2017 Q1 Form 10-Q Financial Statement

#000122460817000024 Filed on May 03, 2017

View on sec.gov

Income Statement

Concept 2017 Q1 2016 Q1
Revenue $1.071B $960.4M
YoY Change 11.48% -1.83%
Cost Of Revenue $669.3M $619.0M
YoY Change 8.13% 2.15%
Gross Profit $401.4M $341.4M
YoY Change 17.57% -8.3%
Gross Profit Margin 37.49% 35.55%
Selling, General & Admin
YoY Change
% of Gross Profit
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $70.00M $68.20M
YoY Change 2.64% -3.94%
% of Gross Profit 17.44% 19.98%
Operating Expenses $943.2M $892.2M
YoY Change 5.72% 2.02%
Operating Profit -$541.8M -$550.8M
YoY Change -1.63% 9.68%
Interest Expense $30.80M $27.70M
YoY Change 11.19% 28.84%
% of Operating Profit
Other Income/Expense, Net
YoY Change
Pretax Income $96.70M $40.50M
YoY Change 138.77% -50.79%
Income Tax $34.40M -$5.000M
% Of Pretax Income 35.57% -12.35%
Net Earnings $62.30M $45.50M
YoY Change 36.92% -13.83%
Net Earnings / Revenue 5.82% 4.74%
Basic Earnings Per Share $0.36 $0.25
Diluted Earnings Per Share $0.36 $0.25
COMMON SHARES
Basic Shares Outstanding 173.4M shares 180.4M shares
Diluted Shares Outstanding 175.1M shares 182.1M shares

Balance Sheet

Concept 2017 Q1 2016 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments
YoY Change
Cash & Equivalents $884.7M $635.7M
Short-Term Investments
Other Short-Term Assets
YoY Change
Inventory
Prepaid Expenses
Receivables
Other Receivables
Total Short-Term Assets
YoY Change
LONG-TERM ASSETS
Property, Plant & Equipment
YoY Change
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments $26.39B $24.94B
YoY Change 5.82% -2.21%
Other Assets $698.0M $829.0M
YoY Change -15.8% 23.73%
Total Long-Term Assets
YoY Change
TOTAL ASSETS
Total Short-Term Assets
Total Long-Term Assets
Total Assets $31.98B $31.46B
YoY Change 1.65% -0.43%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable
YoY Change
Accrued Expenses
YoY Change
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities
YoY Change
LONG-TERM LIABILITIES
Long-Term Debt $4.195B $4.116B
YoY Change 1.92% 9.61%
Other Long-Term Liabilities $798.0M $789.0M
YoY Change 1.14% 18.29%
Total Long-Term Liabilities $4.993B $4.905B
YoY Change 1.79% 10.92%
TOTAL LIABILITIES
Total Short-Term Liabilities
Total Long-Term Liabilities $4.993B $4.905B
Total Liabilities $27.82B $27.23B
YoY Change 2.16% 1.45%
SHAREHOLDERS EQUITY
Retained Earnings $650.1M $380.0M
YoY Change 71.08% 124.45%
Common Stock $3.215B $3.306B
YoY Change -2.76% -9.42%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $4.487B $4.227B
YoY Change
Total Liabilities & Shareholders Equity $31.98B $31.46B
YoY Change 1.65% -0.43%

Cashflow Statement

Concept 2017 Q1 2016 Q1
OPERATING ACTIVITIES
Net Income $62.30M $45.50M
YoY Change 36.92% -13.83%
Depreciation, Depletion And Amortization $70.00M $68.20M
YoY Change 2.64% -3.94%
Cash From Operating Activities $143.4M $143.6M
YoY Change -0.14% 17.22%
INVESTING ACTIVITIES
Capital Expenditures
YoY Change
Acquisitions
YoY Change
Other Investing Activities $8.900M $3.800M
YoY Change 134.21% -26.92%
Cash From Investing Activities $107.0M $155.0M
YoY Change -30.97% -144.75%
FINANCING ACTIVITIES
Cash Dividend Paid $14.00M $12.70M
YoY Change 10.24% 4.96%
Common Stock Issuance & Retirement, Net $36.90M $96.50M
YoY Change -61.76% 13.53%
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -$33.90M -$95.20M
YoY Change -64.39% -342.86%
NET CHANGE
Cash From Operating Activities $143.4M $143.6M
Cash From Investing Activities $107.0M $155.0M
Cash From Financing Activities -$33.90M -$95.20M
Net Change In Cash $216.5M $203.4M
YoY Change 6.44% -210.12%
FREE CASH FLOW
Cash From Operating Activities $143.4M $143.6M
Capital Expenditures
Free Cash Flow
YoY Change

