2023 Q2 Form 10-Q Financial Statement

#000122460823000026 Filed on May 10, 2023

View on sec.gov

Income Statement

Concept 2023 Q2 2023 Q1
Revenue $1.045B $1.021B
YoY Change 22.18% 21.08%
Cost Of Revenue $565.9M $609.7M
YoY Change 66.34% 75.86%
Gross Profit $478.7M $410.9M
YoY Change -7.01% -17.19%
Gross Profit Margin 45.83% 40.26%
Selling, General & Admin
YoY Change
% of Gross Profit
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $65.70M
YoY Change -41.7%
% of Gross Profit 15.99%
Operating Expenses $886.7M $937.5M
YoY Change 36.04% 39.97%
Operating Profit $81.20M $76.40M
YoY Change -37.39% 12.35%
Interest Expense -$40.00M -$69.50M
YoY Change -243.88% -392.02%
% of Operating Profit -49.26% -90.97%
Other Income/Expense, Net
YoY Change
Pretax Income $96.10M -$1.000M
YoY Change -45.21% -100.67%
Income Tax $22.40M -$200.0K
% Of Pretax Income 23.31%
Net Earnings $73.70M -$800.0K
YoY Change -45.85% -100.71%
Net Earnings / Revenue 7.06% -0.08%
Basic Earnings Per Share $0.64 -$0.01
Diluted Earnings Per Share $0.64 -$0.01
COMMON SHARES
Basic Shares Outstanding 114.6M shares 114.2M shares
Diluted Shares Outstanding 115.7M shares 114.5M shares

Balance Sheet

Concept 2023 Q2 2023 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments
YoY Change
Cash & Equivalents $561.9M $522.1M
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 $25.35B $25.34B
YoY Change 0.49% -7.63%
Other Assets $1.007B $988.1M
YoY Change 8.31% 84.97%
Total Long-Term Assets
YoY Change
TOTAL ASSETS
Total Short-Term Assets
Total Long-Term Assets
Total Assets $34.05B $34.02B
YoY Change 0.65% -4.1%
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 $3.980B $4.044B
YoY Change 1.95% 3.4%
Other Long-Term Liabilities $898.9M $698.9M
YoY Change 26.04% -23.39%
Total Long-Term Liabilities $4.879B $4.743B
YoY Change 5.67% -1.67%
TOTAL LIABILITIES
Total Short-Term Liabilities
Total Long-Term Liabilities $4.879B $4.743B
Total Liabilities $32.06B $31.98B
YoY Change 1.37% 0.65%
SHAREHOLDERS EQUITY
Retained Earnings $1.730B $1.674B
YoY Change 28.82% 36.82%
Common Stock $1.999B $2.022B
YoY Change -1.71% -3.1%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $1.996B $2.032B
YoY Change
Total Liabilities & Shareholders Equity $34.05B $34.02B
YoY Change 0.65% -4.1%

Cashflow Statement

Concept 2023 Q2 2023 Q1
OPERATING ACTIVITIES
Net Income $73.70M -$800.0K
YoY Change -45.85% -100.71%
Depreciation, Depletion And Amortization $65.70M
YoY Change -41.7%
Cash From Operating Activities $141.5M $81.90M
YoY Change 27.94% 45.21%
INVESTING ACTIVITIES
Capital Expenditures
YoY Change
Acquisitions
YoY Change
Other Investing Activities -$145.2M $13.90M
YoY Change -34.0% 4.51%
Cash From Investing Activities -$145.2M -$406.7M
YoY Change -34.0% -59.74%
FINANCING ACTIVITIES
Cash Dividend Paid $17.10M
YoY Change 6.21%
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 43.50M $202.0M
YoY Change -67.73% -75.25%
NET CHANGE
Cash From Operating Activities 141.5M $81.90M
Cash From Investing Activities -145.2M -$406.7M
Cash From Financing Activities 43.50M $202.0M
Net Change In Cash 39.80M -$122.8M
YoY Change 56.69% -10.82%
FREE CASH FLOW
Cash From Operating Activities $141.5M $81.90M
Capital Expenditures
Free Cash Flow
YoY Change

