accounted for at fair value pursuant to ASC Topic 815 Derivatives and Hedging. We utilized a modified Black-Scholes option pricing formula in determining the fair value of the Austerlitz II Warrants, which is considered to be a Level 3 fair value measurement. The value is calculated based on the price of the underlying class A common stock of Austerlitz II. The primary unobservable inputs utilized in determining the fair value of the warrants is the 90% probability of success assigned to the consummation of the Austerlitz II Initial Business Combination (further discussed above).
Backstop Agreements
The Backstop Agreements are considered written options and accounted for at fair value. We utilized a Black-Scholes option pricing formula in determining the fair value of the Backstop Agreements, which is considered to be a Level 2 fair value measurement. The value is calculated based on the common stock price of Austerlitz I and Trebia, the amount of time the Backstop Agreements are expected to be outstanding, risk free rates and the volatility of the underlying common stock of Austerlitz I and Trebia.
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
The following table presents a summary of the changes in the fair values of Level 3 assets and liabilities, measured on a recurring basis, for the three and six months ended June 30, 2021 and 2020 (in millions).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended June 30, 2021 | | |
| Corporate debt | | Forward Purchase | | Subscription | | Austerlitz II | | | | |
| | securities | | Agreements | | Agreements | | Warrants | | Total | | |
| | | | | | | | | | | |
| Fair value, beginning of period | $ | 35.8 | | | $ | 13.9 | | | $ | 0.7 | | | $ | 36.1 | | | $ | 86.5 | | | |
| | | | | | | | | | | |
| Recognized gain on settlement (1) | 1.5 | | | 0 | | | — | | | — | | | 1.5 | | | |
| Net valuation loss included in earnings (1) | 0 | | | (5.8) | | | 7.2 | | | (11.4) | | | (10.0) | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Settlement of corporate debt securities | (37.3) | | | 0 | | | 0 | | | 0 | | | (37.3) | | | |
| Fair value, end of period | $ | 0 | | | $ | 8.1 | | | $ | 7.9 | | | $ | 24.7 | | | $ | 40.7 | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | Three months ended June 30, 2020 |
| Corporate debt | | Forward Purchase | | | | | | |
| | securities | | Agreements | | | | | | Total |
| | | | | | | | | |
| Fair value, beginning of period | $ | 26.1 | | | $ | 0 | | | | | | | $ | 26.1 | |
| | | | | | | | | |
| | | | | | | | | |
| Net valuation gain included in earnings (1) | 0 | | | 12.5 | | | | | | | 12.5 | |
| Net valuation gain included in other comprehensive earnings (2) | 7.8 | | | 0 | | | | | | | 7.8 | |
| Fair value, end of period | $ | 33.9 | | | $ | 12.5 | | | | | | | $ | 46.4 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Six Months Ended June 30, 2021 |
| Corporate debt | | Forward Purchase | | Subscription | | Austerlitz II | | |
| | securities | | Agreements | | Agreements | | Warrants | | Total |
| | | | | | | | | |
| Fair value, beginning of period | $ | 35.2 | | | $ | 136.1 | | | $ | 169.6 | | | $ | 0 | | | $ | 340.9 | |
| | | | | | | | | |
| Recognized gain on settlement (1) | 1.5 | | | 0 | | | | | | | 1.5 | |
| Net valuation (loss) gain included in earnings (1) | 0 | | | (27.4) | | | 16.8 | | | (4.9) | | | (15.5) | |
| Reclassification to equity method investment in Paysafe and Paysafe Warrants | 0 | | | (100.6) | | | (178.5) | | | 0 | | | (279.1) | |
| Purchase of Austerlitz II Warrants | 0 | | | 0 | | | 0 | | | 29.6 | | | 29.6 | |
| Net valuation gain included in other comprehensive earnings (2) | 0.6 | | | 0 | | | 0 | | | 0 | | | 0.6 | |
| Redemption of corporate debt securities | (37.3) | | | 0 | | | 0 | | | 0 | | | (37.3) | |
| Fair value, end of period | $ | 0 | | | $ | 8.1 | | | $ | 7.9 | | | $ | 24.7 | | | $ | 40.7 | |
| | | | | | | | | | | | | | | | | | | | | |
| | Six months ended June 30, 2020 |
| Corporate debt | | Forward Purchase | | | | | | |
| | securities | | Agreements | | | | | | Total |
| | | | | | | | | |
| Fair value, beginning of period | $ | 19.2 | | | $ | 0 | | | | | | | $ | 19.2 | |
| | | | | | | | | |
| | | | | | | | | |
| Net valuation gain included in earnings (1) | 0 | | | 12.5 | | | | | | | 12.5 | |
| Net valuation gain included in other comprehensive earnings (2) | 14.7 | | | 0 | | | | | | | 14.7 | |
| Fair value, end of period | $ | 33.9 | | | $ | 12.5 | | | | | | | $ | 46.4 | |
(1) Included in Recognized gains and (losses), net on the Condensed Consolidated Statements of Operations
(2) Included in Unrealized gain on investments and other financial instruments, net (excluding investments in unconsolidated affiliates) on the Condensed Consolidated Statements of Comprehensive Earnings (Loss) Earnings
We had no material assets or liabilities valued on a recurring basis using Level 3 inputs as of or for the six months ended June 30, 2022.
Transfers into or out of the Level 3 fair value category occur when unobservable inputs become more or less significant to the fair value measurement or upon a change in valuation technique. There were no transfers between Level 2 and Level 3 in the three and six months ended June 30, 20212022 and 2020.
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
2021.All of the unrealized gain on investments and other financial instruments, net (excluding investments in unconsolidated affiliates) on our Condensed Consolidated Statements of Comprehensive Earnings (Loss) Earnings for the three and six months ended June 30, 2021 and 2020 relate to fixed maturity securities that are considered Level 3 fair value measures.
Additional information regarding the fair value of our investment portfolio is included in Note D.
The carrying amounts of trade receivables and notes receivable approximate fair value due to their short-term nature. The fair value of our notes payable is included in Note F.
Note D — Investments
Equity Securities
Gains (losses) on equity securities included in Recognized gains and losses, net on the Condensed Consolidated Statements of Operations consisted of the following for the three and six months ended June 30, 20212022 and 2020 (in millions):2021:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| | 2021 | | 2020 | | 2021 | | 2020 |
| Net gains (losses) recognized during the period on equity securities | $ | 148.3 | | | $ | 578.9 | | | $ | (169.3) | | | $ | 1,263.8 | |
| Less: net gains (losses) recognized during the period on equity securities sold or transferred during the period | 6.5 | | | 53.0 | | | (21.8) | | | 180.8 | |
| Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date | $ | 141.8 | | | $ | 525.9 | | | $ | (147.5) | | | $ | 1,083.0 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| (in millions) |
| Net (losses) gains recognized during the period on equity securities | $ | (152.0) | | | $ | 148.3 | | | $ | (476.5) | | | $ | (169.3) | |
| Less: net (losses) gains recognized during the period on equity securities sold or transferred during the period | (24.3) | | | 6.5 | | | (132.2) | | | (21.8) | |
| Unrealized (losses) gains recognized during the reporting period on equity securities held at the reporting date | $ | (127.7) | | | $ | 141.8 | | | $ | (344.3) | | | $ | (147.5) | |
Investments in Unconsolidated Affiliates
Investments in unconsolidated affiliates recorded using the equity method of accounting as of June 30, 2021 and December 31, 2020 consisted of the following (in millions):
| | | | | | | | | | | | | | | | | |
| | Ownership at June 30, 2021 | | June 30,
2021 | | December 31,
2020 |
| Dun & Bradstreet | 15.8 | % | | $ | 580.0 | | | $ | 653.2 | |
| Paysafe (1) | 7.5 | % | | 823.0 | | | 0 | |
| Optimal Blue | 20.0 | % | | 272.5 | | | 279.8 | |
| AmeriLife | 19.8 | % | | 114.3 | | | 121.1 | |
| Other | various | | 198.9 | | | 398.9 | |
| Total | | | $ | 1,988.7 | | | $ | 1,453.0 | |
(1) Represents the Company's direct and indirect interest in Paysafe.
Equity in (losses) earnings of unconsolidated affiliates for the three and six months ended June 30, 2021 and 2020 consisted of the following (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| | 2021 | | 2020 | | 2021 | | 2020 |
| Dun & Bradstreet | $ | (9.2) | | | $ | (55.5) | | | $ | (15.6) | | | $ | (45.4) | |
| Ceridian (1) | 0 | | | 0 | | | 0 | | | 1.5 | |
| Optimal Blue | (4.2) | | | 0 | | | (8.2) | | | 0 | |
| Senator JV | 0 | | | 138.1 | | | (1.2) | | | 79.3 | |
| AmeriLife | (1.1) | | | (3.5) | | | (7.0) | | | (3.5) | |
| Other | 5.7 | | | (21.6) | | | 77.1 | | | (27.1) | |
| Total | $ | (8.8) | | | $ | 57.5 | | | $ | 45.1 | | | $ | 4.8 | |
(1) The amount for the six months ended June 30, 2020 represents the Company's equity in earnings of Ceridian in the three months ended March 31, 2020 prior to the change in accounting for the investment beginning March 31, 2020.
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
Investments in unconsolidated affiliates recorded using the equity method of accounting as of June 30, 2022 and December 31, 2021 consisted of the following:
| | | | | | | | | | | | | | | | | |
| | Ownership at June 30, 2022 | | June 30, 2022 | | December 31, 2021 |
| | | (in millions) |
| Dun & Bradstreet | 20.3 | % | | $ | 968.2 | | | $ | 595.0 | |
| Alight/FTAC Sponsor | 9.7 | % | | 531.0 | | | 505.0 | |
| Sightline | 33.5 | % | | 256.1 | | | 269.5 | |
| System1/Trebia Sponsor | 24.2 | % | | 247.2 | | | — | |
| AmeriLife | 19.6 | % | | 111.3 | | | 112.7 | |
| Paysafe | 8.3 | % | | 107.9 | | | 431.1 | |
| Optimal Blue | — | % | | — | | | 267.7 | |
| Other | various | | 87.9 | | | 80.3 | |
| Total | | | $ | 2,309.6 | | | $ | 2,261.3 | |
Dun & Bradstreet
Based onThe aggregate fair value of our direct and indirect ownership in the common stock of unconsolidated affiliates that have quoted market prices the aggregate value of our ownership of Dun & Bradstreet common stock was $1.5 billion as of June 30, 2021.
As of June 30, 2021, we hold less than 20%2022 consisted of the
outstanding common equity of Dun & Bradstreet but continue to account for our investment under the equity method because we continue to exert significant influence: (a) through our 15.8% ownership, (b) because certain of our senior management and directors serve on D&B's board of directors, and (c) because we are party to an agreement with other of its equity sponsors, which collectively own greater than 50% of the outstanding voting equity of Dun & Bradstreet, pursuant to which we have agreed to collectively vote together on all matters related to the election of directors to the Dun & Bradstreet board of directors for a period of three years.following: | | | | | |
| June 30, 2022 |
| (in millions) |
| Dun & Bradstreet | $ | 1,326.8 | |
| Alight | 354.2 | |
| System1 | 189.4 | |
| Paysafe | 116.5 | |
Effective January 1, 2021, D&B made a change in accounting principle related to removal of lag accounting for its international operations that they believe to be preferable. The change in accounting policy was applied retrospectively by D&B. The impact of this change in accounting principle did not have a material impact to our results of operations or financial condition and was applied to our current period accounting for our investment in D&B.
Summarized financial information for Dun & Bradstreet for the relevant dates and time periods included in Investments in unconsolidated affiliates and Equity in (losses) earnings (losses) of unconsolidated affiliates in our Condensed Consolidated Balance Sheetsfor the three and Statementssix months ended June 30, 2022 and 2021 consisted of Operations, respectively, is presented below. Financial informationthe following:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| (in millions) |
| Dun & Bradstreet | $ | (2.6) | | | $ | (9.2) | | | $ | (10.1) | | | $ | (15.6) | |
Paysafe/Trasimene Capital FT, LP II ("FTAC II Sponsor")(1) | (96.7) | | | 4.5 | | | (89.9) | | | 71.5 | |
| Alight/FTAC Sponsor | 2.5 | | | — | | | 9.2 | | | — | |
| System1/Trebia Sponsor | (9.1) | | | — | | | 3.7 | | | — | |
| Optimal Blue | — | | | (4.2) | | | (1.3) | | | (8.2) | |
| AmeriLife | 2.7 | | | (1.1) | | | (2.4) | | | (7.0) | |
| Sightline | (4.2) | | | (0.1) | | | (8.5) | | | (0.1) | |
| Other | (0.6) | | | 1.3 | | | 23.2 | | | 4.5 | |
| Total | $ | (108.0) | | | $ | (8.8) | | | $ | (76.1) | | | $ | 45.1 | |
(1) The amount for the three and six months ended June 30, 20202021 represents thatthe Company's equity in earnings of Star Parent, L.P. ("Star Parent"),FTAC II Sponsor only.
Dun & Bradstreet
As of June 30, 2022, there was a $239.3 million difference between the former parentamount of our recorded ownership interest in D&B through whichand the Company was invested prioramount of the Company's ratable portion of the underlying equity in the net assets of D&B. The basis difference is primarily a result of our increased ownership resulting from the Optimal Blue Disposition. As of June 30, 2022, $144.5 million of such basis difference is allocated to D&B's initial public offering in July 2020.
| | | | | | | | | | | |
| | June 30,
2021 | | December 31,
2020 |
| (In millions) |
| Total current assets | $ | 624.2 | | | $ | 874.4 | |
| Goodwill and other intangible assets, net | 8,378.4 | | | 7,672.7 | |
| Other assets | 857.8 | | | 673.2 | |
| Total assets | $ | 9,860.4 | | | $ | 9,220.3 | |
| | | |
| Current liabilities | $ | 972.9 | | | $ | 828.1 | |
| Long-term debt | 3,545.8 | | | 3,255.8 | |
| Other non-current liabilities | 1,693.1 | | | 1,552.5 | |
| Total liabilities | 6,211.8 | | | 5,636.4 | |
| | | |
| Total equity | 3,648.6 | | | 3,583.9 | |
| Total liabilities and equity | $ | 9,860.4 | | | $ | 9,220.3 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| | 2021 | | 2020 | | 2021 | | 2020 |
| (In millions) |
| Total revenues | $ | 520.9 | | | $ | 418.7 | | | $ | 1,025.4 | | | $ | 814.4 | |
| Loss before income taxes | (8.5) | | | (203.0) | | | (42.2) | | | (203.6) | |
| Net loss | (50.8) | | | (174.7) | | | (74.1) | | | (100.4) | |
| Dividends attributable to preferred equity and noncontrolling interest expense | (0.9) | | | (33.3) | | | (2.6) | | | (65.7) | |
| Net loss attributable to Dun & Bradstreet | (51.7) | | | (208.0) | | | (76.7) | | | (166.1) | |
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
Optimal Blue
On September 15, 2020, we closed on our $289.0 million investment in Optimal Blue. Summarized financial information for Optimal BlueD&B for the relevant dates and time periods included in Investments in unconsolidated affiliates and Equity in earnings (losses) of unconsolidated affiliates in our Condensed Consolidated Balance Sheets and Statements of Operations, respectively, is presented below.
| | | June 30,
2021 | | December 31,
2020 | | June 30,
2022 | | December 31,
2021 | |
| | (In millions) | | (In millions) | |
| Total current assets | Total current assets | $ | 56.6 | | | $ | 38.0 | | Total current assets | $ | 748.1 | | | $ | 718.0 | | |
| Goodwill and other intangible assets, net | Goodwill and other intangible assets, net | 1,773.7 | | | 1,831.3 | | Goodwill and other intangible assets, net | 7,978.8 | | | 8,317.8 | | |
| Other assets | Other assets | 101.5 | | | 100.1 | | Other assets | 969.7 | | | 961.4 | | |
| Total assets | Total assets | $ | 1,931.8 | | | $ | 1,969.4 | | Total assets | $ | 9,696.6 | | | $ | 9,997.2 | | |
| | Current liabilities | Current liabilities | $ | 33.9 | | | $ | 28.9 | | Current liabilities | $ | 948.0 | | | $ | 1,004.9 | | |
| Long-term debt | Long-term debt | 493.5 | | | 493.0 | | Long-term debt | 3,679.8 | | | 3,716.7 | | |
| Other non-current liabilities | Other non-current liabilities | 97.7 | | | 105.0 | | Other non-current liabilities | 1,423.1 | | | 1,530.3 | | |
| Total liabilities | Total liabilities | 625.1 | | | 626.9 | | Total liabilities | 6,050.9 | | | 6,251.9 | | |
| Redeemable member's interest | 578.0 | | | 578.0 | | |
| Additional paid-in capital | 817.4 | | | 813.0 | | |
| Retained deficit | (88.7) | | | (48.5) | | |
| Total redeemable member's interest and equity | 1,306.7 | | | 1,342.5 | | |
| Total liabilities, redeemable member's interest and equity | $ | 1,931.8 | | | $ | 1,969.4 | | |
| Total equity | | Total equity | 3,645.7 | | | 3,745.3 | | |
| Total liabilities and equity | | Total liabilities and equity | $ | 9,696.6 | | | $ | 9,997.2 | | |
| | | | | | | | | | | | | | | | | Three months ended June 30, | | Six months ended June 30, |
| | | Three Months Ended June 30, 2021 | | | Six Months Ended June 30, 2021 | | | | 2022 | | 2021 | | 2022 | | 2021 |
| | (In millions) | | (In millions) |
| Total revenues | Total revenues | $ | 44.3 | | | | $ | 85.9 | | | | Total revenues | $ | 537.3 | | | $ | 520.9 | | | $ | 1,073.3 | | | $ | 1,025.4 | |
| Operating loss | (13.9) | | | | (31.1) | | | | |
| Loss before income taxes | | Loss before income taxes | (0.7) | | | (8.5) | | | (40.5) | | | (42.2) | |
| Net loss | Net loss | (18.7) | | | | (40.2) | | | | Net loss | — | | | (50.8) | | | (29.8) | | | (74.1) | |
| Net income attributable to noncontrolling interest | | Net income attributable to noncontrolling interest | (1.8) | | | (0.9) | | | (3.3) | | | (2.6) | |
| Net loss attributable to Dun & Bradstreet | | Net loss attributable to Dun & Bradstreet | (1.8) | | | (51.7) | | | (33.1) | | | (76.7) | |
As of June 30, 2022, there was a $41.1 million difference between the amount of our recorded ownership interest in System1 and Trebia Sponsor and the amount of the Company's ratable portion of the underlying equity in the net assets of System1 and Trebia Sponsor. All of the basis difference has been allocated to equity method goodwill, which represents the excess of our basis difference over our equity in System 1 and Trebia Sponsor's net assets that are not attributable to their identifiable net assets.
