FORM 10-Q |
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. |
HC2 HOLDINGS, INC. (Exact name of registrant as specified in its charter) |
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) |
Title of each class | Trading Symbol | Name of each exchange on which registered |
Common Stock, par value $0.001 per share | HCHC | New York Stock Exchange |
Large accelerated filer | ☐ | Accelerated filer | x |
Non-accelerated filer | ☐ | Smaller reporting company | x |
Emerging growth company | ☐ |
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenue | $ | 397.5 | $ | 444.8 | $ | 1,242.3 | $ | 1,315.3 | ||||||||
Life, accident and health earned premiums, net | 28.9 | 25.4 | 88.7 | 65.3 | ||||||||||||
Net investment income | 51.2 | 31.7 | 152.6 | 68.8 | ||||||||||||
Net realized and unrealized (losses) gains on investments | (1.9 | ) | (0.5 | ) | 2.1 | 2.4 | ||||||||||
Net revenue | 475.7 | 501.4 | 1,485.7 | 1,451.8 | ||||||||||||
Operating expenses | ||||||||||||||||
Cost of revenue | 337.0 | 402.9 | 1,075.9 | 1,179.2 | ||||||||||||
Policy benefits, changes in reserves, and commissions | 66.1 | 66.5 | 166.8 | 134.1 | ||||||||||||
Selling, general and administrative | 54.4 | 50.9 | 159.4 | 160.0 | ||||||||||||
Depreciation and amortization | 8.6 | 6.2 | 23.1 | 25.0 | ||||||||||||
Other operating income | — | (0.8 | ) | (1.6 | ) | (2.9 | ) | |||||||||
Total operating expenses | 466.1 | 525.7 | 1,423.6 | 1,495.4 | ||||||||||||
Income (loss) from operations | 9.6 | (24.3 | ) | 62.1 | (43.6 | ) | ||||||||||
Interest expense | (24.0 | ) | (17.5 | ) | (69.3 | ) | (54.0 | ) | ||||||||
Gain on sale and deconsolidation of subsidiary | — | 3.0 | — | 105.1 | ||||||||||||
Income from equity investees | 0.3 | 8.1 | 1.5 | 13.7 | ||||||||||||
Gain on bargain purchase | — | 109.1 | 1.1 | 109.1 | ||||||||||||
Other income, net | 6.8 | 63.9 | 5.4 | 64.0 | ||||||||||||
(Loss) income from continuing operations | (7.3 | ) | 142.3 | 0.8 | 194.3 | |||||||||||
Income tax (expense) benefit | (1.0 | ) | 9.2 | (6.2 | ) | (1.9 | ) | |||||||||
Net (loss) income | (8.3 | ) | 151.5 | (5.4 | ) | 192.4 | ||||||||||
Net loss (income) attributable to noncontrolling interest and redeemable noncontrolling interest | 1.2 | 2.0 | 4.9 | (18.6 | ) | |||||||||||
Net (loss) income attributable to HC2 Holdings, Inc. | (7.1 | ) | 153.5 | (0.5 | ) | 173.8 | ||||||||||
Less: Preferred dividends, deemed dividends, and repurchase gains | 0.4 | 0.7 | (0.4 | ) | 2.1 | |||||||||||
Net (loss) income attributable to common stock and participating preferred stockholders | $ | (7.5 | ) | $ | 152.8 | $ | (0.1 | ) | $ | 171.7 | ||||||
(Loss) income per common share | ||||||||||||||||
Basic | $ | (0.16 | ) | $ | 3.09 | $ | — | $ | 3.48 | |||||||
Diluted | $ | (0.16 | ) | $ | 2.97 | $ | — | $ | 3.38 | |||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 45.7 | 44.3 | 45.4 | 44.2 | ||||||||||||
Diluted | 45.7 | 46.2 | 45.4 | 45.6 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net (loss) income | $ | (8.3 | ) | $ | 151.5 | $ | (5.4 | ) | $ | 192.4 | ||||||
Other comprehensive income (loss) | ||||||||||||||||
Foreign currency translation adjustment | (2.7 | ) | (2.0 | ) | (2.5 | ) | (3.7 | ) | ||||||||
Unrealized gain (loss) on available-for-sale securities | 82.4 | (22.7 | ) | 312.0 | (74.2 | ) | ||||||||||
Other comprehensive income (loss) | 79.7 | (24.7 | ) | 309.5 | (77.9 | ) | ||||||||||
Comprehensive income | 71.4 | 126.8 | 304.1 | 114.5 | ||||||||||||
Net (income) loss attributable to noncontrolling interest and redeemable noncontrolling interest | 1.9 | 2.6 | 5.5 | (17.6 | ) | |||||||||||
Comprehensive income attributable to HC2 Holdings, Inc. | $ | 73.3 | $ | 129.4 | $ | 309.6 | $ | 96.9 |
September 30, 2019 | December 31, 2018 | |||||||
Assets | ||||||||
Investments: | ||||||||
Fixed maturity securities, available-for-sale at fair value | $ | 3,975.5 | $ | 3,391.6 | ||||
Equity securities | 104.3 | 200.5 | ||||||
Mortgage loans | 165.7 | 137.6 | ||||||
Policy loans | 19.1 | 19.8 | ||||||
Other invested assets | 84.4 | 72.5 | ||||||
Total investments | 4,349.0 | 3,822.0 | ||||||
Cash and cash equivalents | 276.9 | 325.0 | ||||||
Accounts receivable, net | 293.3 | 379.2 | ||||||
Recoverable from reinsurers | 947.9 | 1,000.2 | ||||||
Deferred tax asset | 2.0 | 2.1 | ||||||
Property, plant and equipment, net | 405.8 | 376.3 | ||||||
Goodwill | 177.1 | 171.7 | ||||||
Intangibles, net | 223.7 | 219.2 | ||||||
Other assets | 269.8 | 208.1 | ||||||
Total assets | $ | 6,945.5 | $ | 6,503.8 | ||||
Liabilities, temporary equity and stockholders’ equity | ||||||||
Life, accident and health reserves | $ | 4,543.5 | $ | 4,562.1 | ||||
Annuity reserves | 236.9 | 245.2 | ||||||
Value of business acquired | 226.1 | 244.6 | ||||||
Accounts payable and other current liabilities | 329.1 | 344.9 | ||||||
Deferred tax liability | 83.7 | 30.3 | ||||||
Debt obligations | 820.4 | 743.9 | ||||||
Other liabilities | 183.1 | 110.8 | ||||||
Total liabilities | 6,422.8 | 6,281.8 | ||||||
Commitments and contingencies | ||||||||
Temporary equity | ||||||||
Preferred stock | 10.3 | 20.3 | ||||||
Redeemable noncontrolling interest | 11.0 | 8.0 | ||||||
Total temporary equity | 21.3 | 28.3 | ||||||
Stockholders’ equity | ||||||||
Common stock, $.001 par value | — | — | ||||||
Shares authorized: 80,000,000 at September 30, 2019 and December 31, 2018; | ||||||||
Shares issued: 46,554,499 and 45,391,397 at September 30, 2019 and December 31, 2018; | ||||||||
Shares outstanding: 45,850,584 and 44,907,818 at September 30, 2019 and December 31, 2018, respectively | ||||||||
Additional paid-in capital | 272.6 | 260.5 | ||||||
Treasury stock, at cost: 703,915 and 483,579 shares at September 30, 2019 and December 31, 2018, respectively | (3.2 | ) | (2.6 | ) | ||||
Accumulated deficit | (62.0 | ) | (57.2 | ) | ||||
Accumulated other comprehensive income (loss) | 197.4 | (112.6 | ) | |||||
