x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
Delaware | 54-1708481 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
450 Park Avenue, 30th Floor | ||
New York, NY | 10022 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ¨ | Accelerated filer | x |
Non-accelerated filer | ¨ | Smaller reporting company | ¨ |
Class | Outstanding as of October 31, 2016 |
Common Stock, $0.001 par value | 41,818,944 |
PART I. FINANCIAL INFORMATION | ||||
PART II. OTHER INFORMATION | ||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Services revenue | $ | 245,064 | $ | 151,933 | $ | 624,545 | $ | 373,492 | ||||||||
Sales revenue | 133,474 | 125,534 | 379,729 | 386,765 | ||||||||||||
Life, accident and health earned premiums, net | 19,967 | — | 59,939 | — | ||||||||||||
Net investment income | 14,799 | — | 42,585 | — | ||||||||||||
Net realized losses on investments | (220 | ) | — | (2,677 | ) | — | ||||||||||
Net revenue | 413,084 | 277,467 | 1,104,121 | 760,257 | ||||||||||||
Operating expenses | ||||||||||||||||
Cost of revenue - services | 225,876 | 138,099 | 583,942 | 334,608 | ||||||||||||
Cost of revenue - sales | 107,984 | 102,395 | 308,951 | 324,820 | ||||||||||||
Policy benefits, changes in reserves, and commissions | 29,689 | — | 92,784 | — | ||||||||||||
Selling, general and administrative | 36,902 | 28,810 | 107,493 | 77,818 | ||||||||||||
Depreciation and amortization | 5,961 | 6,267 | 18,163 | 17,768 | ||||||||||||
Gain on sale or disposal of assets | (23 | ) | (1,106 | ) | (973 | ) | (135 | ) | ||||||||
Lease termination costs | (159 | ) | 1,124 | 179 | 1,124 | |||||||||||
Total operating expenses | 406,230 | 275,589 | 1,110,539 | 756,003 | ||||||||||||
Income (loss) from operations | 6,854 | 1,878 | (6,418 | ) | 4,254 | |||||||||||
Interest expense | (10,719 | ) | (10,383 | ) | (31,614 | ) | (29,208 | ) | ||||||||
Other income (expense), net | (3,203 | ) | 1,193 | (4,220 | ) | (1,378 | ) | |||||||||
Income from equity investees | 335 | 918 | 3,153 | 427 | ||||||||||||
Loss from continuing operations before income taxes | (6,733 | ) | (6,394 | ) | (39,099 | ) | (25,905 | ) | ||||||||
Income tax benefit (expense) | 1,334 | (1,504 | ) | 3,649 | 1,832 | |||||||||||
Loss from continuing operations | (5,399 | ) | (7,898 | ) | (35,450 | ) | (24,073 | ) | ||||||||
Loss from discontinued operations | — | (24 | ) | — | (44 | ) | ||||||||||
Net loss | (5,399 | ) | (7,922 | ) | (35,450 | ) | (24,117 | ) | ||||||||
Less: Net (income) loss attributable to noncontrolling interest and redeemable noncontrolling interest | 841 | (65 | ) | 2,365 | (8 | ) | ||||||||||
Net loss attributable to HC2 Holdings, Inc. | (4,558 | ) | (7,987 | ) | (33,085 | ) | (24,125 | ) | ||||||||
Less: Preferred stock and deemed dividends | 2,948 | 1,035 | 5,061 | 3,212 | ||||||||||||
Net loss attributable to common stock and participating preferred stockholders | $ | (7,506 | ) | $ | (9,022 | ) | $ | (38,146 | ) | $ | (27,337 | ) | ||||
Basic loss per common share: | ||||||||||||||||
Loss from continuing operations | $ | (0.20 | ) | $ | (0.35 | ) | $ | (1.07 | ) | $ | (1.09 | ) | ||||
Loss from discontinued operations | — | — | — | — | ||||||||||||
Basic and diluted loss per common share | $ | (0.20 | ) | $ | (0.35 | ) | $ | (1.07 | ) | $ | (1.09 | ) | ||||
Diluted loss per common share: | ||||||||||||||||
Loss from continuing operations | $ | (0.20 | ) | $ | (0.35 | ) | $ | (1.07 | ) | $ | (1.09 | ) | ||||
Loss from discontinued operations | — | — | — | — | ||||||||||||
Net loss attributable to common stock and participating preferred stockholders | $ | (0.20 | ) | $ | (0.35 | ) | $ | (1.07 | ) | $ | (1.09 | ) | ||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 36,627 | 25,592 | 35,808 | 25,093 | ||||||||||||
Diluted | 36,627 | 25,592 | 35,808 | 25,093 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net loss | $ | (5,399 | ) | $ | (7,922 | ) | $ | (35,450 | ) | $ | (24,117 | ) | ||||
Other comprehensive income (loss) | ||||||||||||||||
Foreign currency translation adjustment | 672 | (5,275 | ) | 1,335 | (7,147 | ) | ||||||||||
Unrealized gain (loss) on available-for-sale securities, net of tax | 8,972 | (2,008 | ) | 71,261 | (4,186 | ) | ||||||||||
Less: Comprehensive (income) loss attributable to the noncontrolling interest and redeemable noncontrolling interest | 841 | (65 | ) | 2,365 | (8 | ) | ||||||||||
Comprehensive income (loss) attributable to HC2 Holdings, Inc. | $ | 5,086 | $ | (15,270 | ) | $ | 39,511 | $ | (35,458 | ) |
September 30, 2016 | December 31, 2015 | |||||||
Assets | ||||||||
Investments: | ||||||||
Fixed maturity securities, available-for-sale at fair value | $ | 1,331,677 | $ | 1,231,841 | ||||
Equity securities, available-for-sale at fair value | 56,506 | 49,682 | ||||||
Mortgage loans | 8,939 | 1,252 | ||||||
Policy loans | 18,228 | 18,476 | ||||||
Other invested assets | 60,870 | 53,119 | ||||||
Total investments | 1,476,220 | 1,354,370 | ||||||
Cash and cash equivalents | 121,321 | 158,624 | ||||||
Restricted cash | 791 | 538 | ||||||
Accounts receivable (net of allowance for doubtful accounts of $3,033 and $794 at September 30, 2016 and December 31, 2015, respectively) | 272,738 | 210,853 | ||||||
Costs and recognized earnings in excess of billings on uncompleted contracts | 17,091 | 39,310 | ||||||
Inventory | 8,973 | 12,120 | ||||||
Recoverable from reinsurers | 525,599 | 522,562 | ||||||
Accrued investment income | 15,751 | 15,300 | ||||||
Deferred tax asset | 43,555 | 52,511 | ||||||
Property, plant and equipment, net | 244,176 | 214,466 | ||||||
Goodwill | 86,025 | 61,178 | ||||||
Intangibles, net | 39,144 | 29,409 | ||||||
Other assets | 35,520 | 65,206 | ||||||
Assets held for sale | 1,093 | 6,065 | ||||||
Total assets | $ | 2,887,997 | $ | 2,742,512 | ||||
Liabilities, temporary equity and stockholders’ equity | ||||||||
Life, accident and health reserves | $ | 1,637,501 | $ | 1,591,937 | ||||
Annuity reserves | 254,250 | 260,853 | ||||||
Value of business acquired | 48,512 | 50,761 | ||||||
Accounts payable and other current liabilities | 232,149 | 225,389 | ||||||
Billings in excess of costs and recognized earnings on uncompleted contracts | 51,241 | 21,201 | ||||||
Deferred tax liability | 12,807 | 4,281 | ||||||
Long-term obligations | 396,688 | 371,876 | ||||||
Pension liability | 20,744 | 25,156 | ||||||
Other liabilities | 12,042 | 17,793 | ||||||
Total liabilities | 2,665,934 | 2,569,247 | ||||||
Commitments and contingencies | ||||||||
Temporary equity: | ||||||||
Preferred stock, $.001 par value - 20,000,000 shares authorized; Series A - 27,308 and 29,172 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively; Series A-1 - 1,000 and 10,000 shares issued and outstanding at September 30, 2016 and December 31, 2015; Series A-2 - 14,000 shares issued and outstanding at September 30, 2016 and December 31, 2015 | 41,659 | 52,619 | ||||||
Redeemable noncontrolling interest | 1,993 | 3,122 | ||||||
Total temporary equity | 43,652 | 55,741 | ||||||
Stockholders’ equity: | ||||||||
Common stock, $.001 par value - 80,000,000 shares authorized; 38,263,606 and 35,281,375 shares issued and 38,031,325 and 35,249,749 shares outstanding at September 30, 2016 and December 31, 2015, respectively | 38 | 35 | ||||||
Additional paid-in capital | 228,842 | 209,477 | ||||||
Accumulated deficit | (112,814 | ) | (79,729 | ) | ||||
Treasury stock, at cost | (1,262 | ) | (378 | ) | ||||
Accumulated other comprehensive gain (loss) | 37,221 | (35,375 | ) | |||||
Total HC2 Holdings, Inc. stockholders’ equity before noncontrolling interest | 152,025 | 94,030 | ||||||
Noncontrolling interest | 26,386 | 23,494 | ||||||
Total stockholders’ equity | 178,411 | 117,524 | ||||||
Total liabilities, temporary equity and stockholders’ equity | $ | 2,887,997 | $ | 2,742,512 |
Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Non- controlling Interest | ||||||||||||||||||||||||||
Shares | Amount | Total | |||||||||||||||||||||||||||||
Balance as of December 31, 2014 | 23,813 | $ | 24 | $ | 141,948 | $ | (378 | ) | $ | (44,164 | ) | $ | (18,243 | ) | $ | 25,208 | $ | 104,395 | |||||||||||||
Share-based compensation expense | — | — | 7,402 | — | — | — | — | 7,402 | |||||||||||||||||||||||
Dividend paid to noncontrolling interest | — | — | — | — | — | — | (1,038 | ) | (1,038 | ) | |||||||||||||||||||||
Preferred stock dividends and accretion | — | — | (3,212 | ) | — | — | — | — | (3,212 | ) | |||||||||||||||||||||
Amortization of issuance costs and beneficial conversion feature | — | — | (375 | ) | — | — | — | — | (375 | ) | |||||||||||||||||||||
Issuance of Common Stock | 5 | — | — | — | — | — | — | — | |||||||||||||||||||||||
Issuance of restricted stock | 1,539 | 2 | — | — | — | — | — | 2 | |||||||||||||||||||||||
Conversion of Preferred Stock | 235 | — | 1,000 | — | — | — | — | 1,000 | |||||||||||||||||||||||
Acquisition of controlling interest | — | — | — | — | — | — | (822 | ) | (822 | ) | |||||||||||||||||||||
Excess book value over fair value of purchased noncontrolling interest | — | — | 43 | — | — | — | (43 | ) | — | ||||||||||||||||||||||
Excess of fair value of net assets over purchase price of acquired company | — | — | 182 | — | — | — | — | 182 | |||||||||||||||||||||||
Net loss | — | — | — | — | (24,125 | ) | — | 8 | (24,117 | ) | |||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | (7,147 | ) | — | (7,147 | ) | |||||||||||||||||||||
Unrealized loss on available-for-sale securities, net of tax | — | — | — | — | — | (4,186 | ) | — | (4,186 | ) | |||||||||||||||||||||
Balance as of September 30, 2015 | 25,592 | $ | 26 | $ | 146,988 | $ | (378 | ) | $ | (68,289 | ) | $ | (29,576 | ) | $ | 23,313 | $ | 72,084 |
Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Non- controlling Interest | ||||||||||||||||||||||||||
Shares | Amount | Total | |||||||||||||||||||||||||||||
Balance as of December 31, 2015 | 35,250 | $ | 35 | $ | 209,477 | $ | (378 | ) | $ | (79,729 | ) | $ | (35,375 | ) | $ | 23,494 | $ | 117,524 | |||||||||||||
Share-based compensation expense | — | — | 6,667 | — | — | — | — | 6,667 | |||||||||||||||||||||||
Fair value adjustment of Redeemable noncontrolling interest | — | — | (99 | ) | — | — | — | — | (99 | ) | |||||||||||||||||||||
Exercise of Warrants and Stock Options | 2 | — | — | — | — | — | — | — | |||||||||||||||||||||||
Shares withheld to satisfy tax withholdings | (201 | ) | — | — | (884 | ) | — | — | — | (884 | ) | ||||||||||||||||||||
Preferred stock dividend and accretion | — | — | (2,386 | ) | — | — | — | — | (2,386 | ) | |||||||||||||||||||||
Amortization of issuance costs and beneficial conversion feature | — | — | (309 | ) | — | — | — | — | (309 | ) | |||||||||||||||||||||
Issuance of common stock | 65 | — | — | — | — | — | — | — | |||||||||||||||||||||||
Issuance of restricted stock | 199 | — | — | — | — | — | — | — | |||||||||||||||||||||||
Conversion of Preferred Stock | 2,564 | 3 | 10,850 | — | — | — | — | 10,853 | |||||||||||||||||||||||
Deemed dividend to induce conversion of Preferred Stock | 152 | — | (1,490 | ) | — | — | — | — | (1,490 | ) | |||||||||||||||||||||
Acquisition of controlling interests | — | — | — | — | — | 2,161 | 2,161 | ||||||||||||||||||||||||
Sale of controlling interest | — | — | — | — | — | — | 8,000 | 8,000 | |||||||||||||||||||||||
Excess fair value over book value of noncontrolling interest sold | — | — | 6,132 | — | — | — | (6,132 | ) | — | ||||||||||||||||||||||
Net loss | — | — | — | — | (33,085 | ) | — | (2,365 | ) | (35,450 | ) | ||||||||||||||||||||
Net income attributable to redeemable noncontrolling interest | — | — | — | — | — | — | 1,228 | 1,228 | |||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | 1,335 | — | 1,335 | |||||||||||||||||||||||
Unrealized gain on available-for-sale securities, net of tax | — | — | — | — | — | 71,261 | — | 71,261 | |||||||||||||||||||||||
Balance as of September 30, 2016 | 38,031 | $ | 38 | $ | 228,842 | $ | (1,262 | ) | $ | (112,814 | ) | $ | 37,221 | $ | 26,386 | $ | 178,411 |
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (35,450 | ) | $ | (24,117 | ) | |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||
Provision for doubtful accounts receivable | 827 | 325 | |||||
Share-based compensation expense | 6,667 | 7,402 | |||||
Depreciation and amortization | 19,602 | 23,503 | |||||
Amortization of deferred financing costs and debt discount | 1,530 | 1,246 | |||||
Amortization of fixed maturities discount/premium | 8,966 | — | |||||
(Gain) loss on sale or disposal of assets | 251 | (135 | ) | ||||
Net realized (gains) losses on investments | 2,519 | (431 | ) | ||||
Impairment of investments | 4,321 | — | |||||
Equity investment (income) loss | (3,153 | ) | (427 | ) | |||
Lease termination costs | 179 | 1,124 | |||||
Deferred income taxes | (18,940 | ) | (5,957 | ) | |||
Receipt of dividends from equity investees | 7,214 | 2,448 | |||||
Annuity benefits | 6,737 | — | |||||
All other operating activities | (224 | ) | 315 | ||||
Changes in assets and liabilities, net of acquisitions: | |||||||
(Increase) decrease in accounts receivable | (56,463 | ) | (36,099 | ) | |||
(Increase) decrease in costs and recognized earnings in excess of billings on uncompleted contracts | 22,219 | (9,253 | ) | ||||
(Increase) decrease in inventory | 3,518 | 455 | |||||
(Increase) decrease in other assets | 26,725 | (3,316 | ) | ||||
Increase (decrease) in life, accident and health reserves | 41,942 | — | |||||
Increase (decrease) in accounts payable, current and other liabilities | (12,625 | ) | 42,364 | ||||
Increase (decrease) in billings in excess of costs and recognized earnings on uncompleted contracts | 30,040 | (21,933 | ) | ||||
Increase (decrease) in pension liability | (1,423 | ) | (8,665 | ) | |||
Net cash provided by (used in) operating activities | 54,979 | (31,151 | ) | ||||
Cash flows from investing activities: | |||||||
Purchase of property, plant and equipment | (21,689 | ) | (16,751 | ) | |||
Sale of property and equipment | 511 | 4,994 | |||||
Purchase of investments | (179,291 | ) | (41,710 | ) | |||
Sale of investments | 72,188 | 6,876 | |||||
Sale of assets held for sale | 5,900 | 1,479 | |||||
Cash paid for business acquisitions, net of cash acquired | (10,871 | ) | (568 | ) | |||
Maturities and redemptions of fixed maturity securities | 53,663 | — | |||||
Change in restricted cash | (253 | ) | (727 | ) | |||
All other investing activities | (230 | ) | — | ||||
Net cash used in investing activities | (80,072 | ) | (46,407 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from long-term obligations | 11,672 | 54,963 | |||||
Principal payments on long-term obligations | (11,441 | ) | (8,473 | ) | |||
Payment of deferred financing costs | — | (1,137 | ) | ||||
Annuity receipts | 2,522 | — | |||||
Annuity surrenders | (15,562 | ) | — |
Proceeds from issuance of common stock of subsidiary | 8,000 | ||||||
Proceeds from sale of preferred stock, net | — | 14,033 | |||||
Purchase of noncontrolling interest | (2,163 | ) | (239 | ) | |||
Payment of withholdings related to net settlements | (884 | ) | — | ||||
Payment of dividends | (3,007 | ) | (3,855 | ) | |||
Net cash provided by (used in) financing activities | (10,863 | ) | 55,292 | ||||
Effect of currency exchange rate changes on cash and cash equivalents | (1,347 | ) | (4,646 | ) | |||
Net change in cash and cash equivalents | (37,303 | ) | (26,912 | ) | |||
Cash and cash equivalents, beginning of period | 158,624 | 107,978 | |||||
Cash and cash equivalents, end of period | $ | 121,321 | $ | 81,066 | |||
Supplemental cash flow information: | |||||||
Cash paid for interest | $ | 21,491 | $ | 21,445 | |||
Cash paid for taxes | $ | 13,469 | $ | 1,701 | |||
Non-cash investing and financing activities: | |||||||
Purchases of property, plant and equipment under financing arrangements | $ | — | $ | 1,808 | |||
Property, plant and equipment included in accounts payable | $ | 1,542 | $ | 1,521 | |||
Fair value of contingent asset assumed in other acquisitions | $ | 2,992 | $ | — | |||
Fair value of deferred liability assumed in other acquisitions | $ | 2,589 | $ | — | |||
Debt assumed in other acquisitions | $ | 20,813 | $ | — | |||
Deemed dividend from conversion of preferred stock | $ | 1,490 | $ | — | |||
Conversion of preferred stock | $ | 10,853 | $ | 1,000 |
Fair value of consideration transferred | ||||
Cash | $ | 7,146 | ||
Company’s Senior Secured Notes | 1,879 | |||
Company's common stock | 5,380 | |||
2016 Warrants | 4,332 | |||
Total fair value of consideration transferred | $ | 18,737 | ||
Purchase price allocation | ||||
Fixed maturities, available for sale at fair value | $ | 1,230,038 | ||
Equity securities, available for sale at fair value | 35,697 | |||
Mortgage loans | 1,252 | |||
Policy loans | 18,354 | |||
Other investments | 183 | |||
Cash and cash equivalents | 48,525 | |||
Recoverable from reinsurers | 522,790 | |||
Accrued investment income | 14,417 | |||
Goodwill | 46,613 | |||
Intangibles | 4,850 | |||
Other assets | 12,869 | |||
Total assets acquired | 1,935,588 | |||
Life, accident and health reserves | (1,592,722 | ) | ||
Annuity reserves | (259,675 | ) | ||
Value of business acquired | (51,584 | ) | ||
Deferred tax liability | (1,704 | ) | ||
Other liabilities | (11,166 | ) | ||
Total liabilities assumed | (1,916,851 | ) | ||
Total net assets acquired | $ | 18,737 |
Three Months Ended September 30, 2015 | Nine Months Ended September 30, 2015 | |||||||
Net revenue | $ | 315,371 | $ | 876,697 | ||||
Net loss from continuing operations | $ | (7,119 | ) | $ | (22,451 | ) | ||
Loss from discontinued operations | (24 | ) | (44 | ) | ||||
Net loss attributable to HC2 | $ | (7,143 | ) | $ | (22,495 | ) | ||
Per share amounts: | ||||||||
Loss from continuing operations | $ | (0.28 | ) | $ | (0.89 | ) | ||
Loss from discontinued operations | $ | — | $ | — | ||||
Net loss attributable to HC2 | $ | (0.28 | ) | $ | (0.90 | ) |
Total | ||||
Consideration | ||||
Cash | $ | 13,671 | ||
Convertible notes | 2,915 | |||
Promissory note | 1,128 | |||
Fair value of previously held interest | 4,610 | |||
Contingent asset | (2,992 | ) | ||
Deferred consideration | 2,589 | |||
Total fair value of consideration transferred | $ | 21,921 | ||
Purchase price allocation | ||||
Cash and cash equivalents | $ | 2,966 | ||
Accounts receivable | 6,400 | |||
Inventory | 528 | |||
Property, plant and equipment, net | 32,439 | |||
Goodwill | 7,242 | |||
Intangibles | 12,557 | |||
Other assets | 2,335 | |||
Total assets acquired | 64,467 | |||
Accounts payable and other current liabilities | (11,180 | ) | ||
Deferred tax liability | (5,494 | ) | ||
Long-term obligations | (20,813 | ) | ||
Other liabilities | (15 | ) | ||
Noncontrolling interest | (815 | ) | ||
Total liabilities assumed | (38,317 | ) | ||
Enterprise value | 26,150 | |||
Less fair value of noncontrolling interest | 3,889 | |||
Bargain purchase gain | 340 | |||
Purchase price attributable to controlling interest | $ | 21,921 |
September 30, 2016 | Amortized | Unrealized | Unrealized | Fair | ||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Fixed maturity securities | ||||||||||||||||
U.S. Government and government agencies | $ | 16,081 | $ | 834 | $ | — | $ | 16,915 | ||||||||
States, municipalities and political subdivisions | 375,661 | 25,988 | (36 | ) | 401,613 | |||||||||||
Foreign government | 6,392 | — | (113 | ) | 6,279 | |||||||||||
Residential mortgage-backed securities | 141,837 | 2,192 | (550 | ) | 143,479 | |||||||||||
Commercial mortgage-backed securities | 59,114 | 1,113 | (78 | ) | 60,149 | |||||||||||
Asset-backed securities | 68,865 | 1,912 | (261 | ) | 70,516 | |||||||||||
Corporate and other | 587,499 | 48,194 | (2,967 | ) | 632,726 | |||||||||||
Total fixed maturity securities | $ | 1,255,449 | $ | 80,233 | $ | (4,005 | ) | $ | 1,331,677 | |||||||
Equity securities | ||||||||||||||||
Common stocks | $ | 17,485 | $ | 2,402 | $ | (393 | ) | $ | 19,494 | |||||||
Perpetual preferred stocks | 36,752 | 734 | (474 | ) | 37,012 | |||||||||||
Total equity securities | $ | 54,237 | $ | 3,136 | $ | (867 | ) | $ | 56,506 |
December 31, 2015 | Amortized | Unrealized | Unrealized | Fair | ||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Fixed maturity securities | ||||||||||||||||
U.S. Government and government agencies | $ | 17,131 | $ | 1 | $ | (49 | ) | $ | 17,083 | |||||||
States, municipalities and political subdivisions | 387,427 | 60 | (1,227 | ) | 386,260 | |||||||||||
Foreign government | 6,426 | 3 | — | 6,429 | ||||||||||||
Residential mortgage-backed securities | 166,324 | 579 | (588 | ) | 166,315 | |||||||||||
Commercial mortgage-backed securities | 74,898 | 233 | (96 | ) | 75,035 | |||||||||||
Asset-backed securities | 34,396 | 106 | (51 | ) | 34,451 | |||||||||||
Corporate and other | 553,487 | 318 | (7,537 | ) | 546,268 | |||||||||||
Total fixed maturity securities | $ | 1,240,089 | $ | 1,300 | $ | (9,548 | ) | $ | 1,231,841 | |||||||
Equity securities | ||||||||||||||||
Common stocks | $ | 19,935 | $ | 1 | $ | (1,311 | ) | $ | 18,625 | |||||||
Perpetual preferred stocks | 30,901 | 162 | (6 | ) | 31,057 | |||||||||||
Total equity securities | $ | 50,836 | $ | 163 | $ | (1,317 | ) | $ | 49,682 |
Amortized | Fair | |||||||
Cost | Value | |||||||
Corporate, Municipal, U.S. Government and Other securities | ||||||||
Due in one year or less | $ | 40,777 | $ | 38,312 | ||||
Due after one year through five years | 115,932 | 120,562 | ||||||
Due after five years through ten years | 141,642 | 148,033 | ||||||
Due after ten years | 687,282 | 750,626 | ||||||
Subtotal | 985,633 | 1,057,533 | ||||||
Mortgage-backed securities | 200,951 | 203,628 | ||||||
Asset-backed securities | 68,865 | 70,516 | ||||||
Total | $ | 1,255,449 | $ | 1,331,677 |
September 30, 2016 | December 31, 2015 | |||||||||||||||||||||
Amortized | Fair | % of | Amortized | Fair | % of | |||||||||||||||||
Cost | Value | Total | Cost | Value | Total | |||||||||||||||||
Finance, insurance, and real estate | $ | 210,441 | $ | 216,550 | 34.2 | % | $ | 223,144 | $ | 217,377 | 39.8 | % | ||||||||||
Transportation, communication and other services | 166,645 | 181,405 | 28.7 | % | 156,022 | 155,175 | 28.4 | % | ||||||||||||||
Manufacturing | 118,492 | 129,738 | 20.5 | % | 95,138 | 94,792 | 17.4 | % | ||||||||||||||
Other | 91,921 | 105,033 | 16.6 | % | 79,183 | 78,924 | 14.4 | % | ||||||||||||||
Total | $ | 587,499 | $ | 632,726 | 100.0 | % | $ | 553,487 | $ | 546,268 | 100.0 | % |
September 30, 2016 | December 31, 2015 | |||||||||||||
Unrealized | % of | Unrealized | % of | |||||||||||
Losses | Total | Losses | Total | |||||||||||
Fixed maturity and equity securities | ||||||||||||||
Less than 20% | $ | (1,965 | ) | 40.3 | % | $ | (5,667 | ) | 52.2 | % | ||||
20% or more for less than six months | (337 | ) | 6.9 | % | — | — | % | |||||||
20% or more for six months or greater | (2,570 | ) | 52.8 | % | (5,198 | ) | 47.8 | % | ||||||
Total | $ | (4,872 | ) | 100.0 | % | $ | (10,865 | ) | 100.0 | % |
September 30, 2016 | Less than 12 months | 12 months of greater | Total | |||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Losses | Value | Losses | Value | Losses | |||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||
U.S. Government and government agencies | $ | 131 | $ | — | $ | — | $ | — | $ | 131 | $ | — | ||||||||||||
States, municipalities and political subdivisions | 7,080 | (36 | ) | — | — | 7,080 | (36 | ) | ||||||||||||||||
Foreign government | 6,279 | (113 | ) | — | — | 6,279 | (113 | ) | ||||||||||||||||
Residential mortgage-backed securities | 47,909 | (550 | ) | — | — | 47,909 | (550 | ) | ||||||||||||||||
Commercial mortgage-backed securities | 10,703 | (78 | ) | — | — | 10,703 | (78 | ) | ||||||||||||||||
Asset-backed securities | 17,939 | (261 | ) | — | — | 17,939 | (261 | ) | ||||||||||||||||
Corporate and other | 40,389 | (396 | ) | 5,040 | (2,571 | ) | 45,429 | (2,967 | ) | |||||||||||||||
Total fixed maturity securities | $ | 130,430 | $ | (1,434 | ) | $ | 5,040 | $ | (2,571 | ) | $ | 135,470 | $ | (4,005 | ) | |||||||||
Equity securities | ||||||||||||||||||||||||
Common stocks | $ | 5,515 | $ | (393 | ) | $ | — | $ | — | $ | 5,515 | $ | (393 | ) | ||||||||||
Perpetual preferred stocks | 11,520 | (474 | ) | — | — | 11,520 | (474 | ) | ||||||||||||||||
Total equity securities | $ | 17,035 | $ | (867 | ) | $ | — | $ | — | $ | 17,035 | $ | (867 | ) |
December 31, 2015 | Less than 12 months | 12 months of greater | Total | |||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Losses | Value | Losses | Value | Losses | |||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||
U.S. Government and government agencies | $ | 15,409 | $ | (49 | ) | $ | — | $ | — | $ | 15,409 | $ | (49 | ) | ||||||||||
States, municipalities and political subdivisions | 294,105 | (1,227 | ) | — | — | 294,105 | (1,227 | ) | ||||||||||||||||
Residential mortgage-backed securities | 77,695 | (588 | ) | — | — | 77,695 | (588 | ) | ||||||||||||||||
Commercial mortgage-backed securities | 44,618 | (96 | ) | — | — | 44,618 | (96 | ) | ||||||||||||||||
Asset-backed securities | 22,550 | (51 | ) | — | — | 22,550 | (51 | ) | ||||||||||||||||
Corporate and other | 466,293 | (7,537 | ) | — | — | 466,293 | (7,537 | ) | ||||||||||||||||
Total fixed maturity securities | $ | 920,670 | $ | (9,548 | ) | $ | — | $ | — | $ | 920,670 | $ | (9,548 | ) | ||||||||||
Equity securities | ||||||||||||||||||||||||
Common stocks | $ | 13,657 | $ | (1,311 | ) | $ | — | $ | — | $ | 13,657 | $ | (1,311 | ) | ||||||||||
Perpetual preferred stocks | 7,378 | (6 | ) | — | — | 7,378 | (6 | ) | ||||||||||||||||
Total equity securities | $ | 21,035 | $ | (1,317 | ) | $ | — | $ | — | $ | 21,035 | $ | (1,317 | ) |
September 30, 2016 | December 31, 2015 | |||||||||||||||
Cost Method | Equity Method | Cost Method | Equity Method | |||||||||||||
Common Equity | $ | 138 | $ | 1,382 | $ | 249 | $ | 6,475 | ||||||||
Preferred Equity | 2,484 | 10,763 | 1,655 | 7,522 | ||||||||||||
Warrants | 3,097 | — | 3,880 | — | ||||||||||||
Limited Partnerships | — | 1,141 | — | 1,171 | ||||||||||||
Joint Ventures | — | 37,153 | — | 27,324 | ||||||||||||
Total | $ | 5,719 | $ | 50,439 | $ | 5,784 | $ | 42,492 |
September 30, 2016 | Cost | Gains | Losses | Fair Value | ||||||||||||
Warrants | $ | 6,332 | $ | 280 | $ | (2,130 | ) | $ | 4,482 | |||||||
Call Options | 230 | — | — | 230 | ||||||||||||
Total | $ | 6,562 | $ | 280 | $ | (2,130 | ) | $ | 4,712 |
December 31, 2015 | Cost | Gains | Losses | Fair Value | ||||||||||||
Warrants | $ | 6,383 | $ | 428 | $ | (2,600 | ) | $ | 4,211 | |||||||
Call Options | 1,680 | — | (1,048 | ) | 632 | |||||||||||
Total | $ | 8,063 | $ | 428 | $ | (3,648 | ) | $ | 4,843 |
Three Months Ended September 30, 2016 | Nine Months Ended September 30, 2016 | |||||||
Fixed maturity securities, available-for-sale at fair value | $ | 14,033 | $ | 40,388 | ||||
Equity securities, available-for-sale at fair value | 430 | 1,526 | ||||||
Mortgage loans | 120 | 155 | ||||||
Policy loans | 312 | 876 | ||||||
Other invested assets | 129 | 302 | ||||||
Gross investment income | 15,024 | 43,247 | ||||||
External investment expense | (225 | ) | (662 | ) | ||||
Net investment income | $ | 14,799 | $ | 42,585 |
Three Months Ended September 30, 2016 | Nine Months Ended September 30, 2016 | |||||||
Realized gains on fixed maturity securities | $ | 455 | $ | 1,663 | ||||
Realized losses on fixed maturity securities | — | (2,338 | ) | |||||
Realized gains on equity securities | 154 | 438 | ||||||
Realized losses on equity securities | — | (352 | ) | |||||
Net realized gains (losses) on derivative instruments | (829 | ) | (1,925 | ) | ||||
Impairment loss | — | (163 | ) | |||||
Net realized gains (losses) | $ | (220 | ) | $ | (2,677 | ) |
September 30, 2016 | Fair Value Measurement Using: | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets | ||||||||||||||||
Fixed maturity securities | ||||||||||||||||
U.S. Government and government agencies | $ | 16,915 | $ | 5,337 | $ | 11,546 | $ | 32 | ||||||||
States, municipalities and political subdivisions | 401,613 | — | 395,644 | 5,969 | ||||||||||||
Foreign government | 6,279 | — | 6,279 | — | ||||||||||||
Residential mortgage-backed securities | 143,479 | — | 83,479 | 60,000 | ||||||||||||
Commercial mortgage-backed securities | 60,149 | — | 9,870 | 50,279 | ||||||||||||
Asset-backed securities | 70,516 | — | 3,772 | 66,744 | ||||||||||||
Corporate and other | 632,726 | 2,192 | 609,646 | 20,888 | ||||||||||||
Total fixed maturity securities | 1,331,677 | 7,529 | 1,120,236 | 203,912 | ||||||||||||
Equity securities | ||||||||||||||||
Common stocks | 19,494 | 14,668 | — | 4,826 | ||||||||||||
Perpetual preferred stocks | 37,012 | 9,984 | 27,028 | — | ||||||||||||
Total equity securities | 56,506 | 24,652 | 27,028 | 4,826 | ||||||||||||
Derivatives | 4,712 | — | — | 4,712 | ||||||||||||
Contingent asset | 2,724 | — | — | 2,724 | ||||||||||||
Total assets accounted for at fair value | $ | 1,395,619 | $ | 32,181 | $ | 1,147,264 | $ | 216,174 | ||||||||
Liabilities | ||||||||||||||||
Warrant liability | $ | 3,511 | $ | — | $ | — | $ | 3,511 | ||||||||
Deferred consideration | 748 | — | — | 748 | ||||||||||||
Other | 1,490 | — | — | 1,490 | ||||||||||||
Total liabilities accounted for at fair value | $ | 5,749 | $ | — | $ | — | $ | 5,749 |
December 31, 2015 | Fair Value Measurement Using: | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets | ||||||||||||||||
Fixed maturity securities | ||||||||||||||||
U.S. Government and government agencies | $ | 17,083 | $ | 5,753 | $ | 11,257 | $ | 73 | ||||||||
States, municipalities and political subdivisions | 386,260 | — | 380,601 | 5,659 | ||||||||||||
Foreign government | 6,429 | — | 6,429 | — | ||||||||||||
Residential mortgage-backed securities | 166,315 | — | 87,296 | 79,019 |
Commercial mortgage-backed securities | 75,035 | — | 14,510 | 60,525 | ||||||||||||
Asset-backed securities | 34,451 | — | 6,798 | 27,653 | ||||||||||||
Corporate and other | 546,268 | 7,090 | 525,234 | 13,944 | ||||||||||||
Total fixed maturity securities | 1,231,841 | 12,843 | 1,032,125 | 186,873 | ||||||||||||
Equity securities | ||||||||||||||||
Common stocks | 18,625 | 13,693 | — | 4,932 | ||||||||||||
Perpetual preferred stocks | 31,057 | 10,271 | 20,786 | — | ||||||||||||
Total equity securities | 49,682 | 23,964 | 20,786 | 4,932 | ||||||||||||
Derivatives | 4,843 | 632 | — | 4,211 | ||||||||||||