Paysafe
Based on quoted market prices, the aggregate value of our ownership of Paysafe common stock was $202.6 million as of March 31, 2022 and the book value of our investment in Paysafe was $438.6 million prior to any impairment. Due primarily to the quantum of the decrease in the fair market value of our investment, as well as negative trends in the alternative payments industry and decreasing market multiples of peer companies, management determined the decrease in value of our investment in Paysafe was other-than-temporary. Accordingly, we recorded an impairment of $236.0 million in the six months ended June 30, 2022 which is included in Recognized losses, net, on our Condensed Consolidated Statement of Operations. As a result of the impairment, the basis difference between the carrying value of our investment in Paysafe and the Company’s ratable portion of Paysafe’s net assets which was previously attributable to equity method goodwill was eliminated.
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
Paysafe
On March 30, 2021, we closed on our investment in Paysafe. We account for our investment in Paysafe as an equity method investment.
Based on quoted market prices, the aggregate value of our direct and indirect ownership of Paysafe common stock was $654.5 million as of June 30, 2021.
As of June 30, 2021, we hold less than 20% of the outstanding common equity of Paysafe but we account for our investment under the equity method because we continue to exert significant influence: (a) through our 7.5% direct and indirect ownership, (b) because certain of our senior management and directors serve on Paysafe's board of directors, including the chairman of our Board, William P. Foley II, who is also the chairman of Paysafe's board of directors, and (c) because we are party to an agreement with other of its equity investors pursuant to which we have the ability to appoint or be consulted on the election of the majority of the total directors of Paysafe.
As of June 30, 2021, there is a $567.8 million difference between the amount of our recorded direct investment in Paysafe and the amount of the Company's ratable portion of the underlying equity in net assets of Paysafe. We are currently evaluating the accounting treatment of such difference.
We report our equity in earnings or loss of Paysafe on a three-month lag. Because of the timing of the closing of the transaction and our lag reporting for Paysafe, there is no equity in earnings or loss of Paysafe included in the Company's results of operations for the three and six months ended June 30, 2021. Summarized balance sheet information for Paysafe for the relevant dates and time periods included in Investments in unconsolidated affiliates in our Condensed Consolidated Balance Sheets is presented below.
| | | | | | | |
| March 31,
2021 | | |
| (In millions) |
Total current assets | $ | 1,978.0 | | | |
| | | |
Goodwill and other intangible assets, net | 4,929.0 | | | |
| | | |
| | | |
Other assets | 70.5 | | | |
Total assets | $ | 6,977.5 | | | |
| | | |
Current liabilities | $ | 1,757.0 | | | |
Long-term debt | 2,052.6 | | | |
Other liabilities | 425.2 | | | |
Total liabilities | 4,234.8 | | | |
| | | |
| | | |
Total equity | 2,742.7 | | | |
Total liabilities and equity | $ | 6,977.5 | | | |
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
AmeriLife
On March 18, 2020, we closed on our $125.0 million investment in the AmeriLife Joint Venture. We account for our investment in AmeriLife as an equity method investment and report our equity in earnings or loss of AmeriLife on a three-month lag. Accordingly, our net earnings for the three and six months ended June 30, 2021 includes our equity in AmeriLife’s losses for the three and six months ended March 31, 2021 and our net earnings for the three and six months ended June 30, 2020 include our equity in AmeriLife's losses for the period from March 18, 2020 through March 31, 2020. Summarized financial information for AmeriLife for the relevant dates and time periods included in Investments in unconsolidated affiliates and Equity in earnings (losses) of unconsolidated affiliates in our Condensed Consolidated Balance Sheets and Statements of Operations, respectively, is presented below.
| | | | | | | | | | | | | |
| | March 31,
2021 | | September 30,
2020 | | |
| (In millions) |
| Total current assets | $ | 132.0 | | | $ | 108.5 | | | |
| Goodwill and other intangible assets, net | 1,593.9 | | | 1,370.4 | | | |
| Other assets | 23.4 | | | 16.4 | | | |
| Total assets | $ | 1,749.3 | | | $ | 1,495.3 | | | |
| | | | | |
| Current liabilities | $ | 79.3 | | | $ | 53.1 | | | |
| Long-term debt | 798.0 | | | 645.2 | | | |
| Other non-current liabilities | 27.1 | | | 14.7 | | | |
| Total liabilities | 904.4 | | | 713.0 | | | |
| Members' equity | 577.8 | | | 607.4 | | | |
| Noncontrolling interest - nonredeemable | 267.1 | | | 174.9 | | | |
| Total member's equity | 844.9 | | | 782.3 | | | |
| Total liabilities and members' equity | $ | 1,749.3 | | | $ | 1,495.3 | | | |
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2021 | | Period from March 18, 2020 to March 31, 2020 | | Six Months Ended March 31, 2021 | | |
| (In millions) |
| Total revenues | $ | 149.3 | | | $ | 14.7 | | | $ | 280.3 | | | |
| Operating income (loss) | 26.6 | | | (16.1) | | | 24.2 | | | |
| Net income (loss) | 14.2 | | | (16.9) | | | 0.5 | | | |
| Income attributable to noncontrolling interests | 19.8 | | | 0.4 | | | 30.9 | | | |
| Net loss attributable to AmeriLife | (5.6) | | | (17.3) | | | (30.4) | | | |
Fixed Maturity Securities
As discussed in Note A, we received the full payment for the Colt corporate debt securities and as of June 30, 2021, we held no fixed maturity securities. The carrying amounts and fair values of our available for sale fixed maturity securities at December 31, 2020 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2020 |
| | Carrying
Value | | Cost Basis | | Unrealized
Gains | | Unrealized
Losses | | Fair
Value |
| | (In millions) |
| Fixed maturity securities available for sale: | | | | | | | | | |
| Corporate debt securities | $ | 35.2 | | | $ | 22.0 | | | $ | 13.2 | | | $ | 0 | | | $ | 35.2 | |
| | | | | | | | | |
| Total | $ | 35.2 | | | $ | 22.0 | | | $ | 13.2 | | | $ | 0 | | | $ | 35.2 | |
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
The cost basis of fixed maturity securities available for sale includes an adjustment for amortized premium or discount and other-than-temporary-impairment recognized in earnings since the date of purchase. During the six months ended June 30, 2021 and 2020, we incurred 0 other-than-temporary impairment charges relating to corporate debt securities.
Equity Security Investments Without Readily Determinable Fair Values
We account for our investment inownership of preferred equity of QOMPLX and certain other ownership interests at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly market transactions. As of June 30, 2022 and December 31, 2021, we have $30.0$24.8 million and $54.2 million, respectively, recorded for our investment in the equityownership of QOMPLX and certain other ownership interests, which is included in Other long term investments and noncurrent assets on our Condensed Consolidated Balance Sheet. We have not recorded any upward or downward adjustmentsSheets.
During the quarter ended June 30, 2022, we determined it was necessary to record an impairment of $32.8 million to our ownership interest in QOMPLX. The amount of the impairment charge was determined based on the valuation of QOMPLX implied by a pending third-party investment in the preferred equity of QOMPLX.
Note E — Variable Interest Entities
The Company, in the normal course of business, engages in certain activities that involve variable interest entities ("VIEs"), which are legal entities in which a group of equity investors individually lack any of the characteristics of a controlling interest. The primary beneficiary of a VIE is generally the enterprise that has both the power to direct the activities most significant to the economic performance of the VIE and the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. The Company evaluates its interest in certain entities to determine if these entities meet the definition of a VIE and whether the Company is the primary beneficiary and should consolidate the entity based on the variable interests it held both at inception and when there is a change in circumstances that requires a reconsideration. If the Company is determined to be the primary beneficiary of a VIE, it must account for the VIE as a consolidated subsidiary. If the Company is determined not to be the primary beneficiary of a VIE but holds a variable interest in the entity, such variable interests are accounted for under accounting standards as deemed appropriate. As of and for the periods ended June 30, 2021 and December 31, 2020, we are not the primary beneficiary of any VIEs.
Unconsolidated VIEs
The table below summarizes select information related to variable interests held by the Company as of June 30, 2021 and December 31, 2020, of which we are not the primary beneficiary:
| | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2021 | | December 31, 2020 |
| | | Total Assets | | Maximum Exposure | | Total Assets | | Maximum Exposure |
| | (in millions) |
| Investments in unconsolidated affiliates | | $ | 146.1 | | | $ | 146.1 | | | $ | 299.7 | | | $ | 299.7 | |
| Paysafe PIPE subscription | | 0 | | | 0 | | | 169.6 | | | 169.6 | |
| Forward Purchase Agreements | | 8.1 | | | 8.1 | | | 136.1 | | | 136.1 | |
| | | | | | | | |
| Backstop Agreements | | 10.0 | | | 10.0 | | | 0 | | | 0 | |
| | | | | | | | |
Investments in Unconsolidated Affiliates
As of June 30, 2021, we held variable interests in certain unconsolidated affiliates, which are primarily comprised of our investments in the sponsors of FTAC, Trebia, Austerlitz I and Austerlitz II and funds that hold minority ownership interests primarily in healthcare-related entities. Cannae does not have the power to direct the activities that most significantly impact the economic performance of these unconsolidated affiliates; therefore, we are not the primary beneficiary.
The principal risk to which these investments and funds are exposed is the credit risk of the underlying investees. We do not provide any implicit or explicit liquidity guarantees or principal value guarantees to these VIEs. The assets are included in Investments in unconsolidated affiliates on the Condensed Consolidated Balance Sheets and accounted for under the equity method of accounting.
See Note D for further discussion of our accounting for investments in unconsolidated affiliates.
Forward Purchase, Subscription and Backstop Agreements
In addition to the Forward Purchase Agreements, Alight Subscription Agreement, and Backstop Agreements, the Company made investments in the sponsors of FTAC, Trebia Austerlitz I and Austerlitz II, which are considered VIEs for which we are not the primary beneficiary and are included in Investments in unconsolidated affiliates. The assets represented by the Forward Purchase Agreements, Alight Subscription Agreement and Backstop Agreements are accounted for as investments in equity
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
securities pursuant to ASC 321 or as written options. See Notes C and D for further information on our accounting for equity securities and written options.
Note F — Notes Payable
Notes payable, net consists of the following:
| | | | | June 30,
2021 | | December 31,
2020 | | | June 30,
2022 | | December 31,
2021 |
| | | | (In millions) | | | (In millions) |
| 99 Term Loan | | $ | 14.4 | | | $ | 16.8 | | |
| 99 Revolver | | 0 | | | 5.0 | | |
| | 2020 Margin Facility | 2020 Margin Facility | | 0 | | | 0 | | 2020 Margin Facility | | $ | — | | | $ | — | |
| | | 2021 Restaurants Credit Facility | | 2021 Restaurants Credit Facility | | 9.7 | | | — | |
| Brasada Interstate Loans | | Brasada Interstate Loans | | 11.7 | | | 12.6 | |
| FNF Revolver | FNF Revolver | | 0 | | | 0 | | FNF Revolver | | 84.7 | | | — | |
| Brasada Interstate Loans | | 12.9 | | | 13.1 | | |
| Other | Other | | 24.2 | | | 28.6 | | Other | | 0.6 | | | 3.8 | |
| Notes payable, total | Notes payable, total | | $ | 51.5 | | | $ | 63.5 | | Notes payable, total | | $ | 106.7 | | | $ | 16.4 | |
| | Less: Notes payable, current | Less: Notes payable, current | | 26.8 | | | 11.3 | | Less: Notes payable, current | | 10.8 | | | 2.3 | |
| Notes payable, long term | Notes payable, long term | | $ | 24.7 | | | $ | 52.2 | | Notes payable, long term | | $ | 95.9 | | | $ | 14.1 | |
At June 30, 2021,2022, the carrying value of our outstanding notes payable approximates fair value. The respective carrying values of the loans under the 99 Restaurants Credit Facilityvalue and the B Note, Development Loan and Line of Credit Loan pursuant to the Interstate Credit Agreement, each as defined below, approximate fair value as they are variable rate instruments with monthly reset periods that reflect current market rates. The revolving credit facilities are considered Level 2 financial liabilities. The fixed-rate A Note, as defined below, pursuant to the Interstate Credit Agreement approximates fair value as of June 30, 2021.
2020 Margin Facility
On November 30, 2020, Cannae Funding C, LLC (“Borrower 1”), an indirect wholly-owned special purpose subsidiary of the Company, and Cannae Funding D, LLC (“Borrower 2” and, together with Borrower 1, the “Borrowers”), an indirect wholly-owned special purpose subsidiary of the Company, entered into a Margin Loan Agreement (the “2020 Margin Facility”) with the lenders from time to time party thereto and Royal Bank of Canada. The Company concurrently entered into a guaranty (the “Guaranty Agreement”) for the benefit of each of the lenders to the 2020 Margin Facility pro rata to their loan commitments, pursuant to which the Company absolutely, unconditionally and irrevocably guaranteed all of the Borrowers’ obligations under the 2020 Margin Facility for a period of up to one year after the later of (i) the conditions precedent to the obligations of the lenders under the Loan Agreement being met (the date when such conditions have been met, the “Closing Date”) or (ii) as relevant, additional collateral or additional loan commitments being provided. Under the 2020 Margin Facility, the Borrowers may initially borrow up to $100.0 million in revolving loans and, subject to certain terms and conditions, may enter into an amendment to the 2020 Margin Facility to borrow up to $500.0 million in revolving loans (including the initial revolving loans) from the same initial lender and/or additional lenders on substantially identical terms and conditions as the initial revolving loans. The 2020 Margin Facility matures on the 36-month anniversary of the Closing Date. All outstanding amounts under the 2020 Margin Facility bear interest quarterly at a rate per annum equal to a three-month LIBOR rate plus an applicable margin. Interest will be payable in kind unless the Borrowers elect to pay interest in cash or a cumulative cap is exceeded. The Borrowers’ obligations under the 2020 Margin Facility will be secured by a first priority lien on (i) 6,000,0006 million shares of common stock, par value $0.01 per share (the “Ceridian Common Stock”), of Ceridian, which the Company contributed to Borrower 1, and (ii) 19,000,00019 million shares of common stock, par value $0.0001 per share (the “DNB Common Stock”), of D&B, which the Company contributed to Borrower 2. The Borrowers may also, at their discretion, post up to an additional 4,000,0004 million shares of Ceridian Common Stock and/or 11,000,00011 million shares of DNB Common StockD&B as collateral for the revolving loans from time to time after the Closing Date, subject to certain notice, guaranty, average daily trading volume and other requirements. The 2020 Margin Facility requires the Borrowers to maintain a certain loan-to-value ratio (based on the value of Ceridian Common Stock and DNB Common Stock)D&B shares). In the event the Borrowers fail to maintain such loan-to-value ratio, the Borrowers must post additional cash collateral under the Loan Agreement and/or elect to repay a portion of the revolving loans thereunder, or sell the Ceridian Common Stock and/or DNB Common StockD&B shares and use the proceeds from such sale to prepay a portion of the revolving loans thereunder.
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
On May 12, 2022, the Borrowers entered into a fourth amendment agreement to the 2020 Margin Facility, which reduced the borrowing capacity from $300.0 million to $250.0 million and changed the interest rate to three-month adjusted SOFR plus an applicable margin.