Facts In Submission

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CY2023Q1 us-gaap Market Risk Benefit Liability Amount
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CY2023Q1 us-gaap Loss Contingency Disclosures
LossContingencyDisclosures
<div style="text-indent:27pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:700;line-height:120%">LITIGATION AND OTHER LEGAL PROCEEDINGS</span></div><div><span><br/></span></div><div style="text-indent:27pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">Legal Proceedings </span></div><div><span><br/></span></div><div style="text-indent:27pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">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.  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.  The amounts sought in certain of these actions are often large or indeterminate and the ultimate outcome of certain actions is difficult to predict.  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.  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.  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.</span></div><div style="text-indent:27pt"><span><br/></span></div><div style="text-indent:27pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">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.  The Company reviews these matters on an ongoing basis.  When assessing reasonably possible and probable outcomes, the Company bases its assessment on the expected ultimate outcome following all appeals.</span></div><div style="text-indent:27pt"><span><br/></span></div><div style="text-indent:27pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">On April 9, 2019, Bankers Conseco Life Insurance Company ("BCLIC") and Washington National commenced an action entitled</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%"> Bankers Conseco Life Insurance Company and Washington National Insurance Company v. Wilmington Trust, National Association</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">, in the Supreme Court of the State of New York, County of New York, Commercial Division (the "Wilmington Action").  BCLIC and Washington National seek an unspecified amount of damages, costs, attorney's fees, and other relief as the court deems appropriate. In the Wilmington Action, BCLIC and Washington National assert claims against Wilmington Trust, National Association ("Wilmington") for breaching its express contractual obligations under four trust agreements pursuant to which Wilmington was the trustee in regard to trust assets ceded as part of reinsurance agreements with Beechwood Re Ltd. ("BRe"), as well as for breaching its fiduciary duties to BCLIC and Washington National. The Court </span></div><div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">granted Wilmington's motion to dismiss this litigation. BCLIC and Washington National appealed the Court's decision. On April 20, 2021, the New York Appellate Division of the Supreme Court, First Judicial Department unanimously reversed the trial court and reinstated breach of contract and breach of fiduciary duty claims against Wilmington. The Wilmington Action is currently pending in the Supreme Court of the State of New York, County of New York, Commercial Division. </span></div><div><span><br/></span></div><div style="text-indent:27pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">On June 7, 2019, the Joint Official Liquidators of Platinum Partners Value Arbitrage Fund L.P. (in Official Liquidation) and Principal Growth Strategies, LLC, commenced suit against, among others, CNO Financial Group, Inc., BCLIC, Washington National and 40|86 Advisors, Inc. (collectively, the "CNO Parties") in Delaware Chancery Court.  Plaintiffs seek an unspecified amount of damages, costs, attorney's fees, and other relief as the court deems appropriate.  Plaintiffs allege that the CNO Parties were unjustly enriched when they terminated BCLIC and Washington National's reinsurance agreements with BRe and recaptured assets from reinsurance trusts, in particular, Agera securities.  Plaintiffs contend that the Agera securities were fraudulently transferred to the reinsurance trusts by other Platinum-related entities and they are seeking to claw back those Agera securities, or the value of those assets, from the CNO Parties.  The CNO Parties are vigorously contesting the plaintiff's claims. The CNO Parties had removed the case to the United States District Court for the District of Delaware but on April 6, 2020, the District Court granted the plaintiff's motion to remand the case back to the Delaware Chancery Court. Plaintiffs have filed an Amended Complaint and the CNO Parties have moved to dismiss the Amended Complaint. The Delaware Chancery Court denied the CNO Parties’ motions to dismiss the Amended Complaint on the basis of forum non conveniens, but granted the CNO Parties’ motion to stay the case pending the conclusion of a related matter. After the stay is lifted, the court will address the CNO Parties’ and other defendants’ motions to dismiss the Amended Complaint on numerous other grounds.