Total HC2 Holdings, Inc. stockholders’ equity | 404.8 | 88.1 | ||||||
Noncontrolling interest | 96.6 | 105.6 | ||||||
Total stockholders’ equity | 501.4 | 193.7 | ||||||
Total liabilities, temporary equity and stockholders’ equity | $ | 6,945.5 | $ | 6,503.8 |
Three Months Ended September 30, 2019 | |||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total HC2 Stockholders' Equity | Non- controlling Interest | Total Stockholders’ Equity | Temporary Equity | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2019 | 45.8 | $ | — | $ | 270.9 | $ | (3.2 | ) | $ | (54.9 | ) | $ | 117.1 | $ | 329.9 | $ | 100.9 | $ | 430.8 | $ | 20.6 | ||||||||||||||||||
Share-based compensation | — | — | 2.0 | — | — | — | 2.0 | — | 2.0 | — | |||||||||||||||||||||||||||||
Fair value adjustment of redeemable noncontrolling interest | — | — | (1.1 | ) | — | — | — | (1.1 | ) | — | (1.1 | ) | 1.1 | ||||||||||||||||||||||||||
Preferred stock dividend | — | — | (0.2 | ) | — | — | — | (0.2 | ) | — | (0.2 | ) | — | ||||||||||||||||||||||||||
Issuance of common stock | 0.1 | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Transactions with noncontrolling interests | — | — | 1.3 | — | — | — | 1.3 | (2.9 | ) | (1.6 | ) | 0.1 | |||||||||||||||||||||||||||
Other | — | — | (0.3 | ) | — | — | — | (0.3 | ) | — | (0.3 | ) | — | ||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | (7.1 | ) | — | (7.1 | ) | (0.8 | ) | (7.9 | ) | (0.4 | ) | ||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | 80.3 | 80.3 | (0.6 | ) | 79.7 | (0.1 | ) | |||||||||||||||||||||||||||
Balance as of September 30, 2019 | 45.9 | $ | — | $ | 272.6 | $ | (3.2 | ) | $ | (62.0 | ) | $ | 197.4 | $ | 404.8 | $ | 96.6 | $ | 501.4 | $ | 21.3 |
Nine Months Ended September 30, 2019 | |||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total HC2 Stockholders' Equity | Non- controlling Interest | Total Stockholders’ Equity | Temporary Equity | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2018 | 44.9 | $ | — | $ | 260.5 | $ | (2.6 | ) | $ | (57.2 | ) | $ | (112.6 | ) | $ | 88.1 | $ | 105.6 | $ | 193.7 | $ | 28.3 | |||||||||||||||||
Cumulative effect of accounting for leases (1) | — | — | — | — | (4.3 | ) | — | (4.3 | ) | (0.7 | ) | (5.0 | ) | (0.1 | ) | ||||||||||||||||||||||||
Share-based compensation | — | — | 6.7 | — | — | — | 6.7 | — | 6.7 | — | |||||||||||||||||||||||||||||
Fair value adjustment of redeemable noncontrolling interest | — | — | (0.9 | ) | — | — | — | (0.9 | ) | — | (0.9 | ) | 0.9 | ||||||||||||||||||||||||||
Taxes paid in lieu of shares issued for share-based compensation | (0.2 | ) | — | — | (0.6 | ) | — | — | (0.6 | ) | — | (0.6 | ) | — | |||||||||||||||||||||||||
Preferred stock dividend | — | — | (0.7 | ) | — | — | — | (0.7 | ) | — | (0.7 | ) | — | ||||||||||||||||||||||||||
Issuance of common stock | 1.2 | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Purchase of preferred stock by subsidiary | — | — | 1.7 | — | — | — | 1.7 | — | 1.7 | (10.0 | ) | ||||||||||||||||||||||||||||
Transactions with noncontrolling interests | — | — | 6.0 | — | — | — | 6.0 | (3.8 | ) | 2.2 | 3.2 | ||||||||||||||||||||||||||||
Other | — | — | (0.7 | ) | — | — | — | (0.7 | ) | — | (0.7 | ) | — | ||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | (0.5 | ) | — | (0.5 | ) | (4.0 | ) | (4.5 | ) | (0.9 | ) | ||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 310.0 | 310.0 | (0.5 | ) | 309.5 | (0.1 | ) | |||||||||||||||||||||||||||
Balance as of September 30, 2019 | 45.9 | $ | — | $ | 272.6 | $ | (3.2 | ) | $ | (62.0 | ) | $ | 197.4 | $ | 404.8 | $ | 96.6 | $ | 501.4 | $ | 21.3 |
Three Months Ended September 30, 2018 | |||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total HC2 Stockholders' Equity | Non- controlling Interest | Total Stockholders’ Equity | Temporary Equity | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2018 | 44.7 | $ | — | $ | 260.0 | $ | (2.4 | ) | $ | (197.1 | ) | $ | (9.0 | ) | $ | 51.5 | $ | 109.3 | $ | 160.8 | $ | 34.7 | |||||||||||||||||
Share-based compensation | — | — | 4.2 | — | — | — | 4.2 | — | 4.2 | — | |||||||||||||||||||||||||||||
Fair value adjustment of redeemable noncontrolling interest | — | — | 0.6 | — | — | — | 0.6 | — | 0.6 | (0.6 | ) | ||||||||||||||||||||||||||||
Exercise of stock options | — | — | (0.2 | ) | — | — | — | (0.2 | ) | — | (0.2 | ) | — | ||||||||||||||||||||||||||
Preferred stock dividend | — | — | (0.5 | ) | — | — | — | (0.5 | ) | — | (0.5 | ) | — | ||||||||||||||||||||||||||
Transactions with noncontrolling interests | — | — | (0.2 | ) | — | — | — | (0.2 | ) | 1.0 | 0.8 | 1.2 | |||||||||||||||||||||||||||
Net income | — | — | — | — | 153.4 | — | 153.4 | (1.8 | ) | 151.6 | (0.1 | ) | |||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | (24.2 | ) | (24.2 | ) | (0.6 | ) | (24.8 | ) | — | |||||||||||||||||||||||||
Balance as of September 30, 2018 | 44.7 | $ | — | $ | 263.9 | $ | (2.4 | ) | $ | (43.7 | ) | $ | (33.2 | ) | $ | 184.6 | $ | 107.9 | $ | 292.5 | $ | 35.2 |
Nine Months Ended September 30, 2018 | |||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total HC2 Stockholders' Equity | Non- controlling Interest | Total Stockholders’ Equity | Temporary Equity | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2017 | 44.2 | $ | — | $ | 254.7 | $ | (2.1 | ) | $ | (221.2 | ) | $ | 41.7 | $ | 73.1 | $ | 115.0 | $ | 188.1 | $ | 27.9 | ||||||||||||||||||
Cumulative effect of accounting for revenue recognition (1) | — | — | — | — | 0.4 | — | 0.4 | 0.3 | 0.7 | — | |||||||||||||||||||||||||||||
Cumulative effect of accounting for the recognition and measurement of financial assets and financial liabilities (1) | — | — | — | — | 3.3 | (1.7 | ) | 1.6 | — | 1.6 | — | ||||||||||||||||||||||||||||
Share-based compensation | — | — | 10.8 | — | — | — | 10.8 | — | 10.8 | — | |||||||||||||||||||||||||||||
Fair value adjustment of redeemable noncontrolling interest | — | — | (2.7 | ) | — | — | — | (2.7 | ) | — | (2.7 | ) | 2.7 | ||||||||||||||||||||||||||