As of June 30, 2021,2022, there was 0 outstanding balance and $100.0under the 2020 Margin Facility, $250.0 million of unused capacity under the 2020 Margin Facility with an option to increase the capacity to $500.0 million upon amendment.amendment, and the 2020 Margin Facility was secured by 6 million shares of Ceridian and 35 million shares of D&B.
99 Restaurants Credit Facility
On December 21, 2018,31, 2021, 99 Restaurants, LLC and 99 West, LLC, both wholly-owned subsidiaries of 99 Restaurants, O'Charley's LLC, a direct, wholly-owned subsidiary of 99 RestaurantsO'Charley's and Restaurant Growth Services, LLC, a 65.4%-owned subsidiary of the Company (collectively, the "Restaurant Borrowers") entered into a credit agreement (the "99 Restaurants Credit Facility"), as amended from time to time, with Fifth Third Bank and other lenders thereto. The 99 Restaurants Credit Facility provides for (i) a maximum revolving loan of $15.0 million (the “99 Revolver”) with a maturity date of December 21, 2023; (ii) a maximum term loan of $37.0 million (the "99 Term Loan") with monthly installment repayments through November 30, 2023 and a maturity date of December 21, 2023 for the outstanding unpaid principal balance; and (iii) a maximum Development Line of Credit loan (the “99 DLOC Loan”) of up to $10.0 million. Interest on the 99 Credit Facility is based on, at our option, an applicable margin of (x) two and one half percent (2.50%) per annum with respect to Base Rate Loans, as provided therein, and (y) three and one half percent (3.50%) per annum with respect to LIBOR Loans, as provided therein. The 99 Restaurants Credit Facility also allows for 99 Restaurants LLC to request up to $5.0 million of letters of credit commitments and $2.5 million in swingline debt from Fifth Third Bank as the administrative agent. The obligations of the 99 Restaurants LLC under the 99 Restaurants Credit Facility are guaranteed by 99 Restaurants. The 99 Restaurants Credit Facility is subject to affirmative, negative and financial covenants customary for financings of this type, including, among other things, limits on the Borrower’s creation of liens, sales of assets, incurrence of indebtedness, restricted payments and transactions with affiliates. The 99 Restaurants Credit Facility includes customary events of default for facilities of this type (with customary grace periods, as applicable). The 99 Restaurants Credit Facility provides that, upon the occurrence of an event of default, Fifth Third Bank, as administrative agent, may (i) declare the principal of, and any and all accrued and unpaid interest and all other amounts owed in respect of, the loans immediately due and payable, (ii) terminate loan commitments and (iii) exercise all other rights and remedies available to Fifth Third Bank or the lenders under the loan documents. On December 1, 2020, 99 Restaurants LLC entered into a waiver, consent and amendment to the 99 Restaurants Credit Facility pursuant to which(the "2021 Restaurants Credit Facility"). The 2021 Restaurants Credit Facility principally provides for: (i) a payment was made, and the borrowing capacity under the 99 Revolver was permanently reduced by, $7.5 million, the borrowing capacity under the 99 Revolver will be reduced by another $2.5revolving credit commitment of $25.0 million in the aggregate (the "Restaurant Revolver") and (ii) a sub-facility for an aggregate of $15.0 million of letters of credit. The 2021 the applicable margin was increasedRestaurants Credit Facility matures on December 31, 2026. The 2021 Restaurants Credit Facility is secured by 1.00% with respect to both Base Rate Loans and LIBOR Loans, the lender's commitment to provide the 99 DLOC Loan was terminated, and certain assets of the financialRestaurant Borrowers and their subsidiaries and contains customary covenants were added or waived until the second quarterand events of 2021, among other changes.default.
As of June 30, 2021, interest on the 99 Term Loan and 99 Revolver is payable monthly at2022, there was a rate of 4.63% and 6.75%, respectively, and there is $6.5$10.0 million of aggregate borrowing capacity under the 99 Revolver.outstanding principal amount.
Brasada Interstate Loans
On January 29, 2016, FNF NV Brasada, LLC, an Oregon limited liability company and majority-owned subsidiary of Cannae ("NV Brasada"), entered into a credit agreement with an aggregate borrowing capacity of $17.0 million (the “Interstate Credit Agreement”) originally with Bank of the Cascades, and later assigned to First Interstate Bank, as lender. TheSubsequent to various amendments from 2016 through 2022, the Interstate Credit Agreement currently provides for (i) a $12.5 million acquisition loan (the "Acquisition Loan"). On June 13, 2018, the Interstate Credit Agreement was modified to add an additional line of credit of $3.6, (ii) a $2.1 million construction loan ("C Note") and to assign the(iii) a $0.7 million line of credit loan from the Bank of the Cascades to First Interstate Bank. Pursuant to(the "Interstate LOC" and collectively with the Acquisition Loan NVand C Note, the "Brasada Interstate Loans").
The Brasada executed a $6.3 million ("A Note"), which accrues interest at a rate of 4.51% per annum and matures on the tenth anniversary of the issuance thereof, and a $6.3 million ("B Note"), which accrues interest at the rate of LIBOR plus 225 basis points, adjusted monthly, and matures on the tenth anniversary of the issuance thereof. NV Brasada makes equal monthly payments of principal and interest under the Acquisition Loan. The Interstate Loans are secured by certain single-family residential lots that can be sold for construction, owned by NV Brasada, and certain other operating assets owned by NV Brasada. The Company does not provide any guaranty or stock pledge under the Interstate Credit Agreement.
As of June 30, 2021,2022, the B Note, C NoteAcquisition Loan had $9.9 million outstanding and Line of Credit Loan incurred interest at 2.35%.rates ranging from 2.84% to 4.51%; the C Note had $2.0 million outstanding and incurred interest at 3.05%; and the Interstate LOC had no outstanding balance.
FNF Revolver
On November 17, 2017, Fidelity National Financial, Inc. ("FNF")FNF issued to Cannae a revolver note in aggregate principal amount of up to $100.0 million (themillion. On May 12, 2022, FNF and Cannae amended and restated the revolver note to, among other things, limit the use of proceeds for borrowings thereunder to the repurchase of our own shares of common stock from FNF (as amended and restated, the "FNF Revolver"). Pursuant to the FNF Revolver, FNF may make one or more loans to us in increments of $1.0 million, with up to $100.0 million outstanding at any time. The FNF Revolver accrues interest at LIBORone-month adjusted SOFR plus 450 basis points and matures on the five-year anniversary of the date of the FNF Revolver.November 17, 2025. The maturity date is automatically extended for additional five-year terms unless notice of non-renewal is otherwise provided by either FNF or Cannae, in their sole discretion. On June 28, 2022, we completed the repurchase of all of our common stock previously held by FNF.
As of June 30, 2022, there was a $84.7 million outstanding principal amount under the FNF Revolver which incurs interest at 5.99%.
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
As of June 30, 2021, there was 0 outstanding balance under the FNF Revolver and there was $100.0 million remaining borrowing capacity.
Gross principal maturities of notes payable at June 30, 20212022 are as follows (in millions):
| | | 2021 (remaining) | $ | 4.2 | | |
| 2022 | 26.6 | | |
| 2022 (remaining) | | 2022 (remaining) | $ | 10.8 | |
| 2023 | 2023 | 8.2 | | 2023 | 0.8 | |
| 2024 | 2024 | 0.9 | | 2024 | 0.8 | |
| 2025 | 2025 | 0.6 | | 2025 | 85.4 | |
| 2026 | | 2026 | 7.7 | |
| Thereafter | Thereafter | 12.0 | | Thereafter | 1.6 | |
| Total | Total | $ | 52.5 | | Total | $ | 107.1 | |
Note GF — Commitments and Contingencies
Legal Contingencies
In the ordinary course of business, we are involved in various pending and threatened litigation and regulatory matters related to our operations, some of which include claims for punitive or exemplary damages. Our ordinary course litigation includes purported class action lawsuits, which make allegations related to various aspects of our business. From time to time, we also receive requests for information from various state and federal regulatory authorities, some of which take the form of civil investigative demands or subpoenas. Some of these regulatory inquiries may result in the assessment of fines for violations of regulations or settlements with such authorities requiring a variety of remedies. We believe that no actions, other than those discussed below, if any, depart from customary litigation or regulatory inquiries incidental to our business.
Our Restaurant Group companies are a defendant from time to time in various legal proceedings arising in the ordinary course of business, including claims relating to injury or wrongful death under “dram shop” laws that allow a person to sue us based on any injury caused by an intoxicated person who was wrongfully served alcoholic beverages at 1 of the restaurants; individual and purported class or collective action claims alleging violation of federal and state employment, franchise and other laws; and claims from guests or employees alleging illness, injury or other food quality, health or operational concerns. Our Restaurant Group companies are also subject to compliance with extensive government laws and regulations related to employment practices and policies and the manufacture, preparation, and sale of food and alcohol. We may also become subject to lawsuits and other proceedings, as well as card network fines and penalties, arising out of the actual or alleged theft of our customers' credit or debit card information.
We review lawsuits and other legal and regulatory matters (collectively “legal proceedings”) on an ongoing basis when making accrual and disclosure decisions. When assessing reasonably possible and probable outcomes, management bases its decision on its assessment of the ultimate outcome assuming all appeals have been exhausted. For legal proceedings in which it has been determined that a loss is both probable and reasonably estimable, a liability based on known facts that represents our best estimate is recorded. As of June 30, 20212022 and December 31, 2020,2021, our accrualsaccrual for settlements of legal proceedings was not considered material. Actual losses may materially differ from the amounts recorded and the ultimate outcome of our pending legal proceedings is generally not yet determinable. While some of these matters could be material to our operating results or cash flows for any particular period in the event of an unfavorable outcome, at present, we do not believe that the ultimate resolution of currently pending legal proceedings, either individually or in the aggregate, will have a material adverse effect on our financial condition, results of operations or cash flows.
On September 23, 2020, a stockholder derivative lawsuit styled Oklahoma Firefighters Pension & Retirement System, derivatively on behalf of Cannae Holdings, Inc. v. William P. Foley, II, et al., was filed in the Court of Chancery of the State of Delaware against the Company, certain Board members and officers of the Company, and the Manager, alleging breach of fiduciary duties relating to the Company’s Management Services Agreement. The plaintiff further alleges the Board breached their fiduciary duties by approving bonuses in connection with the initial public offering of Ceridian and the approval of an Investment Success Incentive Plan in August 2018. Along with the Complaint, the plaintiff filed a motion for partial summary judgment as to the count seeking to void the Management Services Agreement. On January 27, 2021, the Company entered into an amendment to the Management Services Agreement and plaintiff withdrew its motion for partial summary judgment as moot. On February 1, 2021, the court ordered the plaintiff's summary judgment motion withdrawn and dismissed the related count of the plaintiff's complaint. On February 18, 2021, our Board formed a Special Litigation Committee (the "SLC") consisting of 2 of the Board’s Directors, and has authorized the SLC, among other things, to investigate and evaluate the claims and allegations asserted in the lawsuit. The Board has also given the SLC the sole authority and power to consider and
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
claims and allegations asserted in the lawsuit. The Board has also given the SLC the sole authority and power to consider and determine whether or not prosecution of the claims asserted in the lawsuit is in the best interest of the Company and its shareholders, and what action the Company should take with respect to the lawsuit. On March 9, 2021, the Court entered a stipulated Order staying the action for six months to allow the SLC to investigate, review, and evaluate the facts, circumstances, and claims asserted in or relating to the action and to determine the Company’s response thereto. The stay has subsequently been extended through September 28, 2022. The defendants will contest the remaining claims in the action vigorously.
Unconditional Purchase Obligations
We have certain unconditional purchase obligations, primarily in our Restaurant Group segment. These purchase obligations are with various vendors and are primarily related to food and beverage obligations with fixed commitments in regards to the time period of the contract and the quantities purchased with annual price adjustments that can fluctuate. We used both historical and projected volume and pricing as of June 30, 20212022 to determine the amount of the obligations. Purchase obligations as of June 30, 20212022 are as follows (in millions):
| | 2021 (remaining) | $ | 43.3 | | |
| 2022 | 14.7 | | |
| 2022 (remaining) | | 2022 (remaining) | $ | 57.2 | |
| 2023 | 2023 | 8.7 | | 2023 | 9.0 | |
| 2024 | 2024 | 7.1 | | 2024 | 5.6 | |
| 2025 | 2025 | 5.9 | | 2025 | 4.8 | |
| 2026 | | 2026 | 2.9 | |
| Thereafter | Thereafter | 6.8 | | Thereafter | 2.9 | |
| Total purchase commitments | Total purchase commitments | $ | 86.5 | | Total purchase commitments | $ | 82.4 | |
AAII FPA
On February 25, 2021, we entered into a forward purchase agreement (the "AAII FPA") with Austerlitz Acquisition Corp. II ("AAII"), a special purpose acquisition company ("SPAC") whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities (the "AAII Initial Business Combination"). AAII is co-sponsored by entities affiliated with William P. Foley II. Under the AAII FPA, we agreed to purchase an aggregate of 12,500,000 shares of AAII’s Class A common stock, plus an aggregate of 3,125,000 redeemable warrants to purchase one share of AAII's Class A common stock at $11.50 per share for an aggregate purchase price of $125.0 million in a private placement to occur concurrently with the closing of the AAII Initial Business Combination. The AAII FPA is contingent upon the closing of the AAII Initial Business Combination.
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
Note HG — Segment Information
Summarized financial information concerning our reportable segments is shown in the following tables.
On March 30, 2021, we closed on our investment in Paysafe. We account for our investment in Paysafe as an equity method investment and report our equity in earnings or loss of Paysafe onAs a three-month lag. Because we closed on our investment in Paysafe at the endresult of the first quarter of 2021 and record our share of its earnings or loss on a three-month lag, thereOptimal Blue Disposition, Optimal Blue is no equity in earnings or loss of Paysafe included in our results of operationslonger a reportable segment. As a result, the segment tables for the three orand six months ended June 30, 2021. We expect our chief operating decision maker will review the full financial results2021 have been retrospectively revised to remove Optimal Blue as a reportable segment.
As of Paysafeand for purposes of assessing performance and allocating resources of the Company. Thus, we expect to include the full financial results of Paysafe in the tables below in the third quarter of 2021 in conjunction with our recording of our proportionate share of Paysafe’s second quarter of 2021 earnings or loss on a lag basis.
