2015 Q3 Form 10-Q Financial Statement

#000119312515360386 Filed on October 30, 2015

View on sec.gov

Income Statement

Concept 2015 Q3 2014 Q4 2014 Q3
Revenue $2.100B $2.229B $2.190B
YoY Change -4.11% -7.59% -5.48%
Cost Of Revenue $1.290B $1.934B
YoY Change -33.3% 65.44%
Gross Profit $810.0M $256.0M
YoY Change 216.41% -77.7%
Gross Profit Margin 38.57% 11.69%
Selling, General & Admin $314.0M $299.0M $284.0M
YoY Change 10.56% -3422.22% -30.22%
% of Gross Profit 38.77% 110.94%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $563.0M $156.0M $203.0M
YoY Change 177.34% 21.88% 11.54%
% of Gross Profit 69.51% 79.3%
Operating Expenses $314.0M $2.748B $284.0M
YoY Change 10.56% 111.87% -30.22%
Operating Profit $64.00M -$323.0M
YoY Change -119.81% -332.37%
Interest Expense $105.0M -$106.0M $104.0M
YoY Change 0.96% 34.18% -16.13%
% of Operating Profit 164.06%
Other Income/Expense, Net
YoY Change
Pretax Income -$351.0M -$924.0M -$980.0M
YoY Change -64.18% -458.14% -490.44%
Income Tax -$134.0M -$78.00M -$187.0M
% Of Pretax Income
Net Earnings -$284.0M -$760.0M -$844.0M
YoY Change -66.35% -465.38% -881.48%
Net Earnings / Revenue -13.52% -34.1% -38.54%
Basic Earnings Per Share -$0.57 -$1.53 -$1.70
Diluted Earnings Per Share -$0.57 -$1.53 -$1.70
COMMON SHARES
Basic Shares Outstanding 497.4M shares 496.7M shares 496.6M shares
Diluted Shares Outstanding 497.4M shares 496.7M shares 496.6M shares

Balance Sheet

Concept 2015 Q3 2014 Q4 2014 Q3
SHORT-TERM ASSETS
Cash & Short-Term Investments
YoY Change
Cash & Equivalents $3.666B $4.645B $3.284B
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 $14.00M $16.00M $316.0M
YoY Change -95.57% -98.15% -63.55%
Intangibles $284.0M $250.0M $300.0M
YoY Change -5.33% -37.34% -25.74%
Long-Term Investments $70.86B $70.64B $73.11B
YoY Change -3.08% 2.96% 5.2%
Other Assets $1.206B $2.143B
YoY Change
Total Long-Term Assets
YoY Change
TOTAL ASSETS
Total Short-Term Assets
Total Long-Term Assets
Total Assets $108.2B $111.3B $110.5B
YoY Change -2.07% 3.03% 2.2%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable
YoY Change
Accrued Expenses
YoY Change
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities
YoY Change
LONG-TERM LIABILITIES
Long-Term Debt $6.740B $6.812B $6.897B
YoY Change -2.28% -8.45% -3.17%
Other Long-Term Liabilities $4.799B $4.902B $3.605B
YoY Change 33.12% 19.68% -21.75%
Total Long-Term Liabilities $11.54B $11.71B $10.50B
YoY Change 9.87% 1.53% -10.47%
TOTAL LIABILITIES
Total Short-Term Liabilities
Total Long-Term Liabilities $11.54B $11.71B $10.50B
Total Liabilities $92.81B $94.52B $93.39B
YoY Change -0.63% 2.27% 1.2%
SHAREHOLDERS EQUITY
Retained Earnings $856.0M $1.179B $1.939B
YoY Change -55.85% -51.34% -12.46%
Common Stock $1.000M $1.000M $1.000M
YoY Change 0.0% 0.0% 0.0%
Preferred Stock
YoY Change
Treasury Stock (at cost) $2.700B $2.700B $2.700B
YoY Change 0.0% 0.0% 0.0%
Treasury Stock Shares 88.00M shares 88.00M shares 88.00M shares
Shareholders Equity $13.58B $14.92B $15.17B
YoY Change
Total Liabilities & Shareholders Equity $108.2B $111.3B $110.5B
YoY Change -2.07% 3.03% 2.2%

Cashflow Statement

Concept 2015 Q3 2014 Q4 2014 Q3
OPERATING ACTIVITIES
Net Income -$284.0M -$760.0M -$844.0M
YoY Change -66.35% -465.38% -881.48%
Depreciation, Depletion And Amortization $563.0M $156.0M $203.0M
YoY Change 177.34% 21.88% 11.54%
Cash From Operating Activities $647.0M $1.298B $562.0M
YoY Change 15.12% 324.18% 25.73%
INVESTING ACTIVITIES
Capital Expenditures
YoY Change
Acquisitions
YoY Change
Other Investing Activities -$902.0M $167.0M -$1.065B
YoY Change -15.31% -157.0% 5.97%
Cash From Investing Activities -$902.0M $167.0M -$1.065B
YoY Change -15.31% -157.0% 5.97%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -146.0M 56.00M -81.00M
YoY Change 80.25% -91.54% -117.96%
NET CHANGE
Cash From Operating Activities 647.0M 1.298B 562.0M
Cash From Investing Activities -902.0M 167.0M -1.065B
Cash From Financing Activities -146.0M 56.00M -81.00M
Net Change In Cash -401.0M 1.521B -584.0M
YoY Change -31.34% 125.33% 445.79%
FREE CASH FLOW
Cash From Operating Activities $647.0M $1.298B $562.0M
Capital Expenditures
Free Cash Flow
YoY Change