Total assets accounted for at fair value | $ | 1,286,366 | $ | 37,439 | $ | 1,052,911 | $ | 196,016 | ||||||||
Liabilities | ||||||||||||||||
Warrant liability | $ | 4,332 | $ | — | $ | — | $ | 4,332 | ||||||||
Total liabilities accounted for at fair value | $ | 4,332 | $ | — | $ | — | $ | 4,332 |
Total realized/unrealized gains (losses) included in | ||||||||||||||||||||||||||||||||
Balance at June 30, 2016 | Net earnings (loss) | Other comp. income (loss) | Purchases and issuances | Sales and settlements | Transfer to Level 3 | Transfer out of Level 3 | Balance at September 30, 2016 | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||||||||
U.S. Government and government agencies | $ | 58 | $ | — | $ | — | $ | — | $ | (26 | ) | $ | — | $ | — | $ | 32 | |||||||||||||||
States, municipalities and political subdivisions | 5,864 | 102 | 3 | — | — | — | — | 5,969 | ||||||||||||||||||||||||
Residential mortgage-backed securities | 62,289 | (422 | ) | 525 | — | (2,973 | ) | 8,686 | (8,105 | ) | 60,000 | |||||||||||||||||||||
Commercial mortgage-backed securities | 57,563 | (269 | ) | (19 | ) | — | (7,378 | ) | 2,629 | (2,247 | ) | 50,279 | ||||||||||||||||||||
Asset-backed securities | 54,217 | 85 | 1,454 | 10,337 | (720 | ) | 1,387 | (16 | ) | 66,744 | ||||||||||||||||||||||
Corporate and other | 16,661 | (108 | ) | 550 | 7,899 | (1,145 | ) | — | (2,969 | ) | 20,888 | |||||||||||||||||||||
Total fixed maturity securities | 196,652 | (612 | ) | 2,513 | 18,236 | (12,242 | ) | 12,702 | (13,337 | ) | 203,912 | |||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||||||||
Common stocks | 4,826 | — | — | — | — | — | — | 4,826 | ||||||||||||||||||||||||
Total equity securities | 4,826 | — | — | — | — | — | — | 4,826 | ||||||||||||||||||||||||
Derivatives | 5,318 | (94 | ) | (694 | ) | 230 | (48 | ) | — | — | 4,712 | |||||||||||||||||||||
Contingent asset | 2,813 | (89 | ) | — | — | — | — | — | 2,724 | |||||||||||||||||||||||
Total financial assets | $ | 209,609 | $ | (795 | ) | $ | 1,819 | $ | 18,466 | $ | (12,290 | ) | $ | 12,702 | $ | (13,337 | ) | $ | 216,174 | |||||||||||||
Total realized/unrealized (gains) losses included in | ||||||||||||||||||||||||||||||||
Balance at June 30, 2016 | Net earnings (loss) | Other comp. income (loss) | Purchases and issuances | Sales and settlements | Transfer to Level 3 | Transfer out of Level 3 | Balance at September 30, 2016 | |||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Warrant liability | $ | 2,772 | $ | 739 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 3,511 | ||||||||||||||||
Deferred consideration | 2,218 | (1,470 | ) | — | — | — | — | — | 748 | |||||||||||||||||||||||
Other | — | — | — | 1,490 | — | — | — | 1,490 | ||||||||||||||||||||||||
Total financial liabilities | $ | 4,990 | $ | (731 | ) | $ | — | $ | 1,490 | $ | — | $ | — | $ | — | $ | 5,749 |
Total realized/unrealized gains (losses) included in | ||||||||||||||||||||||||||||||||
Balance at December 31, 2015 | Net earnings (loss) | Other comp. income (loss) | Purchases and issuances | Sales and settlements | Transfer to Level 3 | Transfer out of Level 3 | Balance at September 30, 2016 | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||||||||
U.S. Government and government agencies | $ | 73 | $ | — | $ | 2 | $ | — | $ | (43 | ) | $ | — | $ | — | $ | 32 | |||||||||||||||
States, municipalities and political subdivisions | 5,659 | 302 | 8 | — | — | — | — | 5,969 | ||||||||||||||||||||||||
Residential mortgage-backed securities | 79,019 | (2,105 | ) | 910 | — | (10,988 | ) | 16,569 | (23,405 | ) | 60,000 | |||||||||||||||||||||
Commercial mortgage-backed securities | 60,525 | (760 | ) | 920 | — | (12,394 | ) | 9,779 | (7,791 | ) | 50,279 | |||||||||||||||||||||
Asset-backed securities | 27,653 | 140 | 2,176 | 43,405 | (14,742 | ) | 13,808 | (5,696 | ) | 66,744 |
Corporate and other | 13,944 | 50 | 479 | 8,499 | (1,206 | ) | 2,091 | (2,969 | ) | 20,888 | ||||||||||||||||||||||
Total fixed maturity securities | 186,873 | (2,373 | ) | 4,495 | 51,904 | (39,373 | ) | 42,247 | (39,861 | ) | 203,912 | |||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||||||||
Common stocks | 4,932 | — | (106 | ) | — | — | — | — | 4,826 | |||||||||||||||||||||||
Total equity securities | 4,932 | — | (106 | ) | — | — | — | — | 4,826 | |||||||||||||||||||||||
Derivatives | 4,211 | (1,119 | ) | 1,438 | 230 | (48 | ) | — | — | 4,712 | ||||||||||||||||||||||
Contingent asset | — | (268 | ) | — | 2,992 | — | — | — | 2,724 | |||||||||||||||||||||||
Total financial assets | $ | 196,016 | $ | (3,760 | ) | $ | 5,827 | $ | 55,126 | $ | (39,421 | ) | $ | 42,247 | $ | (39,861 | ) | $ | 216,174 | |||||||||||||
Total realized/unrealized (gains) losses included in | ||||||||||||||||||||||||||||||||
Balance at December 31, 2015 | Net earnings (loss) | Other comp. income (loss) | Purchases and issuances | Sales and settlements | Transfer to Level 3 | Transfer out of Level 3 | Balance at September 30, 2016 | |||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Warrant liability | $ | 4,332 | $ | (821 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 3,511 | |||||||||||||||
Deferred consideration | — | (1,841 | ) | — | 2,589 | — | — | — | 748 | |||||||||||||||||||||||
Other | — | — | — | 1,490 | — | — | — | 1,490 | ||||||||||||||||||||||||
Total financial liabilities | $ | 4,332 | $ | (2,662 | ) | $ | — | $ | 4,079 | $ | — | $ | — | $ | — | $ | 5,749 |
Total realized/unrealized gains (losses) included in | ||||||||||||||||||||||||||||||||
Balance at June 30, 2015 | Net earnings (loss) | Other comp. income (loss) | Purchases and issuances | Sales and settlements | Transfer to Level 3 | Transfer out of Level 3 | Balance at September 30, 2015 | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||||||||
Corporate and other | $ | 13,265 | $ | 123 | $ | (1,542 | ) | $ | — | $ | (4,684 | ) | $ | — | $ | — | $ | 7,162 | ||||||||||||||
Total fixed maturity securities | 13,265 | 123 | (1,542 | ) | — | (4,684 | ) | — | — | 7,162 | ||||||||||||||||||||||
Derivatives | 295 | 317 | — | — | — | — | — | 612 | ||||||||||||||||||||||||
Total financial assets | $ | 13,560 | $ | 440 | $ | (1,542 | ) | $ | — | $ | (4,684 | ) | $ | — | $ | — | $ | 7,774 |
Total realized/unrealized gains (losses) included in | ||||||||||||||||||||||||||||||||
Balance at December 31, 2014 | Net earnings (loss) | Other comp. income (loss) | Purchases and issuances | Sales and settlements | Transfer to Level 3 | Transfer out of Level 3 | Balance at September 30, 2015 | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||||||||
Corporate and other | $ | 250 | $ | 123 | $ | (1,542 | ) | $ | 13,015 | $ | (4,684 | ) | $ | — | $ | — | $ | 7,162 | ||||||||||||||
Total fixed maturity securities | 250 | 123 | (1,542 | ) | 13,015 | (4,684 | ) | — | — | 7,162 | ||||||||||||||||||||||
Derivatives | — | 317 | — | 295 | — | — | — | 612 | ||||||||||||||||||||||||
Total financial assets | $ | 250 | $ | 440 | $ | (1,542 | ) | $ | 13,310 | $ | (4,684 | ) | $ | — | $ | — | $ | 7,774 |
September 30, 2016 | Fair Value Measurement Using: | |||||||||||||||||||
Carrying Value | Estimated Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
Assets | ||||||||||||||||||||
Mortgage loans | $ | 8,939 | $ | 8,940 | $ | — | $ | — | $ | 8,940 | ||||||||||
Policy loans | 18,228 | 18,228 | — | 18,228 | — | |||||||||||||||
Other invested assets | 5,719 | 5,591 | — | — | 5,591 | |||||||||||||||
Total assets not accounted for at fair value | $ | 32,886 | $ | 32,759 | $ | — | $ | 18,228 | $ | 14,531 | ||||||||||
Liabilities | ||||||||||||||||||||
Annuity benefits accumulated (1) | $ | 254,250 | $ | 252,306 | $ | — | $ | — | $ | 252,306 | ||||||||||
Long-term obligations (2) | 343,906 | 340,544 | — | 340,544 | — | |||||||||||||||
Total liabilities not accounted for at fair value | $ | 598,156 | $ | 592,850 | $ | — | $ | 340,544 | $ | 252,306 |
December 31, 2015 | Fair Value Measurement Using: | |||||||||||||||||||
Carrying Value | Estimated Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
Assets | ||||||||||||||||||||
Mortgage loans | $ | 1,252 | $ | 1,252 | $ | — | $ | — | $ | 1,252 | ||||||||||
Policy loans | 18,476 | 18,476 | — | 18,476 | — | |||||||||||||||
Other invested assets | 5,784 | 3,434 | — | — | 3,434 | |||||||||||||||
Total assets not accounted for at fair value | $ | 25,512 | $ | 23,162 | $ | — | $ | 18,476 | $ | 4,686 | ||||||||||
Liabilities | ||||||||||||||||||||
Annuity benefits accumulated (1) | $ | 257,454 | $ | 258,847 | $ | — | $ | — | $ | 258,847 | ||||||||||
Long-term obligations (2) | 319,180 | 310,307 | — | 310,307 | — | |||||||||||||||
Total liabilities not accounted for at fair value | $ | 576,634 | $ | 569,154 | $ | — | $ | 310,307 | $ | 258,847 |
September 30, 2016 | December 31, 2015 | |||||||
Contract receivables: | ||||||||
Contracts in progress | $ | 148,536 | $ | 103,178 | ||||
Unbilled retentions | 39,128 | 31,195 | ||||||
Trade receivables | 87,891 | 77,084 | ||||||
Other receivables | 216 | 190 | ||||||
Allowance for doubtful accounts | (3,033 | ) | (794 | ) | ||||
$ | 272,738 | $ | 210,853 |
September 30, 2016 | December 31, 2015 | |||||||
Costs incurred on contracts in progress | $ | 606,809 | $ | 597,656 | ||||
Estimated earnings | 125,377 | 99,985 | ||||||
732,186 | 697,641 | |||||||
Less progress billings | 766,336 | 679,532 | ||||||
$ | (34,150 | ) | $ | 18,109 | ||||
The above is included in the accompanying Condensed Consolidated Balance Sheet under the following captions: | ||||||||
Costs and recognized earnings in excess of billings on uncompleted contracts | $ | 17,091 | $ | 39,310 | ||||
Billings in excess of costs and recognized earnings on uncompleted contracts | 51,241 | 21,201 | ||||||
$ | (34,150 | ) | $ | 18,109 |
September 30, 2016 | December 31, 2015 | |||||||
Raw materials | $ | 8,514 | $ | 10,485 | ||||
Work in process | 235 | 1,289 | ||||||
Finished goods | 224 | 346 | ||||||
$ | 8,973 | $ | 12,120 |
September 30, 2016 | December 31, 2015 | |||||||||||||||
Reinsurer | A.M. Best Rating | Amount | % of Total | Amount | % of Total | |||||||||||
Loyal American Life Insurance Co (Cigna) | A- | $ | 138,393 | 26.3 | % | $ | 133,646 | 25.5 | % | |||||||
Great American Life Insurance Co | A | 46,939 | 8.9 | % | 44,748 | 8.6 | % | |||||||||
Hannover Life Reassurance Co | A+ | 340,172 | 64.8 | % | 344,168 | 65.9 | % | |||||||||
Other | A- | 95 | — | % | — | — | % | |||||||||
Total | $ | 525,599 | 100.0 | % | $ | 522,562 | 100.0 | % |
Manufacturing | Marine Services | Telecom | Utilities | Insurance | Life Sciences | Other | Total | |||||||||||||||||||||||||
Balance as of December 31, 2015 | $ | 24,490 | $ | 1,134 | $ | 3,378 | $ | 1,374 | $ | 29,021 | $ | — | $ | 1,781 | $ | 61,178 | ||||||||||||||||
Acquisition of business | — | 1,528 | — | 1,257 | 17,592 | 3,633 | 824 | 24,834 | ||||||||||||||||||||||||
Other | — | — | — | — | — | — | 13 | 13 | ||||||||||||||||||||||||
Balance as of September 30, 2016 | $ | 24,490 | $ | 2,662 | $ | 3,378 | $ | 2,631 | $ | 46,613 | $ | 3,633 | $ | 2,618 | $ | 86,025 |
Manufacturing | Marine Services | Utilities | Life Sciences | Other | Corporate | Total | ||||||||||||||||||||||
Trade names | ||||||||||||||||||||||||||||
Balance as of December 31, 2015 | $ | 4,005 | $ | 601 | $ | 5,407 | $ | — | $ | — | $ | — | $ | 10,013 | ||||||||||||||
Amortization | (224 | ) | (243 | ) | (473 | ) | — | — | — | (940 | ) | |||||||||||||||||
Acquisition of business | — | 2,626 | — | — | — | — | 2,626 | |||||||||||||||||||||
Balance as of September 30, 2016 | $ | 3,781 | $ | 2,984 | $ | 4,934 | $ | — | $ | — | $ | — | $ | 11,699 | ||||||||||||||
Customer relationships | ||||||||||||||||||||||||||||
Balance as of December 31, 2015 | $ | — | $ | 6,794 | $ | 4,444 | $ | — | $ | — | $ | — | $ | 11,238 | ||||||||||||||
Amortization | — | (350 | ) | (355 | ) | — | — | — | (705 | ) | ||||||||||||||||||
Acquisition of business | — | — | 2,325 | — | — | — | 2,325 | |||||||||||||||||||||
Balance as of September 30, 2016 | $ | — | $ | 6,444 | $ | 6,414 | $ | — | $ | — | $ | — | $ | 12,858 | ||||||||||||||
Developed technology | ||||||||||||||||||||||||||||
Balance as of December 31, 2015 | $ | — | $ | 810 | $ | — | $ | — | $ | 2,279 | $ | — | $ | 3,089 | ||||||||||||||
Amortization | — | (208 | ) | — | — | (957 | ) | — | (1,165 | ) | ||||||||||||||||||
Balance as of September 30, 2016 | $ | — | $ | 602 | $ | — | $ | — | $ | 1,322 | $ | — | $ | 1,924 | ||||||||||||||
Other | ||||||||||||||||||||||||||||
Balance as of December 31, 2015 | $ | — | $ | — | $ | 20 | $ | 177 | $ | — | $ | 22 | $ | 219 | ||||||||||||||
Amortization | — | — | — | (3 | ) | (21 | ) | (4 | ) | (28 | ) | |||||||||||||||||
Acquisition of business | — | — | 68 | 48 | 1,214 | — | 1,330 | |||||||||||||||||||||
Balance as of September 30, 2016 | $ | — | $ | — | $ | 88 | $ | 222 | $ | 1,193 | $ | 18 | $ | 1,521 | ||||||||||||||
Total amortizable intangible assets | ||||||||||||||||||||||||||||
Balance as of December 31, 2015 | $ | 4,005 | $ | 8,205 | $ | 9,871 | $ | 177 | $ | 2,279 | $ | 22 | $ | 24,559 | ||||||||||||||
Amortization | (224 | ) | (801 | ) | (828 | ) | (3 | ) | (978 | ) | (4 | ) | (2,838 | ) | ||||||||||||||
Acquisition of business | — | 2,626 | 2,393 | 48 | 1,214 | — | 6,281 | |||||||||||||||||||||
Balance as of September 30, 2016 | $ | 3,781 | $ | 10,030 | $ | 11,436 | $ | 222 | $ | 2,515 | $ | 18 | $ | 28,002 |
September 30, 2016 | December 31, 2015 | |||||||
Long-term care insurance reserves | $ | 1,396,446 | $ | 1,354,151 | ||||
Traditional life insurance reserves | 103,131 | 104,450 | ||||||
Other accident and health insurance reserves | 137,924 | 133,336 | ||||||
Total life, accident and health reserves | $ | 1,637,501 | $ | 1,591,937 |
September 30, 2016 | December 31, 2015 | |||||||
HC2 | ||||||||
11.0% Senior Secured Notes, due in 2019 | $ | 307,000 | $ | 307,000 | ||||
GMSL | ||||||||
Notes payable and revolving lines of credit, various maturity dates | 20,765 | — | ||||||
LIBOR plus 3.65% Notes, due in 2019 | 3,025 | 5,260 | ||||||
Obligations under capital leases | 52,782 | 52,697 | ||||||
DBM Global | ||||||||
LIBOR plus 4.0% Notes, due in 2018 and 2019 | 10,114 | 14,378 | ||||||
Line of Credit | 1,900 | 1,600 | ||||||
ANG | ||||||||
5.5% Term Loan, due in 2018 | 541 | 660 | ||||||
LIBOR plus 3.0% Notes, due in 2023 | 3,500 | — | ||||||
4.36% Notes, due in 2022 | 2,500 | — | ||||||
4.25% Seller Note, due in 2022 | 2,919 | — | ||||||
Other | 81 | 19 | ||||||
Total | 405,127 | 381,614 | ||||||
Unamortized issuance discounts on debt, net of premiums | (8,439 | ) | (9,738 | ) | ||||
Total long-term obligations | $ | 396,688 | $ | 371,876 |
Capital Leases | Debt | Total | ||||||||||
2016 | $ | 1,718 | $ | 25,025 | $ | 26,743 | ||||||
2017 | 6,848 | 47,068 | 53,916 | |||||||||
2018 | 9,981 | 43,703 | 53,684 | |||||||||
2019 | 9,849 | 348,041 | 357,890 | |||||||||
2020 | 9,855 | 4,369 | 14,224 | |||||||||
Thereafter | 27,615 | 7,753 | 35,368 | |||||||||
Total minimum principal & interest payments | 65,866 | 475,959 | 541,825 | |||||||||
Less: Amount representing interest | (13,084 | ) | (123,614 | ) | (136,698 | ) | ||||||
$ | 52,782 | $ | 352,345 | $ | 405,127 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Service cost - benefits earning during the period | $ | 17 | $ | 15 | $ | 52 | $ | 46 | ||||||||
Interest cost on projected benefit obligation | 1,878 | 1,833 | 5,633 | 5,498 | ||||||||||||
Expected return on assets | (1,991 | ) | (1,877 | ) | (5,974 | ) | (5,630 | ) | ||||||||
Actuarial gain | — | 128 | — | 384 | ||||||||||||
Foreign currency gain (loss) | 3 | (3 | ) | 9 | (9 | ) | ||||||||||
Net periodic benefit cost/(income) | $ | (93 | ) | $ | 96 | (280 | ) | $ | 289 |
Nine Months Ended September 30, | ||||||
2016 | 2015 | |||||
Expected option life (in years) | 4.70 - 6.00 | 5.38 | ||||
Risk-free interest rate | 1.27% - 1.35% | 1.49% - 1.68% | ||||
Expected volatility | 39.58% - 55.58% | 36.29% - 40.50% | ||||
Dividend yield | — | % | — | % |
Shares | Weighted Average Grant Date Fair Value | ||||||
Unvested - December 31, 2015 | 790,688 | $ | 8.14 | ||||
Granted | 295,899 | $ | 3.89 | ||||
Vested | (882,918 | ) | $ | 7.14 | |||
Forfeitures | (16,611 | ) | $ | 5.03 | |||
Unvested - September 30, 2016 | 187,058 | $ | 6.44 |
Shares | Weighted Average Exercise Price | ||||||
Outstanding - December 31, 2015 | 5,361,285 | $ | 5.48 | ||||
Granted | 1,506,848 | $ | 10.49 | ||||
Exercised | (2,000 | ) | $ | 4.06 | |||
Forfeitures | (2,800 | ) | $ | 4.06 | |||
Outstanding - September 30, 2016 | 6,863,333 | $ | 6.58 | ||||
Eligible for exercise | 3,950,750 | $ | 5.33 |
Declaration Date and Holders of Record Date | March 31, 2016 | June 30, 2016 | September 30, 2016 | ||||||||
Payment/Accrual Date | April 15, 2016 | July 15, 2016 | October 15, 2016 | ||||||||
Total Dividend | $ | 988 | $ | 988 | $ | 800 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net revenue | $ | 14,409 | $ | 3,020 | $ | 25,904 | $ | 17,507 | ||||||||
Operating expenses | $ | 945 | $ | 917 | $ | 3,102 | $ | 2,885 | ||||||||
Interest expense | $ | 377 | $ | 391 | $ | 1,130 | $ | 1,214 | ||||||||
Dividends received | $ | — | $ | 2,440 | $ | 418 | $ | 2,440 |
September 30, 2016 | December 31, 2015 | |||||||
Accounts receivable | $ | 8,020 | $ | 5,058 | ||||
Long-term debt | $ | 37,417 | $ | 37,627 | ||||
Accounts payable | $ | 239 | $ | 9 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net Revenue by Geographic Region | ||||||||||||||||
United States | $ | 272,395 | $ | 173,348 | $ | 768,849 | $ | 494,511 | ||||||||
United Kingdom | 139,981 | 101,327 | 332,318 | 254,396 | ||||||||||||
Other | 708 | 2,792 | 2,954 | 11,350 | ||||||||||||
Total | $ | 413,084 | $ | 277,467 | $ | 1,104,121 | $ | 760,257 | ||||||||
Net Revenue by Segment | ||||||||||||||||
Manufacturing | $ | 129,551 | $ | 122,932 | $ | 372,964 | $ | 380,783 | ||||||||
Marine Services | 50,653 | 35,062 | 116,298 | 105,939 | ||||||||||||
Insurance | 34,546 | — | 99,847 | — | ||||||||||||
Telecommunications | 194,411 | 116,872 | 508,248 | 267,554 | ||||||||||||
Utilities | 1,664 | 1,841 | 4,151 | 4,432 | ||||||||||||
Other | 2,259 | 760 | 2,613 | 1,549 | ||||||||||||
Total | $ | 413,084 | $ | 277,467 | $ | 1,104,121 | $ | 760,257 | ||||||||
Depreciation and Amortization | ||||||||||||||||
Manufacturing | $ | 431 | $ | 513 | $ | 1,263 | $ | 1,490 | ||||||||
Marine Services | 5,554 | 4,759 | 16,793 | 14,129 | ||||||||||||
Insurance (1) | (1,162 | ) | — | (2,902 | ) | — | ||||||||||
Telecommunications | 144 | 98 | 389 | 294 | ||||||||||||
Utilities | 582 | 411 | 1,479 | 1,206 | ||||||||||||
Life Sciences | 32 | 6 | 87 | 8 | ||||||||||||
Other | 380 | 480 | 1,054 | 641 | ||||||||||||
Total | $ | 5,961 | $ | 6,267 | $ | 18,163 | $ | 17,768 | ||||||||
Income (Loss) from Operations | ||||||||||||||||
Manufacturing | $ | 12,339 | $ | 12,995 | $ | 35,421 | $ | 30,256 | ||||||||
Marine Services | 4,794 | 3,588 | (214 | ) | 10,501 | |||||||||||
Insurance | (338 | ) | (160 | ) | (5,916 | ) | (290 | ) | ||||||||
Telecommunications | 2,218 | (523 | ) | 3,434 | (612 | ) | ||||||||||
Utilities | 149 | (164 | ) | 59 | (638 | ) | ||||||||||
Life Sciences | (2,538 | ) | (1,811 | ) | (7,282 | ) | (4,736 | ) | ||||||||
Other | (2,318 | ) | (1,652 | ) | (6,583 | ) | (3,501 | ) | ||||||||
Non-operating Corporate | (7,452 | ) | (10,395 | ) | (25,337 | ) | (26,726 | ) | ||||||||
Total | $ | 6,854 | $ | 1,878 | $ | (6,418 | ) | $ | 4,254 | |||||||
Capital Expenditures (2) | ||||||||||||||||
Manufacturing | $ | 1,506 | $ | 1,276 | $ | 5,317 | $ | 3,124 | ||||||||
Marine Services | 5,682 | 816 | 9,480 | 10,188 | ||||||||||||
Telecommunications | 254 | 205 | 574 | 215 | ||||||||||||
Utilities | 103 | 1,184 | 5,420 | 2,842 | ||||||||||||
Life Sciences | 14 | 204 | 144 | 230 | ||||||||||||
Other | 27 | 152 | 38 | 152 | ||||||||||||
Non-operating Corporate | 214 | — | 219 | — | ||||||||||||
Total | $ | 7,800 | $ | 3,837 | $ | 21,192 | $ | 16,751 |
September 30, 2016 | December 31, 2015 | |||||||
Investments | ||||||||
Marine Services | $ | 37,154 | $ | 27,324 | ||||
Insurance | 1,466,550 | 1,314,448 | ||||||
Life Sciences | 13,866 | 4,888 | ||||||
Other | 7,349 | 22,395 | ||||||
Eliminations | (48,699 | ) | (14,685 | ) | ||||
Total | $ | 1,476,220 | $ | 1,354,370 | ||||
Property, Plant and Equipment, net | ||||||||
United States | $ | 93,461 | $ | 82,540 | ||||
United Kingdom | 146,001 | 126,921 | ||||||
Other | 4,714 | 5,005 | ||||||
Total | $ | 244,176 | $ | 214,466 | ||||
Total Assets | ||||||||
Manufacturing | $ | 306,957 | $ | 268,242 | ||||
Marine Services | 277,975 | 249,003 | ||||||
Insurance | 2,083,877 | 1,965,059 | ||||||
Telecommunications | 97,888 | 114,633 | ||||||
Utilities | 39,738 | 31,462 | ||||||
Life Sciences | 30,180 | 16,494 | ||||||
Other | 21,983 | 34,339 | ||||||
Non-operating Corporate | 78,098 | 77,965 | ||||||
Eliminations | (48,699 | ) | (14,685 | ) | ||||
Total | $ | 2,887,997 | $ | 2,742,512 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Loss from continuing operations attributable to common stock and participating preferred stockholders | $ | (7,506 | ) | $ | (8,998 | ) | $ | (38,146 | ) | $ | (27,293 | ) | ||||
Loss from discontinued operations | — | (24 | ) | — | (44 | ) | ||||||||||
Net Loss attributable to common stock and participating preferred stockholders | $ | (7,506 | ) | $ | (9,022 | ) | $ | (38,146 | ) | $ | (27,337 | ) | ||||
Earnings allocable to common shares: | ||||||||||||||||
Participating shares at end of period: | ||||||||||||||||
Common stock outstanding | 36,627 | 25,592 | 35,808 | 25,093 | ||||||||||||
Numerator for basic and diluted earnings per share | ||||||||||||||||
Percentage of income (loss) allocated to: | ||||||||||||||||
Common Stock | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
Preferred Stock | — | % | — | % | — | % | — | % | ||||||||
Loss attributable to common shares - basic and diluted | ||||||||||||||||
Loss from continuing operations | $ | (7,506 | ) | $ | (8,998 | ) | $ | (38,146 | ) | $ | (27,293 | ) | ||||
Loss from discontinued operations | — | (24 | ) | — | (44 | ) | ||||||||||
Net Loss | $ | (7,506 | ) | $ | (9,022 | ) | $ | (38,146 | ) | $ | (27,337 | ) | ||||
Denominator for basic and diluted earnings per share | ||||||||||||||||
Weighted average common shares outstanding - basic and diluted | 36,627 | 25,592 | 35,808 | 25,093 | ||||||||||||
Basic and Diluted earnings per share | ||||||||||||||||
Net loss attributable to common stock and participating preferred stockholders - basic and diluted | $ | (0.20 | ) | $ | (0.35 | ) | $ | (1.07 | ) | $ | (1.09 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2016 | 2015 | Increase / (Decrease) | 2016 | 2015 | Increase / (Decrease) | |||||||||||||||||||
Net revenue: | ||||||||||||||||||||||||
Manufacturing | $ | 129,551 | $ | 122,932 | $ | 6,619 | $ | 372,964 | $ | 380,783 | $ | (7,819 | ) | |||||||||||
Marine Services | 50,653 | 35,062 | 15,591 | 116,298 | 105,939 | 10,359 | ||||||||||||||||||
Insurance | 34,546 | — | 34,546 | 99,847 | — | 99,847 | ||||||||||||||||||
Telecommunications | 194,411 | 116,872 | 77,539 | 508,248 | 267,554 | 240,694 | ||||||||||||||||||
Utilities | 1,664 | 1,841 | (177 | ) | 4,151 | 4,432 | (281 | ) | ||||||||||||||||
Other | 2,259 | 760 | 1,499 | 2,613 | 1,549 | 1,064 | ||||||||||||||||||
Total net revenue | $ | 413,084 | $ | 277,467 | $ | 135,617 | $ | 1,104,121 | $ | 760,257 | $ | 343,864 | ||||||||||||
Income (loss) from operations: | ||||||||||||||||||||||||
Manufacturing | $ | 12,339 | $ | 12,995 | $ | (656 | ) | $ | 35,421 | $ | 30,256 | $ | 5,165 |
Marine Services | 4,794 | 3,588 | 1,206 | (214 | ) | 10,501 | (10,715 | ) | ||||||||||||||||
Insurance | (338 | ) | (160 | ) | (178 | ) | (5,916 | ) | (290 | ) | (5,626 | ) | ||||||||||||
Telecommunications | 2,218 | (523 | ) | 2,741 | 3,434 | (612 | ) | 4,046 | ||||||||||||||||
Utilities | 149 | (164 | ) | 313 | 59 | (638 | ) | 697 | ||||||||||||||||
Life Sciences | (2,538 | ) | (1,811 | ) | (727 | ) | (7,282 | ) | (4,736 | ) | (2,546 | ) | ||||||||||||
Other | (2,318 | ) | (1,652 | ) | (666 | ) | (6,583 | ) | (3,501 | ) | (3,082 | ) | ||||||||||||
Non-operating Corporate | (7,452 | ) | (10,395 | ) | 2,943 | (25,337 | ) | (26,726 | ) | 1,389 | ||||||||||||||
Total income (loss) from operations | 6,854 | 1,878 | 4,976 | (6,418 | ) | 4,254 | (10,672 | ) | ||||||||||||||||
Interest expense | (10,719 | ) | (10,383 | ) | (336 | ) | (31,614 | ) | (29,208 | ) | (2,406 | ) | ||||||||||||
Other income (expense), net | (3,203 | ) | 1,193 | (4,396 | ) | (4,220 | ) | (1,378 | ) | (2,842 | ) | |||||||||||||
Income from equity investees | 335 | 918 | (583 | ) | 3,153 | 427 | 2,726 | |||||||||||||||||
Loss from continuing operations before income taxes | (6,733 | ) | (6,394 | ) | (339 | ) | (39,099 | ) | (25,905 | ) | (13,194 | ) | ||||||||||||
Income tax benefit (expense) | 1,334 | (1,504 | ) | 2,838 | 3,649 | 1,832 | 1,817 | |||||||||||||||||
Loss from continuing operations | (5,399 | ) | (7,898 | ) | 2,499 | (35,450 | ) | (24,073 | ) | (11,377 | ) | |||||||||||||
Loss from discontinued operations | — | (24 | ) | 24 | — | (44 | ) | 44 | ||||||||||||||||
Net loss | (5,399 | ) | (7,922 | ) | 2,523 | (35,450 | ) | (24,117 | ) | (11,333 | ) | |||||||||||||
Less: Net (income) loss attributable to noncontrolling interest | 841 | (65 | ) | 906 | 2,365 | (8 | ) | 2,373 | ||||||||||||||||
Net loss attributable to HC2 Holdings, Inc. | (4,558 | ) | (7,987 | ) | 3,429 | (33,085 | ) | (24,125 | ) | (8,960 | ) | |||||||||||||
Less: Preferred stock and deemed dividends | 2,948 | 1,035 | 1,913 | 5,061 | 3,212 | 1,849 | ||||||||||||||||||
Net loss attributable to common stock and participating preferred stockholders | $ | (7,506 | ) | $ | (9,022 | ) | $ | 1,516 | $ | (38,146 | ) | $ | (27,337 | ) | $ | (10,809 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2016 | 2015 | Increase / (Decrease) | 2016 | 2015 | Increase / (Decrease) | |||||||||||||||||||
Net revenue | $ | 129,551 | $ | 122,932 | $ | 6,619 | $ | 372,964 | $ | 380,783 | $ | (7,819 | ) | |||||||||||
Cost of revenue | 105,246 | 99,903 | 5,343 | 302,993 | 319,447 | (16,454 | ) | |||||||||||||||||
Selling, general and administrative expenses | 11,558 | 10,510 | 1,048 | 34,251 | 29,658 | 4,593 | ||||||||||||||||||
Depreciation and amortization | 431 | 513 | (82 | ) | 1,262 | 1,491 | (229 | ) | ||||||||||||||||
Other operating (income) expense | (23 | ) | (989 | ) | 966 | (963 | ) | (69 | ) | (894 | ) | |||||||||||||
Income from operations | $ | 12,339 | $ | 12,995 | $ | (656 | ) | $ | 35,421 | $ | 30,256 | $ | 5,165 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2016 | 2015 | Increase / (Decrease) | 2016 | 2015 | Increase / (Decrease) | |||||||||||||||||||
Net revenue | $ | 50,653 | $ | 35,062 | $ | 15,591 | $ | 116,298 | $ | 105,939 | $ | 10,359 | ||||||||||||
Cost of revenue | 35,616 | 23,727 | 11,889 | 85,383 | 72,853 | 12,530 | ||||||||||||||||||
Selling, general and administrative expenses | 4,690 | 3,106 | 1,584 | 14,345 | 8,572 | 5,773 | ||||||||||||||||||
Depreciation and amortization | 5,553 | 4,758 | 795 | 16,794 | 14,130 | 2,664 | ||||||||||||||||||
Other operating (income) expense | — | (117 | ) | 117 | (10 | ) | (117 | ) | 107 | |||||||||||||||
Income (loss) from operations | $ | 4,794 | $ | 3,588 | $ | 1,206 | $ | (214 | ) | $ | 10,501 | $ | (10,715 | ) |
Three Months Ended September 30, 2016 | Nine Months Ended September 30, 2016 | |||||||
Life, accident and health earned premiums, net | $ | 19,967 | $ | 59,939 | ||||
Net investment income | 14,799 | 42,585 | ||||||
Net realized losses on investments | (220 | ) | (2,677 | ) | ||||
Net revenue | 34,546 | 99,847 | ||||||
Policy benefits, changes in reserves, and commissions | 29,689 | 92,784 | ||||||
Selling, general and administrative expenses | 6,356 | 15,881 | ||||||
Depreciation and amortization | (1,161 | ) | (2,901 | ) | ||||
Loss from operations | $ | (338 | ) | $ | (5,917 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2016 | 2015 | Increase / (Decrease) | 2016 | 2015 | Increase / (Decrease) | |||||||||||||||||||
Net revenue | $ | 194,411 | $ | 116,872 | $ | 77,539 | $ | 508,248 | $ | 267,554 | $ | 240,694 | ||||||||||||
Cost of revenue | 190,260 | 114,373 | 75,887 | 498,558 | 261,756 | 236,802 | ||||||||||||||||||
Selling, general and administrative expenses | 1,947 | 1,801 | 146 | 5,687 | 4,942 | 745 | ||||||||||||||||||
Depreciation and amortization | 145 | 97 | 48 | 390 | 294 | 96 | ||||||||||||||||||
Other operating (income) expense | (159 | ) | 1,124 | (1,283 | ) | 179 | 1,174 | (995 | ) | |||||||||||||||
Income (loss) from operations | $ | 2,218 | $ | (523 | ) | $ | 2,741 | $ | 3,434 | $ | (612 | ) | $ | 4,046 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2016 | 2015 | Increase / (Decrease) | 2016 | 2015 | Increase / (Decrease) | |||||||||||||||||||
Net revenue | $ | 1,664 | $ | 1,841 | $ | (177 | ) | $ | 4,151 | $ | 4,432 | $ | (281 | ) | ||||||||||
Cost of revenue | 635 | 1,102 | (467 | ) | 1,570 | 2,599 | (1,029 | ) | ||||||||||||||||
Selling, general and administrative expenses | 299 | 492 | (193 | ) | 1,042 | 1,265 | (223 | ) | ||||||||||||||||
Depreciation and amortization | 581 | 411 | 170 | 1,480 | 1,206 | 274 | ||||||||||||||||||
Income (loss) from operations | $ | 149 | $ | (164 | ) | $ | 313 | $ | 59 | $ | (638 | ) | $ | 697 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2016 | 2015 | Increase / (Decrease) | 2016 | 2015 | Increase / (Decrease) | |||||||||||||||||||
Selling, general and administrative expenses | $ | 2,506 | $ | 1,804 | $ | 702 | $ | 7,195 | $ | 4,728 | $ | 2,467 | ||||||||||||
Depreciation and amortization | 32 | 7 | 25 | 87 | 8 | 79 | ||||||||||||||||||
Loss from operations | $ | (2,538 | ) | $ | (1,811 | ) | $ | (727 | ) | $ | (7,282 | ) | $ | (4,736 | ) | $ | (2,546 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2016 | 2015 | Increase / (Decrease) | 2016 | 2015 | Increase / (Decrease) | |||||||||||||||||||
Net revenue | $ | 2,259 | $ | 761 | $ | 1,498 | $ | 2,613 | $ | 1,550 | $ | 1,063 | ||||||||||||
Cost of revenue | 2,103 | 1,390 | 713 | 4,388 | 2,773 | 1,615 | ||||||||||||||||||
Selling, general and administrative expenses | 2,096 | 543 | 1,553 | 3,756 | 1,636 | 2,120 | ||||||||||||||||||
Depreciation and amortization | 378 | 480 | (102 | ) | 1,052 | 642 | 410 | |||||||||||||||||