Beginning in the three months ended March 31, 2021, AmeriLife exceeded certainJune 30, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Restaurant Group | | | | Dun & Bradstreet | | Paysafe | | Alight | | AmeriLife | | Corporate and Other | | Affiliate Elimination | | Total |
| | (in millions) |
| Restaurant revenues | $ | 166.7 | | | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 166.7 | |
| Other operating revenues | — | | | | | 537.3 | | | 367.7 | | | 715.0 | | | 190.8 | | | 7.8 | | | (1,810.8) | | | 7.8 | |
| Revenues from external customers | 166.7 | | | | | 537.3 | | | 367.7 | | | 715.0 | | | 190.8 | | | 7.8 | | | (1,810.8) | | | 174.5 | |
| Interest, investment and other income, including recognized gains (losses), net | 2.0 | | | | | 11.5 | | | 3.5 | | | 95.0 | | | — | | | (195.5) | | | (110.0) | | | (193.5) | |
| Total revenues, other income and realized gains (losses), net | 168.7 | | | | | 548.8 | | | 371.2 | | | 810.0 | | | 190.8 | | | (187.7) | | | (1,920.8) | | | (19.0) | |
| Depreciation and amortization | 5.6 | | | | | 147.0 | | | 63.4 | | | 13.0 | | | 16.3 | | | 0.6 | | | (239.7) | | | 6.2 | |
| Interest expense | (1.1) | | | | | (41.9) | | | (26.0) | | | (29.0) | | | (14.2) | | | (1.5) | | | 111.1 | | | (2.6) | |
| (Loss) earnings before income taxes and equity in earnings (losses) of unconsolidated affiliates | (2.5) | | | | | (0.7) | | | (1,214.2) | | | 43.0 | | | 28.7 | | | (220.6) | | | 1,143.2 | | | (223.1) | |
| Income tax benefit | — | | | | | (0.1) | | | (43.4) | | | (9.0) | | | — | | | (66.5) | | | 52.5 | | | (66.5) | |
| (Loss) earnings, before equity in (losses) earnings of unconsolidated affiliates | (2.5) | | | | | (0.6) | | | (1,170.8) | | | 52.0 | | | 28.7 | | | (154.1) | | | 1,090.7 | | | (156.6) | |
| Equity in earnings (losses) of unconsolidated affiliates | (0.1) | | | | | 0.6 | | | — | | | — | | | — | | | (13.8) | | | (94.7) | | | (108.0) | |
| Net (loss) earnings from continuing operations | $ | (2.6) | | | | | $ | — | | | $ | (1,170.8) | | | $ | 52.0 | | | $ | 28.7 | | | $ | (167.9) | | | $ | 996.0 | | | $ | (264.6) | |
| Assets | $ | 359.0 | | | | | $ | 9,696.6 | | | $ | 6,501.3 | | | $ | 10,878.0 | | | $ | 1,891.3 | | | $ | 2,829.1 | | | $ | (28,967.2) | | | $ | 3,188.1 | |
| Goodwill | 53.4 | | | | | 3,437.1 | | | 2,712.8 | | | 3,624.0 | | | 984.3 | | | — | | | (10,758.2) | | | 53.4 | |
As of and for the three months ended June 30, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Restaurant Group | | | | Dun & Bradstreet | | | | AmeriLife | | Corporate
and Other | | Affiliate Elimination | | Total | |
| | (in millions) | |
| Restaurant revenues | $ | 189.9 | | | | | $ | — | | | | | $ | — | | | $ | — | | | $ | — | | | $ | 189.9 | | |
| Other operating revenues | — | | | | | 520.9 | | | | | 149.3 | | | 12.5 | | | (670.2) | | | 12.5 | | |
| Revenues from external customers | 189.9 | | | | | 520.9 | | | | | 149.3 | | | 12.5 | | | (670.2) | | | 202.4 | | |
| Interest investment and other income (expense), including recognized gains (losses), net | 1.0 | | | | | 12.6 | | | | | — | | | 273.5 | | | (12.6) | | | 274.5 | | |
| Total revenues, other income and recognized gains (losses), net | 190.9 | | | | | 533.5 | | | | | 149.3 | | | 286.0 | | | (682.8) | | | 476.9 | | |
| Depreciation and amortization | 5.6 | | | | | 152.3 | | | | | 19.1 | | | 0.8 | | | (171.4) | | | 6.4 | | |
| Interest expense | (2.5) | | | | | (48.0) | | | | | (12.4) | | | — | | | 60.4 | | | (2.5) | | |
| Earnings (loss) before income taxes and equity in earnings (losses) of unconsolidated affiliates | 4.3 | | | | | (8.5) | | | | | 14.2 | | | 231.5 | | | (5.7) | | | 235.8 | | |
| Income tax expense | — | | | | | 43.0 | | | | | — | | | 49.3 | | | (43.0) | | | 49.3 | | |
| Earnings (loss) before equity in earnings of unconsolidated affiliates | 4.3 | | | | | (51.5) | | | | | 14.2 | | | 182.2 | | | 37.3 | | | 186.5 | | |
| Equity in earnings (losses) of unconsolidated affiliates | — | | | | | 0.7 | | | | | — | | | 1.5 | | | (11.0) | | | (8.8) | | |
| Net earnings (loss) from continuing operations | $ | 4.3 | | | | | $ | (50.8) | | | | | $ | 14.2 | | | $ | 183.7 | | | $ | 26.3 | | | $ | 177.7 | | |
| Assets | $ | 496.0 | | | | | $ | 9,860.4 | | | | | $ | 1,749.3 | | | $ | 3,943.6 | | | $ | (11,609.7) | | | $ | 4,439.6 | | |
| Goodwill | 53.4 | | | | | 3,331.1 | | | | | 875.1 | | | — | | | (4,206.2) | | | 53.4 | | |
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
As of and for the six months ended June 30, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Restaurant Group | | | | Dun & Bradstreet | | Paysafe | | Alight | | AmeriLife | | Corporate and Other | | Affiliate Elimination | | Total | |
| | (in millions) | |
| Restaurant revenues | $ | 328.8 | | | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 328.8 | | |
| Other operating revenues | — | | | | | 1,073.3 | | | 739.3 | | | 1,440.0 | | | 347.8 | | | 13.1 | | | (3,600.4) | | | 13.1 | | |
| Revenues from external customers | 328.8 | | | | | 1,073.3 | | | 739.3 | | | 1,440.0 | | | 347.8 | | | 13.1 | | | (3,600.4) | | | 341.9 | | |
| Interest, investment and other income, including recognized gains (losses), net | 1.4 | | | | | 2.5 | | | 67.6 | | | 114.0 | | | — | | | (460.1) | | | (184.1) | | | (458.7) | | |
| Total revenues and other income | 330.2 | | | | | 1,075.8 | | | 806.9 | | | 1,554.0 | | | 347.8 | | | (447.0) | | | (3,784.5) | | | (116.8) | | |
| Depreciation and amortization | 10.9 | | | | | 296.4 | | | 127.4 | | | 24.0 | | | 31.7 | | | 1.1 | | | (479.5) | | | 12.0 | | |
| Interest expense | (2.2) | | | | | (89.1) | | | (47.5) | | | (58.0) | | | (28.1) | | | (2.8) | | | 222.7 | | | (5.0) | | |
| (Loss) earnings before income taxes and equity in earnings (losses) of unconsolidated affiliates | (7.8) | | | | | (40.5) | | | (1,142.7) | | | 31.0 | | | 12.5 | | | (558.5) | | | 1,139.7 | | | (566.3) | | |
| Income tax benefit | (0.7) | | | | | (9.4) | | | (62.4) | | | (8.0) | | | — | | | (127.7) | | | 79.8 | | | (128.4) | | |
| (Loss) earnings, before equity in (losses) earnings of unconsolidated affiliates | (7.1) | | | | | (31.1) | | | (1,080.3) | | | 39.0 | | | 12.5 | | | (430.8) | | | 1,059.9 | | | (437.9) | | |
| Equity in earnings (losses) of unconsolidated affiliates | — | | | | | 1.3 | | | — | | | — | | | — | | | 17.1 | | | (94.5) | | | (76.1) | | |
| Net (loss) earnings from continuing operations | $ | (7.1) | | | | | $ | (29.8) | | | $ | (1,080.3) | | | $ | 39.0 | | | $ | 12.5 | | | $ | (413.7) | | | $ | 965.4 | | | $ | (514.0) | | |
| Assets | $ | 359.0 | | | | | $ | 9,696.6 | | | $ | 6,501.3 | | | $ | 10,878.0 | | | $ | 1,891.3 | | | $ | 2,829.1 | | | $ | (28,967.2) | | | $ | 3,188.1 | | |
| Goodwill | 53.4 | | | | | 3,437.1 | | | 2,712.8 | | | 3,624.0 | | | 984.3 | | | — | | | (10,758.2) | | | 53.4 | | |
As of and for the six months ended June 30, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Restaurant Group | | | | Dun & Bradstreet | | | | AmeriLife | | Corporate
and Other | | Affiliate Elimination | | Total |
| | (in millions) |
| Restaurant revenues | $ | 357.2 | | | | | $ | — | | | | | $ | — | | | $ | — | | | $ | — | | | $ | 357.2 | |
| Other operating revenues | — | | | | | 1,025.4 | | | | | 280.3 | | | 17.1 | | | (1,305.7) | | | 17.1 | |
| Revenues from external customers | 357.2 | | | | | 1,025.4 | | | | | 280.3 | | | 17.1 | | | (1,305.7) | | | 374.3 | |
| Interest investment and other income, including recognized gains and losses, net | 1.2 | | | | | 19.5 | | | | | — | | | (38.3) | | | (19.5) | | | (37.1) | |
| Total revenues and other income | 358.4 | | | | | 1,044.9 | | | | | 280.3 | | | (21.2) | | | (1,325.2) | | | 337.2 | |
| Depreciation and amortization | 12.8 | | | | | 302.0 | | | | | 36.3 | | | 1.5 | | | (338.3) | | | 14.3 | |
| Interest expense | (4.9) | | | | | (96.9) | | | | | (23.6) | | | 0.3 | | | 120.5 | | | (4.6) | |
| (Loss) earnings before income taxes and equity in earnings (losses) of unconsolidated affiliates | (3.7) | | | | | (42.2) | | | | | 0.5 | | | (110.2) | | | 41.7 | | | (113.9) | |
| Income tax expense (benefit) | — | | | | | 33.2 | | | | | — | | | (12.7) | | | (33.2) | | | (12.7) | |
| (Loss) earnings before equity in earnings (losses) of unconsolidated affiliates | (3.7) | | | | | (75.4) | | | | | 0.5 | | | (97.5) | | | 74.9 | | | (101.2) | |
| Equity in earnings (losses) of unconsolidated affiliates | — | | | | | 1.3 | | | | | — | | | 67.7 | | | (23.9) | | | 45.1 | |
| Net (loss) earnings from continuing operations | $ | (3.7) | | | | | $ | (74.1) | | | | | $ | 0.5 | | | $ | (29.8) | | | $ | 51.0 | | | $ | (56.1) | |
| Assets | $ | 496.0 | | | | | $ | 9,860.4 | | | | | 1,749.3 | | | $ | 3,943.6 | | | $ | (11,609.7) | | | $ | 4,439.6 | |
| Goodwill | 53.4 | | | | | 3,331.1 | | | | | 875.1 | | | — | | | (4,206.2) | | | 53.4 | |
The activities in our segments include the following:
•Restaurant Group. This segment consists primarily of the quantitative thresholds prescribed by ASC 280 Segment Reportingoperations of O'Charley's and 99 Restaurants in which we began considering AmeriLife a reportable segment. We made our initial investmenthave 65.4% and 88.5% ownership interests, respectively. O'Charley's and 99 Restaurants and their affiliates are the owners and operators of the O'Charley's and Ninety Nine Restaurants restaurant concepts, respectively. This segment also includes the operations of Legendary Baking and VIBSQ Holdco, LLC ("VIBSQ") prior to their respective sales in AmeriLife2021. During the three and six months ended June 30, 2022, other than the winding down of certain immaterial retained assets and liabilities of Legendary Baking and VIBSQ, we have no further material interest in March 18, 2020. We account for our investment in AmeriLife as an equity method investmentLegendary Baking and report our equity in earnings or loss of AmeriLife on a three-month lag.VIBSQ.
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
As of and for the three months ended June 30, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Restaurant Group | | | | Dun & Bradstreet | | Optimal Blue | | AmeriLife | | Corporate and Other | | Affiliate Elimination | | Total |
| | (in millions) |
| Restaurant revenues | $ | 189.9 | | | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 189.9 | |
| Other operating revenues | 0 | | | | | 520.9 | | | 44.3 | | | 149.3 | | | 12.5 | | | (714.5) | | | 12.5 | |
| Revenues from external customers | 189.9 | | | | | 520.9 | | | 44.3 | | | 149.3 | | | 12.5 | | | (714.5) | | | 202.4 | |
| Interest, investment and other income, including recognized gains and losses, net | 1.0 | | | | | 12.6 | | | 0 | | | 0 | | | 273.5 | | | (12.6) | | | 274.5 | |
| Total revenues and other income | 190.9 | | | | | 533.5 | | | 44.3 | | | 149.3 | | | 286.0 | | | (727.1) | | | 476.9 | |
| Depreciation and amortization | 5.6 | | | | | 152.3 | | | 34.4 | | | 19.1 | | | 0.8 | | | (205.8) | | | 6.4 | |
| Interest expense | (2.5) | | | | | (48.0) | | | (7.8) | | | (12.4) | | | 0 | | | 68.2 | | | (2.5) | |
| (Loss) earnings before income taxes and equity in earnings (losses) of unconsolidated affiliates | 4.3 | | | | | (8.5) | | | (21.7) | | | 14.2 | | | 231.5 | | | 16.0 | | | 235.8 | |
| Income tax benefit | 0 | | | | | 43.0 | | | (3.0) | | | 0 | | | 49.3 | | | (40.0) | | | 49.3 | |
| (Loss) earnings, before equity in (losses) earnings of unconsolidated affiliates | 4.3 | | | | | (51.5) | | | (18.7) | | | 14.2 | | | 182.2 | | | 56.0 | | | 186.5 | |
| Equity in earnings (losses) of unconsolidated affiliates | 0 | | | | | 0.7 | | | 0 | | | 0 | | | 5.7 | | | (15.2) | | | (8.8) | |
| Net loss from continuing operations | $ | 4.3 | | | | | $ | (50.8) | | | $ | (18.7) | | | $ | 14.2 | | | $ | 187.9 | | | $ | 40.8 | | | $ | 177.7 | |
| Assets | $ | 496.0 | | | | | $ | 9,860.4 | | | $ | 1,931.8 | | | $ | 1,749.3 | | | $ | 3,943.6 | | | $ | (13,541.5) | | | $ | 4,439.6 | |
| Goodwill | 53.4 | | | | | 3,331.1 | | | 1,237.0 | | | 875.1 | | | 0 | | | (5,443.2) | | | 53.4 | |
As of and for the three months ended June 30, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Restaurant Group | | | | Dun & Bradstreet | | | | Corporate
and Other | | Affiliate Elimination | | Total |
| | (in millions) |
| Restaurant revenues | $ | 99.4 | | | | | $ | 0 | | | | | $ | 0 | | | $ | 0 | | | $ | 99.4 | |
| Other operating revenues | 0 | | | | | 418.7 | | | | | 3.2 | | | (418.7) | | | 3.2 | |
| Revenues from external customers | 99.4 | | | | | 418.7 | | | | | 3.2 | | | (418.7) | | | 102.6 | |
| Interest investment and other income (expense), including recognized gains and losses, net | (0.1) | | | | | (122.7) | | | | | 586.5 | | | 122.7 | | | 586.4 | |
| Total revenues and other income | 99.3 | | | | | 296.0 | | | | | 589.7 | | | (296.0) | | | 689.0 | |
| Depreciation and amortization | 6.6 | | | | | 132.7 | | | | | 0.7 | | | (132.7) | | | 7.3 | |
| Interest expense | (1.1) | | | | | (78.0) | | | | | 0.1 | | | 78.0 | | | (1.0) | |
| (Loss) earnings before income taxes and equity in earnings (losses) of unconsolidated affiliates | (24.0) | | | | | (203.0) | | | | | 563.7 | | | 203.0 | | | 539.7 | |
| Income tax (benefit) expense | 0 | | | | | (27.7) | | | | | 131.1 | | | 27.7 | | | 131.1 | |
| (Loss) earnings before equity in earnings of unconsolidated affiliates | (24.0) | | | | | (175.3) | | | | | 432.6 | | | 175.3 | | | 408.6 | |
| Equity in earnings (losses) of unconsolidated affiliates | (9.7) | | | | | 0.6 | | | | | 122.7 | | | (56.1) | | | 57.5 | |
| Net (loss) earnings from continuing operations | $ | (33.7) | | | | | $ | (174.7) | | | | | $ | 555.3 | | | $ | 119.2 | | | $ | 466.1 | |
| Assets | $ | 408.0 | | | | | $ | 8,981.9 | | | | | $ | 3,380.6 | | | $ | (8,981.9) | | | $ | 3,788.6 | |
| Goodwill | 53.5 | | | | | 2,848.8 | | | | | 0 | | | (2,848.8) | | | 53.5 | |
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
As of and for the six months ended June 30, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Restaurant Group | | | | Dun & Bradstreet | | Optimal Blue | | AmeriLife | | Corporate and Other | | Affiliate Elimination | | Total | |
| | (in millions) | |
| Restaurant revenues | $ | 357.2 | | | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 357.2 | | |
| Other operating revenues | 0 | | | | | 1,025.4 | | | 85.9 | | | 280.3 | | | 17.1 | | | (1,391.6) | | | 17.1 | | |
| Revenues from external customers | 357.2 | | | | | 1,025.4 | | | 85.9 | | | 280.3 | | | 17.1 | | | (1,391.6) | | | 374.3 | | |
| Interest, investment and other income, including recognized gains and losses, net | 1.2 | | | | | 19.5 | | | 0 | | | 0 | | | (38.3) | | | (19.5) | | | (37.1) | | |
| Total revenues and other income | 358.4 | | | | | 1,044.9 | | | 85.9 | | | 280.3 | | | (21.2) | | | (1,411.1) | | | 337.2 | | |
| Depreciation and amortization | 12.8 | | | | | 302.0 | | | 68.6 | | | 36.3 | | | 1.5 | | | (406.9) | | | 14.3 | | |
| Interest expense | (4.9) | | | | | (96.9) | | | (15.6) | | | (23.6) | | | 0.3 | | | 136.1 | | | (4.6) | | |
| (Loss) earnings before income taxes and equity in earnings (losses) of unconsolidated affiliates | (3.7) | | | | | (42.2) | | | (46.7) | | | 0.5 | | | (110.2) | | | 88.4 | | | (113.9) | | |
| Income tax benefit | 0 | | | | | 33.2 | | | (6.5) | | | 0 | | | (12.7) | | | (26.7) | | | (12.7) | | |
| (Loss) earnings, before equity in (losses) earnings of unconsolidated affiliates | (3.7) | | | | | (75.4) | | | (40.2) | | | 0.5 | | | (97.5) | | | 115.1 | | | (101.2) | | |
| Equity in earnings (losses) of unconsolidated affiliates | 0 | | | | | 1.3 | | | 0 | | | 0 | | | 75.8 | | | (32.0) | | | 45.1 | | |
| Net loss from continuing operations | $ | (3.7) | | | | | $ | (74.1) | | | $ | (40.2) | | | $ | 0.5 | | | $ | (21.7) | | | $ | 83.1 | | | $ | (56.1) | | |
| Assets | $ | 496.0 | | | | | $ | 9,860.4 | | | $ | 1,931.8 | | | $ | 1,749.3 | | | $ | 3,943.6 | | | $ | (13,541.5) | | | $ | 4,439.6 | | |
| Goodwill | 53.4 | | | | | 3,331.1 | | | 1,237.0 | | | 875.1 | | | 0 | | | (5,443.2) | | | 53.4 | | |
As of and for the six months ended June 30, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Restaurant Group | | | | Dun & Bradstreet | | | | Corporate
and Other | | Affiliate Elimination | | Total |
| | (in millions) |
| Restaurant revenues | $ | 269.3 | | | | | $ | 0 | | | | | $ | 0 | | | $ | 0 | | | $ | 269.3 | |
| Other operating revenues | 0 | | | | | 814.4 | | | | | 6.3 | | | (814.4) | | | 6.3 | |
| Revenues from external customers | 269.3 | | | | | 814.4 | | | | | 6.3 | | | (814.4) | | | 275.6 | |
| Interest investment and other income, including recognized gains and losses, net | 7.7 | | | | | (33.1) | | | | | 1,496.0 | | | 33.1 | | | 1,503.7 | |
| Total revenues and other income | 277.0 | | | | | 781.3 | | | | | 1,502.3 | | | (781.3) | | | 1,779.3 | |
| Depreciation and amortization | 14.3 | | | | | 267.1 | | | | | 1.4 | | | (267.1) | | | 15.7 | |
| Interest expense | (4.2) | | | | | (161.0) | | | | | (0.6) | | | 161.0 | | | (4.8) | |
| (Loss) earnings before income taxes and equity in earnings (losses) of unconsolidated affiliates | (44.9) | | | | | (203.6) | | | | | 1,444.8 | | | 203.6 | | | 1,399.9 | |
| Income tax (benefit) expense | 0 | | | | | (101.9) | | | | | 300.5 | | | 101.9 | | | 300.5 | |
| (Loss) earnings before equity in earnings of unconsolidated affiliates | (44.9) | | | | | (101.7) | | | | | 1,144.3 | | | 101.7 | | | 1,099.4 | |
| Equity in earnings (losses) of unconsolidated affiliates | (14.9) | | | | | 1.2 | | | | | 65.1 | | | (46.6) | | | 4.8 | |
| Net (loss) earnings from continuing operations | $ | (59.8) | | | | | $ | (100.5) | | | | | $ | 1,209.4 | | | $ | 55.1 | | | $ | 1,104.2 | |
| Assets | $ | 408.0 | | | | | $ | 8,981.9 | | | | | $ | 3,380.6 | | | $ | (8,981.9) | | | $ | 3,788.6 | |
| Goodwill | 53.5 | | | | | 2,848.8 | | | | | 0 | | | (2,848.8) | | | 53.5 | |
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
The activities in our segments include the following:
•Restaurant Group. This segment consists of the operations of O'Charley's, 99 Restaurants, Legendary Baking, and VIBSQ in which we had 65.4%, 88.5%, 100% and 100% ownership interests, respectively. O'Charley's, 99 Restaurants, Legendary Baking, VIBSQ and their affiliates are the owners and operators of the O'Charley's restaurant concept, Ninety Nine Restaurants restaurant concept, Legendary Baking bakery and the Village Inn and Bakers Square restaurant concepts.