Exercise of stock options | 0.1 | — | 0.2 | — | — | — | 0.2 | — | 0.2 | — | |||||||||||||||||||||||||||||
Taxes paid in lieu of shares issued for share-based compensation | (0.1 | ) | — | — | (0.3 | ) | — | — | (0.3 | ) | — | (0.3 | ) | — | |||||||||||||||||||||||||
Preferred stock dividend | — | — | (1.5 | ) | — | — | — | (1.5 | ) | — | (1.5 | ) | — | ||||||||||||||||||||||||||
Issuance of common stock | 0.5 | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Transactions with noncontrolling interests | — | — | 2.4 | — | — | 3.8 | 6.2 | (26.7 | ) | (20.5 | ) | 6.3 | |||||||||||||||||||||||||||
Net income | — | — | — | — | 173.8 | — | 173.8 | 19.5 | 193.3 | (0.9 | ) | ||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | (77.0 | ) | (77.0 | ) | (0.2 | ) | (77.2 | ) | (0.8 | ) | ||||||||||||||||||||||||
Balance as of September 30, 2018 | 44.7 | $ | — | $ | 263.9 | $ | (2.4 | ) | $ | (43.7 | ) | $ | (33.2 | ) | $ | 184.6 | $ | 107.9 | $ | 292.5 | $ | 35.2 |
Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities | ||||||||
Net (loss) income | $ | (5.4 | ) | $ | 192.4 | |||
Adjustments to reconcile net income to cash provided by operating activities | ||||||||
Provision for doubtful accounts receivable | (0.7 | ) | 1.1 | |||||
Share-based compensation expense | 5.9 | 8.1 | ||||||
Depreciation and amortization | 29.7 | 30.0 | ||||||
Amortization of deferred financing costs and debt discount | 9.9 | 5.6 | ||||||
Amortization of (discount) premium on investments | 6.2 | 4.4 | ||||||
Gain on embedded derivative | (4.0 | ) | — | |||||
Gain on sale or disposal of assets | (0.8 | ) | (3.3 | ) | ||||
Gain on sale and deconsolidation of subsidiary | — | (105.1 | ) | |||||
Gain on bargain purchase | (1.1 | ) | (109.1 | ) | ||||
Income from equity investees | (1.5 | ) | (13.7 | ) | ||||
Net realized and unrealized gains on investments | (8.7 | ) | (49.1 | ) | ||||
Receipt of dividends from equity investees | 7.6 | 11.4 | ||||||
Annuity benefits | 6.3 | 6.3 | ||||||
Other operating activities | 4.2 | 3.1 | ||||||
Changes in assets and liabilities, net of acquisitions | ||||||||
Accounts receivable | 99.3 | (28.7 | ) | |||||
Recoverable from reinsurers | 7.1 | 122.3 | ||||||
Other assets | (4.6 | ) | (52.1 | ) | ||||
Life, accident and health reserves | 24.5 | 82.0 | ||||||
Accounts payable and other current liabilities | (26.2 | ) | 9.7 | |||||
Other liabilities | (52.2 | ) | 21.4 | |||||
Cash provided by operating activities | 95.5 | 136.7 | ||||||
Cash flows from investing activities | ||||||||
Purchase of property, plant and equipment | (27.4 | ) | (32.3 | ) | ||||
Disposal of property, plant and equipment | 3.9 | 4.9 | ||||||
Purchase of investments | (806.4 | ) | (515.6 | ) | ||||
Sale of investments | 565.0 | 192.3 | ||||||
Maturities and redemptions of investments | 100.1 | 56.5 | ||||||
Cash received from dispositions, net | 13.5 | 92.0 | ||||||
Cash (paid for) received from acquisitions, net | (56.9 | ) | 729.1 | |||||
Other investing activities | 6.7 | (1.5 | ) | |||||
Cash (used in) provided by investing activities | (201.5 | ) | 525.4 | |||||
Cash flows from financing activities | ||||||||
Proceeds from debt obligations | 81.2 | 266.7 | ||||||
Principal payments on debt obligations | (16.3 | ) | (163.7 | ) | ||||
Cash received by subsidiary to issue preferred stock | 8.9 | — | ||||||
Cash paid by subsidiary to purchase HC2 preferred stock | (8.3 | ) | — | |||||
Annuity receipts | 1.6 | 1.8 | ||||||
Annuity surrenders | (13.6 | ) | (14.9 | ) | ||||
Transactions with noncontrolling interests | 3.5 | (11.8 | ) | |||||
Payment of dividends | (1.9 | ) | (1.5 | ) | ||||
Other financing activities | (1.7 | ) | (0.9 | ) | ||||
Cash provided by financing activities | 53.4 | 75.7 | ||||||
Effects of exchange rate changes on cash, cash equivalents and restricted cash | 0.6 | (0.5 | ) | |||||
Net change in cash, cash equivalents and restricted cash | (52.0 | ) | 737.3 | |||||
Cash, cash equivalents and restricted cash, beginning of period | 330.4 | 98.9 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 278.4 | $ | 836.2 | ||||
Supplemental cash flow information: | ||||||||
Cash paid for interest | $ | 42.3 | $ | 36.2 | ||||
Cash paid for taxes, net of refunds | $ | 6.8 | $ | 13.3 | ||||
Non-cash investing and financing activities: | ||||||||
Property, plant and equipment included in accounts payable | $ | 5.7 | $ | 2.6 | ||||
Investments included in accounts payable | $ | 14.6 | $ | 35.0 | ||||
Declared but unpaid dividends from equity method investments included in other assets | $ | 2.0 | $ | 13.3 |
September 30, 2019 | September 30, 2018 | |||||||
Cash and cash equivalents, beginning of period | $ | 325.0 | $ | 97.9 | ||||
Restricted cash included in other assets, beginning of period | 5.4 | 1.0 | ||||||
Total cash and cash equivalents and restricted cash, beginning of period | $ | 330.4 | $ | 98.9 | ||||
Cash and cash equivalents, end of period | $ | 276.9 | $ | 831.7 | ||||
Restricted cash included in other assets, end of period | 1.5 | 4.5 | ||||||
Total cash and cash equivalents and restricted cash, end of period | $ | 278.4 | $ | 836.2 |
• | Cash flow assumptions must be reviewed at least annually and updated if necessary. The impact of these updates will be reported through net income. Current accounting policy requires the liability assumptions for long-duration contracts and limited payment contracts be locked in at contract inception, unless the contracts project a loss position which would allow the liability assumptions to be unlocked so that the loss could be recognized. |
• | The rate used to discount the liability projections is to be based on an A-rated asset with observable market inputs and duration consistent with the duration of the liabilities. The discount rate is to be updated quarterly with the impact of the change in the discount rate recognized through other comprehensive income. Current accounting policy allows the use of an expected investment yield (which is not required to be observable in the market) to discount the liability projections. |