Loss from operations | $ | (2,318 | ) | $ | (1,652 | ) | $ | (666 | ) | $ | (6,583 | ) | $ | (3,501 | ) | $ | (3,082 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2016 | 2015 | Increase / (Decrease) | 2016 | 2015 | Increase / (Decrease) | |||||||||||||||||||
Selling, general and administrative expenses | $ | 7,452 | $ | 10,395 | $ | (2,943 | ) | $ | 25,337 | $ | 26,726 | $ | (1,389 | ) | ||||||||||
Loss from operations | $ | (7,452 | ) | $ | (10,395 | ) | $ | 2,943 | $ | (25,337 | ) | $ | (26,726 | ) | $ | 1,389 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2016 | 2015 | Increase / (Decrease) | 2016 | 2015 | Increase / (Decrease) | |||||||||||||||||||
Marine Services | $ | 3,778 | $ | 4,012 | $ | (234 | ) | $ | 11,240 | $ | 8,998 | $ | 2,242 | |||||||||||
Life Sciences | (520 | ) | (215 | ) | (305 | ) | (1,235 | ) | (507 | ) | (728 | ) | ||||||||||||
Other and eliminations | (2,923 | ) | (2,879 | ) | (44 | ) | (6,852 | ) | (8,063 | ) | 1,211 | |||||||||||||
Income (loss) from equity investments | $ | 335 | $ | 918 | $ | (583 | ) | $ | 3,153 | $ | 428 | $ | 2,725 |
Three Months Ended September 30, 2016 | ||||||||||||||||||||||||||||||||
Manufacturing | Marine Services | Telecom | Utilities | Life Sciences | Other and Eliminations | Non-operating Corporate | HC2** | |||||||||||||||||||||||||
Net loss attributable to HC2 Holdings, Inc. | $ | 6,962 | $ | 8,696 | $ | 1,796 | $ | 27 | $ | (2,285 | ) | $ | (8,160 | ) | $ | (9,404 | ) | $ | (2,368 | ) | ||||||||||||
Adjustments to reconcile net income (loss) to Adjusted EBITDA: | ||||||||||||||||||||||||||||||||
Depreciation and amortization * | 431 | 5,225 | 144 | 582 | 32 | 380 | 4 | 6,798 | ||||||||||||||||||||||||
Depreciation and amortization (included in cost of revenue) | 1,321 | — | — | — | — | — | — | 1,321 | ||||||||||||||||||||||||
Gain on sale or disposal of assets | (23 | ) | — | — | — | — | — | — | (23 | ) | ||||||||||||||||||||||
Lease termination costs | — | — | (159 | ) | — | — | — | — | (159 | ) | ||||||||||||||||||||||
Interest expense | 304 | 1,328 | — | 119 | — | — | 8,969 | 10,720 | ||||||||||||||||||||||||
Other (income) expense, net | (12 | ) | (2,013 | ) | 422 | (24 | ) | (2 | ) | 3,892 | 835 | 3,098 | ||||||||||||||||||||
Foreign currency (gain) loss (included in cost of revenue) | — | (283 | ) | — | — | — | — | — | (283 | ) | ||||||||||||||||||||||
Income tax (benefit) expense | 4,672 | 96 | — | — | — | — | (7,851 | ) | (3,083 | ) | ||||||||||||||||||||||
Noncontrolling interest | 411 | 465 | — | 27 | (770 | ) | (974 | ) | — | (841 | ) | |||||||||||||||||||||
Share-based compensation expense | — | 546 | — | 3 | 128 | 37 | 1,088 | 1,802 | ||||||||||||||||||||||||
Acquisition and nonrecurring items | 429 | — | — | — | — | — | 821 | 1,250 | ||||||||||||||||||||||||
Adjusted EBITDA | $ | 14,495 | $ | 14,060 | $ | 2,203 | $ | 734 | $ | (2,897 | ) | $ | (4,825 | ) | $ | (5,538 | ) | $ | 18,232 |
Three Months Ended September 30, 2015 | ||||||||||||||||||||||||||||||||
Manufacturing | Marine Services | Telecom | Utilities | Life Sciences | Other and Eliminations | Non-operating Corporate | HC2** | |||||||||||||||||||||||||
Net loss attributable to HC2 Holdings, Inc. | $ | 7,116 | $ | 7,356 | $ | (362 | ) | $ | (82 | ) | $ | (1,575 | ) | $ | 1,525 | $ | (21,804 | ) | $ | (7,826 | ) | |||||||||||
Adjustments to reconcile net income (loss) to Adjusted EBITDA: | ||||||||||||||||||||||||||||||||
Depreciation and amortization * | 513 | 4,376 | 98 | 411 | 6 | 480 | — | 5,884 | ||||||||||||||||||||||||
Depreciation and amortization (included in cost of revenue) | 1,928 | — | — | — | — | — | — | 1,928 | ||||||||||||||||||||||||
Gain on sale or disposal of assets | (990 | ) | (117 | ) | — | — | — | — | — | (1,107 | ) | |||||||||||||||||||||
Lease termination costs | — | — | 1,124 | — | — | — | — | 1,124 | ||||||||||||||||||||||||
Interest expense | 354 | 929 | — | 10 | — | (1 | ) | 9,090 | 10,382 | |||||||||||||||||||||||
Other (income) expense, net | (141 | ) | (1,149 | ) | (162 | ) | (19 | ) | — | 280 | — | (1,191 | ) | |||||||||||||||||||
Foreign currency (gain) loss (included in cost of revenue) | — | (1,739 | ) | — | — | — | — | — | (1,739 | ) | ||||||||||||||||||||||
Income tax (benefit) expense | 5,284 | 260 | — | — | — | (6,359 | ) | 2,318 | 1,503 | |||||||||||||||||||||||
Loss from discontinued operations | — | — | — | — | — | 24 | — | 24 | ||||||||||||||||||||||||
Noncontrolling interest | 383 | 204 | — | (73 | ) | (449 | ) | — | — | 65 | ||||||||||||||||||||||
Share-based compensation expense | — | — | — | 20 | — | 1 | 2,323 | 2,344 | ||||||||||||||||||||||||
Acquisition and nonrecurring items | — | — | — | — | — | — | 2,733 | 2,733 | ||||||||||||||||||||||||
Other costs | — | — | 109 | — | — | — | — | 109 | ||||||||||||||||||||||||
Adjusted EBITDA | $ | 14,447 | $ | 10,120 | $ | 807 | $ | 267 | $ | (2,018 | ) | $ | (4,050 | ) | $ | (5,340 | ) | $ | 14,233 |
(*) | Includes depreciation adjustments from purchase accounting as more fully described in Note 2. Adjustments of the Condensed Consolidated Financial Statements. |
(**) | Excludes net loss from Insurance segment in the amount of $2.2 million and $0.2 million for the three months ended September 30, 2016 and 2015, respectively. |
Nine Months Ended September 30, 2016 | ||||||||||||||||||||||||||||||||
Manufacturing | Marine Services | Telecom | Utilities | Life Sciences | Other and Eliminations | Non-operating Corporate | HC2** | |||||||||||||||||||||||||
Net loss attributable to HC2 Holdings, Inc. | $ | 20,710 | $ | 8,780 | $ | 4,007 | $ | 68 | $ | (2,991 | ) | $ | (21,264 | ) | $ | (30,417 | ) | $ | (21,107 | ) | ||||||||||||
Adjustments to reconcile net income (loss) to Adjusted EBITDA: | ||||||||||||||||||||||||||||||||
Depreciation and amortization * | 1,263 | 15,747 | 389 | 1,479 | 87 | 1,050 | 4 | 20,019 | ||||||||||||||||||||||||
Depreciation and amortization (included in cost of revenue) | 3,048 | — | — | — | — | — | — | 3,048 | ||||||||||||||||||||||||
Asset impairment expense | ||||||||||||||||||||||||||||||||
(Gain) loss on sale or disposal of assets | (963 | ) | (10 | ) | — | — | — | — | — | (973 | ) | |||||||||||||||||||||
Lease termination costs | — | — | 179 | — | — | — | — | 179 | ||||||||||||||||||||||||
Interest expense | 917 | 3,683 | — | 142 | — | 1 | 26,871 | 31,614 | ||||||||||||||||||||||||
Other (income) expense, net | (88 | ) | (1,190 | ) | (574 | ) | (399 | ) | (3,223 | ) | 9,888 | (311 | ) | 4,103 | ||||||||||||||||||
Foreign currency (gain) loss (included in cost of revenue) | — | (1,970 | ) | — | — | — | — | — | (1,970 | ) | ||||||||||||||||||||||
Income tax (benefit) expense | 12,641 | (756 | ) | — | — | — | — | (21,481 | ) | (9,596 | ) | |||||||||||||||||||||
Loss from discontinued operations | ||||||||||||||||||||||||||||||||
Noncontrolling interest | 1,240 | 510 | — | 249 | (2,302 | ) | (2,062 | ) | — | (2,365 | ) | |||||||||||||||||||||
Share-based compensation expense | — | 1,307 | — | 107 | 184 | 238 | 4,833 | 6,669 | ||||||||||||||||||||||||
Acquisition and nonrecurring items | 428 | 266 | 18 | 27 | — | — | 3,335 | 4,073 | ||||||||||||||||||||||||
Adjusted EBITDA | $ | 39,196 | $ | 26,367 | $ | 4,019 | $ | 1,673 | $ | (8,245 | ) | $ | (12,149 | ) | $ | (17,166 | ) | $ | 33,694 |
Nine Months Ended September 30, 2015 | ||||||||||||||||||||||||||||||||
Manufacturing | Marine Services | Telecom | Utilities | Life Sciences | Other and Eliminations | Non-operating Corporate | HC2** | |||||||||||||||||||||||||
Net loss attributable to HC2 Holdings, Inc. | $ | 16,182 | $ | 17,963 | $ | (299 | ) | $ | (329 | ) | $ | (4,030 | ) | $ | 5,768 | $ | (59,089 | ) | $ | (23,834 | ) | |||||||||||
Adjustments to reconcile net income (loss) to Adjusted EBITDA: | ||||||||||||||||||||||||||||||||
Depreciation and amortization * | 1,490 | 12,978 | 294 | 1,206 | 8 | 641 | — | 16,617 | ||||||||||||||||||||||||
Depreciation and amortization (included in cost of revenue) | 5,735 | — | — | — | — | — | — | 5,735 | ||||||||||||||||||||||||
Amortization of Debt Discount | — | — | — | — | — | — | — | |||||||||||||||||||||||||
(Gain) loss on sale or disposal of assets | (69 | ) | (117 | ) | 50 | — | — | — | — | (136 | ) | |||||||||||||||||||||
Lease termination costs | — | — | 1,124 | — | — | — | — | 1,124 | ||||||||||||||||||||||||
Interest expense | 1,064 | 2,888 | — | 32 | — | — | 25,223 | 29,207 | ||||||||||||||||||||||||
Other (income) expense, net | (164 | ) | (2,091 | ) | (314 | ) | (32 | ) | — | (1,010 | ) | 4,991 | 1,380 | |||||||||||||||||||
Foreign currency (gain) loss (included in cost of revenue) | — | (804 | ) | — | — | — | — | — | (804 | ) | ||||||||||||||||||||||
Income tax (benefit) expense | 12,188 | 178 | — | — | — | (16,349 | ) | 2,151 | (1,832 | ) | ||||||||||||||||||||||
Loss from discontinued operations | 20 | — | — | — | — | 24 | — | 44 | ||||||||||||||||||||||||
Noncontrolling interest | 967 | 563 | — | (310 | ) | (1,212 | ) | — | — | 8 | ||||||||||||||||||||||
Share-based payment expense | — | — | — | 23 | — | — | 7,378 | 7,401 | ||||||||||||||||||||||||
Acquisition and nonrecurring items | — | — | — | — | — | — | 4,701 | 4,701 | ||||||||||||||||||||||||
Other Costs | $ | — | $ | — | $ | 109 | $ | — | $ | — | $ | 76 | $ | — | $ | 109 | ||||||||||||||||
Adjusted EBITDA | $ | 37,413 | $ | 31,558 | $ | 964 | $ | 590 | $ | (5,234 | ) | $ | (10,850 | ) | $ | (14,645 | ) | $ | 39,720 |
(*) | Includes depreciation adjustments from purchase accounting as more fully described in Note 2. Adjustments to our unaudited financial statement included elsewhere in this Quarterly Report on Form 10-Q. |
(**) | Excludes net loss from Insurance segment in the amount of $12.0 million and $0.3 million for the nine months ended September 30, 2016 and 2015, respectively. |
Three months ended September 30, 2016 | Nine months ended September 30, 2016 | |||||||
Net loss - Insurance Segment | $ | (2,189 | ) | $ | (11,978 | ) | ||
Effect of investment (gains) losses | 220 | 2,677 | ||||||
Acquisition and non-recurring items | 269 | 269 | ||||||
Insurance AOI | $ | (1,700 | ) | $ | (9,032 | ) |
Nine Months Ended September 30, | ||||||||||||
Cash provided by (used in): | 2016 | 2015 | Increase / (Decrease) | |||||||||
Operating activities | $ | 54,979 | $ | (31,151 | ) | $ | 86,130 | |||||
Investing activities | (80,072 | ) | (46,407 | ) | (33,665 | ) | ||||||
Financing activities | (10,863 | ) | 55,292 | (66,155 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (1,347 | ) | (4,646 | ) | 3,299 | |||||||
Net (decrease) increase in cash and cash equivalents | $ | (37,303 | ) | $ | (26,912 | ) | $ | (10,391 | ) |
September 30, 2016 | December 31, 2015 | |||||||||||||
Fair Value | Percent | Fair Value | Percent | |||||||||||
U.S. Government and government agencies | $ | 16,915 | 1.2 | % | $ | 17,083 | 1.3 | % | ||||||
States, municipalities and political subdivisions | 401,613 | 27.4 | % | 386,260 | 29.4 | % | ||||||||
Foreign government | 6,279 | 0.4 | % | 6,429 | 0.5 | % | ||||||||
Residential mortgage-backed securities | 143,479 | 9.8 | % | 166,315 | 12.7 | % | ||||||||
Commercial mortgage-backed securities | 60,149 | 4.1 | % | 75,035 | 5.7 | % | ||||||||
Asset-backed securities | 70,516 | 4.8 | % | 34,451 | 2.6 | % | ||||||||
Corporate and other | 632,726 | 43.2 | % | 545,825 | 41.5 | % | ||||||||
Common stocks (*) | 70,396 | 4.8 | % | 32,081 | 2.4 | % | ||||||||
Perpetual preferred stocks | 37,012 | 2.5 | % | 31,057 | 2.4 | % | ||||||||
Mortgage loans | 8,939 | 0.6 | % | 1,252 | 0.1 | % | ||||||||
Policy loans | 18,228 | 1.2 | % | 18,476 | 1.4 | % | ||||||||
Other invested assets | 297 | — | % | 183 | — | % | ||||||||
Total | $ | 1,466,549 | 100.0 | % | $ | 1,314,447 | 100.0 | % |
September 30, 2016 | December 31, 2015 | |||||||||||||
Fair Value | Percent | Fair Value | Percent | |||||||||||
AAA, AA, A | $ | 812,930 | 61.1 | % | $ | 790,215 | 64.2 | % | ||||||
BBB | 357,031 | 26.8 | % | 286,861 | 23.3 | % | ||||||||
Total investment grade | 1,169,961 | 87.9 | % | 1,077,076 | 87.5 | % | ||||||||
BB | 33,980 | 2.6 | % | 36,190 | 2.9 | % | ||||||||
B | 18,937 | 1.4 | % | 18,659 | 1.5 | % | ||||||||
CCC, CC, C | 32,552 | 2.4 | % | 34,785 | 2.8 | % | ||||||||
D | 29,655 | 2.2 | % | 25,261 | 2.1 | % | ||||||||
NR | 46,592 | 3.5 | % | 39,427 | 3.2 | % | ||||||||
Total non-investment grade | 161,716 | 12.1 | % | 154,322 | 12.5 | % | ||||||||
Total | $ | 1,331,677 | 100.0 | % | $ | 1,231,398 | 100.0 | % |
September 30, 2016 | December 31, 2015 | |||||||||||||||||||||||||||||||
Cost Method | Equity Method | Fair Value | Total | Cost Method | Equity Method | Fair Value | Total | |||||||||||||||||||||||||
Common Equity | ||||||||||||||||||||||||||||||||
DeepOcean Group | $ | 138 | $ | — | $ | — | $ | 138 | $ | 249 | $ | — | $ | — | $ | 249 | ||||||||||||||||
Novatel Wireless, Inc. | — | 338 | — | 338 | — | 6,475 | — | 6,475 | ||||||||||||||||||||||||
Triple Ring Technologies, Inc. | — | 1,044 | — | 1,044 | ||||||||||||||||||||||||||||
138 | 1,382 | — | 1,520 | 249 | 6,475 | — | 6,724 | |||||||||||||||||||||||||
Preferred Equity | ||||||||||||||||||||||||||||||||
mParticle | 655 | — | — | 655 | 655 | — | — | 655 | ||||||||||||||||||||||||
BeneVir Biopharm, Inc. | — | — | — | — | — | 1,179 | — | 1,179 | ||||||||||||||||||||||||
MediBeacon, Inc. | — | 10,763 | — | 10,763 | — | 2,709 | — | 2,709 | ||||||||||||||||||||||||
NerVve Technologies, Inc. | — | — | — | — | — | 3,634 | — | 3,634 | ||||||||||||||||||||||||
Triple Ring Technologies, Inc. | 1,829 | — | — | 1,829 | 1,000 | — | — | 1,000 | ||||||||||||||||||||||||
2,484 | 10,763 | — | 13,247 | 1,655 | 7,522 | — | 9,177 | |||||||||||||||||||||||||
Warrants and Call Options | ||||||||||||||||||||||||||||||||
DeepOcean Group | — | — | — | — | 783 | — | — | 783 | ||||||||||||||||||||||||
Novatel Wireless, Inc. | 3,097 | — | — | 3,097 | 3,097 | — | — | 3,097 | ||||||||||||||||||||||||
The Andersons, Inc. | — | — | — | — | — | — | 632 | 632 | ||||||||||||||||||||||||
DTV America | — | — | 575 | 575 | — | — | 723 | 723 | ||||||||||||||||||||||||
NerVve Technologies, Inc. | — | — | — | — | — | — | 52 | 52 | ||||||||||||||||||||||||
Gaming Nation, Inc. | — | — | 3,907 | 3,907 | — | — | 3,436 | 3,436 | ||||||||||||||||||||||||
Triple Ring Technologies, Inc. | — | — | 230 | 230 | ||||||||||||||||||||||||||||
3,097 | — | 4,712 | 7,809 | 3,880 | — | 4,843 | 8,723 | |||||||||||||||||||||||||
Other Equity | ||||||||||||||||||||||||||||||||
Kaneland, LLC | — | 844 | — | 844 | — | 988 | — | 988 | ||||||||||||||||||||||||
Other | — | 297 | — | 297 | — | 183 | — | 183 | ||||||||||||||||||||||||
— | 1,141 | — | 1,141 | — | 1,171 | — | 1,171 | |||||||||||||||||||||||||
GMSL Joint Ventures | ||||||||||||||||||||||||||||||||
Huawei Marine Networks Co., Ltd | — | 22,517 | — | 22,517 | — | 16,073 | — | 16,073 | ||||||||||||||||||||||||
International Cableship Pte., Ltd. | — | 1,103 | — | 1,103 | — | 498 | — | 498 | ||||||||||||||||||||||||
S. B. Submarine Systems Co., Ltd. | — | 11,844 | — | 11,844 | — | 9,513 | — | 9,513 | ||||||||||||||||||||||||
Visser Smit Global Marine Pte | — | 1,259 | — | 1,259 | — | 418 | — | 418 | ||||||||||||||||||||||||
Sembawang Cable Depot Pte., Ltd. | — | 430 | — | 430 | — | 822 | — | 822 | ||||||||||||||||||||||||
— | 37,153 | — | 37,153 | — | 27,324 | — | 27,324 | |||||||||||||||||||||||||
Total Other invested assets | $ | 5,719 | $ | 50,439 | $ | 4,712 | $ | 60,870 | $ | 5,784 | $ | 42,492 | $ | 4,843 | $ | 53,119 |
• | The potential for and our ability to remediate future material weaknesses in our internal control over financial reporting; |
• | the possibility of indemnification claims arising out of divestitures of businesses; |
• | uncertain global economic conditions in the markets in which our operating segments conduct their businesses; |
• | the ability of our operating segments to attract and retain customers; |
• | increased competition in the markets in which our operating segments conduct their businesses; |
• | our possible inability to generate sufficient liquidity, margins, earnings per share, cash flow and working capital from our operating segments; |
• | our expectations regarding the timing, extent and effectiveness of our cost reduction initiatives and management’s ability to moderate or control discretionary spending; |
• | management’s plans, goals, forecasts, expectations, guidance, objectives, strategies and timing for future operations, acquisitions, synergies, asset dispositions, fixed asset and goodwill impairment charges, tax and withholding expense, selling, general and administrative expenses, product plans, performance and results; |
• | management’s assessment of market factors and competitive developments, including pricing actions and regulatory rulings; |
• | limitations on our ability to successfully identify any strategic acquisitions or business opportunities and to compete for these opportunities with others who have greater resources; |
• | the impact of additional material charges associated with our oversight of acquired or target businesses and the integration of our financial reporting; |
• | the impact of expending significant resources in considering acquisition targets or business opportunities that are not consummated; |
• | tax consequences associated with our acquisition, holding and disposition of target companies and assets; |
• | our dependence on distributions from our subsidiaries to fund our operations and payments on our obligations; |
• | the impact on our business and financial condition of our substantial indebtedness and the significant additional indebtedness and other financing obligations we may incur; |
• | the impact of covenants in the Certificates of Designation governing HC2’s Preferred Stock, the 11.0% Notes Indenture, the credit agreements governing the DBM Global Facility and the GMSL Facility and future financing agreements, on our ability to operate our business and finance our pursuit of acquisition opportunities; |
• | the impact on the holders of HC2’s common stock if we issue additional shares of HC2 common stock or preferred stock; |
• | the impact of decisions by HC2’s significant stockholders, whose interest may differ from those of HC2’s other stockholders, or their ceasing to remain significant stockholders; |
• | the effect any interests our officers, directors, stockholders and their respective affiliates may have in certain transactions in which we are involved; |
• | our dependence on certain key personnel; |
• | our ability to effectively increase the size of our organization, if needed, and manage our growth; |
• | the impact of a determination that we are an investment company or personal holding company; |
• | the impact of delays or difficulty in satisfying the requirements of Section 404 of the Sarbanes-Oxley Act of 2002; |
• | our possible inability to raise additional capital when needed or refinance our existing debt, on attractive terms, or at all; and |
• | our possible inability to hire and retain qualified executive management, sales, technical and other personnel. |
• | the possibility of global recession or market downturn with a reduction in capital spending within the targeted market segments the business operates in; |
• | project implementation issues and possible subsequent overruns; |
• | risks associated with operating outside of core competencies when moving into different market segments; |
• | possible loss or severe damage to marine assets; |
• | vessel equipment aging or reduced reliability; |
• | risks associated with operating two joint ventures in China (Huawei Marine Networks Co., Ltd; China Telecom); |
• | risks related to foreign corrupt practices; |
• | changes to the local laws and regulatory environment in different geographical regions; |
• | loss of key senior employees; |
• | difficulties attracting enough skilled technical personnel; |
• | foreign exchange rate risk; |
• | liquidity risk; and |
• | potential for financial loss arising from the failure by customers to fulfill their obligations as and when these obligations fall due. |
• | its ability to realize cost savings from expected performance of contracts, whether as a result of improper estimates, performance, or otherwise; |
• | uncertain timing and funding of new contract awards, as well as project cancellations; |
• | cost overruns on fixed-price or similar contracts or failure to receive timely or proper payments on cost-reimbursable contracts, whether as a result of improper estimates, performance, disputes, or otherwise; |
• | risks associated with labor productivity, including performance of subcontractors that DBM Global hires to complete projects; |
• | its ability to settle or negotiate unapproved change orders and claims; |
• | changes in the costs or availability of, or delivery schedule for, equipment, components, materials, labor or subcontractors; |
• | adverse impacts from weather affecting DBM Global’s performance and timeliness of completion of projects, which could lead to increased costs and affect the quality, costs or availability of, or delivery schedule for, equipment, components, materials, labor or subcontractors; |
• | fluctuating revenue resulting from a number of factors, including the cyclical nature of the individual markets in which our customers operate; |
• | adverse outcomes of pending claims or litigation or the possibility of new claims or litigation, and the potential effect of such claims or litigation on DBM Global’s business, financial condition, results of operations or cash flow; and |
• | lack of necessary liquidity to provide bid, performance, advance payment and retention bonds, guarantees, or letters of credit securing DBM Global’s obligations under bids and contracts or to finance expenditures prior to the receipt of payment for the performance of contracts. |
• | our expectations regarding increased competition, pricing pressures and usage patterns with respect to ICS’s product offerings; |
• | significant changes in ICS’s competitive environment, including as a result of industry consolidation, and the effect of competition in its markets, including pricing policies; |
• | its compliance with complex laws and regulations in the U.S. and internationally; |
• | further changes in the telecommunications industry, including rapid technological, regulatory and pricing changes in its principal markets; and |
• | an inability for ICS’ suppliers to obtain credit insurance on ICS in determining whether or not to extend credit. |
• | CIG’s insurance subsidiaries’ ability to maintain statutory capital and maintain or improve their financial strength; |
• | CIG’s insurance subsidiaries’ reserve adequacy, including the effect of changes to accounting or actuarial assumptions or methodologies; |
• | the accuracy of CIG’s assumptions and estimates regarding future events and ability to respond effectively to such events, including mortality, morbidity, persistency, expenses, interest rates, tax liability, business mix, frequency of claims, severity of claims, contingent liabilities, investment performance, and other factors related to its business and anticipated results; |
• | availability, affordability and adequacy of reinsurance and credit risk associated with reinsurance; |
• | CIG’s insurance subsidiaries are extensively regulated and subject to numerous legal restrictions and regulations; |
• | CIG’s ability to defend itself against litigation, inherent in the insurance business (including class action litigation) and respond to enforcement investigations or regulatory scrutiny; |
• | the performance of third parties including distributors and technology service providers, and providers of outsourced services; |
• | the impact of changes in accounting and reporting standards; |
• | CIG’s ability to protect its intellectual property; |
• | general economic conditions and other factors, including prevailing interest and unemployment rate levels and stock and credit market performance which may affect (among other things) CIG’s ability to access capital resources and the costs associated therewith, the fair value of CIG’s investments, which could result in impairments and other-than-temporary impairments, and certain liabilities; |
• | CIG's exposure to any particular sector of the economy or type of asset through concentrations in its investment portfolio; |
• | the ability to increase sufficiently, and in a timely manner, premiums on in-force long-term care insurance policies and/or reduce in-force benefits, as may be required from time to time in the future (including as a result of our failure to obtain any necessary regulatory approvals or unwillingness or inability of policyholders to pay increased premiums); |
• | other regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) regulation of the sale, underwriting and pricing of products, and minimum capitalization, risk-based capital and statutory reserve requirements for insurance companies, and CIG’s insurance subsidiaries’ ability to mitigate such requirements; and |
• | CIG’s ability to effectively implement its business strategy or be successful in the operation of its business; |
• | CIG's ability to retain, attract and motivate qualified employees; |
• | interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems; |
• | medical advances, such as genetic research and diagnostic imaging, and related legislation; and |
• | the occurrence of natural or man-made disasters or a pandemic. |
HC2 Holdings, Inc. | ||
Date: November 9, 2016 | By: | /s/ Michael Sena |
Michael Sena | ||
Chief Financial Officer | ||
(Principal Financial and Accounting Officer) |
Exhibit Number | Description | |||
10.1 | Revised Indemnification Agreement of HC2 Holdings Inc. (filed herewith) | |||
10.2 | Voluntary Conversion Agreement, dated as of August 2, 2016, by and between Luxor Capital Group, LP and HC2 Holdings, Inc. (filed herewith) | |||
10.3 | Registration Rights Agreement, dated as of August 2, 2016, by and between Luxor Capital Group, LP and HC2 Holdings, Inc. (filed herewith) | |||
10.4 | Voluntary Conversion Agreement, dated as of August 2, 2016, by and between Corrib Master Fund, Ltd. and HC2 Holdings, Inc. (filed herewith) | |||
10.5 | Registration Rights Agreement, dated as of August 2, 2016, by and between Corrib Master Fund, Ltd. and HC2 Holdings, Inc. (filed herewith) | |||
10.6^ | Independent Consulting Services Agreement dated effective as of July 1, 2016 and dated as of July 11, 2016, by and between Wayne Barr, Jr. and HC2 Holdings, Inc. (incorporated by reference to Exhibit 10.1 to HC2’s Current Report on Form 8-K, filed on July 14, 2016) (File No. 001-35210). | |||
10.7^ | Separation and Release Agreement dated July 20, 2016 by and between PTGi International Carrier Services, Inc. and Mesfin Demise (incorporated by reference to Exhibit 10.1 to HC2’s Current Report on Form 8-K, filed on July 21, 2016) (File No. 001-35210). | |||
31.1 | Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer (filed herewith). | |||
31.2 | Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer (filed herewith). | |||
32* | Section 1350 Certification of Chief Executive Officer and Chief Financial Officer. | |||
101 | The following materials from the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2016, formatted in extensible business reporting language (XBRL); (i) Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015, (ii) Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2016 and 2015, (iii) Unaudited Condensed Consolidated Balance Sheets at September 30, 2016 and December 31, 2015, (iv) Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2016 and 2015, (v) Unaudited Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2016 and 2015, and (vi) Notes to Unaudited Condensed Consolidated Financial Statements (filed herewith). |
* | These certifications are being “furnished” and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference. |
^ | Indicates management contract or compensatory plan or arrangement. |
By: | ||||
Name: | ||||
Title: |
Name: | ||||
Address: | ||||
Phone: | ||||
Email: |
Legal Entity | Shares | ||
Luxor Capital Partners, LP | 3,988 | ||
Luxor Capital Partners Offshore Master Fund, LP | 4,015 | ||
Thebes Offshore Master Fund, LP | 182 | ||
Luxor Wavefront, LP | 815 |
Page | ||||||||
1. | Definitions | 3 | ||||||
2. | Registration Rights | 5 | ||||||
2.1 | Demand and Shelf Registration | 7 | ||||||
2.2 | Company Registration | 7 | ||||||
2.3 | Underwriting Requirements | 9 | ||||||
2.4 | Obligations of the Company | 12 | ||||||
2.5 | Furnish Information | 12 | ||||||
2.6 | Expenses of Registration | 12 | ||||||
2.7 | Delay of Registration | 12 | ||||||
2.8 | Indemnification | 12 | ||||||
2.9 | Reports Under Exchange Act | 14 | ||||||
2.10 | Limitations on Subsequent Registration Rights | 14 | ||||||
2.11 | Market Stand-off Agreement | 14 | ||||||
2.12 | Termination of Registration Rights | 15 | ||||||
3. | Miscellaneous | 14 | ||||||
3.1 | Successors and Assigns | 14 | ||||||
3.2 | Governing Law | 14 | ||||||
3.3 | Jurisdiction | 14 | ||||||
3.4 | Waiver of Jury Trial | 15 | ||||||
3.5 | Counterparts | 15 | ||||||
3.6 | Titles and Subtitles | 15 | ||||||
3.7 | Notices | 15 | ||||||
3.8 | Amendments and Waivers | 16 | ||||||
3.9 | Severability | 16 | ||||||
3.10 | Aggregation of Stock | 16 | ||||||
3.11 | Entire Agreement | 16 |
Schedule A | - | Investors | ||
Exhibit A | - | Form of Joinder |
HC2 HOLDINGS INC. | |||||
By: | /s/ Paul Robinson | ||||
Name: | Paul L. Robinson | ||||
Title: | Chief Legal Officer and Corporate Secretary |
INVESTORS: | ||||||
LUXOR CAPITAL PARTNERS, LP By: Luxor Capital Group, LP, Its Investment Manager | ||||||
By: | /s/ Norris Nissim | |||||
Name: | Norris Nissim | |||||
Title: | General Counsel |
Address: 1114 Avenue of the Americas 29th Floor New York, NY 10036 LUXOR CAPITAL PARTNERS OFFSHORE MASTER FUND, LP By: Luxor Capital Group, LP, Its Investment Manager | ||||||
By: | /s/ Norris Nissim | |||||
Name: | Norris Nissim | |||||
Title: | General Counsel |
Address: 1114 Avenue of the Americas 29th Floor New York, NY 10036 LUXOR WAVEFRONT, LP By: Luxor Capital Group, LP, Its Investment Manager | ||||||
By: | /s/ Norris Nissim | |||||
Name: | Norris Nissim | |||||
Title: | General Counsel |
Address: | ||||||
114 Avenue of the Americas 29th Floor New York, NY 10036 | ||||||
[NEW PARTY] | |||
By: | |||
Name: | |||
Title: |
527 Marquette Avenue South |
Suite 1000 |