•Dun & Bradstreet. This segment consists of our 15.8% ownership interest in Dun & Bradstreet. Dun & Bradstreet is a leading global provider of business decisioning data and analytics. Its mission is to deliver a global network of trust, enabling clients to transform uncertainty into confidence, risk into opportunity and potential into prosperity. Clients embed D&B's trusted, end-to-end solutions into their daily workflows to enhance sales forcesalesforce productivity, gain visibility into key markets, inform commercial credit decisions and confirm that suppliers are financially viable and compliant with laws and regulations. Dun & Bradstreet's solutions support its clients’ mission critical business operations by providing proprietary and curated data and analytics to help drive informed decisions and improved outcomes. Dun & Bradstreet's global commercial database as of December 31, 20202021 contained more than 420 millionhundreds of millions of business records. Our chief operating decision maker reviews the full financial results of Dun & Bradstreet for purposes of assessing performance and allocating resources. Thus, we consider Dun & Bradstreet a reportable segment and have included the full results of Dun & Bradstreet subsequent to our initial investment in the tables above. We account for Dun & Bradstreet using the equity method of accounting, and therefore, its results do not consolidate into ours. Accordingly, we have presented the elimination of Dun & Bradstreet's results in the Affiliate Elimination section of the segment presentation above. See Note D for further discussion of our investmentownership interest in Dun & Bradstreet and related accounting.
•Optimal BlueAlight. This segment consists of our 20.0%9.7% ownership interest in Optimal Blue, which we acquired on September 15, 2020. Optimal BlueAlight. Alight is a leading cloud-based human capital technology and services provider that powers confident health, wealth and wellbeing decisions for millions of secondary market solutionspeople and actionabletheir dependents. Its Alight Worklife® platform combines data services. They operateand analytics with a software-as-a-service, subscription-based mortgage marketplace, which supports a network of originatorssimple, seamless user experience. Supported by its global delivery capabilities, Alight Worklife is transforming the employee experience for people around the world through personalized, data-driven health, wealth, pay and investors in the residential mortgage market. The marketplace provides a broad set of critical functions utilized by banks, credit unions and mortgage brokerage companies throughout the mortgage processing life cycle. Optimal Blue exceeds certain of the quantitative thresholds prescribed by ASC 280 Segment Reporting and ourwellbeing insights. Our chief operating decision maker reviews the full financial results of Optimal BlueAlight for purposes of assessing performance and allocating resources. Thus, we consider Optimal BlueAlight a reportable segment and have included the full results of operationsAlight subsequent to our initial acquisition of Optimal Bluean ownership interest in the tables above. We account for Optimal BlueAlight using the equity method of accounting, and therefore, its results do not consolidate into ours. Accordingly, we have presented the elimination of Optimal Blue'sAlight's results in the Affiliate Elimination section of the segment presentation above. See Note DWe historically accounted for further discussionour equity ownership and proportionate share of earnings or losses in Alight utilizing a three-month reporting lag due to timeliness considerations. In the second quarter of 2022, the Company was able to obtain financial information for Alight on a more timely basis and began recording our investment in Optimal BlueAlight on a current basis as opposed to the previous three-month lag. The elimination of the three-month reporting lag for our equity ownership in Alight did not result in any material adjustments to any current or prior period financial information.
•Paysafe. This segment consists of our 8.3% ownership interest in Paysafe. Paysafe provides payment solutions through several business lines. These business lines are focused on card not present and related accounting.card present solutions for small to medium size business merchants, wallet based online payment solutions through Skrill and NETELLER brands and solutions that enable consumers to use cash to facilitate online purchases through its paysafecard prepaid vouchers. Our chief operating decision maker reviews the full financial results of Paysafe for purposes of assessing performance and allocating resources. Thus, we consider Paysafe a reportable segment and have included the full results of Paysafe subsequent to our initial acquisition of an ownership interest in the tables above. We account for Paysafe using the equity method of accounting, and therefore, its results do not consolidate into ours. Accordingly, we have presented the elimination of Paysafe's results in the Affiliate Elimination section of the segment presentation above. We report our equity in earnings or loss of Paysafe on a three-month lag and we acquired our ownership interest on March 30, 2021. Accordingly, our net earnings and the segment tables above, respectively, for the three and six months ended June 30, 2022, include our equity in Paysafe’s earnings and complete results of Paysafe, respectively, for the three and six months ended March 31, 2022, respectively.
•AmeriLife. This segment consists of our 19.8%19.6% ownership interest in AmeriLife.AmeriLife, which we acquired on March 18, 2020. AmeriLife is a leader in marketing and distributing life, health, and retirement solutions. AmeriLife has partnered with the nation’s leading insurance carriers to provide value and quality to customers served through a national distribution network of insurance agents and advisors, marketing organizations, and insurance agency locations. AmeriLife exceeds certain of the quantitative thresholds prescribed by ASC 280 Segment Reporting and our chief operating decision maker reviews the financial results of AmeriLife for purposes of assessing performance and allocating resources. Thus, we consider AmeriLife a reportable segment and have included the results of operations of AmeriLife in the tables above. We account for our investment in AmeriLife as an equity method investment, and therefore, its results do not consolidate into ours. Accordingly, we have presented the elimination of AmeriLife's results in the Affiliate Elimination section of the segment presentation above. See Note D for further discussion of our investment in AmeriLife and related accounting. We report our equity in earnings or loss of AmeriLife on a three-month lag. Our net earnings and the segment tables above, respectively, for the three and six
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
months ended June 30, 2022 and 2021 includes our equity in AmeriLife’s losses and the complete results of AmeriLife, respectively, for the three and six months ended June 30, 2021 includes our equity in AmeriLife’s losses for the periods from December 31, 2020 through March 31, 20212022 and September 30, 2020 through March 31, 2021, respectively.
•Corporate and Other. This nonreportable segment consists of our share in the operations of certain controlled portfolio companies and other equity investments,interests, activity of the corporate holding company and certain intercompany eliminations and taxes.
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued
Note IH — Supplemental Cash Flow Information
The following supplemental cash flow information is provided with respect to certain cash payments, as well as certain non-cash investing and financing activities.
| | | Six months ended June 30, | | Six months ended June 30, |
| | | | 2021 | | 2020 | | | 2022 | | 2021 |
| | | | (In millions) | | | (In millions) |
| Cash paid during the period: | Cash paid during the period: | | | Cash paid during the period: | | |
| Interest | Interest | | $ | 2.8 | | | $ | 3.1 | | Interest | | $ | 4.0 | | | $ | 2.8 | |
| Income taxes | Income taxes | | 64.8 | | | 0.2 | | Income taxes | | 64.3 | | | 64.8 | |
| Operating leases | Operating leases | | 19.5 | | | 21.5 | | Operating leases | | 18.3 | | | 19.5 | |
| Non-cash investing and financing activities: | | Non-cash investing and financing activities: | |
| D&B shares received as partial consideration for the Optimal Blue Disposition | | D&B shares received as partial consideration for the Optimal Blue Disposition | | 435.0 | | | — | |
|
Note J — Assets Held for Sale
In the six months ended June 30, 2021, we began the process of the Dispositions. As a result of the Company's plan to dispose Legendary Baking, VIBSQ and RC, we have classified the assets and liabilities of each as assets and liabilities held for sale on our Condensed Consolidated Balance Sheet as of June 30, 2021.
The carrying amounts of the major classes of assets and liabilities included as part of the disposal groups classified as held for sale is presented below:
| | | | | | | | |
| | June 30, 2021 |
| | (In millions) |
Assets | | |
Cash and cash equivalents | | $ | 4.1 | |
Trade receivables, net | | 8.7 | |
Inventory | | 9.8 | |
Property and equipment, net | | 33.2 | |
Right of use assets | | 16.8 | |
Intangible assets | | 21.4 | |
Other assets | | 17.4 | |
Valuation allowance | | (7.0) | |
Total Assets | | $ | 104.4 | |
| | |
Liabilities | | |
Accounts payable and other accrued liabilities | | $ | 24.6 | |
Lease liabilities | | 15.7 | |
Other liabilities | | 2.8 | |
| | |
Total liabilities | | $ | 43.1 | |
We recorded a loss of $7.0 million as a result of classifying Legendary Baking and VIBSQ as held for sale, which is included in Recognized gains (losses), net on the Condensed Consolidated Statement of Operations for the six months ended June 30, 2021. Legendary Baking and VIBSQ are included in the Restaurant Group segment and RC is included in the Corporate and other segment.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The statements contained in this Quarterly Report on Form 10-Q (this "Quarterly Report") that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including statements regarding our expectations, hopes, intentions or strategies regarding the future. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. It is important to note that our actual results could vary materially from those forward-looking statements contained herein due to many factors, including, but not limited to: changes in general economic, business and political conditions, including changes in the financial markets and changes in macroeconomic conditions resulting from the outbreak of a pandemic such as the novel coronavirus COVID-19 ("COVID-19"); and the overall impactcurrent conflict between Russia and Ukraine; risks associated with the Investment Company Act of the outbreak of COVID-19 and measures to curb its spread, including the effect of governmental or voluntary mitigation measures such as business shutdowns, social distancing, and stay-at-home orders;1940; our potential inability to find suitable acquisition candidates, acquisitions in lines of business that will not necessarily be limited to our traditional areas of focus, or difficulties in integrating acquisitions; significant competition that our operating subsidiaries face; risks associated with our Split-Off from Fidelity National Financial, Inc., including the Investment Company Act of 1940; risks related to the externalization of certain of our management functions to our Manager; and other risks detailed in the “Statement"Statement Regarding Forward-Looking Information,” “Risk Factors”" "Risk Factors" and other sections of our Annual Report on Form 10-K for the year ended December 31, 20202021 (our "Annual Report") and other filings with the SEC.
The following discussion should be read in conjunction with our Annual Report.
Overview
For a description of our business, including descriptions of segments and recent business developments, see the discussion under Basis of Financial Statements in Note A to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report, which is incorporated by reference into this Part I, Item 2.
Business Trends and Conditions
Dun & Bradstreet. Businesses rely on business-to-business data and analytics providers to extract data-driven insights and make better decisions. For example, in commercial lending and trade credit, the scarcity of readily available credit history makes the extension of credit a time-consuming and imprecise process. In procurement, businesses face increasingly complex and global supply chains, making the assessment of compliance and viability of all suppliers prohibitively difficult and expensive if not conducted effectively. In sales and marketing, businesses have benefited from the proliferation of customer relationship management, Marketing Automation and Sales Acceleration tools designed to help identify, track and improve both customer management and prospecting growth activities. While these tools are helping to fill sales funnels and improve the progression of opportunities, key challenges remain in sales force productivity, effective client segmentation and marketing campaign activation. Common stumbling blocks include incorrect, or outdated, contact information, duplicated or inaccurate firmographic data and a lack of synchronization between the various platforms in the marketing technology ecosystem.
D&B helps its clients solve these mission critical business problems. D&B believes the total addressable market (‘‘TAM’’) in which it operates is large, growing and significantly underpenetrated. D&B participates in the big data and analytics software market, as defined by Interactive Data Corporation, or IDC, which represents a collection of software markets that functionally address decision support and decision automation. This market includes business intelligence and analytics tools, analytic data management and integration platforms and analytics and performance management applications. Within the broader market of data and analytics solutions, D&B serves a number of different markets, including the commercial credit data, sales and marketing data and Governance, Risk and Compliance ("GRC") markets to provide clients with decisioning support and automation. As D&B continues to drive innovation in its solutions, it expects to address a greater portion of this TAM as new use cases for its data assets and analytical capabilities are introduced.
D&B believes there are several key trends in the global macroeconomic environment generating additional growth in D&B's TAM and increasing the demand for its solutions, including growing recognition by business of the value of analytics and data-informed business decisioning, growth in data creation and applications driven by the proliferation of new technologies with new data sets and applications, advances in analytical capabilities that are unlocking the value of data, and heightened compliance requirements in the regulatory environment for business driven by the growth of new technologies.
Restaurant Group. The restaurant industry is highly competitive and is often affected by changes in consumer tastes and discretionary spending patterns; changes in general economic conditions; public safety conditions or concerns; demographic trends; weather conditions; the cost of food products, labor, energy and other operating costs; and governmental regulations. Higher labor costs due to state and local minimum wage increases and shopping pattern shifts to e-commerce and “ready to eat” grocery and convenience stores have had a negative impact on restaurant performance, particularly in the casual and family dining restaurants in which the company operates.
The restaurant industry is also characterized by high capital investments for new restaurants and relatively high fixed or semi-variable restaurant operating expenses. Because of the high fixed and semi-variable expenses, changes in sales in existing restaurants are generally expected to significantly affect restaurant profitability because many restaurant costs and expenses are not expected to change at the same rate as sales. The most significant commodities that may affect our cost of food and beverage are beef, seafood, poultry, and dairy, which accounted for approximately half of our overall cost of food and beverage in the past. Generally, temporary increases in these costs are not passed on to guests; however, in the past, we have adjusted menu prices to compensate for increased costs of a more permanent nature.
We are currently operating in a period of high inflation relative to long term inflation expectations in the United States. This inflationary environment is primarily impacting the commodity and labor costs of our Restaurant Group. We have adjusted menu pricing to account for these cost increases to an extent, but will continue to balance the impact of inflationary pressures on costs with the value proposition offered to customers with a focus on long term profitability.
Average weekly sales per restaurant are typically higher in the first and fourth quarters than in other quarters, and we typically generate a disproportionate share of our earnings from operations in the first and fourth quarters. Holidays, severe weather and other disruptive conditions may impact sales volumes seasonally in some operating regions.
Our revenues and operating income in future periods will continue to be subject to these and other factors that are beyond our control and, as a result, are likely to fluctuate.
COVID-19. In March 2020,As described in our Annual Report, pandemics and other health emergencies such as COVID-19 may impact the outbreakoperations and results of our various businesses. The spread of COVID-19 was declared a national health emergency in the United States and worldwide. As a result of the unprecedented social restrictions related to COVID-19, our Restaurant Group brands experienced a significant reduction in guest counts beginning in the last two weeks of Marchearly 2020 and continuing through the end of the year. Inassociated government and social response to the outbreak and these changing conditions, our Restaurant Group brands closed the dining rooms in substantially all of our restaurants in late March 2020 with substantially all remaining closed to dine in customers through early May 2020. During such time, most of our restaurants were solely operating to-go and delivery services in the jurisdictions where government regulations permit restaurants to continue to operate and where the guest demand made such operations sustainable. We temporarily closed certain restaurants, modified work hours for our Restaurant Group employees and identified and implemented cost savings measures throughout our Restaurant Group operations.