• | Deferred acquisition costs for long-duration contracts are to be amortized in proportion to premiums, gross profits, or gross margins and those balances must be amortized on a constant-level basis over the expected life of the contract. Current accounting policy would amortize deferred acquisition costs based on revenue and profits. The Company does not have any deferred acquisition costs but VOBA amortization will follow this new guidance. |
• | Market risk benefits are to be measured at fair value and presented separately in the statement of financial position. Under current accounting policy benefit features that will meet the definition of market risk benefits are accounted for as embedded derivatives or insurance liabilities via the benefit ratio model. The Company does not have any benefit features that will be categorized as market risk benefits. |
• | Disaggregated rollforwards of beginning to ending balances of the liability for future policy benefits, policyholder account balances, VOBA, as well as information about significant inputs, judgments, assumptions, and methods used in measurement are required to be disclosed. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenue (1) | ||||||||||||||||
Construction | $ | 168.4 | $ | 195.3 | $ | 556.2 | $ | 531.2 | ||||||||
Marine Services | 48.2 | 44.8 | 130.0 | 149.9 | ||||||||||||
Energy | 8.7 | 4.6 | 19.3 | 16.2 | ||||||||||||
Telecommunications | 162.2 | 187.8 | 507.0 | 580.6 | ||||||||||||
Broadcasting | 10.0 | 12.0 | 29.8 | 33.7 | ||||||||||||
Other | — | 0.3 | — | 3.7 | ||||||||||||
Total revenue | $ | 397.5 | $ | 444.8 | $ | 1,242.3 | $ | 1,315.3 |
September 30, 2019 | December 31, 2018 | |||||||
Accounts receivables with customers | ||||||||
Construction | $ | 163.0 | $ | 196.6 | ||||
Marine Services | 34.3 | 48.3 | ||||||
Energy | 7.4 | 3.3 | ||||||
Telecommunications | 61.1 | 117.6 | ||||||
Broadcasting | 7.8 | 9.2 | ||||||
Total accounts receivables with customers | $ | 273.6 | $ | 375.0 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Commercial | $ | 50.6 | $ | 65.2 | $ | 162.9 | $ | 202.6 | ||||||||
Convention | 9.7 | 54.2 | 66.8 | 108.0 | ||||||||||||
Healthcare | 12.1 | 28.4 | 34.5 | 85.5 | ||||||||||||
Industrial | 63.1 | 13.8 | 179.6 | 49.8 | ||||||||||||
Transportation | 14.4 | 17.4 | 48.8 | 31.0 | ||||||||||||
Other | 18.3 | 16.3 | 63.2 | 54.3 | ||||||||||||
Total revenue from contracts with customers | 168.2 | 195.3 | 555.8 | 531.2 | ||||||||||||
Other revenue | 0.2 | — | 0.4 | — | ||||||||||||
Total Construction segment revenue | $ | 168.4 | $ | 195.3 | $ | 556.2 | $ | 531.2 |
September 30, 2019 | December 31, 2018 | |||||||
Contract assets | $ | 66.3 | $ | 69.0 | ||||
Contract liabilities | $ | (31.1 | ) | $ | (62.0 | ) |
Within one year | Within five years | Total | ||||||||||
Commercial | $ | 113.3 | $ | 21.4 | $ | 134.7 | ||||||
Convention | 16.0 | — | 16.0 | |||||||||
Healthcare | 33.3 | 0.5 | 33.8 | |||||||||
Industrial | 127.0 | 12.1 | 139.1 | |||||||||
Transportation | 87.5 | 0.1 | 87.6 | |||||||||
Other | 41.6 | — | 41.6 | |||||||||
Remaining unsatisfied performance obligations | $ | 418.7 | $ | 34.1 | $ | 452.8 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Telecommunication - Maintenance | $ | 21.6 | $ | 21.9 | $ | 62.6 | $ | 65.8 | ||||||||
Telecommunication - Installation | 12.8 | 5.5 | 28.2 | 29.3 | ||||||||||||
Power - Operations, Maintenance & Construction Support | 6.0 | 9.3 | 15.2 | 25.9 | ||||||||||||
Power - Cable Installation & Repair | 7.8 | 8.1 | 24.0 | 28.9 | ||||||||||||
Total revenue from contracts with customers | 48.2 | 44.8 | 130.0 | 149.9 | ||||||||||||
Other revenue | — | — | — | — | ||||||||||||
Total Marine Services segment revenue | $ | 48.2 | $ | 44.8 | $ | 130.0 | $ | 149.9 |
September 30, 2019 | December 31, 2018 | |||||||
Contract assets | $ | 12.1 | $ | 5.2 | ||||
Contract liabilities | $ | (14.9 | ) | $ | (1.0 | ) |
Within one year | Within five years | Thereafter | Total | |||||||||||||
Telecommunication - Maintenance | $ | 18.5 | $ | 217.1 | $ | 60.0 | $ | 295.6 | ||||||||
Telecommunication - Installation | 4.8 | 12.8 | — | 17.6 | ||||||||||||
Power - Operations, Maintenance & Construction Support | 3.1 | 18.0 | — | 21.1 | ||||||||||||
Power - Cable Installation & Repair | 15.3 | 49.1 | — | 64.4 | ||||||||||||
Remaining unsatisfied performance obligations | $ | 41.7 | $ | 297.0 | $ | 60.0 | $ | 398.7 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Volume-related | $ | 8.5 | $ | 4.2 | $ | 18.5 | $ | 12.3 | ||||||||
Maintenance services | — | — | 0.1 | 0.1 | ||||||||||||
Total revenue from contracts with customers | 8.5 | 4.2 | 18.6 | 12.4 | ||||||||||||
RNG incentives | 0.1 | 0.3 | 0.5 | 1.0 | ||||||||||||
Alternative fuel tax credit | — | 0.1 | — | 2.6 | ||||||||||||
Other revenue | 0.1 | — | 0.2 | 0.2 | ||||||||||||
Total Energy segment revenue | $ | 8.7 | $ | 4.6 | $ | 19.3 | $ | 16.2 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Termination of long distance minutes | $ | 162.2 | $ | 187.8 | $ | 507.0 | $ | 580.6 | ||||||||
Total revenue from contracts with customers | 162.2 | 187.8 | 507.0 | 580.6 | ||||||||||||
Other revenue | — | — | — | — | ||||||||||||
Total Telecommunications segment revenue | $ | 162.2 | $ | 187.8 | $ | 507.0 | $ | 580.6 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Network advertising | $ | 5.1 | $ | 7.4 | $ | 15.9 | $ | 21.2 | ||||||||
Broadcast station | 3.1 | 2.5 | 8.7 | 8.0 | ||||||||||||
Network distribution | 1.1 | 1.7 | 3.8 | 3.5 | ||||||||||||
Other | 0.7 | 0.4 | 1.4 | 1.0 | ||||||||||||
Total revenue from contracts with customers | 10.0 | 12.0 | 29.8 | 33.7 | ||||||||||||
Other revenue | — | — | — | — | ||||||||||||