Facts In Submission

Frame Concept Type Concept / XBRL Key Value Unit
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CY2017Q1 cno Number Of Product Distribution Channels
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CY2016Q1 cno Revenue Relatedto Transitionand Support Services Agreements
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CY2016Q1 cno Sales Of Investments
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CY2017Q1 cno Variable Interest Entities Investments Sold
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CY2017Q1 cno Variable Interest Entities Net Realized Gain Loss On Investments
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CY2017Q1 cno Variable Interest Entity Amortized Cost Securities Held
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CY2017Q1 cno Variable Interest Entity Fixed Maturity Securities Fair Value
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CY2016Q1 cno Variable Interest Entity Investments Gross Investment Losses From Sale Before Tax
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CY2017Q1 cno Variable Interest Entity Investments Gross Investment Losses From Sale Before Tax
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CY2017Q1 dei Amendment Flag
AmendmentFlag
false
CY2017Q1 dei Current Fiscal Year End Date
CurrentFiscalYearEndDate
--12-31
CY2017Q1 dei Document Fiscal Period Focus
DocumentFiscalPeriodFocus
Q1
CY2017Q1 dei Document Fiscal Year Focus
DocumentFiscalYearFocus
2017
CY2017Q1 dei Document Period End Date
DocumentPeriodEndDate
2017-03-31
CY2017Q1 dei Document Type
DocumentType
10-Q
CY2017Q1 dei Entity Central Index Key
EntityCentralIndexKey
0001224608
CY2017Q2 dei Entity Common Stock Shares Outstanding
EntityCommonStockSharesOutstanding
171311512 shares
CY2017Q1 dei Entity Filer Category
EntityFilerCategory
Large Accelerated Filer
CY2017Q1 dei Entity Registrant Name
EntityRegistrantName
CNO Financial Group, Inc.
CY2016Q4 us-gaap Accrued Investment Income Receivable
AccruedInvestmentIncomeReceivable
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CY2017Q1 us-gaap Accrued Investment Income Receivable
AccruedInvestmentIncomeReceivable
258200000 USD
CY2016Q4 us-gaap Accumulated Other Comprehensive Income Loss Net Of Tax
AccumulatedOtherComprehensiveIncomeLossNetOfTax
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58700000 USD
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:left;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">LITIGATION AND OTHER LEGAL PROCEEDINGS</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Legal Proceedings</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company and its subsidiaries are involved in various legal actions in the normal course of business, in which claims for compensatory and punitive damages are asserted, some for substantial amounts.&#160;&#160;We recognize an estimated loss from these loss contingencies when we believe it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Some of the pending matters have been filed as purported class actions and some actions have been filed in certain jurisdictions that permit punitive damage awards that are disproportionate to the actual damages incurred.&#160;&#160;The amounts sought in certain of these actions are often large or indeterminate and the ultimate outcome of certain actions is difficult to predict.&#160;&#160;In the event of an adverse outcome in one or more of these matters, there is a possibility that the ultimate liability may be in excess of the liabilities we have established and could have a material adverse effect on our business, financial condition, results of operations and cash flows.&#160;&#160;In addition, the resolution of pending or future litigation may involve modifications to the terms of outstanding insurance policies or could impact the timing and amount of rate increases, which could adversely affect the future profitability of the related insurance policies.&#160;&#160;Based upon information presently available, and in light of legal, factual and other defenses available to the Company and its subsidiaries, the Company does not believe that it is probable that the ultimate liability from either pending or threatened legal actions, after consideration of existing loss provisions, will have a material adverse effect on the Company's consolidated financial condition, operating results or cash flows. However, given the inherent difficulty in predicting the outcome of legal proceedings, there exists the possibility that such legal actions could have a material adverse effect on the Company's consolidated financial condition, operating results or cash flows.</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In addition to the inherent difficulty of predicting litigation outcomes, particularly those that will be decided by a jury, some matters purport to seek substantial or an unspecified amount of damages for unsubstantiated conduct spanning several years based on complex legal theories and damages models. The alleged damages typically are indeterminate or not factually supported in the complaint, and, in any event, the Company's experience indicates that monetary demands for damages often bear little relation to the ultimate loss. In some cases, plaintiffs are seeking to certify classes in the litigation and class certification either has been denied or is pending and we have filed oppositions to class certification or sought to decertify a prior class certification. In addition, for many of these cases: (i) there is uncertainty as to the outcome of pending appeals or motions; (ii) there are significant factual issues to be resolved; and/or (iii) there are novel legal issues presented. Accordingly, the Company cannot reasonably estimate the possible loss or range of loss in excess of amounts accrued, if any, or predict the timing of the eventual resolution of these matters.&#160;&#160;The Company reviews these matters on an ongoing basis.&#160;&#160;When assessing reasonably possible and probable outcomes, the Company bases its assessment on the expected ultimate outcome following all appeals.