Minneapolis, MN 55402 |
Page | ||||||||
1. | Definitions | 3 | ||||||
2. | Registration Rights | 5 | ||||||
2.1 | Demand and Shelf Registration | 7 | ||||||
2.2 | Company Registration | 7 | ||||||
2.3 | Underwriting Requirements | 9 | ||||||
2.4 | Obligations of the Company | 12 | ||||||
2.5 | Furnish Information | 12 | ||||||
2.6 | Expenses of Registration | 12 | ||||||
2.7 | Delay of Registration | 12 | ||||||
2.8 | Indemnification | 12 | ||||||
2.9 | Reports Under Exchange Act | 14 | ||||||
2.10 | Limitations on Subsequent Registration Rights | 14 | ||||||
2.11 | Market Stand-off Agreement | 14 | ||||||
2.12 | Termination of Registration Rights | 15 | ||||||
3. | Miscellaneous | 14 | ||||||
3.1 | Successors and Assigns | 14 | ||||||
3.2 | Governing Law | 14 | ||||||
3.3 | Jurisdiction | 14 | ||||||
3.4 | Waiver of Jury Trial | 15 | ||||||
3.5 | Counterparts | 15 | ||||||
3.6 | Titles and Subtitles | 15 | ||||||
3.7 | Notices | 15 | ||||||
3.8 | Amendments and Waivers | 16 | ||||||
3.9 | Severability | 16 | ||||||
3.10 | Aggregation of Stock | 16 | ||||||
3.11 | Entire Agreement | 16 |
Schedule A | -C3 | Investors | ||
Exhibit A | -C1 | Form of Joinder |
[NEW PARTY] | |||
By: | |||
Name: | |||
Title: |
1. | I have reviewed this Quarterly Report on Form 10-Q of HC2 Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 9, 2016 | By: | /s/ Philip A. Falcone |
Name: | Philip A. Falcone | |
Title: | Chairman, President, and Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of HC2 Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 9, 2016 | By: | /s/ Michael Sena |
Name: | Michael Sena | |
Title: | Chief Financial Officer (Principal Financial and Accounting Officer) |
1. | The Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2016, to which this Certification is attached as Exhibit 32 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Periodic Report fairly presents, in all material respects, the financial condition of the Company at the end of the period covered by the Periodic Report and results of operations of the Company for the period covered by the Periodic Report. |
/s/ Philip A. Falcone | /s/ Michael Sena | |
Philip A. Falcone | Michael Sena | |
Chairman, President and Chief Executive Officer (Principal Executive Officer) | Chief Financial Officer (Principal Financial and Accounting Officer) |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Oct. 31, 2016 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | HC2 Holdings, Inc. | |
Entity Central Index Key | 0001006837 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 41,818,944 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (INCOME) LOSS (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (5,399) | $ (7,922) | $ (35,450) | $ (24,117) |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustment | 672 | (5,275) | 1,335 | (7,147) |
Unrealized gain (loss) on available-for-sale securities, net of tax | 8,972 | (2,008) | 71,261 | (4,186) |
Less: Comprehensive (income) loss attributable to the noncontrolling interest and redeemable noncontrolling interest | 841 | (65) | 2,365 | (8) |
Comprehensive income (loss) attributable to HC2 Holdings, Inc. | $ 5,086 | $ (15,270) | $ 39,511 | $ (35,458) |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts receivable | $ 3,033 | $ 794 |
Preferred stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 80,000,000 | 80,000,000 |
Shares of common stock issued (in shares) | 38,263,606 | 35,281,375 |
Common stock, shares outstanding | 38,031,325 | 35,249,749 |
Series A Convertible Preferred Stock | ||
Preferred stock, shares issued | 27,308 | 29,172 |
Preferred stock, shares outstanding | 27,308 | 29,172 |
Series A-1 Preferred Stock | ||
Preferred stock, shares issued | 1,000 | 10,000 |
Preferred stock, shares outstanding | 1,000 | 10,000 |
Series A-2 Convertible Preferred Stock | ||
Preferred stock, shares issued | 14,000 | 14,000 |
Preferred stock, shares outstanding | 14,000 | 14,000 |
Organization and Business |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | 1. Organization and Business HC2 Holdings, Inc. (“HC2” and, together with its subsidiaries, the “Company”, “we”, "us" and “our”) is a diversified holding company which seeks to acquire and grow attractive businesses that the Company believes can generate long-term sustainable free cash flow and attractive returns. While the Company generally intends to acquire controlling equity interests in its operating subsidiaries, the Company also invests to a more limited extent in a variety of debt instruments or noncontrolling equity interest positions. HC2's common stock trades on the NYSE MKT LLC under the symbol “HCHC”. The Company currently has seven reportable segments based on management’s organization of the enterprise - Manufacturing, Marine Services, Insurance, Utilities, Telecommunications, Life Sciences, and Other which includes operations that do not meet the separately reportable segment thresholds. 1.Our Manufacturing segment includes DBM Global Inc. (“DBM Global”, f/k/a Schuff International, Inc.) and its wholly-owned subsidiaries. DBM Global offers integrated steel construction services from a single source and professional services that include design-assist, design-build, engineering, building information modeling participation, 3D steel modeling / detailing, fabrication, advanced field erection, project management and state-of-the-art steel management systems. Major market segments for DBM Global include commercial, healthcare, convention centers, stadiums, gaming and hospitality, mixed use and retail, industrial, public works, bridges, transportation, and international projects. Headquartered in Phoenix, Arizona, DBM Global has operations in Arizona, California, Georgia, Kansas, and Texas, with construction projects primarily located in the aforementioned states, in addition to international construction projects in select markets, primarily Panama, through its Panamanian joint venture Schuff Hopsa Engineering. The Company maintains a 92% controlling interest in DBM Global. 2.Our Marine Services segment includes Global Marine Systems Limited ("GMSL"). GMSL is a leading provider of engineering and underwater services on submarine cables. The Company maintains a 95% equity interest in GMSL. 3.Our Insurance segment includes United Teacher Associates Insurance Company ("UTA") and Continental General Insurance Company ("CGI", and together with UTA, the "Insurance Companies"). The Insurance Companies provide long-term care, life and annuity coverage that help protect policy and certificate holders from the financial hardships associated with illness, injury, loss of life, or income continuation. The Company owns 100% of the Insurance Companies. 4.Our Utilities segment includes American Natural Gas ("ANG"). Headquartered in the Northeast, ANG is a premier distributor of natural gas motor fuel. ANG designs, builds, owns, acquires, operates and maintains compressed natural gas fueling stations for transportation vehicles. The Company maintains effective control of, and a 49.99% ownership interest in ANG. 5.Our Telecommunications segment includes PTGi International Carrier Services, ("ICS"). ICS operates a telecommunications business including a network of direct routes and provides premium voice communication services for national telecom operators, mobile operators, wholesale carriers, prepaid operators, Voice over Internet Protocol ("VOIP") service operators and Internet service providers from our International Carrier Services business unit. ICS provides a quality service via direct routes and by forming strong relationships with carefully selected partners. The Company owns 100% of ICS. 6.Our Life Sciences segment includes Pansend Life Sciences, LLC (“Pansend”). Pansend owns a (i) 77% interest in Genovel Orthopedics, Inc., which seeks to develop products to treat early osteoarthritis of the knee, (ii) 61% interest in R2 Dermatology Incorporated (f/k/a GemDerm Aesthetics, Inc.), which develops skin lightening technology, and (iii) 80% interest in BeneVir Biopharm, Inc. ("BeneVir"), which focuses on immunotherapy for the treatment of solid tumors. Pansend also invests in other early stage or developmental stage healthcare companies. 7.In our Other segment, we invest in and grow developmental stage companies that we believe have significant growth potential. Among the businesses included in this segment are the Company's 56% ownership interest in DMi, Inc. ("DMi"), which owns licenses to create and distribute NASCAR® video games, and the Company's 72% interest in NerVve Technologies Inc. ("NerVve"), which provides analytics on broadcast TV, digital and social media online platforms. |
Summary of Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting and Securities and Exchange Commission (“SEC”) regulations. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such principles and regulations. In the opinion of management, the financial statements reflect all adjustments (all of which are of a normal and recurring nature), which are necessary to present fairly the financial position, results of operations, cash flows and comprehensive income (loss) for the interim periods. The results for the Company’s nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the calendar year ending December 31, 2016. The financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s most recently filed Annual Report on Form 10-K. Principles of Consolidation The Condensed Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries and all other subsidiaries over which the Company exerts control. All intercompany profits, transactions and balances have been eliminated in consolidation. As of September 30, 2016, the Company has a 100% interest in the Insurance Companies, a 100% interest in ICS, a 95% interest in GMSL, a 92% interest in DBM Global, a 56% interest in DMi, a 72% interest in NerVve, and board control of, and a 49.99% interest in ANG. Because the Company controls the operations of ANG through its control of the board, the assets, liabilities, revenues and expenses of ANG are included in our Condensed Consolidated Financial Statements. Through its subsidiary, Pansend, the Company has a 77% interest in Genovel Orthopedics, Inc., a 61% interest in R2 Dermatology and an 80% interest in BeneVir. The results of each of these entities are consolidated with the Company’s results from and after their respective acquisition dates based on guidance from the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, “Consolidation” (“ASC 810”). The remaining interests not owned by the Company are presented as a noncontrolling interest component of total equity. DBM Global uses a 4-4-5 week quarterly cycle, which for the third quarter of 2016 ended on October 1, 2016. Reclassification Certain previous year amounts have been reclassified to conform with current year presentations related to the reporting of new financial statement line items. Adjustments During the second quarter of 2016, the Company identified an immaterial error in its calculation of depreciation expense for the twelve months ended December 31, 2015 and 2014 and the three months ended March 31, 2016 related to purchase accounting associated with the acquisition of DBM Global in May of 2014. This resulted in an excess depreciation expense being recorded in each of the periods noted. In addition, certain gains and losses on assets that were disposed of by DBM Global were incorrectly recorded during the same periods as a result of these adjustments. The net impact of these adjustments to net income would have been an increase of $0.7 million and a decrease of $0.2 million for the twelve months ended December 31, 2015 and 2014, respectively, and an increase of $0.8 million for the three months ended March 31, 2016. The Company determined to correct the cumulative effect of these adjustments in the second quarter of 2016, which resulted in a net adjustment to net income (loss) attributable to common and participating preferred stockholders for the nine months ended September 30, 2016 of $1.3 million. Excluding this adjustment, net loss attributable to common and participating preferred stockholders would have been $39.4 million or $1.10 per fully diluted share for the nine months ended September 30, 2016, instead of the $38.1 million recorded. Newly Adopted Accounting Principles In September 2015, the FASB issued Accounting Standards Update ("ASU") 2015-16, “Business Combination Topic No. 805: Simplifying the Accounting for Measurement - Period Adjustments”, which requires adjustments to provisional amounts that are identified during the measurement period to be recognized in the reporting period in which the adjustment amounts are determined. This includes any effect on earnings of changes in depreciation, amortization, or other income effects as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. On January 1, 2016, the Company adopted this update, which did not have a material impact on the Condensed Consolidated Financial Statements. In August 2015, the FASB issued ASU 2015-15, “Interest - Imputation of Interest Subtopic No. 835-30: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” which codifies an SEC staff announcement that entities are permitted to defer and present debt issuance costs related to line-of-credit arrangements as assets, rather than as a direct offset to the liability as is required now under ASU 2015-03. On January 1, 2016, the Company adopted this update, which did not have a material impact on the Condensed Consolidated Financial Statements. In July 2015, the FASB issued ASU 2015-12, "(Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, and (Part III) Measurement Date Practical Expedient". Part I of this ASU is related to one area of several potential simplifications for employee benefit plans and designates contract value as the only required measure for fully benefit-responsive investment contracts, which maintains the relevant information while reducing the cost and complexity of reporting for fully benefit responsive investment contracts. On January 1, 2016, the Company adopted this update, which did not have a material impact on the Condensed Consolidated Financial Statements. In May 2015, the FASB has issued ASU 2015-9, "Disclosures About Short-Duration Contracts". This ASU requires insurance entities to disclose for annual reporting periods certain information in respect of liability for unpaid claims and claim adjustment expenses. On January 1, 2016, the Company adopted this update, which did not have a material impact on the Condensed Consolidated Financial Statements. In May 2015, the FASB issued ASU 2015-8, “Business Combinations Topic No. 805: Pushdown Accounting-Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 115 (SEC Update),” which rescinds certain SEC guidance in order to conform with ASU 2014-17, “Pushdown Accounting” (“ASU 2014-17”). ASU 2014-17 was issued in November 2014 and provides a reporting entity that is a business or nonprofit activity (an “acquiree”) the option to apply pushdown accounting to its separate financial statements when an acquirer obtains control of the acquiree. On January 1, 2016, the Company adopted this update, which did not have a material impact on the Condensed Consolidated Financial Statements. In May 2015, the FASB issued ASU 2015-07, "Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)". The amendments in this ASU remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The amendments also remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient. On January 1, 2016, the Company adopted this update, which did not have a material impact on the Condensed Consolidated Financial Statements. In February 2015, the FASB issued ASU 2015-2, “Amendments to the Consolidation Analysis”, which amends the consolidation requirements in ASC 810 and significantly changes the consolidation analysis required under U.S. GAAP relating to whether or not to consolidate certain legal entities. On January 1, 2016, the Company adopted this update, which did not have a material impact on the Condensed Consolidated Financial Statements. In January 2015, the FASB issued ASU 2015-1, “Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items”, which eliminates from U.S. GAAP the concept of an extraordinary item. Under the ASU, an entity will no longer (1) segregate an extraordinary item from the results of ordinary operations; (2) separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; or (3) disclose income taxes and earnings-per-share data applicable to an extraordinary item. On January 1, 2016, the Company adopted this update, which did not have a material impact on the Condensed Consolidated Financial Statements. New Accounting Pronouncements In August, 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)" ("ASU 2016-15"). The amendments in ASU 2016-15 address eight specific cash flow issues and apply to all entities that are required to present a statement of cash flows under FASB ASC 230, "Statement of Cash Flows." The amendments in ASU 2016-15 are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption during an interim period. The Company has not yet adopted this update and is currently evaluating the impact of ASU 2016-15 on its Condensed Consolidated Financial Statements. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses" (Topic 326)" ("ASU-2016-13"), which amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, ASU 2016-13 eliminates the probable initial recognition threshold in current U.S. GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses should be measured in a manner similar to current U.S. GAAP, however ASU 2016-13 will require that credit losses be presented as an allowance rather than as a write-down. For public business entities that file reports with the SEC, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019. The Company has not yet adopted this update and is currently evaluating the impact of ASU 2016-13 on its Condensed Consolidated Financial Statements. In May 2016, the FASB issued ASU 2016-12, "Revenue From Contracts With Customers" "(Topic 606)" ("ASU 2016-12"), which addresses narrow-scope improvements to the guidance on collectability, non-cash consideration, and completed contracts at transition. Additionally, the amendments in this update provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements for ASU 2016-12 (and any other Topic amended by ASU 2014-09). "Revenue from Contracts with Customers (Topic 606), Section A - Summary and Amendments that Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs - Contracts with Customers (Subtopic 340-40)" ("ASU 2014-09"). ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year. The Company has not yet adopted this update and is currently evaluating the impact of ASU 2016-12 on its Condensed Consolidated Financial Statements. In April 2016, the FASB issued ASU 2016-10, "Revenue From Contracts With Customers (Topic 606): Identifying Performance Obligations and Licensing" ("ASU 2016-10"), which clarifies guidance related to identifying performance obligations and licensing implementation guidance contained in the new revenue recognition standard. Further, this update includes targeted improvements based on input the Board received from the Transition Resource Group for Revenue Recognition and other stakeholders. ASU 2016-10seeks to proactively address areas in which diversity in practice potentially could arise, as well as to reduce the cost and complexity of applying certain aspects of the guidance both at implementation and on an ongoing basis. The Company has not yet adopted ASU 2016-10 and is currently evaluating the impact the update would have on its Condensed Consolidated Financial Statements. In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting" "(Topic 718)" ("ASU 2016-09"), which introduces targeted amendments intended to simplify accounting for stock compensation. Specifically, ASU 2016-09 requires all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) to be recognized as income tax expense or benefit in the income statement. Early adoption is permitted. The Company has not yet adopted this update and is currently evaluating the update would have on its Condensed Consolidated Financial Statements. In March 2016, the FASB issued ASU 2016-08, "Principal versus Agent Considerations" (Topic 606), which updates the new revenue standard by clarifying the principal versus agent implementation guidance. Early adoption is permitted. The Company's effective date for adoption is January 1, 2018. The Company has not yet adopted this update and is currently evaluating the impact of ASU 2016-08 on its Condensed Consolidated Financial Statements. In March 2016, the FASB issued ASU 2016-07, "Simplifying the Transition to the Equity Method of Accounting" "(Topic 323)" ("ASU 2016-07"), which requires an investor to initially apply the equity method of accounting from the date such investor qualifies for that method (i.e., the date such investor obtains significant influence over the operating and financial policies of an investee). The ASU eliminates the previous requirement to retroactively adjust the investment and record a cumulative catch up for the periods that the investment had been held, but did not qualify for the equity method of accounting. Early adoption is permitted. The Company's effective date for adoption is January 1, 2017. The Company has not yet adopted this update and is currently evaluating the impact of ASU 2016-07 on its Condensed Consolidated Financial Statements. In March 2016, the FASB issued ASU 2016-06, "Contingent Put and Call Options in Debt Instruments" "(Topic 815)" ("ASU 2016-06"), which addresses how an entity should assess whether contingent call or put options that can accelerate the payment of debt instruments are clearly and closely related to their debt hosts. This assessment is necessary to determine if the option(s) must be separately accounted for as a derivative. ASU 2016-06 clarifies that an entity is required to assess the embedded call or put options in accordance with a specific four-step decision sequence. This means that entities are not also required to assess whether the contingency for exercising the option(s) is indexed to interest rates or credit risk. For example, when evaluating debt instruments that may be put upon a change in control, the event triggering the change in control is not relevant to the assessment. Only the resulting settlement of debt is subject to the four-step decision sequence. Early adoption is permitted. The Company's effective date for adoption is January 1, 2017. The Company has not yet adopted ASU 2016-06 and is currently evaluating the impact the update would have on its Condensed Consolidated Financial Statements. In February 2016, the FASB issued ASU 2016-02, "Leases" "(Topic 842)" ("ASU 2016-02"), which applies a right-of-use (ROU) model that requires a lessee to record, for all leases with a lease term of more than 12 months, an asset representing its right to use the underlying asset and a liability to make lease payments. ASU 2016-02 requires a lessor to classify leases as either sales-type, direct financing or operating, similar to existing U.S. GAAP requirements. Classification depends on the same five criteria used by lessees as well as certain additional factors. The new standard addresses other considerations including identification of a lease, separating lease and nonlease components of a contract, sale and leaseback transactions, modifications, combining contracts, reassessment of the lease term, and remeasurement of lease payments. Early adoption is permitted. The Company’s effective date for adoption is January 1, 2019. The Company has not yet adopted ASU 2016-02 and is currently evaluating the impact the update would have on its Condensed Consolidated Financial Statements. In January 2016, the FASB issued ASU 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities" "(Subtopic 825-10)" ("ASU 2016-01") which, among other things, requires all equity securities currently classified as “available for sale” to be reported at fair value, with holding gains and losses recognized in net income instead of accumulated other comprehensive income ("AOCI"). Certain provisions of ASU 2016-01 are eligible for early adoption. The Company’s effective date for adoption is January 1, 2018. The Company has not yet adopted ASU 2016-01 and is currently evaluating the impact the update would have on its Condensed Consolidated Financial Statements. |
Business Combinations |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | 3. Business Combinations The Company’s acquisitions were accounted for using the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date. Estimates of fair value included in the Condensed Consolidated Financial Statements, in conformity with ASC 820, “Fair Value Measurements and Disclosures”, represent the Company’s best estimates and valuations developed, when needed, with the assistance of independent appraisers or, where such valuations have not yet been completed or are not available, industry data and trends and by reference to relevant market rates and transactions. The following estimates and assumptions are inherently subject to significant uncertainties and contingencies beyond the control of the Company. Accordingly, the Company cannot provide assurance that the estimates, assumptions, and values reflected in the valuations will be realized, and actual results could vary materially. Any changes to the initial estimates of the fair value of the assets and liabilities will be recorded as adjustments to those assets and liabilities, and residual amounts will be allocated to goodwill. In accordance with ASC 805 “Business Combinations,” if additional information is obtained about the initial estimates of the fair value of the assets acquired and liabilities assumed within the measurement period (not to exceed one year from the date of acquisition), including finalization of asset appraisals, the Company will refine its estimates of fair value to allocate the purchase price more accurately. Insurance Segment On December 24, 2015, the Company completed the acquisitions of 100% of the interest in each of the Insurance Companies as well as all assets owned by the sellers of the Insurance Companies and their affiliates (the "Seller Parties") that are used exclusively or primarily in the business of the Insurance Companies, subject to certain exceptions. The operations of the Insurance Companies form the basis of our Insurance segment, and we plan to leverage their existing platform and industry expertise to identify strategic growth opportunities for managing closed blocks of long-term care businesses. The aggregate consideration paid in connection with the acquisition of the Insurance Companies and related transactions and agreements was valued at $18.7 million, consisting of $7.1 million of cash, $2.0 million in aggregate principal amount of the Company’s 11.0% Senior Secured Notes due 2019, 1,007,422 shares of the Company's common stock and five-year warrants to purchase 2,000,000 shares of the Company's common stock at an exercise price of $7.08 per share (subject to customary adjustments for stock splits or similar transactions) exercisable on or after February 3, 2016 (the "Warrants"). Purchase Price Allocation The preliminary fair values of identified assets acquired, liabilities assumed, residual goodwill and consideration transferred are summarized as follows (in thousands):