Total Broadcasting segment revenue | $ | 10.0 | $ | 12.0 | $ | 29.8 | $ | 33.7 |
Other invested assets | $ | 0.9 | ||
Cash and cash equivalents | 8.6 | |||
Accounts receivable | 28.8 | |||
Property, plant and equipment | 15.4 | |||
Goodwill | 50.7 | |||
Intangibles | 44.1 | |||
Other assets | 18.9 | |||
Total assets acquired | 167.4 | |||
Accounts payable and other current liabilities | (23.7 | ) | ||
Other liabilities | (3.9 | ) | ||
Total liabilities assumed | (27.6 | ) | ||
Total net assets acquired | $ | 139.8 |
Fixed maturity securities, available-for-sale at fair value | $ | 1,575.4 | ||
Equity securities | 0.3 | |||
Mortgage loans | 0.9 | |||
Policy loans | 2.9 | |||
Cash and cash equivalents | 806.6 | |||
Recoverable from reinsurers | 902.5 | |||
Other assets | 28.2 | |||
Total assets acquired | 3,316.8 | |||
Life, accident and health reserves | (2,931.3 | ) | ||
Annuity reserves | (11.3 | ) | ||
Value of business acquired | (214.4 | ) | ||
Accounts payable and other current liabilities | (6.5 | ) | ||
Deferred tax liability | (25.3 | ) | ||
Other liabilities | (11.5 | ) | ||
Total liabilities assumed | (3,200.3 | ) | ||
Total net assets acquired | 116.5 | |||
Total fair value of consideration | — | |||
Gain on bargain purchase | $ | 116.5 |
• | The Unified Loss Rules tax attribute reduction to tax value of assets and the seller tax adjustments to tax value of liabilities contribute significantly to the bargain purchase price. |
• | The reduction in the federal income tax rate, from 35% at the time the seller contribution was established to 21% effective January 1, 2018, effectively generates the remaining balance for the bargain purchase price. |
• | Changes in fair value of acquired assets and assumed liabilities between the date the deal was signed and the closing date was driven by the time it took to obtain regulatory approvals, amongst other closing conditions. |
Three Months Ended September 30, 2018 | Nine Months Ended September 30, 2018 | |||||||
Net revenue | $ | 509.2 | $ | 1,581.5 | ||||
Net income (loss) from operations | $ | (43.2 | ) | $ | 9.2 | |||
Net income (loss) attributable to HC2 Holdings, Inc. | $ | 139.8 | $ | 215.4 |
September 30, 2019 | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
U.S. Government and government agencies | $ | 6.4 | $ | 0.8 | $ | — | $ | 7.2 | ||||||||
States, municipalities and political subdivisions | 404.8 | 43.1 | — | 447.9 | ||||||||||||
Residential mortgage-backed securities | 71.2 | 5.0 | (0.8 | ) | 75.4 | |||||||||||
Commercial mortgage-backed securities | 99.8 | 4.0 | — | 103.8 | ||||||||||||
Asset-backed securities | 545.7 | 1.8 | (18.9 | ) | 528.6 | |||||||||||
Corporate and other | 2,566.1 | 277.6 | (31.1 | ) | 2,812.6 | |||||||||||
Total fixed maturity securities | $ | 3,694.0 | $ | 332.3 | $ | (50.8 | ) | $ | 3,975.5 |
December 31, 2018 | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
U.S. Government and government agencies | $ | 24.7 | $ | 0.7 | $ | — | $ | 25.4 | ||||||||
States, municipalities and political subdivisions | 413.7 | 9.6 | (1.4 | ) | 421.9 | |||||||||||
Residential mortgage-backed securities | 92.6 | 3.1 | (1.3 | ) | 94.4 | |||||||||||
Commercial mortgage-backed securities | 94.7 | 0.3 | (1.1 | ) | 93.9 | |||||||||||
Asset-backed securities | 540.8 | 0.8 | (30.1 | ) | 511.5 | |||||||||||
Corporate and other | 2,311.0 | 17.0 | (83.5 | ) | 2,244.5 | |||||||||||
Total fixed maturity securities | $ | 3,477.5 | $ | 31.5 | $ | (117.4 | ) | $ | 3,391.6 |
Amortized Cost | Fair Value | |||||||
Corporate, Municipal, U.S. Government and Other securities | ||||||||
Due in one year or less | $ | 31.2 | $ | 32.0 | ||||
Due after one year through five years | 252.5 | 259.6 | ||||||
Due after five years through ten years | 355.1 | 375.5 | ||||||
Due after ten years | 2,338.5 | 2,600.6 | ||||||
Subtotal | 2,977.3 | 3,267.7 | ||||||
Mortgage-backed securities | 171.0 | 179.2 | ||||||
Asset-backed securities | 545.7 | 528.6 | ||||||
Total | $ | 3,694.0 | $ | 3,975.5 |
September 30, 2019 | December 31, 2018 | |||||||||||||||||||||
Amortized Cost | Fair Value | % of Total | Amortized Cost | Fair Value | % of Total | |||||||||||||||||
Finance, insurance, and real estate | $ | 572.5 | $ | 607.4 | 21.6 | % | $ | 469.0 | $ | 452.9 | 20.2 | % | ||||||||||
Transportation, communication and other services | 836.6 | 899.3 | 32.0 | % | 758.6 | 734.0 | 32.7 | % | ||||||||||||||
Manufacturing | 730.4 | 829.9 | 29.5 | % | 712.7 | 693.5 | 30.9 | % | ||||||||||||||
Other | 426.6 | 476.0 | 16.9 | % | 370.7 | 364.1 | 16.2 | % | ||||||||||||||
Total | $ | 2,566.1 | $ | 2,812.6 | 100.0 | % | $ | 2,311.0 | $ | 2,244.5 | 100.0 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net realized and unrealized gains (losses) on investments | $ | — | $ | 0.6 | $ | — | $ | 0.6 | ||||||||
Total Other-Than-Temporary Impairments | $ | — | $ | 0.6 | $ | — | $ | 0.6 |
September 30, 2019 | December 31, 2018 | |||||||||||||
Unrealized Losses | % of Total | Unrealized Losses | % of Total | |||||||||||
Less than 20% | $ | (49.9 | ) | 98.2 | % | $ | (116.0 | ) | 98.8 | % | ||||
20% or more for less than six months | (0.1 | ) | 0.2 | % | (0.8 | ) | 0.7 | % | ||||||
20% or more for six months or greater | (0.8 | ) | 1.6 | % | (0.6 | ) | 0.5 | % | ||||||
Total | $ | (50.8 | ) | 100.0 | % | $ | (117.4 | ) | 100.0 | % |
September 30, 2019 | Less than 12 months | 12 months or greater | Total | |||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
Residential mortgage-backed securities | 3.7 | (0.3 | ) | 10.5 | (0.5 | ) | 14.2 | (0.8 | ) | |||||||||||||||
Commercial mortgage-backed securities | 1.9 | — | 0.3 | — | 2.2 | — | ||||||||||||||||||
Asset-backed securities | 290.9 | (9.2 | ) | 119.2 | (9.7 | ) | 410.1 | (18.9 | ) | |||||||||||||||
Corporate and other | 236.6 | (11.5 | ) | 138.3 | (19.6 | ) | 374.9 | (31.1 | ) | |||||||||||||||