</span></div><div style="text-indent:27pt"><span><br/></span></div><div style="text-indent:27pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">On June 28, 2019, BCLIC and Washington National commenced an action entitled </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Bankers Conseco Life Insurance Company and Washington National Insurance Company v. KPMG LLP,</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> in the Supreme Court of the State of New York, County of New York, Commercial Division (the "KPMG Action").  BCLIC and Washington National seek an unspecified amount of damages, costs, attorney's fees, and other relief as the court deems appropriate. In the KPMG Action, BCLIC and Washington National assert claims against KPMG LLP ("KPMG") for aiding and abetting fraud, constructive fraud and negligent misrepresentation arising from KPMG's alleged role in the Platinum Partners' scheme to defraud BCLIC and Washington National into reinsuring its long-term care business with BRe. The Court granted KPMG’s motion to dismiss this litigation. BCLIC and Washington National appealed the Court's decision. On December 1, 2020, the New York Appellate Division of the Supreme Court, First Judicial Department unanimously reversed the trial court and reinstated the aiding and abetting claim against KPMG. The KPMG Action is currently pending in the Supreme Court of the State of New York, County of New York, Commercial Division.</span></div><div style="text-indent:27pt"><span><br/></span></div><div style="text-indent:27pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">On October 5, 2012, plaintiffs William Jeffrey Burnett and Joe H. Camp commenced an action entitled Burnett v. Conseco Life Ins. Co. against, among others, CNO Financial Group, Inc. and CNO Services, LLC (collectively, the "CNO Entities") in the United States District Court for the Central District of California on behalf of a putative class of former interest-sensitive whole life insurance policyholders who surrendered their policies or let them lapse. Plaintiffs' first amended complaint alleges that the CNO Entities are liable under an alter ego theory for Conseco Life Insurance Company's purported breach of the optional premium payment provision (the "Optional Premium Payment") of plaintiffs' insurance policies. In January 2018, the case was transferred to the United States District Court for the Southern District of Indiana (the "Court"). On August 17, 2020, the Court denied the CNO Entities' motions to dismiss. On January 13, 2021, the Court granted final approval of a class action settlement between plaintiffs and co-defendant Conseco Life Insurance Company (n/k/a Wilco Life Insurance Company). The case remains pending against the CNO Entities. On March 25, 2022, the Court certified a Rule 23(b)(3) class of under 2,000 policyholders who invoked the policy's Optional Premium Payment prior to October 2008 and who surrendered their policies between October 7, 2008 and September 1, 2011. The Court's certification order acknowledged the existence of individualized issues of causation and damages, which the Court stated could be addressed in individualized proceedings following a class trial on the alter ego allegations and the meaning of the subject insurance policy language. The CNO Entities continue to vigorously defend the case.</span></div><div><span><br/></span></div><div style="text-indent:27pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">Regulatory Examinations and Fines</span></div><div><span><br/></span></div><div style="text-indent:27pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Insurance companies face significant risks related to regulatory investigations and actions.  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 </span></div>unsuitable products to customers.  We are, in the ordinary course of our business, subject to various examinations, inquiries and information requests from state, federal and other authorities.  The ultimate outcome of these regulatory actions (including the costs of complying with information requests and policy reviews) cannot be predicted with certainty.  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.
CY2019Q2 cno Number Of Trust Agreements
NumberOfTrustAgreements
4 trust_agreement
CY2022Q1 cno Number Of Policyholders
NumberOfPolicyholders
2000 policyholder
CY2023Q1 cno Gain Losson Investments Excluding Cash Expenses
GainLossonInvestmentsExcludingCashExpenses
-14600000 usd
CY2022Q1 cno Gain Losson Investments Excluding Cash Expenses
GainLossonInvestmentsExcludingCashExpenses
-32700000 usd
CY2023Q1 us-gaap Net Income Loss
NetIncomeLoss
-800000 usd
CY2022Q1 us-gaap Net Income Loss
NetIncomeLoss
183400000 usd
CY2023Q1 us-gaap Depreciation Depletion And Amortization
DepreciationDepletionAndAmortization
65700000 usd
CY2022Q1 us-gaap Depreciation Depletion And Amortization
DepreciationDepletionAndAmortization
61100000 usd
CY2023Q1 us-gaap Increase Decrease In Accrued Income Taxes Payable
IncreaseDecreaseInAccruedIncomeTaxesPayable
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CY2022Q1 us-gaap Increase Decrease In Accrued Income Taxes Payable
IncreaseDecreaseInAccruedIncomeTaxesPayable
42300000 usd
CY2023Q1 us-gaap Increase Decrease In Insurance Liabilities