Timing of reopening stores and resulting guest traffic has varied by jurisdiction. In the second half of 2020, our Restaurant Group experienced a gradual increase in guest traffic and revenues compared to the first half of 2020; however, the volume of customers visiting our stores remained below our historical levels through December 31, 2020. We experienced an increase in revenues from to-go and delivery sales from historical experience; however, comparable store sales across all of our restaurant brands remained depressed compared to previous years through the first quarter of 2021.
Coinciding with the first available vaccines for COVID-19 in December 2020, capacity restrictions on dining rooms began to ease in most jurisdictions in which our Restaurant Group operates. Furthermore, the U.S. government provided significant stimulus to consumers through direct payments to U.S. citizens. Through the three months ended March 31, 2021, we were still operating a limited number of restaurants with restricted capacity. In light of recent spread of new variants of COVID-19, uncertainty remains regarding the continued rate of immunization in the public, timing of an economic recovery, and changed guest decision-making with regard to dining in restaurants. Beginning in the three months ended June 30, 2021, we began to experience increases in same store sales compared to the corresponding period in 2020. However, same store sales remain lower compared to the corresponding periods in 2019.
The COVID-19 outbreak and these responses haveadversely affected and may continue to adversely affect our Restaurant Group brands' guest traffic, sales and operating costs. See further discussioncosts in fiscal years 2020 and 2021. While we believe the operations of the impactour businesses are no longer being materially, adversely impacted by COVID-19, if another variant of COVID-19 onresults in government and social responses similar to those experienced with the initial spread of COVID-19 in 2020, our Restaurant Groupresults of operations may be adversely impacted again in the Results of Operations subsectionbelow.future.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with U.S. GAAP. The Critical Accounting Policies and Estimates disclosed in Item 7 of our Annual Report are hereby incorporated by reference. Other than as described below, there have been no changes to our critical accounting policies and estimates.
Investments in unconsolidated affiliates. On an ongoing basis, management monitors the Company's investments in unconsolidated affiliates to determine whether there are indications that the fair value of an investment may be other-than-temporarily below our recorded book value of the investment. Factors considered when determining whether a decline in the fair value of an investment is other-than-temporary include, but are not limited to: the length of time and the extent to which the market value has been less than book value, the financial condition and near-term prospects of the investee, and the intent and ability of the Company to retain its investment in the investee for a period of time sufficient to allow for any anticipated recovery in market value.
As of March 31, 2022, the fair value of our investment in Paysafe based on quoted market prices was $202.6 million and the book value of our investment in Paysafe was $438.6 million prior to any impairment. Due primarily to the quantum of the decrease in the fair market value of our investment, as well as negative trends in the alternative payments industry and decreasing market multiples of peer companies, management determined the decrease in value of our investment in Paysafe was other-than-temporary. Accordingly, we recorded an impairment charge of $236.0 million in the six months ended June 30, 2022 which is included in Recognized losses, net, on our Condensed Consolidated Statement of Operations.
Results of Operations
| | Consolidated Results of Operations | Consolidated Results of Operations | | Consolidated Results of Operations | |
Net Earnings. The following table presents certain financial data for the periods indicated: | Net Earnings. The following table presents certain financial data for the periods indicated: | Net Earnings. The following table presents certain financial data for the periods indicated: |
| | | Three months ended June 30, | | Six months ended June 30, | | Three months ended June 30, | | Six months ended June 30, |
| | 2021 | | 2020 | | 2021 | | 2020 | | 2022 | | 2021 | | 2022 | | 2021 |
| | | (Dollars in millions) | | (Dollars in millions) |
| Revenues: | Revenues: | | | | | | | | Revenues: | | | | | | | |
| Restaurant revenue | Restaurant revenue | $ | 189.9 | | | $ | 99.4 | | | $ | 357.2 | | | $ | 269.3 | | Restaurant revenue | $ | 166.7 | | | $ | 189.9 | | | $ | 328.8 | | | $ | 357.2 | |
| Other operating revenue | Other operating revenue | 12.5 | | | 3.2 | | | 17.1 | | | 6.3 | | Other operating revenue | 7.8 | | | 12.5 | | | 13.1 | | | 17.1 | |
| Total operating revenues | Total operating revenues | 202.4 | | | 102.6 | | | 374.3 | | | 275.6 | | Total operating revenues | 174.5 | | | 202.4 | | | 341.9 | | | 374.3 | |
| Operating expenses: | Operating expenses: | | Operating expenses: | |
| Cost of restaurant revenue | Cost of restaurant revenue | 160.3 | | | 100.8 | | | 308.0 | | | 253.9 | | Cost of restaurant revenue | 147.9 | | | 160.3 | | | 293.3 | | | 308.0 | |
| Personnel costs | Personnel costs | 24.4 | | | 23.3 | | | 36.4 | | | 52.5 | | Personnel costs | 16.0 | | | 24.4 | | | 37.1 | | | 36.4 | |
| Depreciation and amortization | Depreciation and amortization | 6.4 | | | 7.3 | | | 14.3 | | | 15.7 | | Depreciation and amortization | 6.2 | | | 6.4 | | | 12.0 | | | 14.3 | |
| Other operating expenses | Other operating expenses | 47.5 | | | 16.9 | | | 87.8 | | | 44.8 | | Other operating expenses | 31.4 | | | 47.5 | | | 102.1 | | | 87.8 | |
| Goodwill impairment | — | | | — | | | — | | | 7.7 | | |
| | Total operating expenses | Total operating expenses | 238.6 | | | 148.3 | | | 446.5 | | | 374.6 | | Total operating expenses | 201.5 | | | 238.6 | | | 444.5 | | | 446.5 | |
| Operating loss | Operating loss | (36.2) | | | (45.7) | | | (72.2) | | | (99.0) | | Operating loss | (27.0) | | | (36.2) | | | (102.6) | | | (72.2) | |
| Other income (expense): | Other income (expense): | | | | | | | | Other income (expense): | | | | | | | |
| Interest, investment and other income | Interest, investment and other income | 0.5 | | | 8.3 | | | 1.4 | | | 10.5 | | Interest, investment and other income | 0.1 | | | 0.5 | | | 0.1 | | | 1.4 | |
| Interest expense | Interest expense | (2.5) | | | (1.0) | | | (4.6) | | | (4.8) | | Interest expense | (2.6) | | | (2.5) | | | (5.0) | | | (4.6) | |
| Recognized gains (losses), net | 274.0 | | | 578.1 | | | (38.5) | | | 1,493.2 | | |
| Total other income (expense) | 272.0 | | | 585.4 | | | (41.7) | | | 1,498.9 | | |
| Earnings (loss) before income taxes and equity in losses of unconsolidated affiliates | 235.8 | | | 539.7 | | | (113.9) | | | 1,399.9 | | |
| Income tax expense (benefit) | 49.3 | | | 131.1 | | | (12.7) | | | 300.5 | | |
| Earnings (loss) before equity in (losses) earnings of unconsolidated affiliates | 186.5 | | | 408.6 | | | (101.2) | | | 1,099.4 | | |
| Recognized (losses) gains, net | | Recognized (losses) gains, net | (193.6) | | | 274.0 | | | (458.8) | | | (38.5) | |
| Total other expense | | Total other expense | (196.1) | | | 272.0 | | | (463.7) | | | (41.7) | |
| (Loss) earnings before income taxes and equity in earnings of unconsolidated affiliates | | (Loss) earnings before income taxes and equity in earnings of unconsolidated affiliates | (223.1) | | | 235.8 | | | (566.3) | | | (113.9) | |
| Income tax (benefit) expense | | Income tax (benefit) expense | (66.5) | | | 49.3 | | | (128.4) | | | (12.7) | |
| (Loss) earnings before equity in (losses) earnings of unconsolidated affiliates | | (Loss) earnings before equity in (losses) earnings of unconsolidated affiliates | (156.6) | | | 186.5 | | | (437.9) | | | (101.2) | |
| Equity in (losses) earnings of unconsolidated affiliates | Equity in (losses) earnings of unconsolidated affiliates | (8.8) | | | 57.5 | | | 45.1 | | | 4.8 | | Equity in (losses) earnings of unconsolidated affiliates | (108.0) | | | (8.8) | | | (76.1) | | | 45.1 | |
| | Net earnings (loss) | 177.7 | | | 466.1 | | | (56.1) | | | 1,104.2 | | |
| Less: Net earnings (loss) attributable to non-controlling interests | 1.3 | | | (9.2) | | | 0.6 | | | (18.8) | | |
| Net earnings (loss) attributable to Cannae Holdings, Inc. common shareholders | $ | 176.4 | | | $ | 475.3 | | | $ | (56.7) | | | $ | 1,123.0 | | |
| Net (loss) earnings | | Net (loss) earnings | (264.6) | | | 177.7 | | | (514.0) | | | (56.1) | |
| Less: Net (loss) earnings attributable to non-controlling interests | | Less: Net (loss) earnings attributable to non-controlling interests | (1.3) | | | 1.3 | | | (3.1) | | | 0.6 | |
| Net (loss) earnings attributable to Cannae Holdings, Inc. common shareholders | | Net (loss) earnings attributable to Cannae Holdings, Inc. common shareholders | $ | (263.3) | | | $ | 176.4 | | | $ | (510.9) | | | $ | (56.7) | |
Revenues.Revenues
Total revenues increased $99.8decreased $27.9 million, or 97.3%13.8%, in the three months ended June 30, 20212022 and increased $98.7decreased $32.4 million, or 35.8%8.7%, in the six months ended June 30, 20212022 compared to the corresponding periods in 2020.2021.
Net earnings (loss) attributable to Cannae Holdings, Inc. common shareholders decreased $298.9 million, or 62.9%, in the three months ended June 30, 2021 and decreased $1,179.7 million, or 105.0%, in the six months ended June 30, 2021 compared to the corresponding periods in 2020.
The change in revenues and net earnings (loss)loss is discussed in further detail at the segment level below.
Expenses.
Our operating expenses consist primarily of personnel costs, cost of restaurant revenue, other operating expenses, and depreciation and amortization.
Cost of restaurant revenue includes cost of food and beverage, primarily the costs of beef, groceries, produce, seafood, poultry and alcoholic and non-alcoholic beverages, net of vendor discounts and rebates, payroll and related costs and expenses directly relating to restaurant level activities, and restaurant operating costs including occupancy and other operating expenses at the restaurant level.
Personnel costs include base salaries, commissions, benefits, stock-based compensation and bonuses paid to employees, and are one of our most significant operating expenses. Personnel costs that are directly attributable to the operations of the Restaurant Group are included in Cost of restaurant revenue.
Other operating expenses include rent,management fees, carried interest fees, professional fees, advertising costs, travel expenses and impairments of operating assets.
Depreciation and amortization expense consists of our depreciation related to investments in property and equipment as well as amortization of intangible assets.
Pre-Tax Loss.
(Loss) earnings before income taxes and equity in earnings of unconsolidated affiliates decreased $458.9 million, or 194.6%, in the three months ended June 30, 2022 and decreased $452.4 million, or 397.2%, in the six months ended June 30, 2022 compared to the corresponding periods in 2021.
The change in revenues, expenses from our segmentsand pre-tax loss is discussed in further detail at the segment level below.
Income Taxes.
Income tax (benefit) expense (benefit) was $49.3$(66.5) million and $131.1$49.3 million in the three-month periods ended June 30, 20212022 and 2020,2021, respectively, and $(12.7)$(128.4) million and $300.5$(12.7) million in the six-month periods ended June 30, 20212022 and 2020,2021, respectively. Our effective tax rate was 20.9%29.8% and 24.3%20.9% in the three months ended June 30, 20212022 and 2020,2021, respectively, and 11.2%22.7% and 21.5%11.2% in the six months ended June 30, 20212022 and 2020,2021, respectively. Our effective tax rate fluctuates depending on our estimate of ultimate income tax liability and changes in the characteristics of net earnings, such as the weighting of operating income versus investmentother income or earnings and losses of unconsolidated affiliates. The change in our effective tax rate in all periods presented is primarily attributable to the varying impact of equity in earnings (losses) of unconsolidated affiliates on earnings (loss) before taxes.income tax (benefit) expense.
Other.Equity in Earnings of Unconsolidated Affiliates.
Equity in (losses) earnings of unconsolidated affiliates for the three and six months ended June 30, 2022 and 2021 consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| (in millions) |
| Dun & Bradstreet | $ | (2.6) | | | (9.2) | | | $ | (10.1) | | | $ | (15.6) | |
Paysafe/FTAC II Sponsor (1) | (96.7) | | | 4.5 | | | (89.9) | | | 71.5 | |
| Alight/FTAC Sponsor | 2.5 | | | — | | | 9.2 | | | — | |
| System1/Trebia Sponsor | (9.1) | | | — | | | 3.7 | | | — | |
| Optimal Blue | — | | | (4.2) | | | (1.3) | | | (8.2) | |
| AmeriLife | 2.7 | | | (1.1) | | | (2.4) | | | (7.0) | |
| Sightline | (4.2) | | | (0.1) | | | (8.5) | | | (0.1) | |
| Other | (0.6) | | | 1.3 | | | 23.2 | | | 4.5 | |
| Total | $ | (108.0) | | | $ | (8.8) | | | $ | (76.1) | | | $ | 45.1 | |
(1) The amount for the three and six months ended June 30, 2021 and 2020 consisted of the following (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| | 2021 | | 2020 | | 2021 | | 2020 |
| Dun & Bradstreet | $ | (9.2) | | | $ | (55.5) | | | $ | (15.6) | | | $ | (45.4) | |
| Ceridian (1) | — | | | — | | | — | | | 1.5 | |
| Optimal Blue | (4.2) | | | — | | | (8.2) | | | — | |
| Senator JV | — | | | 138.1 | | | (1.2) | | | 79.3 | |
| AmeriLife | (1.1) | | | (3.5) | | | (7.0) | | | (3.5) | |
| Other | 5.7 | | | (21.6) | | | 77.1 | | | (27.1) | |
| Total | $ | (8.8) | | | $ | 57.5 | | | $ | 45.1 | | | $ | 4.8 | |
(1) The amount for the six months ended June 30, 20202022 represents the Company's equity in earnings of Ceridian in the three months ended March 31, 2020 prior to the change in accounting for the investment beginning March 31, 2020.
Other equity in (losses) earnings of unconsolidated affiliates in the table above for the six months ended June 30, 2021 includes the Company's ratable share of the gain recorded by the sponsor of FTAC II associated with the sponsor's accounting for its investment in Paysafe.Sponsor only.
Other equity in earnings of unconsolidated affiliates in the six months ended June 30, 2022 from the table above includes $23.9 million for our ownership interest in Triple Tree Holdings which was primarily driven by its sale of its investment banking business.