Total fixed maturity securities | $ | 533.1 | $ | (21.0 | ) | $ | 268.3 | $ | (29.8 | ) | $ | 801.4 | $ | (50.8 | ) |
December 31, 2018 | Less than 12 months | 12 months of greater | Total | |||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
U.S. Government and government agencies | $ | 5.0 | $ | — | $ | 3.3 | $ | — | $ | 8.3 | $ | — | ||||||||||||
States, municipalities and political subdivisions | 117.2 | (1.3 | ) | 1.9 | (0.1 | ) | 119.1 | (1.4 | ) | |||||||||||||||
Residential mortgage-backed securities | 22.4 | (1.2 | ) | 5.7 | (0.1 | ) | 28.1 | (1.3 | ) | |||||||||||||||
Commercial mortgage-backed securities | 57.8 | (1.1 | ) | — | — | 57.8 | (1.1 | ) | ||||||||||||||||
Asset-backed securities | 466.0 | (29.6 | ) | 5.9 | (0.5 | ) | 471.9 | (30.1 | ) | |||||||||||||||
Corporate and other | 1,418.2 | (71.9 | ) | 254.6 | (11.6 | ) | 1,672.8 | (83.5 | ) | |||||||||||||||
Total fixed maturity securities | $ | 2,086.6 | $ | (105.1 | ) | $ | 271.4 | $ | (12.3 | ) | $ | 2,358.0 | $ | (117.4 | ) |
September 30, 2019 | December 31, 2018 | |||||||
Common stocks | $ | 17.4 | $ | 15.0 | ||||
Perpetual preferred stocks | 86.9 | 185.5 | ||||||
Total equity securities | $ | 104.3 | $ | 200.5 |
September 30, 2019 | December 31, 2018 | |||||||||||||||
Measurement Alternative | Equity Method | Measurement Alternative | Equity Method | |||||||||||||
Common Equity | $ | — | $ | 2.3 | $ | — | $ | 2.1 | ||||||||
Preferred Equity | — | 16.9 | 1.6 | 9.6 | ||||||||||||
Other | — | 65.2 | — | 59.2 | ||||||||||||
Total | $ | — | $ | 84.4 | $ | 1.6 | $ | 70.9 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Fixed maturity securities, available-for-sale at fair value | $ | 45.2 | $ | 26.7 | $ | 132.5 | $ | 58.6 | ||||||||
Equity securities | 1.9 | 1.5 | 6.5 | 2.7 | ||||||||||||
Mortgage loans | 3.4 | 2.0 | 10.2 | 4.8 | ||||||||||||
Policy loans | 0.3 | 0.3 | 0.9 | 0.9 | ||||||||||||
Other invested assets | 0.8 | 1.4 | 3.4 | 2.0 | ||||||||||||
Gross investment income | 51.6 | 31.9 | 153.5 | 69.0 | ||||||||||||
External investment expense | (0.4 | ) | (0.2 | ) | (0.9 | ) | (0.2 | ) | ||||||||
Net investment income | $ | 51.2 | $ | 31.7 | $ | 152.6 | $ | 68.8 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Realized gains on fixed maturity securities | $ | 1.4 | $ | 1.0 | $ | 6.4 | $ | 4.7 | ||||||||
Realized losses on fixed maturity securities | (2.9 | ) | (0.1 | ) | (8.0 | ) | (1.4 | ) | ||||||||
Realized gains on equity securities | 1.4 | 0.4 | 1.8 | 0.3 | ||||||||||||
Realized losses on equity securities | (0.1 | ) | — | (1.2 | ) | — | ||||||||||
Realized gains on mortgage loans | 1.0 | — | 1.0 | — | ||||||||||||
Net unrealized gains (losses) on equity securities | (1.6 | ) | (1.0 | ) | 4.2 | (1.1 | ) | |||||||||
Net unrealized gains (losses) on derivative instruments | (1.1 | ) | (0.2 | ) | (2.1 | ) | 0.5 | |||||||||
Impairment loss | — | (0.6 | ) | — | (0.6 | ) | ||||||||||
Net realized and unrealized gains (losses) | $ | (1.9 | ) | $ | (0.5 | ) | $ | 2.1 | $ | 2.4 |
September 30, 2019 | Fair Value Measurement Using: | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets | ||||||||||||||||
Fixed maturity securities | ||||||||||||||||
U.S. Government and government agencies | $ | 7.2 | $ | 4.2 | $ | 3.0 | $ | — | ||||||||
States, municipalities and political subdivisions | 447.9 | — | 447.9 | — | ||||||||||||
Residential mortgage-backed securities | 75.4 | — | 67.2 | 8.2 | ||||||||||||
Commercial mortgage-backed securities | 103.8 | — | 43.3 | 60.5 | ||||||||||||
Asset-backed securities | 528.6 | — | 209.7 | 318.9 | ||||||||||||
Corporate and other | 2,812.6 | 38.8 | 2,666.9 | 106.9 | ||||||||||||
Total fixed maturity securities | 3,975.5 | 43.0 | 3,438.0 | 494.5 | ||||||||||||
Equity securities | ||||||||||||||||
Common stocks | 17.4 | 13.1 | — | 4.3 | ||||||||||||
Perpetual preferred stocks | 86.9 | 7.9 | 26.2 | 52.8 | ||||||||||||
Total equity securities | 104.3 | 21.0 | 26.2 | 57.1 | ||||||||||||
Total assets accounted for at fair value | $ | 4,079.8 | $ | 64.0 | $ | 3,464.2 | $ | 551.6 |
Liabilities | ||||||||||||||||
Embedded derivative | $ | 4.5 | $ | — | $ | — | $ | 4.5 | ||||||||
Other | 5.4 | — | — | 5.4 | ||||||||||||
Total liabilities accounted for at fair value | $ | 9.9 | $ | — | $ | — | $ | 9.9 |
December 31, 2018 | Fair Value Measurement Using: | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets | ||||||||||||||||
Fixed maturity securities | ||||||||||||||||
U.S. Government and government agencies | $ | 25.4 | $ | 6.1 | $ | 19.3 | $ | — | ||||||||
States, municipalities and political subdivisions | 421.9 | — | 421.9 | — | ||||||||||||
Residential mortgage-backed securities | 94.4 | — | 75.4 | 19.0 | ||||||||||||
Commercial mortgage-backed securities | 93.9 | — | 35.7 | 58.2 | ||||||||||||
Asset-backed securities | 511.5 | — | 33.3 | 478.2 | ||||||||||||
Corporate and other | 2,244.5 | 6.6 | 2,152.9 | 85.0 | ||||||||||||
Total fixed maturity securities | 3,391.6 | 12.7 | 2,738.5 | 640.4 | ||||||||||||
Equity securities | ||||||||||||||||
Common stocks | 15.0 | 9.1 | — | 5.9 | ||||||||||||
Perpetual preferred stocks | 185.5 | 7.2 | 123.0 | 55.3 | ||||||||||||
Total equity securities | 200.5 | 16.3 | 123.0 | 61.2 | ||||||||||||
Total assets accounted for at fair value | $ | 3,592.1 | $ | 29.0 | $ | 2,861.5 | $ | 701.6 |
Liabilities | ||||||||||||||||
Embedded derivative | $ | 8.4 | $ | — | $ | — | $ | 8.4 | ||||||||
Other | 3.5 | — | — | 3.5 | ||||||||||||
Total liabilities accounted for at fair value | $ | 11.9 | $ | — | $ | — | $ | 11.9 |
Total realized/unrealized gains (losses) included in | ||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | Net earnings (loss) | Other comp. income (loss) | Purchases and issuances | Sales and settlements | Transfer to Level 3 | Transfer out of Level 3 | Balance at September30, 2019 | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||||||||