The values of intangibles, life, accident and health reserves, annuity reserves, and value of business acquired are estimates and might change. The acquisition of the Insurance Companies resulted in the recording of goodwill of approximately $46.6 million. Goodwill consists of the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The Insurance Companies were recognized as a new stand-alone reporting unit. Goodwill is not amortized and is not deductible for tax purposes. The Value of Business Acquired ("VOBA") The VOBA was derived using a “Becker-ized” Present Value of Distributable Earnings (“PVDE”) method. The PVDE was derived using the statutory after tax profits. The VOBA was valued at $51.6 million and is amortized over the anticipated remaining future lifetime of the acquired long-term care blocks of business. VOBA is amortized in relation to the projected future premium of the acquired long-term care blocks of business. Recoverable from Reinsurers The recoverable from reinsurers balance represents amounts recoverable from third parties. U.S. GAAP requires insurance reserves and recoverable from reinsurers balances to be presented on a gross basis, as opposed to U.S. statutory accounting principles, where reserves are presented net of reinsurance. Accordingly, the Company grossed up the fair value of the net insurance contract liability for the amount of reinsurance of approximately $515.9 million, to arrive at a gross insurance liability, and recognized an offsetting recoverable from reinsurers amount of approximately $515.9 million. As part of this process, management analyzed reinsurance counterparty credit risk and considers it to have an immaterial impact on the reinsurance fair value gross-up. To mitigate this risk substantially all reinsurance is ceded to companies with investment grade S&P ratings. Amounts recoverable from reinsurers were estimated in a manner consistent with the liability associated with the reinsured policies and were an estimate of the recoverable from reinsurers amount in respect of each of paid and unpaid losses, including an estimate for losses incurred but not reported. Recoverable from reinsurers represents expected cash inflows from reinsurers for liabilities ceded and therefore incorporate uncertainties as to the timing and amount of claim payments. Recoverable from reinsurers includes the balances due from reinsurers under the terms of the reinsurance agreements for these ceded balances as well as settlement amounts currently due. Contingent Liability Pursuant to the agreements governing the acquisition of the Insurance Companies, the Company also agreed to pay to the Seller Parties, on an annual basis with respect to the years 2015 through 2019, the amount, if any, by which the Insurance Companies’ cash flow testing and premium deficiency reserves decrease from the amount of such reserves as of December 31, 2014. Such payments are capped at $13.0 million in the aggregate. The balance is calculated based on the fluctuation of the statutory cash flow testing and premium deficiency reserves annually following each of the Insurance Companies' filing with its applicable insurance regulator of its annual statutory financial statements for each calendar year ending December 31 through and including December 31, 2019. Based on the 2015 statutory statements, the Company does not have a payment due. Further, the Company's current estimate is that the obligation will not be incurred through the calendar year ending December 31, 2019. This expectation is primarily driven by the following factors: (i) reduced confidence that treasury rates will increase to historical averages over the near term; (ii) uncertainty around future operating expenses historically performed by the Seller Parties; and (iii) the increase in the premium deficiency reserve as reported at December 31, 2015 of approximately $8.0 million (because the balance is cumulative over the period, a decrease of approximately $8.0 million would be required before there would be any obligation to the Seller Parties under the earn-out). The Company will perform this assessment at each reporting period through December 31, 2019 or until the $13.0 million is paid in full. Control Level Risk-Based Capital In connection with the consummation of the acquisition of the Insurance Companies, the Company agreed with the statutory regulator of CGI, the Ohio Department of Insurance ("ODOI"), that for five years following the closing of the transaction, the Company will contribute to CGI cash or marketable securities acceptable to the ODOI to the extent required for CGI’s total adjusted capital to be not less than 400% of CGI’s authorized control level risk-based capital (each as defined under Ohio law and reported in CGI’s statutory statements filed with the ODOI). Similarly, the Company has agreed with the statutory regulator of UTA, the Texas Department of Insurance ("TDOI"), that, for five years following the closing of the transaction, the Company will contribute to UTA cash or other admitted assets acceptable to the TDOI to the extent required for UTA’s total adjusted capital to be not less than 400% of UTA’s authorized control level risk-based capital (each as defined under Texas law and reported in UTA’s statutory statements filed with the TDOI). In connection with the consummation of the acquisition of the Insurance Companies, each of the Insurance Companies also entered into a capital maintenance agreement with Great American Financial Resources, Inc. ("GAFRI" and each such agreement, a “Capital Maintenance Agreement,” and collectively, the “Capital Maintenance Agreements”). Under each Capital Maintenance Agreement, if the applicable Insurance Company's total adjusted capital reported in its annual statutory financial statements is less than 400% of its authorized control level risk-based capital, GAFRI will pay cash or assets to the applicable Insurance Company, as required, to eliminate such shortfall (after giving effect to any capital contributions made by the Company or its affiliates since the date of the relevant annual statutory financial statements). GAFRI’s obligation to make such payments is capped at $25.0 million under the Capital Maintenance Agreement with UTA and $10.0 million under the Capital Maintenance Agreement with CGI. Each of the Capital Maintenance Agreements will remain in effect from January 1, 2016 to January 1, 2021, or until payments by GAFRI thereunder equal the maximum amount payable under the applicable agreement. The Company will indemnify GAFRI for the amount of any payments made by it under the Capital Maintenance Agreements. Other Transaction costs incurred in connection with the acquisition of the Insurance Companies were $0.0 and $0.5 million during the three and nine months ended September 30, 2016 and were included within Selling, general and administrative expenses. The Company recorded net revenue of $34.5 million and $99.8 million and net loss of $2.0 million and $12.6 million from the Insurance Companies for the three and nine months ended September 30, 2016. Pro Forma Adjusted Summary The results of operations for the Insurance Companies have been included in the Condensed Consolidated Financial Statements subsequent to their acquisition date. The following schedule presents unaudited consolidated pro forma results of operations data as if the acquisition of the Insurance Companies had occurred on January 1, 2015. This information neither purports to be indicative of the actual results that would have occurred if those acquisitions had actually been completed on the date indicated, nor is it necessarily indicative of the future operating results or the financial position of the combined company (in thousands, except per share amounts):
Other Acquisitions During the nine months ended September 30, 2016, we purchased three fueling stations, completed the acquisition of additional interests in and thereby control of NerVve and BeneVir, and acquired a 60% controlling interest in CWind Limited ("CWind") with an obligation to purchase the remaining 40% in equal amounts on September 30, 2016 and September 30, 2017 (based on agreed financial targets). The total consideration transferred for these acquisitions was $21.9 million including $13.7 million in cash. The results of each of the companies acquired have been reported in our results of operations from the date of acquisition. We have preliminarily allocated the purchase price of these acquired businesses to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. We are in the process of completing the valuation of identifiable intangible assets, fixed assets and debt; therefore, the fair values set forth below are subject to adjustment upon finalization of the valuations. The amounts in respect of these potential adjustments could be significant. We expect to complete the purchase price allocation for fiscal year 2016 acquisitions during fiscal year 2017. The following table summarizes the preliminary allocation of the purchase price to the fair value of identifiable assets acquired and liabilities assumed for the fiscal year 2016 acquisitions at the date of acquisition, in accordance with the acquisition method of accounting:
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | 4. Investments Fixed Maturity and Equity Securities Available-for-Sale The following tables provide information relating to investments in fixed maturity and equity securities as of September 30, 2016 and December 31, 2015 (in thousands):
The Company has investments in mortgage-backed securities ("MBS") that contain embedded derivatives (primarily interest-only MBS) that do not qualify for hedge accounting. The Company recorded the change in the fair value of these securities within Net realized losses on investments. These investments had a fair value of $15.0 million and $21.0 million as of September 30, 2016 and December 31, 2015, respectively. The change in fair value related to these securities resulted in a net loss of approximately $0.1 million and $2.4 million for the three and nine months ended September 30, 2016, respectively, and $0 for each of the three and nine months ended September 30, 2015. Maturities of Fixed Maturity Securities Available-for-Sale The amortized cost and fair value of fixed maturity securities available-for-sale as of September 30, 2016 are shown by contractual maturity in the table below (in thousands). Actual maturities can differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Asset and mortgage-backed securities are shown separately in the table below, as they are not due at a single maturity date:
Corporate Fixed Maturity Securities The tables below show the major industry types of the Company’s corporate and other fixed maturity securities as of September 30, 2016 and December 31, 2015 (in thousands):
Other-Than-Temporary Impairments - Fixed Maturity and Equity Securities A portion of certain other-than-temporary impairment (“OTTI”) losses on fixed maturity securities is recognized in AOCI. For these securities the net amount recognized in the Condensed Consolidated Statements of Operations (“credit loss impairments”) represents the difference between the amortized cost of the securities and the net present value of their projected future cash flows discounted at the effective interest rate implicit in such securities prior to impairment. Any remaining difference between the fair value and amortized cost is recognized in AOCI. The Company recorded a $1.5 million and $2.6 million impairment related to two fixed maturity securities for the three and nine months ended September 30, 2016, respectively. The Company reported a $2.5 million impairment within Other income (expense), net and a $0.2 million impairment within Net realized losses on investments. The Company did not record any impairments on fixed maturity or equity securities during the three and nine months ended September 30, 2015. Unrealized Losses for Fixed Maturity and Equity Securities Available-for-Sale The following table presents the total unrealized losses for the 117 and 528 fixed maturity and equity securities held by the Company as of September 30, 2016 and December 31, 2015, respectively, where the estimated fair value had declined and remained below amortized cost by the indicated amount (in thousands):
The determination of whether unrealized losses are “other-than-temporary” requires judgment based on subjective as well as objective factors. Factors considered and resources used by management include (i) whether the unrealized loss is credit-driven or a result of changes in market interest rates, (ii) the extent to which fair value is less than cost basis, (iii) cash flow projections received from independent sources, (iv) historical operating, balance sheet and cash flow data contained in issuer SEC filings and news releases, (v) near-term prospects for improvement in the issuer and/or its industry, (vi) third party research and communications with industry specialists, (vii) financial models and forecasts, (viii) the continuity of dividend payments, maintenance of investment grade ratings and hybrid nature of certain investments, (ix) discussions with issuer management, and (x) ability and intent to hold the investment for a period of time sufficient to allow for anticipated recovery in fair value. The Company analyzes its MBS for other-than-temporary impairment each quarter based upon expected future cash flows. Management estimates expected future cash flows based upon its knowledge of the MBS market, cash flow projections (which reflect loan-to-collateral values, subordination, vintage and geographic concentration) received from independent sources, implied cash flows inherent in security ratings and analysis of historical payment data. The Company believes it will recover its cost basis in the non-impaired securities with unrealized losses and that the Company has the ability to hold the securities until they recover in value. The Company neither intends to sell nor does it expect to be required to sell the securities with unrealized losses as of September 30, 2016 and December 31, 2015, respectively. However, unforeseen facts and circumstances may cause the Company to sell fixed maturity and equity securities in the ordinary course of managing its portfolio to meet certain diversification, credit quality and liquidity guidelines. The following tables present the estimated fair values and gross unrealized losses for the 117 and 528 fixed maturity and equity securities held by the Company that have estimated fair values below amortized cost as of September 30, 2016 and December 31, 2015, respectively. The Company does not have any OTTI losses reported in AOCI. These investments are presented by investment category and the length of time the related fair value has remained below amortized cost (in thousands):
At September 30, 2016, investment grade fixed maturity securities (as determined by nationally recognized rating agencies) represented approximately 13.0% of the gross unrealized loss and 52.5% of the fair value. At December 31, 2015, investment grade fixed maturity securities represented approximately 33.2% of the gross unrealized loss and 88.3% of the fair value. Certain risks are inherent in connection with fixed maturity securities, including loss upon default, price volatility in reaction to changes in interest rates, and general market factors and risks associated with reinvestment of proceeds due to prepayments or redemptions in a period of declining interest rates. Other Invested Assets Other invested assets represent approximately 4.1% and 3.9% of the Company’s total investments as of September 30, 2016 and December 31, 2015, respectively. Carrying values of other invested assets as of September 30, 2016 and December 31, 2015 are as follows (in thousands):
Additionally, as of September 30, 2016 and December 31, 2015, other invested assets include common stock purchase warrants and call options accounted for under ASC 815, "Derivatives and Hedging" ("ASC 815") (in thousands):
Net Investment Income For the three and nine months ended September 30, 2016, the major sources of net investment income in the accompanying Condensed Consolidated Statements of Operations were as follows (in thousands):
Net Realized Gains (Losses) on Investments For the three and nine months ended September 30, 2016, the major sources of net realized gains (losses) on investments in the accompanying Condensed Consolidated Statements of Operations were as follows (in thousands):
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | 5. Fair Value of Financial Instruments Assets by Hierarchy Level Assets and liabilities measured at fair value on a recurring basis at September 30, 2016 and December 31, 2015 are summarized below (in thousands):
The Company reviews the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets or liabilities. Such reclassifications are reported as transfers in and out of Level 3, or between other levels, at the beginning fair value for the reporting period in which the changes occur. The Company transferred $1.1 million corporate and other bonds and $0.5 million preferred stock from Level 1 into Level 2 during the nine months ended September 30, 2016, reflecting the level of market activity in these instruments. There were no transfers between Level 1 and Level 2 for the three months ended September 30, 2016 and the three and nine months ended September 30, 2015. Availability of secondary market activity and consistency of pricing from third-party sources impacts the Company's ability to classify securities as Level 2 or Level 3. The Company’s assessment resulted in a net transfer out of Level 3 of $0.6 million and transfer into Level 3 of $2.4 million during the three and nine months ended September 30, 2016, respectively. There were no transfers into or out of Level 3 for the three and nine months ended September 30, 2015. The methods and assumptions the Company uses to estimate the fair value of assets and liabilities measured at fair value on a recurring basis are summarized below: Fixed Maturity Securities - The fair values of the Company’s publicly-traded fixed maturity securities are generally based on prices obtained from independent pricing services. Prices from pricing services are sourced from multiple vendors, and a vendor hierarchy is maintained by asset type based on historical pricing experience and vendor expertise. In some cases, the Company receives prices from multiple pricing services for each security, but ultimately uses the price from the pricing service highest in the vendor hierarchy based on the respective asset type. Consistent with the fair value hierarchy described above, securities with validated quotes from pricing services are generally reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs. If the Company ultimately concludes that pricing information received from the independent pricing service is not reflective of market activity, non-binding broker quotes are used, if available. If the Company concludes the values from both pricing services and brokers are not reflective of market activity, it may override the information from the pricing service or broker with an internally developed valuation; however, this occurs infrequently. Internally developed valuations or non-binding broker quotes are also used to determine fair value in circumstances where vendor pricing is not available. These estimates may use significant unobservable inputs, which reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset. Pricing service overrides, internally developed valuations and non-binding broker quotes are generally based on significant unobservable inputs and are reflected as Level 3 in the valuation hierarchy. The inputs used in the valuation of corporate and government securities include, but are not limited to, standard market observable inputs which are derived from, or corroborated by, market observable data including market yield curve, duration, call provisions, observable prices and spreads for similar publicly traded or privately traded issues that incorporate the credit quality and industry sector of the issuer. For structured securities, valuation is based primarily on matrix pricing or other similar techniques using standard market inputs including spreads for actively traded securities, spreads off benchmark yields, expected prepayment speeds and volumes, current and forecasted loss severity, rating, weighted average coupon, weighted average maturity, average delinquency rates, geographic region, debt-service coverage ratios and issuance-specific information including, but not limited to: collateral type, payment terms of the underlying assets, payment priority within the tranche, structure of the security, deal performance and vintage of loans. When observable inputs are not available, the market standard valuation techniques for determining the estimated fair value of certain types of securities that trade infrequently, and therefore have little or no price transparency, rely on inputs that are significant to the estimated fair value but that are not observable in the market or cannot be derived principally from or corroborated by observable market data. These unobservable inputs are sometimes based in large part on management judgment or estimation, and cannot be supported by reference to market activity. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and are believed to be consistent with what other market participants would use when pricing such securities. The fair values of private placement securities are primarily determined using a discounted cash flow model. In certain cases these models primarily use observable inputs with a discount rate based upon the average of spread surveys collected from private market intermediaries who are active in both primary and secondary transactions, taking into account, among other factors, the credit quality and industry sector of the issuer and the reduced liquidity associated with private placements. Generally, these securities have been reflected within Level 3. For certain private fixed maturities, the discounted cash flow model may also incorporate significant unobservable inputs, which reflect the Company’s own assumptions about the inputs market participants would use in pricing the security. To the extent management determines that such unobservable inputs are not significant to the price of a security, a Level 2 classification is made. Otherwise, a Level 3 classification is used. Equity Securities. The balance consists principally of common and preferred stock of publicly and privately traded companies. The fair values of publicly traded equity securities are primarily based on quoted market prices in active markets and are classified within Level 1 in the fair value hierarchy. The fair values of preferred equity securities, for which quoted market prices are not readily available, are based on prices obtained from independent pricing services and these securities are generally classified within Level 2 in the fair value hierarchy. The fair value of common stock of privately held companies was determined using unobservable market inputs, including volatility and underlying security values and was classified as Level 3. Cash Equivalents. The balance consists of money market instruments, which are generally valued using unadjusted quoted prices in active markets that are accessible for identical assets and are primarily classified as Level 1. Various time deposits carried as cash equivalents are not measured at estimated fair value and therefore are excluded from the tables presented. Derivatives. The balance consists of common stock purchase warrants and call options. The fair values of the call options are primarily based on quoted market prices in active markets and are classified within Level 1 in the fair value hierarchy. Depending on the terms, the common stock warrants were valued using either Black-Scholes analysis or Monte Carlo Simulation. Fair value was determined using unobservable market inputs, including volatility and underlying security values, therefore the common stock purchase warrants were classified as Level 3. Warrant Liability. The balance consists of the Warrants issued in connection with the acquisition of the Insurance Companies and recorded within other liabilities on the Condensed Consolidated Balance Sheets. Fair value was determined using the Monte Carlo Simulation because the adjustments for exercise price and warrant shares represent path dependent features; the exercise price from prior periods needs to be known to determine whether a subsequent sale of shares occurs at a price that is lower than the then current exercise price. The analysis entails a Geometric Brownian Motion based simulation of 100 unique price paths of the Company's stock for each combination of assumptions. Fair value was determined using unobservable market inputs, including volatility, and a range of assumptions regarding a possibility of an equity capital raise each year and the expected size of future equity capital raises. The present value of a given simulated scenario was based on intrinsic value at expiration discounted to the valuation date, taking into account any adjustments to the exercise price or warrant shares issuable. The average present value across all 100 independent price paths represents the estimate of fair value for each combination of assumptions. Therefore, the warrant liability was classified as Level 3. Level 3 Measurements and Transfers Changes in balances of Level 3 financial assets carried at fair value during the three and nine months ended September 30, 2016 and 2015 are presented below (in thousands):
Since internally developed Level 3 asset fair values represent less than 1% of the Company’s total assets, any justifiable changes in unobservable inputs used to determine internally developed fair values would not have a material impact on the Company’s financial position. Fair Value of Financial Instruments Not Measured at Fair Value The Company is required by general accounting principles for Fair Value Measurements and Disclosures to disclose the fair value of certain financial instruments including those that are not carried at fair value. The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments, which were not measured at fair value on a recurring basis, at September 30, 2016 and December 31, 2015, respectively. This table excludes carrying amounts reported in the Condensed Consolidated Balance Sheets for cash, accounts receivable, costs and recognized earnings in excess of billings, accounts payable, accrued expenses, billings in excess of costs and recognized earnings, and other current assets and liabilities approximate fair value due to relatively short periods to maturity (in thousands):
(1) Excludes life contingent annuities in the payout phase. (2) Excludes certain lease obligations accounted for under ASC 840, "Leases". Mortgage Loans on Real Estate. The fair value of mortgage loans on real estate is estimated by discounting cash flows, both principal and interest, using current interest rates for mortgage loans with similar credit ratings and similar remaining maturities. As such, inputs include current treasury yields and spreads, which are based on the credit rating and average life of the loan, corresponding to the market spreads. The valuation of mortgage loans on real estate is considered Level 3 in the fair value hierarchy. Policy Loans. The policy loans are reported at the unpaid principal balance and carry a fixed interest rate. The Company determined that the carrying value approximates fair value because (i) policy loans present no credit risk as the amount of the loan cannot exceed the obligation due upon the death of the insured or surrender of the underlying policy; (ii) there is no active market for policy loans (i.e., there is no commonly available exit price to determine the fair value of policy loans in the open market); (iii) policy loans are intricately linked to the underlying policy liability and, in many cases, policy loan balances are recovered through offsetting the loan balance against the benefits paid under the policy; and (iv) policy loans can be repaid by policyholders at any time, and this prepayment uncertainty reduces the potential impact of a difference between amortized cost (carrying value) and fair value. The valuation of policy loans is considered Level 2 in the fair value hierarchy. Other Invested Assets. The balance primarily includes common stock purchase warrants. The fair values were derived using Black-Scholes analysis using unobservable market inputs, including volatility and underlying security values; therefore, the common stock purchase warrants were classified as Level 3. Annuity Benefits Accumulated. The fair value of annuity benefits was determined using the surrender values of the annuities and classified as Level 3. Long-term Obligations. The fair value of the Company’s long-term obligations was determined using Bloomberg Valuation Service BVAL. The methodology combines direct market observations from contributed sources with quantitative pricing models to generate evaluated prices and classified as Level 2. |
Accounts Receivable |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable | 6. Accounts Receivable Accounts receivable consist of the following (in thousands):
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Contracts in Progress |
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Contractors [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contracts in Progress | 7. Contracts in Progress Costs and recognized earnings in excess of billings on uncompleted contracts and billings in excess of costs and recognized earnings on uncompleted contracts consist of the following (in thousands):
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Inventory |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | 8. Inventory Inventory consists of the following (in thousands):
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Recoverable from Reinsurers |
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Insurance [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance Recoverable | 9. Recoverable from Reinsurers The following table presents information for the Company's recoverable from reinsurers assets as of September 30, 2016 and December 31, 2015 (in thousands):
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Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | 10. Goodwill and Other Intangible Assets Goodwill The changes in the carrying amount of goodwill by segment for the nine months ended September 30, 2016 are as follows (in thousands):
Indefinite-lived Intangible Assets The acquisition of the Insurance Companies resulted in the acquisition of state licenses, which are indefinite-lived intangible assets not subject to amortization valued at $4.8 million as of September 30, 2016. In addition, the acquisition of BeneVir resulted in the recording of an in-process research and development intangible asset not subject to amortization valued at $6.4 million. Amortizable Intangible Assets Intangible assets subject to amortization consisted of the following (in thousands):
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Life, Accident and Health Reserves |
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Insurance [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Life, Accident and Health Reserves | 11. Life, Accident and Health Reserves Life, accident and health reserves consist of the following (in thousands):
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Long-Term Obligations |
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Long-Term Obligations | 12. Long-Term Obligations Long-term debt consists of the following (in thousands):
Aggregate capital lease and debt payments are as follows (in thousands):