Restaurant Group
The following table presents the results from operations of our Restaurant Group segment:
| | | Three months ended June 30, | | Six months ended June 30, | | Three months ended June 30, | | Six months ended June 30, |
| | | 2021 | | 2020 | | 2021 | | 2020 | | 2022 | | 2021 | | 2022 | | 2021 |
| | | (In millions) | | (In millions) |
| Revenues: | Revenues: | | | | Revenues: | | | |
| Restaurant revenue | Restaurant revenue | $ | 189.9 | | | $ | 99.4 | | | $ | 357.2 | | | $ | 269.3 | | Restaurant revenue | $ | 166.7 | | | $ | 189.9 | | | $ | 328.8 | | | $ | 357.2 | |
| | Total operating revenues | Total operating revenues | 189.9 | | | 99.4 | | | 357.2 | | | 269.3 | | Total operating revenues | 166.7 | | | 189.9 | | | 328.8 | | | 357.2 | |
| Operating expenses: | Operating expenses: | | Operating expenses: | |
| Cost of restaurant revenue | Cost of restaurant revenue | 160.3 | | | 100.8 | | | 308.0 | | | 253.9 | | Cost of restaurant revenue | 147.9 | | | 160.3 | | | 293.3 | | | 308.0 | |
| Personnel costs | Personnel costs | 8.9 | | | 7.2 | | | 17.1 | | | 15.7 | | Personnel costs | 6.1 | | | 8.9 | | | 12.3 | | | 17.1 | |
| Depreciation and amortization | Depreciation and amortization | 5.6 | | | 6.6 | | | 12.8 | | | 14.3 | | Depreciation and amortization | 5.6 | | | 5.6 | | | 10.9 | | | 12.8 | |
| Other operating expenses | Other operating expenses | 9.3 | | | 7.6 | | | 19.3 | | | 26.1 | | Other operating expenses | 10.5 | | | 9.3 | | | 19.3 | | | 19.3 | |
| Goodwill impairment | — | | | — | | | — | | | 7.7 | | |
| | Total operating expenses | Total operating expenses | 184.1 | | | 122.2 | | | 357.2 | | | 317.7 | | Total operating expenses | 170.1 | | | 184.1 | | | 335.8 | | | 357.2 | |
| Operating income (loss) | 5.8 | | | (22.8) | | | — | | | (48.4) | | |
| Operating (loss) income | | Operating (loss) income | (3.4) | | | 5.8 | | | (7.0) | | | — | |
| Other income (expense): | Other income (expense): | | | | | | | | Other income (expense): | | | | | | | |
| | Interest expense | Interest expense | (2.5) | | | (1.1) | | | (4.9) | | | (4.2) | | Interest expense | (1.1) | | | (2.5) | | | (2.2) | | | (4.9) | |
| Recognized gains (losses), net | 1.0 | | | (0.1) | | | 1.2 | | | 7.7 | | |
| Total other (expense) income | (1.5) | | | (1.2) | | | (3.7) | | | 3.5 | | |
| Earnings (loss) before income taxes and equity in earnings (losses) of unconsolidated affiliates | $ | 4.3 | | | $ | (24.0) | | | $ | (3.7) | | | $ | (44.9) | | |
| Recognized gains, net | | Recognized gains, net | 2.0 | | | 1.0 | | | 1.4 | | | 1.2 | |
| Total other income (expense) | | Total other income (expense) | 0.9 | | | (1.5) | | | (0.8) | | | (3.7) | |
| (Loss) earnings before income taxes and equity in earnings of unconsolidated affiliates | | (Loss) earnings before income taxes and equity in earnings of unconsolidated affiliates | $ | (2.5) | | | $ | 4.3 | | | $ | (7.8) | | | $ | (3.7) | |
Total revenues for the Restaurant groupGroup segment increased $90.5decreased $23.2 million, or 91.0%12.2%, in the three months ended June 30, 20212022 and increased $87.9decreased $28.4 million, or 32.6%8.0%, in the six months ended June 30, 20212022 compared to the corresponding periods in 2020.2021. The increasedecrease was primarily driven by: (1)by decreased revenue related to our sale of the Village Inn, Baker's Square, and Legendary Baking concepts subsequent to the prior year period. The decrease was partially offset by an overall increase in comparable store sales (discussed in further detail below) driven by continued recovery from the COVID-19 pandemic and the related social restrictions imposed by state and local governments, which resulted in the closing of dining rooms for substantially all of our restaurants beginning in late March 2020 and adversely impacted the comparable 2020 periods and (2) increased revenue related to the reconsolidation of Legendary Baking and VIBSQ beginning October 2, 2020 as part of their emergence from bankruptcy. VIBSQ is the owner of the Village Inn and Bakers Square restaurant concepts. The increase was partially offset by the closing or sale of company-owned restaurants primarilysales.
Revenue associated with our O'Charley's,Legendary Baking, Village Inn, and Baker's Square concepts subsequent to the prior year periods.
Revenue associated primarily with O'Charley's, Village Inn and Baker's Square of $8.6 million and $25.3 million was recorded in the three and six months ended June 30, 2020, respectively, associated with stores closed subsequent to June 30, 2020. Revenue of $17.8 million is recorded in the six months ended June 30, 2020 for the predecessors of Legendary and VIBSQ, which represents revenue for the period from January 1, 2020 through January 27, 2020, the date of their respective predecessors' filing for bankruptcy. Revenue for Legendary Baking and VIBSQbrands was $23.9 million and $44.2 million in the three and six months ended June 30, 2021, respectively.
Comparable Store Sales. One method we use in evaluating the performance of our restaurants is to compare sales results for restaurants period over period. A new restaurant is included in our comparable store sales figures starting in the first period following the restaurant's first seventy-eight weeks of operations. Changes in comparable store sales reflect changes in sales for the comparable store group of restaurants over a specified period of time. This measure highlights the performance of existing restaurants, as the impact of new restaurant openings is excluded. Comparable store sales for our O'Charley's and 99 Restaurants Village Inn, and Baker's Square brands (decreased) increased by 68.5%, 132.6%, 154.9%(5.1)% and 120.3%10.2%, respectively, in the three months ended June 30, 20212022 and (decreased) increased 28.1%, 30.7%, 26.8%by (2.7)% and 6.0%17.1%, respectively, in the six months ended June 30, 2021,2022, compared to the comparable periods in 2020.2021. The decrease in 2022 for our O'Charley's brand is primarily attributable to a decrease in guest counts, mostly offset by an increase in the average amount spent by customers each visit. The increase in 2022 for all brandsour 99 Restaurants brand is primarily attributable to the 2020 impact of the social restrictions imposed in response to COVID-19, which depressed salesincreased guest counts and an increase in the comparable 2020 periods. The increase at O'Charley's is also attributable to the closure of underperforming stores in prior periods.average amount spent by customers each visit.
Cost of restaurant revenue increaseddecreased directionally consistent with Restaurant revenues. Cost of restaurant revenue as a percentage of restaurant revenue was 84.4%88.7% and 101.4%84.4% in the three months ended June 30, 20212022 and 2020,2021, respectively, and 86.2%89.2% and 94.3%86.2% in the six months ended June 30, 20212022 and 2020,2021, respectively. The decreaseincrease in cost of restaurant revenue as a percentage of restaurant revenue in the three and six months ended June 30, 20212022 compared to the comparable periodsperiod in 2020
2021 is primarily attributable to improvements in overall labor costs resulting from a gradual return of the workforce during the recovery from the COVID-19 pandemic, partially offset by increased costs of labor, food, and supplies.
Other operating expense increased $1.7(Loss) earnings before income taxes decreased by $6.8 million, or 22.4%158.1%, in the three months ended June 30, 2021,2022 and decreased $6.8(increased loss) by $4.1 million, or 26.1%110.8%, in the six months ended June 30, 2021 from the corresponding period in 2020. The decrease in the six month period is primarily attributable to the impairment of assets of $6.8 million in the six months ended June 30, 2020.
Recognized gains and losses, net for the six months ended June 30, 2020 includes a gain of $26.5 million as a result of the deconsolidation of Blue Ribbon on January 27, 2020 and an other-than-temporary impairment loss on our recorded investment in Blue Ribbon of $18.6 million.
Loss before income taxes decreased by $28.3 million, or 117.9%, in the three months ended June 30, 2021 and increased $41.2 million, or 91.8%, in the six months ended June 30, 20212022 from the corresponding periods in 2020.2021. The change in income was primarily attributable to the factors discussed above.
Dun & Bradstreet
As of June 30, 2021,2022, we own approximately 15.8%20.3% of the outstanding common stock of Dun & Bradstreet. We account for our investmentownership interest in Dun & Bradstreet under the equity method of accounting; therefore, its results of operations do not consolidate into ours. Subsequent to June 30, 2022, we completed the sale of 9.2 million shares of common stock of Dun & Bradstreet to a broker pursuant to Rule 144. In connection with the sale, we received proceeds of $127.2 million.
Summarized financial information for Dun & Bradstreet for the relevant dates and time periods included in Investments in unconsolidated affiliates and Equity in earnings (losses) of unconsolidated affiliates in our Condensed Consolidated Balance Sheets and Statements of Operations, respectively, is presented below. Financial information for the three and six months ended June 30, 2020 represents that of Star Parent, L.P. ("Star Parent"), the former parent of D&B through which the Company was invested prior to D&B's initial public offering in July 2020.
| | | | Three months ended June 30, | | Six months ended June 30, | | Three months ended June 30, | | Six months ended June 30, |
| | 2021 | | 2020 | | 2021 | | 2020 | | 2022 | | 2021 | | 2022 | | 2021 |
| | (In millions) | | (In millions) | | (In millions) |
| Total revenues | Total revenues | $ | 520.9 | | | $ | 418.7 | | | $ | 1,025.4 | | | $ | 814.4 | | Total revenues | $ | 537.3 | | | $ | 520.9 | | | $ | 1,073.3 | | | $ | 1,025.4 | |
| Loss before income taxes | Loss before income taxes | (8.5) | | | (203.0) | | | (42.2) | | | (203.6) | | Loss before income taxes | (0.7) | | | (8.5) | | | (40.5) | | | (42.2) | |
| Net loss | Net loss | (50.8) | | | (174.7) | | | (74.1) | | | (100.4) | | Net loss | — | | | (50.8) | | | (29.8) | | | (74.1) | |
| Dividends attributable to preferred equity and noncontrolling interest expense | (0.9) | | | (33.3) | | | (2.6) | | | (65.7) | | |
| Net loss attributable to Dun & Bradstreet | (51.7) | | | (208.0) | | | (76.7) | | | (166.1) | | |
| Net income attributable to noncontrolling interest | | Net income attributable to noncontrolling interest | (1.8) | | | (0.9) | | | (3.3) | | | (2.6) | |
| Loss attributable to Dun & Bradstreet | | Loss attributable to Dun & Bradstreet | (1.8) | | | (51.7) | | | (33.1) | | | (76.7) | |
Details relating to the results of operations of Dun & Bradstreet (NYSE: "DNB") can be found in its periodic reports filed with the SEC.
Optimal BlueAlight
On September 15, 2020,July 2, 2021, we completedclosed on the acquisition of our investmentownership interest in Optimal Blue.Alight. As of June 30, 2022, we own approximately 9.7% of the outstanding common stock of Alight. We account for our investment in Optimal Blueownership of Alight under the equity method of accounting; therefore, its results of operations do not consolidate into ours. We historically accounted for our equity ownership and proportionate share of equity in earnings or loss of Alight on a three-month lag. In the second quarter of 2022, the Company was able to obtain financial information for Alight on a more timely basis and determined it was preferable to record our investment in Alight on a current basis as opposed to the previous three-month lag. Accordingly, our net earnings and the segment table above, respectively, for the three months ended June 30, 2022, include our equity in Alight’s earnings for both the first and second quarters of 2022. The elimination of the three-month reporting lag for our equity ownership in Alight did not result in any material adjustments for any current or prior periods presented.
Summarized financial information for Optimal BlueAlight for the relevant dates and time periods included in Equity in earnings (losses) of unconsolidated affiliates in our Condensed Consolidated Statements of Operations is presented below.
| | | | | | | | | | | | | | | |
| | Three months ended June 30, 2021 | | | | Six months ended June 30, 2021 | | |
| (In millions) | | (In millions) |
| Total revenues | $ | 44.3 | | | | | $ | 85.9 | | | |
| Operating loss | (13.9) | | | | | (31.1) | | | |
| Net loss | (18.7) | | | | | (40.2) | | | |
| | | | | | | | | | | | | | | |
| | Three months ended June 30, 2022 | | Six months ended June 30, 2022 |
| | | | | | | |
| (In millions) |
| Total revenues | $ | 715.0 | | | | | $ | 1,440.0 | | | |
| Loss from operations | (23.0) | | | | | (25.0) | | | |
| | | | | | | |
| | | | | | | |
| Net income attributable to Alight | 51.0 | | | | | 40.0 | | | |
Paysafe
On March 30, 2021, we closed on the acquisition of our ownership interest in Paysafe. As of June 30, 2022, we own approximately 8.3% of the outstanding common stock of Paysafe. We account for our ownership of Paysafe under the equity method of accounting; therefore, its results do not consolidate into ours. We report our equity in the earnings or loss of Paysafe on a three-month lag. Accordingly, our net loss for the three and six months ended June 30, 2022 includes our equity in Paysafe’s losses for the three and six months ended March 31, 2022, respectively. Because we closed on our investment in Paysafe at the end of the first quarter of 2021 and record our share of its earnings or loss on a three-month lag, there is no equity in earnings or loss of Paysafe included in our results of operations for the three or six months ended June 30, 2021.
Summarized financial information for Paysafe for the relevant dates and time periods included in Equity in earnings of unconsolidated affiliates in our Condensed Consolidated Statements of Operations is presented below.
AmeriLife | | | | | | | | | | | | | | | |
| | Three months ended
March 31, 2022 | | Six Months Ended
March 31, 2022 |
| | | | | | | |
| (In millions) |
| Total revenues | $ | 367.7 | | | | | $ | 739.3 | | | |
| Loss from operations | (1,191.7) | | | | | (1,162.7) | | | |
| Net loss | (1,170.8) | | | | | (1,080.3) | | | |
| Less: net income attributable to noncontrolling interest | 0.4 | | | | | 0.6 | | | |
| Net loss attributable to Paysafe | (1,171.2) | | | | | (1,080.9) | | | |
On March 18, 2020, we closed on our $125.0 million investmentDetails relating to the results of operations of Paysafe (NYSE: "PSFE") can be found in its periodic reports filed with the AmeriLife Joint Venture. Summarized financial information for AmeriLife for the relevant dates and time periods included in Investments in unconsolidated affiliates and Equity in earnings (losses) of unconsolidated affiliates in our Condensed Consolidated Balance Sheets and Statements of Operations, respectively, is presented below. We account for our investment in AmeriLife as an equity method investment and report our equity in earnings or loss of AmeriLife on a three-month lag. Accordingly, our net earnings for the three months ended June 30, 2021 includes our equity in AmeriLife’s losses for the three months ended March 31, 2021.
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| | Three Months Ended March 31, 2021 | | Period from March 18, 2020 to March 31, 2020 | | Six Months Ended March 31, 2021 | | |
| (In millions) |
| Total revenues | $ | 149.3 | | | $ | 14.7 | | | $ | 280.3 | | | |
| Operating income (loss) | 26.6 | | | (16.1) | | | 24.2 | | | |
| Net income (loss) | 14.2 | | | (16.9) | | | 0.5 | | | |
| Income attributable to noncontrolling interests | 19.8 | | | 0.4 | | | 30.9 | | | |
| Net loss attributable to AmeriLife | (5.6) | | | (17.3) | | | (30.4) | | | |
Corporate and Other
The Corporate and Other segment consists of our share in the operations of certain controlled portfolio companiesbusinesses and other equity investments,ownership interests, activity of the corporate holding company and certain intercompany eliminations and taxes.
The following table presents the results from operations of our non-reportable Corporate and other segment:
| | | Three months ended June 30, | | Six months ended June 30, | | Three months ended June 30, | | Six months ended June 30, |
| | 2021 | | 2020 | | 2021 | | 2020 | | 2022 | | 2021 | | 2022 | | 2021 |
| | | (In millions) | | (In millions) | | (In millions) |
| Revenues: | Revenues: | | | Revenues: | | |
| | Other operating revenue | Other operating revenue | $ | 12.5 | | | $ | 3.2 | | | $ | 17.1 | | | $ | 6.3 | | Other operating revenue | $ | 7.8 | | | $ | 12.5 | | | $ | 13.1 | | | $ | 17.1 | |
| | Operating expenses: | Operating expenses: | | Operating expenses: | |
| | Personnel costs | Personnel costs | 15.5 | | | 16.1 | | | 19.3 | | | 36.8 | | Personnel costs | 9.9 | | | 15.5 | | | 24.8 | | | 19.3 | |
| Depreciation and amortization | Depreciation and amortization | 0.8 | | | 0.7 | | | 1.5 | | | 1.4 | | Depreciation and amortization | 0.6 | | | 0.8 | | | 1.1 | | | 1.5 | |
| Other operating expenses | Other operating expenses | 38.2 | | | 9.3 | | | 68.5 | | | 18.7 | | Other operating expenses | 20.9 | | | 38.2 | | | 82.8 | | | 68.5 | |
| Total operating expenses | Total operating expenses | 54.5 | | | 26.1 | | | 89.3 | | | 56.9 | | Total operating expenses | 31.4 | | | 54.5 | | | 108.7 | | | 89.3 | |
| Operating loss | Operating loss | (42.0) | | | (22.9) | | | (72.2) | | | (50.6) | | Operating loss | (23.6) | | | (42.0) | | | (95.6) | | | (72.2) | |
| Other income (expense): | Other income (expense): | | | | | | | | Other income (expense): | | | | | | | |
| Interest, investment and other income | Interest, investment and other income | 0.5 | | | 8.3 | | | 1.4 | | | 10.5 | | Interest, investment and other income | 0.1 | | | 0.5 | | | 0.1 | | | 1.4 | |
| Interest elimination (expense) | — | | | 0.1 | | | 0.3 | | | (0.6) | | |
| Recognized gains (losses), net | 273.0 | | | 578.2 | | | (39.7) | | | 1,485.5 | | |
| Total other income (expense) | 273.5 | | | 586.6 | | | (38.0) | | | 1,495.4 | | |
| Earnings (loss) before income taxes and equity in losses of unconsolidated affiliates | $ | 231.5 | | | $ | 563.7 | | | $ | (110.2) | | | $ | 1,444.8 | | |
| Interest expense | | Interest expense | (1.5) | | | — | | | (2.8) | | | 0.3 | |
| Recognized (losses) gains, net | | Recognized (losses) gains, net | (195.6) | | | 273.0 | | | (460.2) | | | (39.7) | |
| Total other (expense) income | | Total other (expense) income | (197.0) | | | 273.5 | | | (462.9) | | | (38.0) | |
| (Loss) earnings before income taxes and equity in earnings of unconsolidated affiliates | | (Loss) earnings before income taxes and equity in earnings of unconsolidated affiliates | $ | (220.6) | | | $ | 231.5 | | | $ | (558.5) | | | $ | (110.2) | |
Other operating revenue increased $9.3Personnel costs decreased $5.6 million in the three months ended June 30, 20212022 and $10.8increased $5.5 million in the six months ended June 30, 20212022 compared to the corresponding periods in 2020.2021. The increasechange in both periods is attributable the impact of COVID-19 on our real estate and resort revenuespersonnel costs was primarily driven by changes in the three and six months ended June 30, 2020.amounts of success bonuses paid related to our sales of shares of Ceridian.