States, municipalities and political subdivisions | $ | 3.7 | $ | — | $ | 0.1 | $ | — | $ | — | $ | — | $ | (3.8 | ) | $ | — | |||||||||||||||
Residential mortgage-backed securities | 12.5 | — | (0.1 | ) | — | (0.7 | ) | — | (3.5 | ) | 8.2 | |||||||||||||||||||||
Commercial mortgage-backed securities | 66.4 | 0.2 | 1.3 | — | (7.4 | ) | — | — | 60.5 | |||||||||||||||||||||||
Asset-backed securities | 412.6 | (0.5 | ) | (6.3 | ) | 13.6 | (38.3 | ) | 14.2 | (76.4 | ) | 318.9 | ||||||||||||||||||||
Corporate and other | 158.1 | (0.4 | ) | 2.2 | 3.1 | (10.3 | ) | — | (45.8 | ) | 106.9 | |||||||||||||||||||||
Total fixed maturity securities | 653.3 | (0.7 | ) | (2.8 | ) | 16.7 | (56.7 | ) | 14.2 | (129.5 | ) | 494.5 | ||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||||||||
Common stocks | 4.9 | (0.5 | ) | 0.1 | — | (0.2 | ) | — | — | 4.3 | ||||||||||||||||||||||
Perpetual preferred stocks | 57.1 | (0.2 | ) | (1.5 | ) | — | (2.6 | ) | — | — | 52.8 | |||||||||||||||||||||
Total equity securities | 62.0 | (0.7 | ) | (1.4 | ) | — | (2.8 | ) | — | — | 57.1 | |||||||||||||||||||||
Total financial assets | $ | 715.3 | $ | (1.4 | ) | $ | (4.2 | ) | $ | 16.7 | $ | (59.5 | ) | $ | 14.2 | $ | (129.5 | ) | $ | 551.6 |
Total realized/unrealized (gains) losses included in | ||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | Net (earnings) loss | Other comp. (income) loss | Purchases and issuances | Sales and settlements | Transfer to Level 3 | Transfer out of Level 3 | Balance at September30, 2019 | |||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Embedded derivative | $ | 2.9 | $ | 1.6 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 4.5 | ||||||||||||||||
Other | 5.4 | — | — | — | — | — | — | 5.4 | ||||||||||||||||||||||||
Total financial liabilities | $ | 8.3 | $ | 1.6 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 9.9 |
Total realized/unrealized gains (losses) included in | ||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | Net earnings (loss) | Other comp. income (loss) | Purchases and issuances | Sales and settlements | Transfer to Level 3 | Transfer out of Level 3 | Balance at September30, 2019 | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||||||||
States, municipalities and political subdivisions | $ | — | $ | — | $ | 0.1 | $ | — | $ | (0.5 | ) | $ | 4.2 | $ | (3.8 | ) | $ | — | ||||||||||||||
Residential mortgage-backed securities | 19.0 | — | 0.2 | — | (1.5 | ) | — | (9.5 | ) | 8.2 | ||||||||||||||||||||||
Commercial mortgage-backed securities | 58.2 | 0.2 | 3.4 | 7.5 | (7.9 | ) | — | (0.9 | ) | 60.5 | ||||||||||||||||||||||
Asset-backed securities | 478.2 | (2.1 | ) | 11.7 | 102.1 | (214.4 | ) | 19.8 | (76.4 | ) | 318.9 | |||||||||||||||||||||
Corporate and other | 85.0 | (0.5 | ) | 4.5 | 23.5 | (27.8 | ) | 105.0 | (82.8 | ) | 106.9 | |||||||||||||||||||||
Total fixed maturity securities | 640.4 | (2.4 | ) | 19.9 | 133.1 | (252.1 | ) | 129.0 | (173.4 | ) | 494.5 | |||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||||||||
Common stocks | 5.9 | (0.3 | ) | 0.1 | — | (1.2 | ) | — | (0.2 | ) | 4.3 | |||||||||||||||||||||
Perpetual preferred stocks | 55.3 | (3.9 | ) | (1.5 | ) | 2.5 | (2.6 | ) | 3.0 | — | 52.8 | |||||||||||||||||||||
Total equity securities | 61.2 | (4.2 | ) | (1.4 | ) | 2.5 | (3.8 | ) | 3.0 | (0.2 | ) | 57.1 | ||||||||||||||||||||
Total financial assets | $ | 701.6 | $ | (6.6 | ) | $ | 18.5 | $ | 135.6 | $ | (255.9 | ) | $ | 132.0 | $ | (173.6 | ) | $ | 551.6 |
Total realized/unrealized (gains) losses included in | ||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | Net (earnings) loss | Other comp. (income) loss | Purchases and issuances | Sales and settlements | Transfer to Level 3 | Transfer out of Level 3 | Balance at September30, 2019 | |||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Embedded derivative | $ | 8.4 | $ | (3.9 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 4.5 | |||||||||||||||
Other | 3.5 | (1.1 | ) | — | 3.0 | — | — | — | 5.4 | |||||||||||||||||||||||
Total financial liabilities | $ | 11.9 | $ | (5.0 | ) | $ | — | $ | 3.0 | $ | — | $ | — | $ | — | $ | 9.9 |
Total realized/unrealized gains (losses) included in | ||||||||||||||||||||||||||||||||
Balance at June 30, 2018 | 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, 2018 | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||||||||
U.S. Government and government agencies | $ | — | $ | — | $ | — | $ | 2.3 | $ | — | $ | — | $ | — | $ | 2.3 | ||||||||||||||||
States, municipalities and political subdivisions | 0.4 | — | — | — | — | — | — | 0.4 | ||||||||||||||||||||||||
Residential mortgage-backed securities | 12.3 | — | (0.4 | ) | 33.7 | (1.3 | ) | 2.6 | — | 46.9 | ||||||||||||||||||||||
Commercial mortgage-backed securities | 22.1 | — | — | 2.0 | (0.1 | ) | 1.8 | — | 25.8 | |||||||||||||||||||||||
Asset-backed securities | 132.8 | — | (0.8 | ) | 116.9 | (9.3 | ) | — | — | 239.6 | ||||||||||||||||||||||
Corporate and other | 67.2 | 0.2 | (0.7 | ) | 65.0 | (9.8 | ) | 9.1 | — | 131.0 | ||||||||||||||||||||||
Total fixed maturity securities | 234.8 | 0.2 | (1.9 | ) | 219.9 | (20.5 | ) | 13.5 | — | 446.0 | ||||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||||||||
Common stocks | 0.5 | 1.8 | — | 0.1 | — | 4.4 | — | 6.8 | ||||||||||||||||||||||||
Perpetual preferred stocks | 24.4 | (0.4 | ) | — | 32.0 | — | 1.0 | — | 57.0 | |||||||||||||||||||||||
Total equity securities | 24.9 | 1.4 | — | 32.1 | — | 5.4 | — | 63.8 | ||||||||||||||||||||||||
Derivatives | 0.2 | — | — | — | — | — | — | 0.2 | ||||||||||||||||||||||||
Total financial assets | $ | 259.9 | $ | 1.6 | $ | (1.9 | ) | $ | 252.0 | $ | (20.5 | ) | $ | 18.9 | $ | — | $ | 510.0 |
Total realized/unrealized (gains) losses included in | ||||||||||||||||||||||||||||||||
Balance at June 30, 2018 | 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, 2018 | |||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Other | $ | 4.2 | $ | (0.3 | ) | $ | — | $ | 2.6 | $ | — | $ | — | $ | — | $ | 6.5 | |||||||||||||||