11.0% Senior Secured Notes due 2019 On November 20, 2014, the Company issued $250.0 million in aggregate principal amount of 11.0% Senior Secured Notes due 2019 (the “November 2014 Notes”). The November 2014 Notes were issued at a price of 99.05% of principal amount, which resulted in a discount of $2.4 million. The net proceeds from the issuance of the November 2014 Notes were used to repay a senior secured credit facility, which had provided for a twelve month, floating interest rate term loan of $214 million and a delayed draw term loan of $36 million, entered into in connection with the Company's acquisition of GMSL. On March 26, 2015, the Company issued an additional $50.0 million in aggregate principal amount of 11.0% Senior Secured Notes due 2019 (the “March 2015 Notes”). The March 2015 Notes were issued at a price of 100.5% of principal amount, plus accrued interest from November 20, 2014, which resulted in a premium of $0.3 million. On August 5, 2015, the Company issued an additional $5.0 million aggregate principal amount of its 11.0% Senior Secured Notes due 2019 (the “August 2015 Notes”). The August 2015 Notes were issued in consideration for a release of claims by holders of the Preferred Stock discussed below (see Note 17 - Equity for additional information). On December 24, 2015, the Company issued an additional $2.0 million aggregate principal amount of its 11% Senior Secured Notes due 2019 (the "December 2015 Notes"). All of the 11.0% Senior Secured Notes due 2019 (collectively, the "11.0% Notes") were issued under an indenture dated November 20, 2014, by and among HC2, the guarantors party thereto and U.S. Bank National Association, a national banking association (“U.S. Bank”), as trustee (the “11.0% Notes Indenture”). Maturity and Interest. The 11.0% Notes mature on December 1, 2019. The 11.0% Notes accrue interest at a rate of 11.0% per year. Interest on the 11.0% Notes is paid semi-annually on December 1st and June 1st of each year. Ranking. The 11.0% Notes and the guarantees thereof are HC2’s and certain of its direct and indirect domestic subsidiaries’ (the “Subsidiary Guarantors”) general senior secured obligations. The 11.0% Notes and the guarantees thereof rank: (i) senior in right of payment to all of HC2’s and the Subsidiary Guarantors’ future subordinated debt; (ii) equal in right of payment with all of HC2’s and the Subsidiary Guarantors’ existing and future senior debt and effectively senior to all of the Company's unsecured debt to the extent of the value of the collateral; and (iii) effectively subordinated to all liabilities of its non-guarantor subsidiaries. Collateral. The 11.0% Notes and the guarantees thereof are collateralized on a first-priority basis by substantially all of HC2’s assets and the assets of the Subsidiary Guarantors (except for certain “Excluded Assets,” and subject to certain “Permitted Liens,” each as defined in the 11.0% Notes Indenture). The 11.0% Notes Indenture permits the Company, under specified circumstances, to incur additional debt that could equally and ratably share in the collateral. The amount of such debt is limited by the covenants contained in the 11.0% Notes Indenture. Certain Covenants. The 11.0% Notes Indenture contains covenants limiting, among other things, the ability of HC2 and, in certain cases, HC2’s subsidiaries, to incur additional indebtedness or issue certain types of redeemable equity interests; create liens; engage in sale-leaseback transactions; pay dividends; make distributions in respect of capital stock and make certain other restricted payments; sell assets; engage in transactions with affiliates; or consolidate or merge with, or sell substantially all of its assets to, another person. These covenants are subject to a number of important exceptions and qualifications. HC2 is also required to maintain compliance with certain financial tests, including minimum liquidity and collateral coverage ratios. As of September 30, 2016, HC2 was in compliance with these covenants. Redemption Premiums. The Company may redeem the 11.0% Notes at a redemption price equal to 100.0% of the principal amount of the 11.0% Notes plus a make-whole premium if the 11.0% Notes are redeemed before December 1, 2016. The make-whole premium is the greater of (i) 1% of principal amount or (ii) the excess of the present value of the redemption price at December 1, 2016 plus all required interest payments through December 1, 2016 over the principal amount. On or after December 1, 2016 and until November 30, 2017, the Company may redeem the 11.0% Notes at a redemption price equal to 108.25% and on or after December 1, 2017 until November 30, 2018 at a redemption price equal to 105.50% of the principal amount plus accrued and unpaid interest. Beginning December 1, 2018, the Company may redeem the 11.0% Notes at a redemption price equal to 100.00% plus accrued and unpaid interest. The Company is required to make an offer to purchase the 11.0% Notes upon a change of control at a purchase price equal to 101% of the principal amount of the 11.0% Notes on the date of purchase plus accrued and unpaid interest. DBM Global Credit Facilities DBM Global entered into a Credit and Security Agreement (“DBM Global Facility”) with Wells Fargo Credit, Inc. (“Wells Fargo”), pursuant to which Wells Fargo initially agreed to advance up to a maximum amount of $50.0 million to DBM Global, including up to $5.0 million of letters of credit. On January 23, 2015, DBM Global entered into an amendment to the DBM Global Facility, pursuant to which Wells Fargo agreed to increase the maximum amount of the DBM Global Facility that could be used to issue letters of credit from $5.0 million to $14.5 million. The DBM Global Facility has a floating interest rate of LIBOR plus 3.0% (3.63% at September 30, 2016) and requires monthly interest payments. As of September 30, 2016 and December 31, 2015, DBM Global had $3.9 million in outstanding letters of credit issued under the facility, of which $0 have been drawn. The DBM Global Facility is secured by a first priority, perfected security interest in all of DBM Global’s and its present and future subsidiaries' assets, excluding real estate, and a second priority, perfected security interest in all of DBM Global’s real estate. The security agreements pursuant to which DBM Global’s assets are pledged prohibit any further pledge of such assets without the written consent of the bank. The DBM Global Facility contains various restrictive covenants. At September 30, 2016, DBM Global was in compliance with these covenants. On May 6, 2014, DBM Global entered into an amendment to the DBM Global Facility, pursuant to which Wells Fargo extended the maturity date of the DBM Global Facility to April 30, 2019, lowered the interest rate charged in connection with borrowings under the DBM Global Facility and allowed for the issuance of additional loans in the form of notes totaling up to $5.0 million, secured by its real estate as a separate tranche under the DBM Global Facility (“Real Estate Term Advance”). At September 30, 2016 and December 31, 2015, DBM Global had borrowed $3.5 million and $4.0 million, respectively, under the Real Estate Term Advance. The Real Estate Term Advance has a five year amortization period requiring monthly principal payments and a final balloon payment at maturity. The Real Estate Term Advance has a floating interest rate of LIBOR plus 4.0% and requires monthly interest payments. On October 21, 2014, DBM Global further amended the DBM Global Facility to allow for the issuance of additional loans in the form of notes of up to $10.0 million, secured by its machinery and equipment (“Real Estate (2) Term Advance (M&E)”) and the issuance of a note payable of up to $5.0 million, secured by its real estate (“Real Estate (2) Term Advance (Working Capital)”), each as separate tranches of debt under the DBM Global Facility. The Real Estate (2) Term Advance (M&E) and Real Estate (2) Term Advance (Working Capital) have a five year amortization period requiring monthly principal payments and a final balloon payment at maturity. The Real Estate (2) Term Advance (M&E) and Real Estate (2) Term Advance (Working Capital) have a floating interest rate of LIBOR plus 4.0% and require monthly interest payments. At September 30, 2016 and December 31, 2015, there was $6.6 million and $8.1 million, respectively, outstanding under the Real Estate (2) Term Advance (M&E) and $0.0 million and $2.2 million, respectively, outstanding under the Real Estate (2) Term Advance (Working Capital). Schuff Hopsa Engineering, Inc. (“SHE”), a joint venture which DBM Global consolidates, has a Line of Credit Agreement (“International LOC”) with Banco General, S.A. (“Banco General”) in Panama pursuant to which Banco General agreed to advance up to a maximum amount of $3.5 million to SHE. The line of credit is secured by a first priority, perfected security interest in SHE’s property and plant. The interest rate is 5.25% plus 1.0% of the special interest compensation fund. The International LOC contains covenants that, among other things, limit SHE’s ability to incur additional indebtedness, change its business, merge, consolidate or dissolve and sell, lease, exchange or otherwise dispose of its assets, without prior written notice. At September 30, 2016, SHE had $1.9 million in borrowings and no outstanding letters of credit issued under its International LOC. There was $1.6 million available under the International LOC at September 30, 2016. GMSL Credit Facility GMSL established a $20.0 million term loan with DVB Bank in January 2014 (the “GMSL Facility”). The GMSL Facility has a 4.5 year term and bears interest at the rate of USD LIBOR plus 3.65% rate. As of September 30, 2016 and December 31, 2015, $3.0 million and $5.3 million, respectively, remained outstanding under the GMSL Facility. The GMSL Facility contains various restrictive covenants. At September 30, 2016, GMSL was in compliance with these covenants. CWind Credit Facilities GMSL acquired CWind in February 2016 and assumed liability for all of CWind's outstanding loans. CWind currently maintains 14 notes payable related to its vessels, with maturities ranging between 2018 and 2024 and interest rates varying between 5.25% and 10.0%. The initial aggregate principle amount outstanding under all 14 notes was GBP 18.1 million. As of September 30, 2016, the outstanding aggregate principal amount of the notes was GBP 15.0 million. CWind also has a note payable related to a series of sundry assets, bearing an annual interest rate of 15.3% and maturing in 2018 with a principal of GBP 0.2 million and an outstanding debt balance of GBP 0.15 million as of September 30, 2016. CWind also has two revolving lines of credit, one based in the UK with a capacity of GBP 3.0 million and an interest rate of 2.65% over Barclays' Base Rate of 0.5% and one based in Germany with a capacity of EUR 3.0 million and an interest rate of 2.0% over Barclays' Base Rate of 0.5%. As of September 30, 2016 CWind had borrowings outstanding under the UK and German lines of credit of GBP 0.2 million and EUR 0.6 million, respectively. GMSL Capital Leases GMSL is a party to two leases to finance the use of two vessels: the Innovator (the “Innovator Lease”) and the Cable Retriever (the “Cable Lease,” and together with the Innovator Lease, the “GMSL Leases”). The Innovator Lease was restructured effective May 31, 2016, extending the lease to 2025. The principal amount thereunder bears interest at the rate of approximately 10.4%. The Cable Lease expires in 2023. The principal amount thereunder bears interest at the rate of approximately 4.0%. As of September 30, 2016 and December 31, 2015, $52.8 million and $52.7 million, respectively, in aggregate principal amount remained outstanding under the GMSL Leases. ANG Term Loan ANG established a term loan with Signature Financial in October 2013. This term loan has a five year term and bears interest at the rate of 5.5% per annum. As of September 30, 2016 and December 31, 2015, $0.5 million and $0.7 million, respectively, remained outstanding under this term loan. On June 13, 2016, ANG entered into a seven year delayed draw term note for $6.5 million with Pioneer Savings Bank (“Pioneer”). The note includes an interest only provision for the first year and will mature on July 1, 2023. The interest rate on this loan is LIBOR plus 3.0% for the first year and a fixed rate of 4.3% thereafter. The agreement with Pioneer also includes a revolving demand note for $1.0 million with an annual renewal provision and interest at monthly LIBOR plus 3.0%. As of September 30, 2016, ANG borrowed $3.5 million of aggregate principal under the delayed draw term note. On August 5, 2016, ANG entered into a six year seller note for $3.0 million with the seller of a station, maturing on February 1, 2022. The interest rate on this loan is a fixed rate of 4.25%. Interest was pre-paid for the first month of the loan. As of September 30, 2016, the outstanding principal balance was $2.9 million. On September 19, 2016, ANG entered into a delayed draw term note for $2.5 million, maturing on October 1, 2022. The note includes an interest only provision for the first month of the loan. The interest rate on this loan is a fixed rate of 4.3%. |
Income Taxes |
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Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 13. Income Taxes Income Tax Benefit Income tax was a benefit of $1.3 million and an expense of $1.5 million for the three months ended September 30, 2016 and 2015, and a benefit of $3.6 million and a benefit of $1.8 million for the nine months ended September 30, 2016 and 2015. The Company used the Annual Effective Tax Rate (“ETR”) approach of ASC 740-270 (formerly FIN 18), "Interim Reporting," to calculate its 2016 interim tax provision. NOL Limitation The Company has an estimated NOL carryforward for U.S. federal tax purposes in the amount of $80.7 million. In the first quarter of 2014, substantial acquisitions of the Company's stock were reported by new beneficial owners of 5.0% or more of the Company’s common stock on Schedule 13D filings made with the SEC. On May 29, 2014, the Company issued 30,000 shares of Series A Convertible Participating Preferred Stock of the Company (the “Series A Preferred Stock”) and 1,500,000 shares of common stock to finance the acquisition of DBM Global. During the second quarter of 2014 the Company completed a Section 382 review. The conclusions of this review indicate that an ownership change had occurred as of May 29, 2014. The Company’s annual Section 382 base limit following the ownership change is estimated to be $2.3 million per year. On November 4, 2015, HC2 issued 8,452,500 shares of its stock in a primary offering which the Company believes resulted in a Section 382 ownership change resulting in an additional annual limitation to cumulative carryforward. NOLs of approximately $77.7 million are subject to this new limitation. The Company does not believe that any NOLs will expire as a result of the November 2015 ownership change. Unrecognized Tax Benefits The Company follows the provision of ASC 740-10, “Income Taxes”, which prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the Company has taken or expects to take on a tax return. The Company is subject to challenge from various taxing authorities relative to certain tax planning strategies, including certain intercompany transactions as well as regulatory taxes. The amount of unrecognized tax benefits may change in the next 12 months; however, the Company does not expect any such change to have a significant impact on the results of operations or the financial position of the Company. Examinations The Company conducts business globally, and as a result, the Company or one or more of its subsidiaries files income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. In the normal course of business the Company is subject to examination by taxing authorities throughout the world. The open tax years contain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, character, timing or inclusion of revenue and expenses or the applicability of income tax credits for the relevant tax period. Given the nature of tax audits there is a risk that disputes may arise. Tax years 2002 - 2015 remain open for examination. |
Commitments and Contingencies |
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Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 14. Commitments and Contingencies Litigation The Company is subject to claims and legal proceedings that arise in the ordinary course of business. Such matters are inherently uncertain, and there can be no guarantee that the outcome of any such matter will be decided favorably to the Company or that the resolution of any such matter will not have a material adverse effect upon the Company’s Condensed Consolidated Financial Statements. The Company does not believe that any of such pending claims and legal proceedings will have a material adverse effect on its Condensed Consolidated Financial Statements. The Company records a liability in its Condensed Consolidated Financial Statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. The Company reviews these estimates each accounting period as additional information is known and adjusts the loss provision when appropriate. If a matter is both probable to result in a liability and the amounts of loss can be reasonably estimated, the Company estimates and discloses the possible loss or range of loss to the extent necessary for the Condensed Consolidated Financial Statements not to be misleading. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in its Condensed Consolidated Financial Statements. On July 16, 2013, Plaintiffs Xplornet Communications Inc. and Xplornet Broadband, Inc. (“Xplornet”) initiated an action against Inukshuk Wireless Inc. (“Inukshuk”), Globility Communications Corporation (“Globility”), MIPPS Inc., Primus Telecommunications Canada Inc. ("PTCI") and Primus Telecommunications Group, Incorporated (n/k/a HC2). Xplornet alleges that it entered into an agreement to acquire certain licenses for radio spectrum in Canada from Globility but that Globility breached the letter of intent by selling the licenses to Inukshuk. Xplornet also alleges similar claims against Inukshuk, and seeks damages from all defendants in the amount of $50 million. On January 29, 2014, Globility, MIPPS Inc., and PTCI, demanded indemnification pursuant to the Equity Purchase Agreement among PTUS, Inc., PTCAN, Inc., the Company (f/k/a Primus Telecommunications Group, Incorporated), Primus Telecommunications Holding, Inc., Lingo Holdings, Inc., and Primus Telecommunications International, Inc., dated as of May 10, 2013. On February 14, 2014, the Company assumed the defense of this litigation, while reserving all of its rights under the Equity Purchase Agreement. Inukshuk filed a cross claim against Globility, MIPPS, PTCI, and the Company. Inukshuk asserts that if Inukshuk is found liable to Xplornet, then Inukshuk is entitled to contribution and indemnity, compensatory damages, interest, and costs from the Company. The Company and Inukshuk have moved for summary judgment against Xplornet, arguing that there was no agreement between Globility and Xplornet to acquire the licenses at issue. On January 19, 2016, PTCI sought and obtained an order under the Companies’ Creditors Arrangement Act (the “CCAA”) from the Ontario Superior Court of Justice. PTCI received an Initial Order staying all proceedings against PTCI until February 26, 2016 - which it has moved to extend through September 2016. On February 25, 2016, the Ontario Superior Court of Justice extended the stay of proceedings until September 19, 2016. PTCI has advised the Company that this stays all proceedings against PTCI, Globility, and MIPPS, except against the Company. In October 2016, the Company settled the matter. On November 8, 2016, the Court entered a consent order dismissing this action. On November 6, 2014, a putative stockholder class action complaint challenging the tender offer by which HC2 acquired approximately 721,000 of the issued and outstanding common shares of DBM Global was filed in the Court of Chancery of the State of Delaware, captioned Mark Jacobs v. Philip A. Falcone, Keith M. Hladek, Paul Voigt, Michael R. Hill, Rustin Roach, D. Ronald Yagoda, Phillip O. Elbert, HC2 Holdings, Inc., and Schuff International, Inc., Civil Action No. 10323 (the “Complaint”). On November 17, 2014, a second lawsuit was filed in the Court of Chancery of the State of Delaware, captioned Arlen Diercks v. Schuff International, Inc. Philip A. Falcone, Keith M. Hladek, Paul Voigt, Michael R. Hill, Rustin Roach, D. Ronald Yagoda, Phillip O. Elbert, HC2 Holdings, Inc., Civil Action No. 10359. On February 19, 2015, the court consolidated the actions (now designated as Schuff International, Inc. Stockholders Litigation) and appointed lead plaintiff and counsel. The currently operative complaint is the Complaint filed by Mark Jacobs. The Complaint alleges, among other things, that in connection with the tender offer, the individual members of the DBM Global's Board of Directors and HC2, the now-controlling stockholder of DBM Global, breached their fiduciary duties to members of the plaintiff class. The Complaint also purports to challenge a potential short-form merger based upon plaintiff’s expectation that the Company would cash out the remaining public stockholders of DBM Global following the completion of the tender offer. The Complaint seeks rescission of the tender offer and/or compensatory damages, as well as attorney’s fees and other relief. The defendants filed answers to the Complaint on July 30, 2015. The litigation is currently in the discovery phase, and fact discovery is scheduled to be completed on March 27, 2017. Trial is scheduled for March 12-15, 2018. We believe that the allegations and claims set forth in the Complaint are without merit and intend to defend our interests vigorously. Tax Matters Currently, the Canada Revenue Agency (“CRA”) is auditing a subsidiary previously held by the Company. The Company intends to cooperate in audit matters. To date, CRA has not proposed any specific adjustments and the audit is ongoing. |
Employee Retirement Plans |
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Employee Retirement Plans | 15. Employee Retirement Plans The following table presents the components of net periodic benefit cost for the three and nine months ended September 30, 2016 and 2015, respectively (in thousands):
The Company previously disclosed in its financial statements for the year ended December 31, 2015 that it expected to contribute $7.2 million to its pension plans in 2016. As of September 30, 2016, $1.4 million contributions have been made. Due to current funding levels, the Company does not anticipate contributing further funds to its pension plans in 2016. |
Share-Based Compensation |
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Share-Based Compensation | 16. Share-Based Compensation On April 11, 2014, HC2’s board of directors adopted the HC2 Holdings, Inc. 2014 Omnibus Equity Award Plan (the “Omnibus Plan”), which was approved by our stockholders at the annual meeting of stockholders held on June 12, 2014. The Omnibus Plan provides that no further awards will be granted pursuant to the Company’s Management Compensation Plan, as amended (the “Prior Plan”). However, awards that had been previously granted pursuant to the Prior Plan will continue to be subject to and governed by the terms of the Prior Plan. The Compensation Committee of HC2's board of directors administers HC2's Omnibus Plan and the Prior Plan and has broad authority to administer, construe and interpret the plans. The Omnibus Plan provides for the grant of awards of non-qualified stock options, incentive (qualified) stock options, stock appreciation rights, restricted stock awards, restricted stock units, other stock based awards, performance compensation awards (including cash bonus awards) or any combination of the foregoing. The Company typically issues new shares of common stock upon the exercise of stock options, as opposed to using treasury shares. The Omnibus Plan authorizes the issuance of up to 5,000,000 shares of the Company’s common stock, subject to adjustment as provided in the Omnibus Plan. The Company follows guidance which addresses the accounting for share-based payment transactions whereby an entity receives employee services in exchange for either equity instruments of the enterprise or liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. The guidance generally requires that such transactions be accounted for using a fair-value based method and share-based compensation expense be recorded, based on the grant date fair value, estimated in accordance with the guidance, for all new and unvested stock awards that are ultimately expected to vest as the requisite service is rendered. The Company granted 1,506,848 and 1,406,681 options during the nine months ended September 30, 2016 and 2015, respectively. Of the total options granted during the nine months ended September 30, 2016 and 2015, 6,848 and 885,173, respectively, of such options were granted to Philip Falcone, pursuant to a standalone option agreement entered in connection with Mr. Falcone’s appointment as Chairman, President and Chief Executive Officer of the Company, and not pursuant to the Omnibus Plan. The anti-dilution protection provision contained in such standalone option agreement was canceled in April 2016 and replaced with an award consisting solely of 1,500,000 premium stock options issued under the Omnibus Plan. The weighted average fair value at date of grant for options granted during the nine months ended September 30, 2016 and 2015 was $1.09 and $1.55, respectively, per option. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions shown as a weighted average for the year:
Total share-based compensation expense recognized by the Company and its subsidiaries under all equity compensation arrangements during the three months ended September 30, 2016 and 2015 was $1.8 million and $2.3 million, respectively. Total share-based compensation expense recognized by the Company and its subsidiaries under all equity compensation arrangements during the nine months ended September 30, 2016 and 2015 was $6.7 million and $7.4 million, respectively. Most of the Company’s stock awards vest ratably during the vesting period. The Company recognizes compensation expense for equity awards, reduced by estimated forfeitures, using the straight-line basis. Restricted Stock and Restricted Stock Units A summary of the Company’s restricted stock and restricted stock unit activity for the nine months ended September 30, 2016 is as follows:
As of September 30, 2016, the unvested restricted stock represented $0.5 million of compensation expense that is expected to be recognized over the weighted average remaining vesting period of 1.1 years. The number of shares of unvested restricted stock expected to vest is 185,189. Stock Options A summary of the Company’s stock option activity and respective weighted average exercise price during the nine months ended September 30, 2016 is as follows:
As of September 30, 2016, intrinsic value and average remaining life of the Company's outstanding and exercisable options were $3.2 million and $2.4 million and 8.29 and 7.88 years, respectively. As of September 30, 2016, the Company had 2,912,583 unvested stock options outstanding, of which $2.8 million of compensation expense is expected to be recognized over the weighted average remaining vesting period of 1.82 years. The number of unvested stock options expected to vest is 2,912,583 shares, with a weighted average remaining life of 8.84 years, a weighted average exercise price of $8.27, and an intrinsic value of $0.8 million. |
Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | 17. Equity Preferred and Common Stock At September 30, 2016 and December 31, 2015, there were 38,031,325 and 35,249,749 shares of common stock outstanding, respectively. At September 30, 2016 and December 31, 2015, there were 42,308 and 53,172 shares of the Company's Preferred Stock outstanding. On May 29, 2014, the Company issued 30,000 shares of Series A Preferred Stock and 1,500,000 shares of common stock, the proceeds of which were used to pay for a portion of the purchase price related to the acquisition of DBM Global. Each share of Series A Preferred Stock is convertible into the Company's common stock at a conversion price of $4.25. On September 22, 2014, the Company issued 11,000 shares of Series A-1 Convertible Participating Preferred Stock of the Company (the “Series A-1 Preferred Stock”). Each share of Series A-1 Preferred Stock is convertible into the Company's common stock at a conversion price of $4.25. On January 5, 2015, the Company issued 14,000 shares of Series A-2 Convertible Participating Preferred Stock of the Company (the "Series A-2 Preferred Stock" and together with the Series A Preferred Stock and Series A-1 Preferred Stock, the “Preferred Stock”). Each share of Series A-2 Preferred Stock is convertible into the Company's common stock at a conversion price of $7.85. The Company has amended the certificates of designation governing the Series A-1 Preferred Stock to reflect the issuance of the Series A-2 Preferred Stock as a class of preferred stock which ranks at parity with the Series A Preferred Stock and Series A-1 Preferred Stock and to make certain other technical and administrative changes to conform the terms of the Series A-1 Preferred Stock to those of the Series A-2 Preferred Stock. The conversion prices for the Preferred Stock are subject to adjustments for dividends, certain distributions, stock splits, combinations, reclassifications, reorganizations, mergers, recapitalizations and similar events. The Preferred Stock accrues a cumulative quarterly cash dividend at an annualized rate of 7.5% of the accreted value thereof. In addition, the accreted value of the Preferred Stock accretes quarterly at an annualized rate of 4.0% that will be reduced to 2.0% or 0.0% if the Company achieves specified rates of growth measured by increases in its net asset value. Each share of Series A Preferred Stock may be converted by the holder into common stock at any time based on the then-applicable conversion price. On the seventh anniversary of the issue date of the Series A Preferred Stock, holders of the Series A Preferred Stock are entitled to cause the Company to redeem the Series A Preferred Stock at the accreted value per share plus accrued but unpaid dividends. Each share of Series A Preferred Stock that is not so redeemed will be automatically converted into shares of common stock at the conversion price then in effect. Upon a change of control, holders of the Series A Preferred Stock shall be entitled to cause the Company to redeem their Series A Preferred Stock at a price per share equal to the greater of (i) the accrued value of the Series A Preferred Stock, which amount would be multiplied by 150% in the event of a change of control occurring on or prior to the third anniversary of the issue date of the Series A Preferred Stock plus any accrued but unpaid dividends and (ii) the value that would be received if the share of Series A Preferred Stock were converted into common stock immediately prior to the change of control. Certain certificates of amendment related to the Company’s Series A Preferred Stock (the “Prior Amendments”) did not become effective because they were filed without proper authorization of the stockholders of the Company. The holders of the Series A Preferred Stock agreed to release all claims against the Company relating to the ineffectiveness of the Prior Amendments, including the fact that the conversion price of the Series A Preferred Stock remains at $4.25. As payment for the release of claims, the Company issued $5.0 million aggregate principal amount of the 11.0% Notes to the holders of the Series A Preferred Stock. The Company recorded this payment to other income (expense), net in August 2015. At any time after the third anniversary of the issue date of the Series A Preferred Stock, the Company may redeem the Series A Preferred Stock, in whole but not in part, at a price per share generally equal to 150% of the accrued value per share plus accrued but unpaid dividends. After the third anniversary of the issue date of the Series A Preferred Stock, the Company may force conversion of the Series A Preferred Stock into common stock if the common stock’s thirty-day volume-weighted average price (“VWAP”) exceeds 150% of the then-applicable conversion price and the common stock’s daily VWAP exceeds 150% of the then-applicable conversion price for at least twenty trading days out of the thirty trading day period used to calculate the thirty-day VWAP. During the nine months ended September 30, 2016, 1,864 and 9,000 shares of Series A and A-1 Preferred Stock were converted into 444,550 and 2,119,764 shares of the Company's common stock, respectively, in private exchange transactions. During the nine months ended September 30, 2015, 1,000 shares of Series A-1 Preferred Stock were converted into 235,526 shares of common stock in private exchange transactions. We refer to these transactions as the "Preferred Share Conversions". In their Preferred Share conversions conjunction consummated during the nine months ended September 30, 2016, the Company issued 15,318 and 136,149 shares of its Common Stock (the "Conversion Share Consideration") to Corrib Master Fund, Ltd ("Corrib") and Luxor Capital Group, LLP ("Luxor"), respectively. The fair value of the Conversion Share Consideration was $0.7 million on the date of the issuance. The Company also agreed to provide the following two forms of additional consideration for as long as the Preferred Stock remained entitled to receive dividend payments (the "Additional Share Consideration"). In addition, the Company agreed that in the event that Corrib and Luxor would have been entitled to any Participating Dividends payable, had they not converted the Preferred Stock (as defined in the respective Series A and Series A-1 Certificate of Designation), after the date of their Preferred Share conversion, then the Company will issue to Corrib and Luxor, on the date such Participating Dividends become payable by the Company, in a transaction exempt from the registration requirements of the Securities Act the number of shares of common stock equal to (a) the value of the Participating Dividends Corrib or Luxor would have received pursuant to Sections (2)(c) and (2)(d) of the respective Series A and Series A-1 Certificate of Designation, divided by (b) the Thirty Day VWAP (as defined in the respective Series A and Series A-1 Certificate of Designation) for the period ending two business days prior to the underlying event or transaction that would have entitled Corrib or Luxor to such Participating Dividend had Corrib’s or Luxor’s Preferred Stock remain unconverted. Further, the Company agreed that it will issue to Corrib and Luxor, on each quarterly anniversary of May 29, 2017 (or, if later, the date on which the corresponding dividend payment is made to the holders of the outstanding Preferred Stock), through and until the Maturity Date (as defined in the respective Series A and Series A-1 Certificate of Designation), in a transaction exempt from the registration requirements of the Securities Act the number of shares of common stock equal to (a) 1.875% the Accrued Value (as defined in the respective Series A and Series A-1 Certificate of Designation) of Corrib’s or Luxor’s Preferred Stock as of the Closing Date (as defined in applicable Voluntary Conversion Agreements) divided by (b) the Thirty Day VWAP (as defined in the respective Series A and Series A-1 Certificate of Designation) for the period ending two business days prior to the applicable Dividend Payment Date (as defined in the respective Series A and Series A-1 Certificate of Designation). The Additional Share Consideration was valued by the Company at $1.5 million and recorded within other liabilities. Dividends During 2016, HC2's board of directors declared cash dividends with respect to HC2’s issued and outstanding Preferred Stock, as presented in the following table (Total Dividend amount presented in thousands):
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Parties | 18. Related Parties HC2 In January 2015, the Company entered into a services agreement (the “Services Agreement”) with Harbinger Capital Partners with respect to the provision of shared services that may include providing office space and operational support and each party making available their respective employees to provide services as reasonably requested by the other party, subject to any limitations contained in applicable employment agreements and the terms of the Services Agreement. The Company recognized $1.2 million and $0.8 million of expenses under the Services Agreement for the three months ended September 30, 2016 and 2015, respectively. The Company recognized $2.7 million and $1.1 million of expenses under the Services Agreement for the nine months ended September 30, 2016 and 2015, respectively. In April 2015, the Company purchased a $16.1 million convertible debenture of Gaming Nation, Inc. ("Gaming Nation"). On February 22, 2016, Gaming Nation purchased 41,204 shares of the common stock of DMi, which at the time was a wholly-owned subsidiary of the Company. The purchase price paid by Gaming Nation for the shares was $4.0 million. As part of the investment, Gaming Nation was given the right to designate one member of the DMi board of directors, and the number of directors was increased to five in connection with the investment. GMSL The parent company of GMSL, Global Marine Holdings, LLC, incurred management fees of $0.2 million and $0.1 million for the three months ended September 30, 2016 and 2015, respectively. Global Marine Holdings, LLC incurred management fees of $0.5 million and $0.4 million for the nine months ended September 30, 2016 and 2015, respectively. GMSL has investments in various entities upon which it exercises significant influence. A summary of transactions with such entities during the three and nine months ended September 30, 2016 and 2015 and balances outstanding at September 30, 2016 and December 31, 2015 are as follows (in thousands):
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Operating Segment and Related Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Segment and Related Information | 19. Operating Segment and Related Information The Company currently has two primary reportable geographic segments - United States and United Kingdom; and Other. The Company has seven reportable operating segments based on management’s organization of the enterprise - Manufacturing, Marine Services, Insurance, Telecommunications, Utilities, Life Sciences, Other, and a non-operating Corporate segment. Net revenue and long-lived assets by geographic segment is reported on the basis of where the entity is domiciled. All inter-segment revenues are eliminated. The Company has no single customer representing greater than 10% of its revenues. Summary information with respect to the Company’s geographic and operating segments is as follows (in thousands):
(1) Balance represents amortization of negative VOBA, which increases net income. (2) The above capital expenditures exclude assets acquired under terms of capital lease and vendor financing obligations.
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Backlog |
9 Months Ended |
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Sep. 30, 2016 | |
Risks and Uncertainties [Abstract] | |
Backlog | 20. Backlog DBM Global’s backlog was $318.2 million, with $243.8 million under contracts or purchase orders and $74.4 million under letters of intent at September 30, 2016. DBM Global’s backlog increases as contract commitments, letters of intent, notices to proceed and purchase orders are obtained, decreases as revenues are recognized, and increases or decreases to reflect modifications in the work to be performed under the contracts, notices to proceed, letters of intent or purchase orders. DBM Global’s backlog can be significantly affected by the receipt and loss of individual contracts. Approximately $159.8 million, representing 50.2% of DBM Global’s backlog at September 30, 2016, was attributable to five contracts, letters of intent, notices to proceed or purchase orders. If one or more of these large contracts or other commitments were terminated or their scope reduced, DBM Global’s backlog could decrease substantially. |
Basic and Diluted Loss per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted Loss per Common Share | 21. Basic and Diluted Loss Per Common Share Earnings per share ("EPS") is calculated using the two class method, which allocates earnings among common stock and participating securities to calculate EPS when an entity's capital structure includes either two or more classes of common stock or common stock and participating securities. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities. As such, unvested restricted stock of the Company are considered participating securities. The dilutive effect of options and their equivalents (including non-vested stock issued under stock-based compensation plans), is computed using the “treasury” method. The following table presents a reconciliation of net income (loss) used in basic and diluted EPS calculations (in thousands, except share amounts):
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Subsequent Events (Notes) |
9 Months Ended |
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Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 22. Subsequent Events ASC 855, “Subsequent Events” (“ASC 855”), establishes general standards of accounting and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued. ASC 855 requires the Company to evaluate events that occur after the balance date through the date on which Company’s financial statements are issued, and to determine whether adjustments to or additional disclosures in the financial statements are necessary. The Company has evaluated subsequent events through the date these financial statements were issued. On October 5, 2016, R2 Dermatology, a portfolio company within the Company's subsidiary Pansend, received notification from the United States Food and Drug Administration of market clearance of R2 Dermatology's initial device, the R2 Dermal Cooling System. The R2 Dermal Cooling System is a cryosurgical instrument intended for use in dermatologic procedures for the removal of benign lesions of the skin. On October 7, 2016, the Company entered into an agreement with Hudson Bay Absolute Return Credit Opportunities Master Fund, LTD. ("Hudson") to convert and exchange all of Hudson's 12,500 shares of the Company's Series A Convertible Participating Preferred Stock into a total of 3,751,838 shares of the Company's common stock. On October 11, 2016, the Company announced that its operating subsidiary DBM Global had entered into an agreement to acquire the detailing and Building Information Modeling (“BIM”) management business of PDC Global Pty Ltd. (“PDC”), a highly experienced global engineering design, detailing and 3D BIM management company. DBM Global also announced that it has entered into a purchase agreement to acquire BDS VirCon, a leading global steel and rebar detailing and BIM firm. On November 1, 2016, GMSL executed a new sale and purchase agreement through which it completed the renegotiation of the deferred purchase obligation to purchase the outstanding 40% minority interest of CWind. |
Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting and Securities and Exchange Commission (“SEC”) regulations. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such principles and regulations. In the opinion of management, the financial statements reflect all adjustments (all of which are of a normal and recurring nature), which are necessary to present fairly the financial position, results of operations, cash flows and comprehensive income (loss) for the interim periods. The results for the Company’s nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the calendar year ending December 31, 2016. The financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s most recently filed Annual Report on Form 10-K. |
Principles of Consolidation | Principles of Consolidation The Condensed Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries and all other subsidiaries over which the Company exerts control. All intercompany profits, transactions and balances have been eliminated in consolidation. As of September 30, 2016, the Company has a 100% interest in the Insurance Companies, a 100% interest in ICS, a 95% interest in GMSL, a 92% interest in DBM Global, a 56% interest in DMi, a 72% interest in NerVve, and board control of, and a 49.99% interest in ANG. Because the Company controls the operations of ANG through its control of the board, the assets, liabilities, revenues and expenses of ANG are included in our Condensed Consolidated Financial Statements. Through its subsidiary, Pansend, the Company has a 77% interest in Genovel Orthopedics, Inc., a 61% interest in R2 Dermatology and an 80% interest in BeneVir. The results of each of these entities are consolidated with the Company’s results from and after their respective acquisition dates based on guidance from the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, “Consolidation” (“ASC 810”). The remaining interests not owned by the Company are presented as a noncontrolling interest component of total equity. |
Reclassification | Reclassification Certain previous year amounts have been reclassified to conform with current year presentations related to the reporting of new financial statement line items. |
Newly Adopted Accounting Principles and New Accounting Pronouncements | Newly Adopted Accounting Principles In September 2015, the FASB issued Accounting Standards Update ("ASU") 2015-16, “Business Combination Topic No. 805: Simplifying the Accounting for Measurement - Period Adjustments”, which requires adjustments to provisional amounts that are identified during the measurement period to be recognized in the reporting period in which the adjustment amounts are determined. This includes any effect on earnings of changes in depreciation, amortization, or other income effects as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. On January 1, 2016, the Company adopted this update, which did not have a material impact on the Condensed Consolidated Financial Statements. In August 2015, the FASB issued ASU 2015-15, “Interest - Imputation of Interest Subtopic No. 835-30: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” which codifies an SEC staff announcement that entities are permitted to defer and present debt issuance costs related to line-of-credit arrangements as assets, rather than as a direct offset to the liability as is required now under ASU 2015-03. On January 1, 2016, the Company adopted this update, which did not have a material impact on the Condensed Consolidated Financial Statements. In July 2015, the FASB issued ASU 2015-12, "(Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, and (Part III) Measurement Date Practical Expedient". Part I of this ASU is related to one area of several potential simplifications for employee benefit plans and designates contract value as the only required measure for fully benefit-responsive investment contracts, which maintains the relevant information while reducing the cost and complexity of reporting for fully benefit responsive investment contracts. On January 1, 2016, the Company adopted this update, which did not have a material impact on the Condensed Consolidated Financial Statements. In May 2015, the FASB has issued ASU 2015-9, "Disclosures About Short-Duration Contracts". This ASU requires insurance entities to disclose for annual reporting periods certain information in respect of liability for unpaid claims and claim adjustment expenses. On January 1, 2016, the Company adopted this update, which did not have a material impact on the Condensed Consolidated Financial Statements. In May 2015, the FASB issued ASU 2015-8, “Business Combinations Topic No. 805: Pushdown Accounting-Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 115 (SEC Update),” which rescinds certain SEC guidance in order to conform with ASU 2014-17, “Pushdown Accounting” (“ASU 2014-17”). ASU 2014-17 was issued in November 2014 and provides a reporting entity that is a business or nonprofit activity (an “acquiree”) the option to apply pushdown accounting to its separate financial statements when an acquirer obtains control of the acquiree. On January 1, 2016, the Company adopted this update, which did not have a material impact on the Condensed Consolidated Financial Statements. In May 2015, the FASB issued ASU 2015-07, "Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)". The amendments in this ASU remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The amendments also remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient. On January 1, 2016, the Company adopted this update, which did not have a material impact on the Condensed Consolidated Financial Statements. In February 2015, the FASB issued ASU 2015-2, “Amendments to the Consolidation Analysis”, which amends the consolidation requirements in ASC 810 and significantly changes the consolidation analysis required under U.S. GAAP relating to whether or not to consolidate certain legal entities. On January 1, 2016, the Company adopted this update, which did not have a material impact on the Condensed Consolidated Financial Statements. In January 2015, the FASB issued ASU 2015-1, “Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items”, which eliminates from U.S. GAAP the concept of an extraordinary item. Under the ASU, an entity will no longer (1) segregate an extraordinary item from the results of ordinary operations; (2) separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; or (3) disclose income taxes and earnings-per-share data applicable to an extraordinary item. On January 1, 2016, the Company adopted this update, which did not have a material impact on the Condensed Consolidated Financial Statements. New Accounting Pronouncements In August, 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)" ("ASU 2016-15"). The amendments in ASU 2016-15 address eight specific cash flow issues and apply to all entities that are required to present a statement of cash flows under FASB ASC 230, "Statement of Cash Flows." The amendments in ASU 2016-15 are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption during an interim period. The Company has not yet adopted this update and is currently evaluating the impact of ASU 2016-15 on its Condensed Consolidated Financial Statements. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses" (Topic 326)" ("ASU-2016-13"), which amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, ASU 2016-13 eliminates the probable initial recognition threshold in current U.S. GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses should be measured in a manner similar to current U.S. GAAP, however ASU 2016-13 will require that credit losses be presented as an allowance rather than as a write-down. For public business entities that file reports with the SEC, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019. The Company has not yet adopted this update and is currently evaluating the impact of ASU 2016-13 on its Condensed Consolidated Financial Statements. In May 2016, the FASB issued ASU 2016-12, "Revenue From Contracts With Customers" "(Topic 606)" ("ASU 2016-12"), which addresses narrow-scope improvements to the guidance on collectability, non-cash consideration, and completed contracts at transition. Additionally, the amendments in this update provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements for ASU 2016-12 (and any other Topic amended by ASU 2014-09). "Revenue from Contracts with Customers (Topic 606), Section A - Summary and Amendments that Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs - Contracts with Customers (Subtopic 340-40)" ("ASU 2014-09"). ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year. The Company has not yet adopted this update and is currently evaluating the impact of ASU 2016-12 on its Condensed Consolidated Financial Statements. In April 2016, the FASB issued ASU 2016-10, "Revenue From Contracts With Customers (Topic 606): Identifying Performance Obligations and Licensing" ("ASU 2016-10"), which clarifies guidance related to identifying performance obligations and licensing implementation guidance contained in the new revenue recognition standard. Further, this update includes targeted improvements based on input the Board received from the Transition Resource Group for Revenue Recognition and other stakeholders. ASU 2016-10seeks to proactively address areas in which diversity in practice potentially could arise, as well as to reduce the cost and complexity of applying certain aspects of the guidance both at implementation and on an ongoing basis. The Company has not yet adopted ASU 2016-10 and is currently evaluating the impact the update would have on its Condensed Consolidated Financial Statements. In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting" "(Topic 718)" ("ASU 2016-09"), which introduces targeted amendments intended to simplify accounting for stock compensation. Specifically, ASU 2016-09 requires all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) to be recognized as income tax expense or benefit in the income statement. Early adoption is permitted. The Company has not yet adopted this update and is currently evaluating the update would have on its Condensed Consolidated Financial Statements. In March 2016, the FASB issued ASU 2016-08, "Principal versus Agent Considerations" (Topic 606), which updates the new revenue standard by clarifying the principal versus agent implementation guidance. Early adoption is permitted. The Company's effective date for adoption is January 1, 2018. The Company has not yet adopted this update and is currently evaluating the impact of ASU 2016-08 on its Condensed Consolidated Financial Statements. In March 2016, the FASB issued ASU 2016-07, "Simplifying the Transition to the Equity Method of Accounting" "(Topic 323)" ("ASU 2016-07"), which requires an investor to initially apply the equity method of accounting from the date such investor qualifies for that method (i.e., the date such investor obtains significant influence over the operating and financial policies of an investee). The ASU eliminates the previous requirement to retroactively adjust the investment and record a cumulative catch up for the periods that the investment had been held, but did not qualify for the equity method of accounting. Early adoption is permitted. The Company's effective date for adoption is January 1, 2017. The Company has not yet adopted this update and is currently evaluating the impact of ASU 2016-07 on its Condensed Consolidated Financial Statements. In March 2016, the FASB issued ASU 2016-06, "Contingent Put and Call Options in Debt Instruments" "(Topic 815)" ("ASU 2016-06"), which addresses how an entity should assess whether contingent call or put options that can accelerate the payment of debt instruments are clearly and closely related to their debt hosts. This assessment is necessary to determine if the option(s) must be separately accounted for as a derivative. ASU 2016-06 clarifies that an entity is required to assess the embedded call or put options in accordance with a specific four-step decision sequence. This means that entities are not also required to assess whether the contingency for exercising the option(s) is indexed to interest rates or credit risk. For example, when evaluating debt instruments that may be put upon a change in control, the event triggering the change in control is not relevant to the assessment. Only the resulting settlement of debt is subject to the four-step decision sequence. Early adoption is permitted. The Company's effective date for adoption is January 1, 2017. The Company has not yet adopted ASU 2016-06 and is currently evaluating the impact the update would have on its Condensed Consolidated Financial Statements. In February 2016, the FASB issued ASU 2016-02, "Leases" "(Topic 842)" ("ASU 2016-02"), which applies a right-of-use (ROU) model that requires a lessee to record, for all leases with a lease term of more than 12 months, an asset representing its right to use the underlying asset and a liability to make lease payments. ASU 2016-02 requires a lessor to classify leases as either sales-type, direct financing or operating, similar to existing U.S. GAAP requirements. Classification depends on the same five criteria used by lessees as well as certain additional factors. The new standard addresses other considerations including identification of a lease, separating lease and nonlease components of a contract, sale and leaseback transactions, modifications, combining contracts, reassessment of the lease term, and remeasurement of lease payments. Early adoption is permitted. The Company’s effective date for adoption is January 1, 2019. The Company has not yet adopted ASU 2016-02 and is currently evaluating the impact the update would have on its Condensed Consolidated Financial Statements. In January 2016, the FASB issued ASU 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities" "(Subtopic 825-10)" ("ASU 2016-01") which, among other things, requires all equity securities currently classified as “available for sale” to be reported at fair value, with holding gains and losses recognized in net income instead of accumulated other comprehensive income ("AOCI"). Certain provisions of ASU 2016-01 are eligible for early adoption. The Company’s effective date for adoption is January 1, 2018. The Company has not yet adopted ASU 2016-01 and is currently evaluating the impact the update would have on its Condensed Consolidated Financial Statements |
Business Combinations (Tables) |
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Schedule of unaudited consolidated pro forma results of operations | The following schedule presents unaudited consolidated pro forma results of operations data as if the acquisition of the Insurance Companies had occurred on January 1, 2015. This information neither purports to be indicative of the actual results that would have occurred if those acquisitions had actually been completed on the date indicated, nor is it necessarily indicative of the future operating results or the financial position of the combined company (in thousands, except per share amounts):
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Schedule of Business Acquisitions, by Acquisition | The following table summarizes the preliminary allocation of the purchase price to the fair value of identifiable assets acquired and liabilities assumed for the fiscal year 2016 acquisitions at the date of acquisition, in accordance with the acquisition method of accounting:
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Schedule of purchase price allocation | The preliminary fair values of identified assets acquired, liabilities assumed, residual goodwill and consideration transferred are summarized as follows (in thousands):
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Schedule of purchase price allocation |
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Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fixed maturity and equity securities available-for-sale | Additionally, as of September 30, 2016 and December 31, 2015, other invested assets include common stock purchase warrants and call options accounted for under ASC 815, "Derivatives and Hedging" ("ASC 815") (in thousands):
The following tables provide information relating to investments in fixed maturity and equity securities as of September 30, 2016 and December 31, 2015 (in thousands):
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Schedule of maturities of fixed maturity securities available-for-sale | Asset and mortgage-backed securities are shown separately in the table below, as they are not due at a single maturity date:
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Schedule of major industry types of fixed maturity holdings | The tables below show the major industry types of the Company’s corporate and other fixed maturity securities as of September 30, 2016 and December 31, 2015 (in thousands):
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Schedule of unrealized losses for fixed maturities and equity securities | The following table presents the total unrealized losses for the 117 and 528 fixed maturity and equity securities held by the Company as of September 30, 2016 and December 31, 2015, respectively, where the estimated fair value had declined and remained below amortized cost by the indicated amount (in thousands):
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Schedule of estimated fair value and gross unrealized loss | The following tables present the estimated fair values and gross unrealized losses for the 117 and 528 fixed maturity and equity securities held by the Company that have estimated fair values below amortized cost as of September 30, 2016 and December 31, 2015, respectively. The Company does not have any OTTI losses reported in AOCI. These investments are presented by investment category and the length of time the related fair value has remained below amortized cost (in thousands):