IncreaseDecreaseInInsuranceLiabilities
173300000 usd
CY2022Q1 us-gaap Increase Decrease In Insurance Liabilities
IncreaseDecreaseInInsuranceLiabilities
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CY2023Q1 cno Change In Accrued Investment Income Amortization Of Premium Or Discount On Investments And Fair Value Of Investments
ChangeInAccruedInvestmentIncomeAmortizationOfPremiumOrDiscountOnInvestmentsAndFairValueOfInvestments
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CY2022Q1 cno Change In Accrued Investment Income Amortization Of Premium Or Discount On Investments And Fair Value Of Investments
ChangeInAccruedInvestmentIncomeAmortizationOfPremiumOrDiscountOnInvestmentsAndFairValueOfInvestments
52200000 usd
CY2023Q1 us-gaap Increase Decrease In Deferred Policy Acquisition Costs
IncreaseDecreaseInDeferredPolicyAcquisitionCosts
89800000 usd
CY2022Q1 us-gaap Increase Decrease In Deferred Policy Acquisition Costs
IncreaseDecreaseInDeferredPolicyAcquisitionCosts
83700000 usd
CY2023Q1 us-gaap Other Operating Activities Cash Flow Statement
OtherOperatingActivitiesCashFlowStatement
-46800000 usd
CY2022Q1 us-gaap Other Operating Activities Cash Flow Statement
OtherOperatingActivitiesCashFlowStatement
-79200000 usd
CY2023Q1 us-gaap Net Cash Provided By Used In Operating Activities
NetCashProvidedByUsedInOperatingActivities
81900000 usd
CY2022Q1 us-gaap Net Cash Provided By Used In Operating Activities
NetCashProvidedByUsedInOperatingActivities
56400000 usd
CY2023Q1 cno Share Based Compensation Noncash Portion
ShareBasedCompensationNoncashPortion
6500000 usd
CY2022Q1 cno Share Based Compensation Noncash Portion
ShareBasedCompensationNoncashPortion
7200000 usd
CY2023Q1 cno Variable Interest Entity Amortized Cost Securities Held
VariableInterestEntityAmortizedCostSecuritiesHeld
1060300000 usd
CY2023Q1 cno Variable Interest Entity Gross Unrealized Gains Fixed Maturity Securities
VariableInterestEntityGrossUnrealizedGainsFixedMaturitySecurities
1400000 usd
CY2023Q1 cno Variable Interest Entity Gross Unrealized Losses Fixed Maturity Securities
VariableInterestEntityGrossUnrealizedLossesFixedMaturitySecurities
40300000 usd
CY2023Q1 cno Variable Interest Entity Fixed Maturity Securities Allowance For Credit Loss
VariableInterestEntityFixedMaturitySecuritiesAllowanceForCreditLoss
3500000 usd
CY2023Q1 cno Variable Interest Entity Fixed Maturity Securities Fair Value
VariableInterestEntityFixedMaturitySecuritiesFairValue
1017900000 usd
CY2023Q1 cno Fair Value Fixed Maturity Securities Valued Using Broker Quotes Percentage
FairValueFixedMaturitySecuritiesValuedUsingBrokerQuotesPercentage
0.86
CY2023Q1 cno Variable Interest Entities Net Realized Gain Loss On Investments
VariableInterestEntitiesNetRealizedGainLossOnInvestments
600000 usd
CY2023Q1 cno Variable Interest Entities Net Gain Loss From Sale Of Fixed Maturity Investments
VariableInterestEntitiesNetGainLossFromSaleOfFixedMaturityInvestments
2600000 usd
CY2023Q1 cno Variable Interest Entities Change In Allowance For Current Expected Credit Losses
VariableInterestEntitiesChangeInAllowanceForCurrentExpectedCreditLosses
-2000000 usd
CY2023Q1 cno Variable Interest Entity Investments Gross Investment Losses From Sale Before Tax
VariableInterestEntityInvestmentsGrossInvestmentLossesFromSaleBeforeTax
2600000 usd
CY2023Q1 cno Variable Interest Entities Investments Sold
VariableInterestEntitiesInvestmentsSold
5600000 usd
CY2022Q1 cno Variable Interest Entities Net Realized Gain Loss On Investments
VariableInterestEntitiesNetRealizedGainLossOnInvestments
3200000 usd
CY2022Q1 cno Variable Interest Entities Net Gain Loss From Sale Of Fixed Maturity Investments
VariableInterestEntitiesNetGainLossFromSaleOfFixedMaturityInvestments
800000 usd
CY2022Q1 cno Variable Interest Entities Change In Market Value Of Other Investments
VariableInterestEntitiesChangeInMarketValueOfOtherInvestments
-200000 usd
CY2022Q1 cno Variable Interest Entities Change In Allowance For Current Expected Credit Losses
VariableInterestEntitiesChangeInAllowanceForCurrentExpectedCreditLosses
2200000 usd
CY2022Q1 cno Variable Interest Entity Investments Gross Investment Losses From Sale Before Tax
VariableInterestEntityInvestmentsGrossInvestmentLossesFromSaleBeforeTax
800000 usd
CY2022Q1 cno Variable Interest Entities Investments Sold
VariableInterestEntitiesInvestmentsSold
11700000 usd
CY2023Q1 cno Number Of Investments Held By Variable Interest Entities In Default
NumberOfInvestmentsHeldByVariableInterestEntitiesInDefault
0 investment
CY2023Q1 cno Investments Held In Limited Partnerships
InvestmentsHeldInLimitedPartnerships
578500000 usd
CY2023Q1 cno Unfunded Commitmentsto Limited Partnerships
UnfundedCommitmentstoLimitedPartnerships
431000000 usd
CY2023Q1 cno Available For Sale Fixed Maturities With Significant Unobservable Inputs Investment Grade Percent
AvailableForSaleFixedMaturitiesWithSignificantUnobservableInputsInvestmentGradePercent
0.87
CY2023Q1 cno Available For Sale Maturities With Significant Unobservable Inputs Corporate Securities Percent
AvailableForSaleMaturitiesWithSignificantUnobservableInputsCorporateSecuritiesPercent
0.59

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