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<div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; WIDOWS: 1; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <b>(7) Deferred Acquisition Costs</b></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; WIDOWS: 1; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; -webkit-text-stroke-width: 0px"> The following table presents the activity impacting deferred acquisition costs (&#x201C;DAC&#x201D;) for the dates indicated:</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; WIDOWS: 1; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WORD-SPACING: 0px; WIDOWS: 1; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="75%"></td> <td valign="bottom" width="8%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"> <b>As&#xA0;of&#xA0;or&#xA0;for&#xA0;the&#xA0;nine&#xA0;months<br /> ended&#xA0;September&#xA0;30,</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'"> <td valign="bottom" nowrap="nowrap"> <p style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'; BORDER-BOTTOM: rgb(0,0,0) 1pt solid; WIDTH: 74.05pt"> <b>(Amounts in millions)</b></p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"> <b>&#xA0;&#xA0;&#xA0;&#xA0;2015&#xA0;&#xA0;&#xA0;&#xA0;</b></td> <td valign="bottom">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"> <b>&#xA0;&#xA0;&#xA0;&#xA0;2014&#xA0;&#xA0;&#xA0;&#xA0;</b></td> <td valign="bottom">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Unamortized beginning balance</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">5,197</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">5,211</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Impact of foreign currency translation</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(20</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(6</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Costs deferred</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">226</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">282</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; TEXT-INDENT: -1em"> Amortization, net of interest accretion</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(265</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">&#xA0;</td> <td valign="bottom" align="right">(281</td> <td valign="bottom" nowrap="nowrap">)&#xA0;</td> </tr> <tr style="FONT-SIZE: 10pt; 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FONT-FAMILY: 'Times New Roman'"> <td valign="top"> <p style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; TEXT-INDENT: -1em"> Ending balance</p> </td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">4,437</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom">$</td> <td valign="bottom" align="right">4,870</td> <td valign="bottom" nowrap="nowrap">&#xA0;</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> <td valign="bottom">&#xA0;&#xA0;</td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td valign="bottom"> <p style="BORDER-TOP: rgb(0,0,0) 3px double">&#xA0;</p> </td> <td>&#xA0;</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; WIDOWS: 1; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; -webkit-text-stroke-width: 0px"> On September&#xA0;30, 2015, Genworth Life and Annuity Insurance Company (&#x201C;GLAIC&#x201D;), our indirect wholly-owned subsidiary, entered into a Master Agreement (the &#x201C;Master Agreement&#x201D;) with Protective Life Insurance Company (&#x201C;Protective Life&#x201D;). Pursuant to the Master Agreement, GLAIC and Protective Life agreed to enter into a reinsurance agreement (the &#x201C;Reinsurance Agreement&#x201D;), under the terms of which Protective Life will coinsure certain term life insurance business of GLAIC, net of third-party reinsurance. The&#xA0;Reinsurance Agreement will be executed at closing which is expected during the first quarter of 2016, subject to approvals from certain regulatory authorities and satisfaction of other customary closing conditions. In connection with entering into the Master Agreement, we recorded a DAC impairment of $455 million as a result of loss recognition testing of certain term life insurance policies as part of this life block transaction.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; WIDOWS: 1; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; -webkit-text-stroke-width: 0px"> As of September&#xA0;30, 2015, we believe all of our other businesses had sufficient future income and therefore the related DAC was recoverable.</p> </div>
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Our repurchase agreement and securities lending programs expose us to liquidity risk if we did not have enough cash or collateral readily available to return to the counterparty when required to do so under the agreements. We manage this risk by regularly monitoring our available sources of cash and collateral to ensure we can meet short-term liquidity demands under normal and stressed scenarios. We are also exposed to credit risk in the event of default of our counterparties or changes in collateral values. This risk is significantly reduced because our programs require over collateralization and collateral exposures are trued up on a daily basis. We manage this risk by using multiple counterparties and ensuring that changes in required collateral are monitored and adjusted daily.We also monitor the creditworthiness, including credit ratings, of our counterparties on a regular basis.
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<div> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; MARGIN-LEFT: 75px; WIDOWS: 1; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px"> <i>b) Accounting Pronouncement Not Yet Adopted</i></p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; WIDOWS: 1; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; -webkit-text-stroke-width: 0px"> In May 2015, the Financial Accounting Standards Board (the &#x201C;FASB&#x201D;) issued new disclosure requirements for short-duration insurance contracts. The new guidance requires additional disclosures on short-duration policy and contract claims liabilities for incurred and paid claims development, unpaid claims and claims frequency. These new disclosures will be effective for us on December&#xA0;31, 2016 with early adoption permitted and will only impact our mortgage insurance disclosures.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; WIDOWS: 1; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; -webkit-text-stroke-width: 0px"> In April 2015, the FASB issued new guidance related to the presentation of debt issuance costs. This guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. In August 2015, the FASB issued new guidance further clarifying that companies can make the election to present debt issuance costs related to revolving credit facilities as either an asset or as a direct deduction from the carrying amount of that debt liability. The new guidance related to debt issuance costs are both effective for us on January&#xA0;1, 2016 and are required to be applied on a retrospective basis. We plan to early adopt this new guidance as of December&#xA0;31, 2015 and expect approximately $45 million presented in other assets to be deducted from debt liabilities in our consolidated financial statements upon adoption.</p> <p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; TEXT-TRANSFORM: none; WORD-SPACING: 0px; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; WIDOWS: 1; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; -webkit-text-stroke-width: 0px"> In February 2015, the FASB issued new accounting guidance related to consolidation. This guidance primarily impacts limited partnerships and similar legal entities, evaluation of fees paid to a decision maker as a variable interest, the effect of fee arrangements and related parties on the primary beneficiary determination and certain investment funds. This guidance is effective for us on January&#xA0;1, 2016, with early adoption permitted. While we are in the process of determining the impact of this new guidance, we do not believe the impact will be significant to our consolidated financial statements.</p> </div>
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