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Schedule of other invested assets | Carrying values of other invested assets as of September 30, 2016 and December 31, 2015 are as follows (in thousands):
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Schedule of net investment income | For the three and nine months ended September 30, 2016, the major sources of net investment income in the accompanying Condensed Consolidated Statements of Operations were as follows (in thousands):
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Schedule of net investment (losses) gains | For the three and nine months ended September 30, 2016, the major sources of net realized gains (losses) on investments in the accompanying Condensed Consolidated Statements of Operations were as follows (in thousands):
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Fair Value of Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of assets and liabilities measured at fair value on recurring basis | Assets and liabilities measured at fair value on a recurring basis at September 30, 2016 and December 31, 2015 are summarized below (in thousands):
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Schedule of changes in balances of level 3 financial assets at fair value | Changes in balances of Level 3 financial assets carried at fair value during the three and nine months ended September 30, 2016 and 2015 are presented below (in thousands):
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Schedule of financial instruments measured at fair value on nonrecurring basis | The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments, which were not measured at fair value on a recurring basis, at September 30, 2016 and December 31, 2015, respectively. This table excludes carrying amounts reported in the Condensed Consolidated Balance Sheets for cash, accounts receivable, costs and recognized earnings in excess of billings, accounts payable, accrued expenses, billings in excess of costs and recognized earnings, and other current assets and liabilities approximate fair value due to relatively short periods to maturity (in thousands):
(1) Excludes life contingent annuities in the payout phase. (2) Excludes certain lease obligations accounted for under ASC 840, "Leases". |
Accounts Receivable (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accounts receivable | Accounts receivable consist of the following (in thousands):
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Contracts in Progress (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractors [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of costs and recognized earnings in excess of billings on uncompleted contracts and billings in excess of costs and recognized earnings on uncompleted contracts | Costs and recognized earnings in excess of billings on uncompleted contracts and billings in excess of costs and recognized earnings on uncompleted contracts consist of the following (in thousands):
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Inventory (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Inventories | Inventory consists of the following (in thousands):
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Recoverable from Reinsurers (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reinsurance recoverable assets | The following table presents information for the Company's recoverable from reinsurers assets as of September 30, 2016 and December 31, 2015 (in thousands):
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Goodwill and Other Intangible Assets (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the changes in the carrying amount of goodwill by reporting unit | The changes in the carrying amount of goodwill by segment for the nine months ended September 30, 2016 are as follows (in thousands):
|
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Schedule of intangible assets subject to amortization | Intangible assets subject to amortization consisted of the following (in thousands):
|
Life, Accident and Health Reserves (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of life, accident and health reserves | Life, accident and health reserves consist of the following (in thousands):
|
Long-Term Obligations (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt | Long-term debt consists of the following (in thousands):
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|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of aggregate maturities for capital leases | Aggregate capital lease and debt payments are as follows (in thousands):
|
Employee Retirement Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The following table presents the components of net periodic benefit cost for the three and nine months ended September 30, 2016 and 2015, respectively (in thousands):
|
Share-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value of each option grant estimated | The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions shown as a weighted average for the year:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of restricted stock activity | A summary of the Company’s restricted stock and restricted stock unit activity for the nine months ended September 30, 2016 is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of stock option activity | A summary of the Company’s stock option activity and respective weighted average exercise price during the nine months ended September 30, 2016 is as follows:
|
Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of board of directors cash dividends declared | During 2016, HC2's board of directors declared cash dividends with respect to HC2’s issued and outstanding Preferred Stock, as presented in the following table (Total Dividend amount presented in thousands):
|
Related Parties (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of transactions and balances outstanding | A summary of transactions with such entities during the three and nine months ended September 30, 2016 and 2015 and balances outstanding at September 30, 2016 and December 31, 2015 are as follows (in thousands):
|
Operating Segment and Related Information (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of operating activity and capital expenditures of geographic and operating segments | Summary information with respect to the Company’s geographic and operating segments is as follows (in thousands):
(1) Balance represents amortization of negative VOBA, which increases net income. (2) The above capital expenditures exclude assets acquired under terms of capital lease and vendor financing obligations. |
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Summary of assets of geographic and operating segments |
|
Basic and Diluted Loss per Common Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of calculation of basic income (loss) per common share to diluted income (loss) per common share | The following table presents a reconciliation of net income (loss) used in basic and diluted EPS calculations (in thousands, except share amounts):
|
Summary of Significant Accounting Policies - Adjustments (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Sep. 30, 2016 |
Mar. 31, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||
Net income (loss) | $ (5,399) | $ (7,922) | $ (35,450) | $ (24,117) | |||
Net income (loss) attributable to common stock and participating preferred stockholders, not adjusted | $ (39,400) | ||||||
EPS, diluted, not adjusted (in dollars per share) | $ (1.10) | ||||||
Net income (loss) attributable to common stock and participating preferred stockholders | $ (7,506) | $ (9,022) | $ (38,146) | $ (27,337) | |||
Error in Accounting for Certain Items Related to Purchase Accounting | |||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||
Net income (loss) | $ 800 | $ 700 | $ (200) | ||||
Cumulative effect of error correction adjustments | $ (1,300) |
Business Combinations - Pro Forma Adjusted Summary (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2015 |
Sep. 30, 2015 |
|
Business Combinations [Abstract] | ||
Net revenue | $ 315,371 | $ 876,697 |
Net loss from continuing operations | (7,119) | (22,451) |
Loss from discontinued operations | (24) | (44) |
Net loss attributable to HC2 | $ (7,143) | $ (22,495) |
Per share amounts: | ||
Income (loss) from continuing operations (in dollars per share) | $ (0.28) | $ (0.89) |
Gain (loss) from discontinued operations (in dollars per share) | 0.00 | 0.00 |
Net income (loss) attributable to HC2 (in dollars per share) | $ (0.28) | $ (0.90) |
Business Combinations - Other Acquisitions Narrative (Details) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2016
USD ($)
fueling_station
|
Sep. 30, 2017 |
|
Other | ||
Business Acquisition [Line Items] | ||
Number of businesses acquired | fueling_station | 3 | |
Total fair value of consideration transferred | $ 21,921 | |
Cash | $ 13,671 | |
GMSL | CWind | ||
Business Acquisition [Line Items] | ||
Percentage of ownership interest acquired | 60.00% | |
Scenario, Forecast | CWind | ||
Business Acquisition [Line Items] | ||
Percentage of ownership interest acquired | 40.00% |
Investments - Schedule of Maturities of Fixed Maturity Securities Available-for-Sale (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Amortized Cost | ||
Total | $ 1,255,449 | |
Fair Value | ||
Total | 1,331,677 | $ 1,231,841 |
Corporate, Municipal, U.S. Government and Other securities | ||
Amortized Cost | ||
Due in one year or less | 40,777 | |
Due after one year through five years | 115,932 | |
Due after five years through ten years | 141,642 | |
Due after ten years | 687,282 | |
Subtotal | 985,633 | |
Fair Value | ||
Due in one year or less | 38,312 | |
Due after one year through five years | 120,562 | |
Due after five years through ten years | 148,033 | |
Due after ten years | 750,626 | |
Subtotal | 1,057,533 | |
Mortgage-backed securities | ||
Amortized Cost | ||
Amortized cost, without single maturity date | 200,951 | |
Fair Value | ||
Fair value, without single maturity date | 203,628 | |
Asset-backed securities | ||
Amortized Cost | ||
Amortized cost, without single maturity date | 68,865 | |
Fair Value | ||
Fair value, without single maturity date | $ 70,516 |
Investments - Schedule of Unrealized Losses for Fixed Maturities and Equity Securities (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Unrealized Losses | ||
Less than 20% | $ (1,965) | $ (5,667) |
20% or more for less than six months | (337) | 0 |
20% or more for six months or greater | (2,570) | (5,198) |
Total | $ (4,872) | $ (10,865) |
Percentage of Total | ||
Less than 20% | 40.30% | 52.20% |
20% or more for less than six months | 6.90% | 0.00% |
20% or more for six months or greater | 52.80% | 47.80% |
Total | 100.00% | 100.00% |
Investments - Schedule of Other Invested Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Summary of Investment Holdings [Line Items] | ||
Cost Method | $ 5,719 | $ 5,784 |
Equity Method | 50,439 | 42,492 |
Common Equity | ||
Summary of Investment Holdings [Line Items] | ||
Cost Method | 138 | 249 |
Equity Method | 1,382 | 6,475 |
Preferred Equity | ||
Summary of Investment Holdings [Line Items] | ||
Cost Method | 2,484 | 1,655 |
Equity Method | 10,763 | 7,522 |
Warrants | ||
Summary of Investment Holdings [Line Items] | ||
Cost Method | 3,097 | 3,880 |
Equity Method | 0 | 0 |
Limited Partnerships | ||
Summary of Investment Holdings [Line Items] | ||
Cost Method | 0 | 0 |
Equity Method | 1,141 | 1,171 |
Joint Ventures | ||
Summary of Investment Holdings [Line Items] | ||
Cost Method | 0 | 0 |
Equity Method | $ 37,153 | $ 27,324 |
Investments - Schedule of Other Invested Assets - Common Stock Purchase Warrants and Call Options (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Investment Holdings [Line Items] | ||
Fair Value | $ 56,506 | $ 49,682 |
Derivatives | ||
Investment Holdings [Line Items] | ||
Cost | 6,562 | 8,063 |
Gains | 280 | 428 |
Losses | (2,130) | (3,648) |
Fair Value | 4,712 | 4,843 |
Warrants | ||
Investment Holdings [Line Items] | ||
Cost | 6,332 | 6,383 |
Gains | 280 | 428 |
Losses | (2,130) | (2,600) |
Fair Value | 4,482 | 4,211 |
Call Options | ||
Investment Holdings [Line Items] | ||
Cost | 230 | 1,680 |
Gains | 0 | 0 |
Losses | 0 | (1,048) |
Fair Value | $ 230 | $ 632 |
Investments - Schedule of Net Investment Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Investment [Line Items] | ||||
Gross investment income | $ 15,024 | $ 43,247 | ||
External investment expense | (225) | (662) | ||
Net investment income | 14,799 | $ 0 | 42,585 | $ 0 |
Fixed Maturities | ||||
Investment [Line Items] | ||||
Net investment income | 14,033 | 40,388 | ||
Equity Securities | ||||
Investment [Line Items] | ||||
Net investment income | 430 | 1,526 | ||
Mortgage loans | ||||
Investment [Line Items] | ||||
Net investment income | 120 | 155 | ||
Policy loans | ||||
Investment [Line Items] | ||||
Net investment income | 312 | 876 | ||
Other invested assets | ||||
Investment [Line Items] | ||||
Net investment income | $ 129 | $ 302 |
Investments - Schedule of Net Investment (Losses) Gains (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Schedule of Available-for-sale Securities [Line Items] | ||||
Net realized gains (losses) | $ (220,000) | $ 0 | $ (2,677,000) | $ 0 |
Impairment loss | (1,500,000) | $ 0 | (2,600,000) | $ 0 |
Fixed Maturities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Realized gains | 455,000 | 1,663,000 | ||
Realized losses | 0 | (2,338,000) | ||
Equity Securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Realized gains | 154,000 | 438,000 | ||
Realized losses | 0 | (352,000) | ||
Derivatives | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Net realized gains (losses) | (829,000) | (1,925,000) | ||
Other Income (Expense) | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Impairment loss | $ 0 | $ (163,000) |
Fair Value of Financial Instruments - Narrative (Details) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2016
USD ($)
|
|
Corporate and Other Bonds | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Transfer of assets from level 1 to level 2 | $ 1.1 | $ 1.1 |
Preferred Stock | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Transfer of assets from level 1 to level 2 | 0.5 | 0.5 |
Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Transfers out of level three | $ (0.6) | |
Net transfer to level 3 | $ 2.4 | |
Level 3 | Assets, Total | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Percent of total assets (less than) | 1.00% |
Accounts Receivable (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Contract receivables: | ||
Contracts in progress | $ 148,536 | $ 103,178 |
Unbilled retentions | 39,128 | 31,195 |
Trade receivables | 87,891 | 77,084 |
Other receivables | 216 | 190 |
Allowance for doubtful accounts | (3,033) | (794) |
Total accounts receivable | $ 272,738 | $ 210,853 |
Contracts in Progress (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Contractors [Abstract] | ||
Costs incurred on contracts in progress | $ 606,809 | $ 597,656 |
Estimated earnings | 125,377 | 99,985 |
Costs incurred on contracts in progress and estimated earnings, gross | 732,186 | 697,641 |
Less progress billings | 766,336 | 679,532 |
Costs incurred on contracts in progress and estimated earnings, net | (34,150) | 18,109 |
The above is included in the accompanying Condensed Consolidated Balance Sheet under the following captions: | ||
Costs and recognized earnings in excess of billings on uncompleted contracts | 17,091 | 39,310 |
Billings in excess of costs and recognized earnings on uncompleted contracts | 51,241 | 21,201 |
Costs incurred on contracts in progress and estimated earnings, net | $ (34,150) | $ 18,109 |
Inventory (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 8,514 | $ 10,485 |
Work in process | 235 | 1,289 |
Finished goods | 224 | 346 |
Inventories, net | $ 8,973 | $ 12,120 |
Goodwill and Other Intangible Assets - Narrative (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Licensing Agreements | Insurance Companies | |
Finite-Lived Intangible Assets [Line Items] | |
Indefinite-lived intangible assets | $ 4.8 |
In Process Research and Development | Benevir Biopharm Inc | |
Finite-Lived Intangible Assets [Line Items] | |
Indefinite-lived intangible assets | $ 6.4 |
Life, Accident and Health Reserves (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Total life, accident and health reserves | $ 1,637,501 | $ 1,591,937 |
Long-term care insurance reserves | ||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Total life, accident and health reserves | 1,396,446 | 1,354,151 |
Traditional life insurance reserves | ||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Total life, accident and health reserves | 103,131 | 104,450 |
Other accident and health insurance reserves | ||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Total life, accident and health reserves | $ 137,924 | $ 133,336 |
Long-Term Obligations - Schedule of Aggregate Debt Maturities (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Capital Leases Maturities | ||
2016 | $ 1,718 | |
2017 | 6,848 | |
2018 | 9,981 | |
2019 | 9,849 | |
2020 | 9,855 | |
Thereafter | 27,615 | |
Total minimum principal & interest payments | 65,866 | |
Less: Amount representing interest | (13,084) | |
Total capital lease obligations | 52,782 | |
Debt Maturities | ||
2016 | 25,025 | |
2017 | 47,068 | |
2018 | 43,703 | |
2019 | 348,041 | |
2020 | 4,369 | |
Thereafter | 7,753 | |
Total minimum principal & interest payments | 475,959 | |
Less: Amount representing interest | (123,614) | |
Long-term debt | 352,345 | |
Maturities of Long-term Debt and Capital Lease Obligations [Abstract] | ||
2016 | 26,743 | |
2017 | 53,916 | |
2018 | 53,684 | |
2019 | 357,890 | |
2020 | 14,224 | |
Thereafter | 35,368 | |
Total minimum principal & interest payments | 541,825 | |
Less: Amount representing interest | (136,698) | |
Total | $ 405,127 | $ 381,614 |
Long-Term Obligations - GMSL Credit Facility (Details) - USD ($) |
1 Months Ended | 9 Months Ended | |
---|---|---|---|
Jan. 31, 2014 |
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Line of Credit Facility [Line Items] | |||
Outstanding debt | $ 352,345,000 | ||
GMSL | Note Payable Collateralized by Assets | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate (as a percent) | 3.65% | ||
Outstanding debt | $ 3,025,000 | $ 5,260,000 | |
GMSL | LIBOR | Note Payable Collateralized by Assets | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate (as a percent) | 3.65% | ||
Term Loan | GMSL | |||
Line of Credit Facility [Line Items] | |||
Term loan amount established | $ 20,000,000.0 | ||
Term Loan | GMSL | LIBOR | |||
Line of Credit Facility [Line Items] | |||
Debt instrument term | 4 years 6 months |
Long-Term Obligations - GMSL Capital Leases (Details) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2016
USD ($)
lease
vessel
|
Dec. 31, 2015
USD ($)
|
|
Debt Instrument [Line Items] | ||
Number of leases | lease | 2 | |
Number of vessels | vessel | 2 | |
Obligations under capital leases | $ | $ 52,782 | $ 52,697 |
Innovator Lease | ||
Debt Instrument [Line Items] | ||
Interest rate (as a percent) | 10.40% | |
Cable Lease | ||
Debt Instrument [Line Items] | ||
Interest rate (as a percent) | 4.00% |
Income Taxes - Income Tax Benefit (Expense) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ (1,334) | $ 1,504 | $ (3,649) | $ (1,832) |
Income Taxes - NOL Limitation (Details) - USD ($) $ in Millions |
9 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Nov. 04, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
Nov. 06, 2014 |
May 29, 2014 |
Mar. 31, 2014 |
|
Operating Loss Carryforwards [Line Items] | |||||||
Estimated NOL carryforward amount | $ 80.7 | ||||||
Substantial acquisition of stock (as a percent) | 5.00% | ||||||
Shares of common stock issued (in shares) | 38,263,606 | 35,281,375 | |||||
Estimated amount of annual base limit | $ 2.3 | ||||||
Operating loss carryforward limitation | $ 77.7 | ||||||
Series A Preferred Stock | |||||||
Operating Loss Carryforwards [Line Items] | |||||||
Shares issued (in shares) | 30,000 | ||||||
Schuff | |||||||
Operating Loss Carryforwards [Line Items] | |||||||
Shares of common stock issued (in shares) | 721,000 | 1,500,000 | |||||
Common Stock | |||||||
Operating Loss Carryforwards [Line Items] | |||||||
Issuance of common stock (in shares) | 8,452,500 | 65,000 | 5,000 |
Commitments and Contingencies (Details) - USD ($) $ in Millions |
Jul. 16, 2013 |
Sep. 30, 2016 |
Dec. 31, 2015 |
Nov. 06, 2014 |
May 29, 2014 |
---|---|---|---|---|---|
Loss Contingencies [Line Items] | |||||
Shares of common stock issued (in shares) | 38,263,606 | 35,281,375 | |||
Xplornet | |||||
Loss Contingencies [Line Items] | |||||
Damage amount sought | $ 50 | ||||
Schuff | |||||
Loss Contingencies [Line Items] | |||||
Shares of common stock issued (in shares) | 721,000 | 1,500,000 |
Employee Retirement Plans - Schedule of Net Benefit Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Compensation and Retirement Disclosure [Abstract] | ||||
Service cost - benefits earning during the period | $ 17 | $ 15 | $ 52 | $ 46 |
Interest cost on projected benefit obligation | 1,878 | 1,833 | 5,633 | 5,498 |
Expected return on assets | (1,991) | (1,877) | (5,974) | (5,630) |
Actuarial gain | 0 | 128 | 0 | 384 |
Foreign currency gain (loss) | 3 | (3) | 9 | (9) |
Net periodic benefit cost/(income) | $ (93) | $ 96 | $ (280) | $ 289 |
Employee Retirement Plans - Narrative (Details) - USD ($) $ in Millions |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Compensation and Retirement Disclosure [Abstract] | ||
Expected contributions in 2016 | $ 7.2 | |
Contributions | $ 1.4 |
Share-Based Compensation - Narrative (Details) - $ / shares |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Apr. 30, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted (in shares) | 1,506,848 | 1,406,681 | |
Weighted average fair value (in dollars per share) | $ 1.09 | $ 1.55 | |
Chief Executive Officer | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted (in shares) | 6,848 | 885,173 | |
Omnibus Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares authorized for issuance (in shares) | 5,000,000 | 1,500,000 |
Share-Based Compensation - Fair Value of Option Grant (Details) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Fair Value Inputs, Equity, Quantitative Information [Line Items] | ||
Expected option life (in years) | 5 years 4 months 17 days | |
Risk free interest rate, minimum | 1.27% | 1.49% |
Risk-free interest rate, maximum | 1.35% | 1.68% |
Expected volatility, minimum (as a percent) | 39.58% | 36.29% |
Expected volatility, maximum (as a percent) | 55.58% | 40.50% |
Dividend yield (as a percent) | 0.00% | 0.00% |
Minimum | ||
Fair Value Inputs, Equity, Quantitative Information [Line Items] | ||
Expected option life (in years) | 4 years 8 months 12 days | |
Maximum | ||
Fair Value Inputs, Equity, Quantitative Information [Line Items] | ||
Expected option life (in years) | 6 years |
Share-Based Compensation - Fair Value of Option Grant Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Share based compensation expense | $ 1.8 | $ 2.3 | $ 6.7 | $ 7.4 |
Share-Based Compensation - Summary of Restricted Stock and Restricted Stock Units (Details) - Restricted Stock |
9 Months Ended |
---|---|
Sep. 30, 2016
$ / shares
shares
| |
Shares | |
Beginning balance (in shares) | shares | 790,688.00 |
Granted (in shares) | shares | 295,899.00 |
Vested (in shares) | shares | (882,918) |
Forfeitures (in shares) | shares | (16,611) |
Ending balance (in shares) | shares | 187,058 |
Weighted Average Grant Date Fair Value | |
Beginning balance (in dollars per share) | $ / shares | $ 8.14 |
Granted (in dollars per share) | $ / shares | 3.89 |
Vested (in dollars per share) | $ / shares | 7.14 |
Forfeitures (in dollars per share) | $ / shares | 5.03 |
Ending balance (in dollars per share) | $ / shares | $ 6.44 |
Share-Based Compensation - Restricted Stock and Restricted Stock Units Narrative (Details) - Restricted Stock $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unvested restricted stock | $ | $ 0.5 |
Vesting period | 1 year 1 month 17 days |
Unvested restricted stock expected to vest (in shares) | shares | 185,189 |
Share-Based Compensation - Summary of Stock Options (Details) - $ / shares |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Shares | |||
Granted (in shares) | 1,506,848 | 1,406,681 | |
Stock Option | |||
Shares | |||
Beginning balance (in shares) | 5,361,285.00 | ||
Granted (in shares) | 1,506,848.00 | ||
Exercised (in shares) | (2,000) | ||
Forfeitures (in shares) | (2,800) | ||
Ending balance (in shares) | 6,863,333 | ||
Weighted Average Exercise Price | |||
Beginning balance (in dollars per share) | $ 6.58 | $ 5.48 | |
Granted (in dollars per share) | 10.49 | ||
Exercised (in dollars per share) | 4.06 | ||
Forfeitures (in dollars per share) | $ 4.06 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | |||
Eligible for exercise (in shares) | 3,950,750.00 | ||
Eligible for exercise (in dollars per share) | $ 5.33 |
Share-Based Compensation - Stock Option Narrative (Details) - Stock Option $ / shares in Units, $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Intrinsic value, options outstanding | $ 3.2 |
Intrinsic value, options exercisable | $ 2.4 |
Weighted average remaining life, options outstanding | 8 years 3 months 15 days |
Weighted average remaining life, options exercisable | 7 years 10 months 17 days |
Unvested stock options outstanding (in shares) | shares | 2,912,583 |
Compensation expense expected to be recognized | $ 2.8 |
Vesting period | 1 year 9 months 26 days |
Unvested stock options expected to vest (in shares) | shares | 2,912,583 |
Weighted average remaining life | 8 years 10 months 2 days |
Weighted average exercise price (in dollars per share) | $ / shares | $ 8.27 |
Options, expected to vest, intrinsic value | $ 0.8 |
Equity - Summary of Cash Dividends (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Dividend Declared for Q1 | |
Dividends Payable [Line Items] | |
Declaration Date and Holders of Record Date | Mar. 31, 2016 |
Payment/Accrual Date | Apr. 15, 2016 |
Total Dividend | $ 988 |
Dividend Declared for Q2 | |
Dividends Payable [Line Items] | |
Declaration Date and Holders of Record Date | Jun. 30, 2016 |
Payment/Accrual Date | Jul. 15, 2016 |
Total Dividend | $ 988 |
Dividend Declared for Q3 | |
Dividends Payable [Line Items] | |
Declaration Date and Holders of Record Date | Sep. 30, 2016 |
Payment/Accrual Date | Oct. 15, 2016 |
Total Dividend | $ 800 |
Related Parties - Narrative (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|---|
Feb. 22, 2016 |
Apr. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Services Agreement | Harbinger Capital Partners | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses | $ 1.2 | $ 0.8 | $ 2.7 | $ 1.1 | ||
DMi Inc. | ||||||
Related Party Transaction [Line Items] | ||||||
Purchase price | $ 4.0 | $ 16.1 | ||||
Shares purchased (in shares) | 41,204 | |||||
Global Marine Holdings, LLC | ||||||
Related Party Transaction [Line Items] | ||||||
Management fees accrued | $ 0.2 | $ 0.1 | $ 0.5 | $ 0.4 |
Related Parties - Transactions and Balances Outstanding (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Supplemental Income Statement Elements [Abstract] | |||||
Net revenue | $ 14,409 | $ 3,020 | $ 25,904 | $ 17,507 | |
Operating expenses | 945 | 917 | 3,102 | 2,885 | |
Interest expense | 377 | 391 | 1,130 | 1,214 | |
Dividends received | 0 | $ 2,440 | 418 | $ 2,440 | |
Related Party Transaction, Due from (to) Related Party [Abstract] | |||||
Accounts receivable | 8,020 | 8,020 | $ 5,058 | ||
Long-term debt | 37,417 | 37,417 | 37,627 | ||
Accounts payable | $ 239 | $ 239 | $ 9 |
Operating Segment and Related Information - Narrative (Details) |
9 Months Ended |
---|---|
Sep. 30, 2016
segment
| |
Segment Reporting [Abstract] | |
Number of reportable geographic segments | 2 |
Number of reportable operating segments | 7 |
Backlog (Details) - DBM $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
contract
| |
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |
Backlog | $ 318.2 |
Contracts or Purchase Orders | |
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |
Backlog | 243.8 |
Letters of Intent | |
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |
Backlog | 74.4 |
Five Contracts, Letters of Intent, Notices to Proceed or Purchase Orders | |
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |
Backlog | $ 159.8 |
Backlog percentage | 50.20% |
Number of contracts attributable to backlog | contract | 5 |
Basic and Diluted Loss per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Earnings Per Share [Abstract] | ||||
Loss from continuing operations attributable to common stock and participating preferred stockholders | $ (7,506) | $ (8,998) | $ (38,146) | $ (27,293) |
Loss from discontinued operations | 0 | (24) | 0 | (44) |
Net Loss attributable to common stock and participating preferred stockholders | $ (7,506) | $ (9,022) | $ (38,146) | $ (27,337) |
Weighted average common shares outstanding-basic | 36,627 | 25,592 | 35,808 | 25,093 |
Common Stock (as a percent) | 100.00% | 100.00% | 100.00% | 100.00% |
Preferred Stock (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% |
Loss from continuing operations | $ (7,506) | $ (8,998) | $ (38,146) | $ (27,293) |
Net Loss | $ (7,506) | $ (9,022) | $ (38,146) | $ (27,337) |
Net loss attributable to common stock and participating preferred stockholders - basic and diluted | $ (0.20) | $ (0.35) | $ (1.07) | $ (1.09) |
Subsequent Events (Details) - shares |
9 Months Ended | ||
---|---|---|---|
Oct. 07, 2016 |
Sep. 30, 2016 |
Sep. 30, 2017 |
|
Series A Preferred Stock | |||
Subsequent Event [Line Items] | |||
Shares of preferred stock converted (in shares) | 1,864 | ||
Hudson | Series A Preferred Stock | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Shares of preferred stock converted (in shares) | 12,500 | ||
Hudson | Common Stock | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Common stock issued upon conversion (in shares) | 3,751,838 | ||
CWind | Scenario, Forecast | |||
Subsequent Event [Line Items] | |||
Percentage of ownership interest acquired | 40.00% |
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