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;padding-bottom:13px;text-align:left;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On September 29, 2016, Washington National and Bankers Conseco Life Insurance Company ("BCLIC") commenced an arbitration proceeding seeking compensatory, consequential and punitive damages against BRe based upon BRe&#8217;s incurable material breaches of the long-term care reinsurance agreements, conversion, fraud, and breaches of fiduciary duties and the obligation to deal honestly and in good faith. BRe filed a counterclaim against Washington National and BCLIC in the arbitration alleging damages relating to the reinsurance agreements and their termination. In addition, on September 29, 2016, a complaint was filed by BCLIC and Washington National in the United States District Court for the Southern District of New York, Bankers Conseco Life Insurance Company and Washington National Insurance Company v. Moshe M. Feuer, Scott Taylor and David Levy, Case No. 16-cv-7646, alleging, among other claims, fraud/fraudulent concealment, and violation of the Racketeer Influenced and Corrupt Organizations Act. These allegations relate to the long-term care reinsurance agreements between BRe and Washington National and BCLIC, respectively, and emanate from the undisclosed relationships between and among the defendants (who were the principal owners and officers of BRe) and Platinum Partners, LP ("Platinum") and its affiliates. On April 27, 2017, an amended complaint was filed adding Beechwood Capital Group, LLC as a defendant. Washington National and BCLIC intend to vigorously pursue their claims for damages and other remedies in the arbitration and the litigation described above.</font></div><div style="line-height:120%;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On July 20, 2007, a complaint was filed in the Hamilton County, Indiana Circuit Court, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Signature Estates of Indiana, Inc. d/b/a Gordon Marketing, Stephens-Matthews Marketing, Inc., Shields Brokerage, Inc. and Edwin A Hildebrand d/b/a Hildebrand Insurance Services v. Conseco Medical Insurance Company, Conseco Medical Insurance Company a/k/a Washington National Insurance Company and Washington National Insurance Company, Cause No. 29D02- 0707-PL-790.&#160; </font><font style="font-family:inherit;font-size:10pt;">The Plaintiffs are independent insurance marketing organizations which previously marketed Conseco Medical Insurance Company ("CMIC") individual major medical products and which are claiming damages for allegedly fraudulent conduct by CMIC in withdrawing from this business in 2002.&#160; The Plaintiffs contend that they relied on CMIC&#8217;s alleged representations that its major medical business was profitable and that CMIC was committed to it.&#160; The Plaintiffs further allege that when CMIC exited the market, it caused agents that were previously writing business through their organizations to cease doing business with them, thereby causing irreparable damage.&#160; CMIC merged into Washington National, effective July 1, 2003.&#160; On December 16, 2016, following a jury trial, verdicts were entered in favor of the plaintiffs, and compensatory damages aggregating </font><font style="font-family:inherit;font-size:10pt;">$4.7 million</font><font style="font-family:inherit;font-size:10pt;"> and punitive damages aggregating </font><font style="font-family:inherit;font-size:10pt;">$6.0 million</font><font style="font-family:inherit;font-size:10pt;"> were awarded to the plaintiffs.&#160; Washington National has filed post-trial motions requesting the court correct errors, grant a new trial, find that punitive damages were improper, and reduce both compensatory and punitive damages.&#160; Plaintiffs filed motions requesting pre-judgment interest and attorney fees.&#160; A hearing on the post-trial motions is set for May 30, 2017. We believe the case is without merit and intend to defend it vigorously.</font></div><div style="line-height:120%;text-align:left;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Regulatory Examinations and Fines</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Insurance companies face significant risks related to regulatory investigations and actions.&#160;&#160;Regulatory investigations generally result from matters related to sales or underwriting practices, payment of contingent or other sales commissions, claim payments and procedures, product design, product disclosure, additional premium charges for premiums paid on a periodic basis, denial or delay of benefits, charging excessive or impermissible fees on products, procedures related to canceling policies, changing the way cost of insurance charges are calculated for certain life insurance products or recommending unsuitable products to customers.&#160;&#160;We are, in the ordinary course of our business, subject to various examinations, inquiries and information requests from state, federal and other authorities.&#160;&#160;The ultimate outcome of these regulatory actions (including the costs of complying with information requests and policy reviews) cannot be predicted with certainty.&#160;&#160;In the event of an unfavorable outcome in one or more of these matters, the ultimate liability may be in excess of liabilities we have established and we could suffer significant reputational harm as a result of these matters, which could also have a material adverse effect on our business, financial condition, results of operations or cash flows.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In August 2011, we were notified of an examination to be done on behalf of a number of states for the purpose of determining compliance with unclaimed property laws by the Company and its subsidiaries. &#160;Such examination has included inquiries related to the use of data available on the U.S. Social Security Administration's Death Master File to identify instances where benefits under life insurance policies, annuities and retained asset accounts are payable. We are continuing to provide information to the examiners in response to their requests. A total of </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">38</font><font style="font-family:inherit;font-size:10pt;"> states and the District of Columbia are currently participating in this examination.</font></div></div>

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