Personnel costsOther operating expenses decreased $0.6by $17.3 million in the three months ended June 30, 20212022 and decreased $17.5increased $14.3 million in the six months ended June 30, 20212022 compared to the corresponding periods in 2020.2021. The decrease in the three month period was primarily driven by management fees and carried interest incurred with our Manager of $10.6 million and $2.2 million, respectively, for the three months ended June 30, 2022 compared with $8.2 million and $20.3 million, respectively, for the same period in 2021. The increase in the six month period was primarily driven by $25.6management fees and carried interest incurred with our Manager of $21.2 million and $47.4 million, respectively, for the six months ended June 30, 2022 compared with $15.7 million and $37.4 million, respectively, for the same period in investment success bonuses2021. The carried interest for the period ended June 30, 2022 was primarily attributable to the Optimal Blue Disposition, of which $31.8 million was paid in D&B stock. The carried interest for the 2020 periodperiods ended June 30, 2021 were primarily related to our salesdistributions from the Senator JV and sale of shares of Ceridian paid in 2020 compared to $11.1 million of such expense in the 2021 period.D&B stock.
Other operating expenses increased by $28.9Recognized (losses) gains, net, decreased $468.6 million in the three months ended June 30, 20212022 and increased $49.8decreased (increased loss) $420.5 million in the six months ended June 30, 20212022 compared to the corresponding periods in 2020.2021. The increase was primarily driven by $8.2 million and $15.7 million of management fees and $20.3 million and 37.4 million of carried interest expense incurred with our Managerdecrease in the three and six months ended June 30, 2021, respectively,2022 is primarily attributable to increased losses on equity securities in the three months ended June 30, 2022 compared to $4.2the corresponding period in 2021, a gain of $111.1 million on the sale of D&B shares recorded in the 2021 period and $8.4a non-cash impairment of $32.8 million ofon our ownership interest in QOMPLX in the 2022 period. The
management fees in the three and six months ended June 30, 2020, respectively. Carried interest payments in the 2021 periods were attributable to our distributions from Senator JV and sales of D&B.
Recognized (losses) gains, net, decreased $305.2 million in the three months ended June 30, 2021 and decreased $1,553.6 milliondecrease in the six months ended June 30, 20212022 is also attributable to a $236.0 million impairment charge recorded on our ownership interest in Paysafe in the six months ended June 30, 2022 and increased losses on equity securities in the six months ended June 30, 2022 compared to the corresponding period in 2020. The decrease is primarily attributable to greater gains2021. This was partially offset by the $313.0 million gain on sales and fair value marks on our holdingsthe sale of CeridianOptimal Blue recorded in the three and six months ended June 30, 2020 compared to the three and six months ended June 30, 2021, offset by a gain of $111.1 million on our sale of D&B shares in the three and six months ended June 30, 2021.2022. See Note D for further information on recognized gains and losses on equity securities.
Earnings (loss)(Loss) earnings before income taxes decreased $332.2$452.1 million in the three months ended June 30, 20212022 and decreased $1,583.4(increased loss) $448.3 million in the six months ended June 30, 20212022 compared to the corresponding periods in 2020.2021. The decreasedincrease earnings was primarily attributable to the factors noted above.
Liquidity and Capital Resources
Cash Requirements. Our current cash requirements include personnel costs, operating expenses, taxes, payments of interest and principal on our debt, capital expenditures, the AAII FPA, and business acquisitions. There are no restrictions on our retained earnings regarding our ability to pay dividends to stockholders, although there are limits on the ability of certain subsidiaries to pay dividends to us, as a result of provisions in certain debt agreements. The declaration of any future dividends is at the discretion of our Board of Directors. Additional uses of cash flow are expected to include additional investments, businessstock repurchases, acquisitions, or stock repurchases.and debt repayments.
As of June 30, 2021,2022, we had cash and cash equivalents of $271.2$100.6 million, of which $214.6$75.7 million was cash held by the corporate holding company, and $200.0$250.0 million of capacity under our existing holding company credit facilities with the ability to add an additional $400.0$250.0 million of borrowing capacity by amending our 2020 Margin Facility.
We continually assess our capital allocation strategy, including decisions relating to reducing debt, repurchasing our stock, and/or conserving cash. We believe that all anticipated cash requirements for current operations will be met from internally generated funds, cash dividends from subsidiaries, cash generated by investment securities, potential sales of non-strategic assets, and borrowings on existing credit facilities. Our short-term and long-term liquidity requirements are monitored regularly to ensure that we can meet our cash requirements. We forecast the needs of all of our subsidiaries and periodically review their short-term and long-term projected sources and uses of funds, as well as the asset, liability, investment and cash flow assumptions underlying such forecasts.
We are focused on evaluating our assets and investmentsownership interests as potential vehicles for creating liquidity. Our intent is to use that liquidity for general corporate purposes, including future investments,acquisitions, potentially reducing debt, repurchasing shares of our stock, other strategic initiatives and/or conserving cash.
Operating Cash Flow. Our cash flows used in operations for the six months ended June 30, 2022 and 2021 and 2020 totaled $67.2$133.0 million and $81.3$67.2 million, respectively. The decreaseincrease in cash used in operations of $15.6$65.8 million is primarily attributable to the timing of payment and receipt of working capital assets and liabilities.
Investing Cash Flows. Our cash flows provided by (used in) provided by investing activities for the six months ended June 30, 2022 and 2021 and 2020 were $(282.0)$201.7 million and $83.3$(282.0) million, respectively. The decreaseincrease in cash provided by (increase(decrease in cash used in) investing activities of $365.3$483.7 million in the 20212022 period from the 20202021 period is primarily attributable to a net decrease in proceeds from sales of investments, net of investments in new and additional investments in unconsolidated affiliates in the 20212022 period compared to the 20202021 period.
Capital Expenditures. Total capital expenditures for property and equipment and other intangible assets were $4.9$7.6 million and $16.2$4.9 million for the six-month periods ended June 30, 20212022 and 2020,2021, respectively. The capital expenditures in 20212022 and 20202021 primarily consisted of purchases of equipment in our Restaurant Group segment.
Financing Cash Flows. Our cash flows (used in) provided byused in financing activities for the six months ended June 30, 2022 and 2021 and 2020 were $(100.2)$53.9 million and $387.0$100.2 million, respectively. The decrease in cash provided byused in financing activities of $486.8$46.3 million is primarily attributable to an increase in debt, net proceeds of $455.0paydowns, of $104.2 million, from an equity offering shares of our common stock in the six months ended June 30, 2020 andpartially offset by increased treasury repurchases of $73.6$57.8 million in the six months ended June 30, 2021, partially offset by greater net debt paydowns (net of borrowings) of $44.9 million in the six months ended June 30, 2020.2022.
Financing Arrangements. For a description of our financing arrangements, see Note FE included in Item 1 of Part 1I of this Quarterly Report, which is incorporated by reference into this Item 2 of Part I.
Seasonality. There have been no material changes to the seasonality experienced in our businesses from those described for the period as of and for the year ended December 31, 20202021 included in our Annual Report on Form 10-K.Report.
Contractual Obligations. Our long term contractual obligations generally include our credit agreements and other debt facilities, lease payments and financing obligations on certain of our premises and equipment, purchase obligations of the Restaurant Group and payments to our Manager.
Operating lease payments include the expected future rent payments of the Company and its operating subsidiaries, primarily for the Restaurant Group. The operating leases are accounted for pursuant to ASC 842 Leases.
Purchase obligations include agreements to purchase goods or services that are enforceable, are legally binding and specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. The Restaurant Group has unconditional purchase obligations with various vendors, primarily related to food and beverage obligations with fixed commitments in regards to the time period of the contract and the quantities purchased with annual price adjustments that can fluctuate. Future purchase obligations are estimated by assuming historical purchase activity over the remaining, non-cancellable terms of the various agreements. For agreements with minimum purchase obligations, at least the minimum amounts we are legally required to purchase are included. These agreements do not include fixed delivery terms. We used both historical and projected volume and pricing as of June 30, 20212022 to determine the amount of these obligations.
Pursuant to the terms of the Management Services Agreement between Cannae LLC and our Manager, Cannae LLC is obligated to pay our Manager a quarterly management fee equal to 0.375% (1.5% annualized) of the Company’s cost of invested capital (as defined in the Management Services Agreement) as of the last day of each fiscal quarter, payable in arrears in cash, as may be adjusted pursuant to the terms of the Management Services Agreement. Management fees payable to our Manager are included for the initial 5-year term of the Management Services Agreement that began in September 2019 and are based on our cost of invested capital of $2,364.3$2,918.1 million as of June 30, 2021.2022.
Restaurant Group financing obligations include its agreements to lease its corporate office and certain O'Charley's restaurant locations, which are accounted for as failed sale and leaseback transactions.
As of June 30, 2021,2022, our required annual payments relating to these contractual obligations were as follows:
| | | | 2021 | | 2022 | | 2023 | | 2024 | | 2025 | | Thereafter | | Total | | 2022 | | 2023 | | 2024 | | 2025 | | 2026 | | Thereafter | | Total |
| | | (In millions) | | (In millions) |
| Operating lease payments | Operating lease payments | $ | 18.2 | | | $ | 35.8 | | | $ | 32.4 | | | $ | 24.3 | | | $ | 21.3 | | | $ | 146.9 | | | $ | 278.9 | | Operating lease payments | $ | 17.7 | | | $ | 33.5 | | | $ | 25.9 | | | $ | 22.9 | | | $ | 21.0 | | | $ | 132.7 | | | $ | 253.7 | |
| Unconditional purchase obligations | Unconditional purchase obligations | 43.3 | | | 14.7 | | | 8.7 | | | 7.1 | | | 5.9 | | | 6.8 | | | 86.5 | | Unconditional purchase obligations | 57.2 | | | 9.0 | | | 5.6 | | | 4.8 | | | 2.9 | | | 2.9 | | | 82.4 | |
| Notes payable | Notes payable | 4.2 | | | 26.6 | | | 8.2 | | | 0.9 | | | 0.6 | | | 12.0 | | | 52.5 | | Notes payable | 10.8 | | | 0.8 | | | 0.8 | | | 85.4 | | | 7.7 | | | 1.6 | | | 107.1 | |
| Management fees payable to Manager | Management fees payable to Manager | 16.3 | | | 32.7 | | | 32.7 | | | 27.3 | | | — | | | — | | | 109.0 | | Management fees payable to Manager | 21.2 | | | 42.3 | | | 35.3 | | | — | | | — | | | — | | | 98.8 | |
| Restaurant Group financing obligations | Restaurant Group financing obligations | 1.7 | | | 3.4 | | | 3.4 | | | 3.4 | | | 3.5 | | | 24.2 | | | 39.6 | | Restaurant Group financing obligations | 1.7 | | | 3.4 | | | 3.4 | | | 3.5 | | | 3.5 | | | 20.7 | | | 36.2 | |
| Total | Total | $ | 83.7 | | | $ | 113.2 | | | $ | 85.4 | | | $ | 63.0 | | | $ | 31.3 | | | $ | 189.9 | | | $ | 566.5 | | Total | $ | 108.6 | | | $ | 89.0 | | | $ | 71.0 | | | $ | 116.6 | | | $ | 35.1 | | | $ | 157.9 | | | $ | 578.2 | |
See Note A and Note CF to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report for further discussion of our commitments to fund the Forward Purchase AgreementEagle Commitment and Subscription Agreements.the AAII FPA.
Capital Stock Transactions. On September 19, 2019,Effective February 26, 2021, our Board of Directors approvedauthorized a three-year stock repurchase program, effective September 19, 2019 (the "2019 Repurchase Program") under which we may purchase up to 5 million shares of our CNNE common stock through September 30, 2022. We may make repurchases from time to time in the open market, in block purchases or in privately negotiated transactions, depending on market conditions and other factors.
On March 1, 2021, we announced that our Board has authorized an additional three-year stock repurchase program, effective February 26, 2021 (the "2021 Repurchase Program"), under which the Company may repurchase up to 10 million shares of its common stock. Purchases may be made from time to time in the open market at prevailing prices or in privately negotiated transactions through February 26, 2024. The repurchase program does not obligate the Company to acquire any specific number of shares and may be suspended or terminated at any time.
WePursuant to the 2021 Repurchase Program, we repurchased 2,528,1686,775,598 shares of CNNE common stock during the six months ended June 30, 20212022 for approximately $89.7$138.6 million in the aggregate, or an average of $35.49$20.46 per share. Since the original commencement of the 20192021 Repurchase Program through market close on June 30, 2021,2022, we repurchased a total of 3,216,5847,292,182 common shares for approximately $109.1$157.2 million in the aggregate, or an average of $33.90$21.56 per share.
On August 3, 2022, our Board authorized the 2022 Repurchase Program, under which the Company may repurchase up to 10.0 million shares of its common stock. Purchases may be made from time to time in the open market at prevailing prices or in privately negotiated transactions through August 3, 2025. The repurchase program does not obligate the Company to acquire any specific number of shares and may be suspended or terminated at any time.
Off-Balance Sheet Arrangements. There have been no significant changes to our off-balance sheet arrangements since our Annual Report.
Item 3. Quantitative and Qualitative Disclosure about Market Risk
There have been no material changes in the market risks described in our Annual Report on Form 10-K for the year ended December 31, 2020.2021.
Item 4. Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is: (a) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms; and (b) accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 20212022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II: OTHER INFORMATION
Item 1. Legal Proceedings
See discussion of legal proceedings in Note G.F. Commitments and Contingencies to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report, which is incorporated by reference into this Item 1 of Part II.
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| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
The following table summarizes repurchases of equity securities by the Company during the three months ended June 30, 2021:2022:
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| Period | | Total Number of Shares Purchased | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)(2) | | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (3) |
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| 4/1/2021 - 4/30/2021 | | — | | | — | | | — | | | 14,311,584 | |
| 5/1/2021 - 5/31/2021 | | 1,299,951 | | | 36.29 | | | 1,299,951 | | | 13,011,633 | |
| 6/1/2021 - 6/30/2021 | | 1,228,217 | | | 34.65 | | | 1,228,217 | | | 11,783,416 | |
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| Total | | 2,528,168 | | | $35.49 | | 2,528,168 | | | |
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| Period | | Total Number of Shares Purchased | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (3) |
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| 4/1/2022 - 4/30/2022 | | — | | | $ | — | | | — | | | 7,483,416 | |
| 5/1/2022 - 5/31/2022 | | 2,000,000 | | | $ | 17.00 | | | 2,000,000 | | | 5,483,416 | |
| 6/1/2022 - 6/30/2022 | | 2,775,598 | | | $ | 18.26 | | | 2,775,598 | | | 2,707,818 | |
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| Total | | 4,775,598 | | (1) | $ | 17.73 | | | 4,775,598 | | | |
(1) On September 19, 2019, our BoardAll shares repurchased during the three months ended June 30, 2022 were purchased from FNF in privately negotiated transactions for an aggregate amount of Directors approved the 2019 Repurchase Program, under which we may purchase up to 5 million shares of our CNNE common stock through September 30, 2022.$84.7 million.
(2) On March 1, 2021, our Board of Directors approved the 2021 Repurchase Program, under which we may purchase up to 10 million shares of our CNNE common stock through February 26, 2024.
(3) As of the last day of the applicable month.
Item 6. Exhibits
(a) Exhibits:
EXHIBIT INDEX
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| 10.1 | | Backstop Agreement,Amended and Restated Revolver Note, dated as of May 10, 2021,12, 2022, by and among Austerlitz Acquisition Corporation I andbetween Cannae Holdings, Inc. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed May 10, 2021).and Fidelity National Financial, Inc. |
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| 10.2 | | Amended and Restated SponsorAmendment Agreement dated as of May 10, 2021 (incorporated by reference to Exhibit 10.212, 2022, to the Company's Current Report on Form 8-K, filed May 10, 2021).Margin Loan Agreement, dated as of November 30, 2020, among Cannae Funding C, LLC, as Borrower 1, Cannae Funding D, LLC, as Borrower 2, the lenders from time to time party thereto and Royal Bank of Canada, as administrative agent. |
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| 101.INS | | Inline XBRL Instance Document * |
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| 101.SCH | | Inline XBRL Taxonomy Extension Schema Document |
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| 101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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| 101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
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| 101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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| 101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document |
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| 104 | | Cover Page Interactive Data File formatted in Inline XBRL and contained in Exhibit 101. |
* The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| Date: | August 5, 20218, 2022 | CANNAE HOLDINGS, INC.
(registrant)
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| | By: | /s/ Bryan D. Coy | |
| | | Bryan D. Coy | |
| | | Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) | |