Total financial liabilities | $ | 4.2 | $ | (0.3 | ) | $ | — | $ | 2.6 | $ | — | $ | — | $ | — | $ | 6.5 |
Total realized/unrealized gains (losses) included in | ||||||||||||||||||||||||||||||||
Balance at December 31, 2017 | 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, 2018 | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||||||||
U.S. Government and government agencies | $ | — | $ | — | $ | — | $ | 2.3 | $ | — | $ | — | $ | — | $ | 2.3 | ||||||||||||||||
States, municipalities and political subdivisions | 6.0 | — | (0.1 | ) | 0.1 | — | 0.4 | (6.0 | ) | 0.4 | ||||||||||||||||||||||
Residential mortgage-backed securities | 14.6 | 0.3 | 0.2 | 33.7 | (6.7 | ) | 8.1 | (3.3 | ) | 46.9 | ||||||||||||||||||||||
Commercial mortgage-backed securities | 12.2 | (0.1 | ) | (0.2 | ) | 12.3 | (0.1 | ) | 1.7 | — | 25.8 | |||||||||||||||||||||
Asset-backed securities | 133.7 | 1.1 | (4.0 | ) | 184.9 | (73.2 | ) | — | (2.9 | ) | 239.6 | |||||||||||||||||||||
Corporate and other | 26.3 | 0.2 | (1.7 | ) | 94.0 | (12.7 | ) | 24.9 | — | 131.0 | ||||||||||||||||||||||
Total fixed maturity securities | 192.8 | 1.5 | (5.8 | ) | 327.3 | (92.7 | ) | 35.1 | (12.2 | ) | 446.0 | |||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||||||||
Common stocks | 0.2 | 1.7 | — | 0.1 | — | 4.8 | — | 6.8 | ||||||||||||||||||||||||
Perpetual preferred stocks | 6.4 | 0.1 | — | 47.0 | — | 3.5 | — | 57.0 | ||||||||||||||||||||||||
Total equity securities | 6.6 | 1.8 | — | 47.1 | — | 8.3 | — | 63.8 | ||||||||||||||||||||||||
Derivatives | 0.2 | — | — | — | — | — | — | 0.2 | ||||||||||||||||||||||||
Total financial assets | $ | 199.6 | $ | 3.3 | $ | (5.8 | ) | $ | 374.4 | $ | (92.7 | ) | $ | 43.4 | $ | (12.2 | ) | $ | 510.0 |
Total realized/unrealized (gains) losses included in | ||||||||||||||||||||||||||||||||
Balance at December 31, 2017 | 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, 2018 | |||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Other | $ | 4.8 | $ | (0.9 | ) | $ | — | $ | 2.6 | $ | — | $ | — | $ | — | $ | 6.5 | |||||||||||||||
Total financial liabilities | $ | 4.8 | $ | (0.9 | ) | $ | — | $ | 2.6 | $ | — | $ | — | $ | — | $ | 6.5 |
September 30, 2019 | Fair Value Measurement Using: | |||||||||||||||||||
Carrying Value | Estimated Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
Assets | ||||||||||||||||||||
Mortgage loans | $ | 165.7 | $ | 165.7 | $ | — | $ | — | $ | 165.7 | ||||||||||
Policy loans | 19.1 | 19.1 | — | 19.1 | — | |||||||||||||||
Total assets not accounted for at fair value | $ | 184.8 | $ | 184.8 | $ | — | $ | 19.1 | $ | 165.7 | ||||||||||
Liabilities | ||||||||||||||||||||
Annuity benefits accumulated (1) | $ | 235.5 | $ | 232.9 | $ | — | $ | — | $ | 232.9 | ||||||||||
Debt obligations (2) | 784.1 | 754.2 | — | 754.2 | — | |||||||||||||||
Total liabilities not accounted for at fair value | $ | 1,019.6 | $ | 987.1 | $ | — | $ | 754.2 | $ | 232.9 |
December 31, 2018 | Fair Value Measurement Using: | |||||||||||||||||||
Carrying Value | Estimated Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
Assets | ||||||||||||||||||||
Mortgage loans | $ | 137.6 | $ | 137.6 | $ | — | $ | — | $ | 137.6 | ||||||||||
Policy loans | 19.8 | 19.8 | — | 19.8 | — | |||||||||||||||
Other invested assets | 1.6 | 1.6 | — | — | 1.6 | |||||||||||||||
Total assets not accounted for at fair value | $ | 159.0 | $ | 159.0 | $ | — | $ | 19.8 | $ | 139.2 | ||||||||||
Liabilities | ||||||||||||||||||||
Annuity benefits accumulated (1) | $ | 244.0 | $ | 241.7 | $ | — | $ | — | $ | 241.7 | ||||||||||
Debt obligations (2) | 702.5 | 703.0 | — | 703.0 | — | |||||||||||||||
Total liabilities not accounted for at fair value | $ | 946.5 | $ | 944.7 | $ | — | $ | 703.0 | $ | 241.7 |
September 30, 2019 | December 31, 2018 | |||||||
Contracts in progress | $ | 150.5 | $ | 188.2 | ||||
Trade receivables | 69.3 | 127.5 | ||||||
Unbilled retentions | 55.7 | 65.6 | ||||||
Other receivables | 19.7 | 4.2 | ||||||
Allowance for doubtful accounts | (1.9 | ) | (6.3 | ) | ||||
Total accounts receivable, net | $ | 293.3 | $ | 379.2 |
September 30, 2019 | December 31, 2018 | |||||||||||||||
Reinsurer | A.M. Best Rating | Amount | % of Total | Amount | % of Total | |||||||||||
Munich American Reassurance Company | A+ | $ | 343.6 | 36.3 | % | $ | 335.0 | 33.5 | % | |||||||
Hannover Life Reassurance Company of America | A+ | 324.6 | 34.2 | % | 336.9 | 33.7 | % | |||||||||
Loyal American Life Insurance Company | A | 145.9 | 15.4 | % | 146.0 | 14.6 | % | |||||||||
Great American Life Insurance Company | A | 56.1 | 5.9 | % | 54.5 | 5.4 | % | |||||||||
ManhattanLife Assurance Company of America | B+ | 43.9 | 4.6 | % | 89.5 | 8.9 | % | |||||||||
Other | 33.8 | 3.6 | % | 38.3 | 3.9 | % | ||||||||||
Total | $ | 947.9 | 100.0 | % | $ | 1,000.2 | 100.0 | % |
September 30, 2019 | December 31, 2018 | |||||||
Cable-ships and submersibles | $ | 242.2 | $ | 251.1 | ||||
Equipment, furniture and fixtures, and software | 209.6 | 148.0 | ||||||
Building and leasehold improvements | 48.5 | 47.3 | ||||||
Land | 36.8 | 32.8 | ||||||
Construction in progress | 9.7 | 12.9 | ||||||
Plant and transportation equipment | 13.5 | 12.0 | ||||||
560.3 | 504.1 | |||||||
Less: Accumulated depreciation | 154.5 | 127.8 | ||||||
Total | $ | 405.8 | $ | 376.3 |
Construction | Marine Services | Energy | Telecom | Insurance | Broadcasting | Total | ||||||||||||||||||||||
Balance at December 31, 2018 | $ | 82.2 | $ | 14.3 | $ | 2.1 | $ | 4.4 | $ | 47.3 | $ | 21.4 | $ | 171.7 | ||||||||||||||
Measurement period adjustment | 7.1 | — | — | — | — | — | 7.1 | |||||||||||||||||||||
Impairments | — | — | — | (1.3 | ) | — | — | (1.3 | ) | |||||||||||||||||||
Effect of translation | (0.4 | ) | — | — | — | — | — | (0.4 | ) | |||||||||||||||||||
Balance at September 30, 2019 | $ | 88.9 | $ | 14.3 | $ | 2.1 | $ | 3.1 | $ | 47.3 | $ | 21.4 | $ | 177.1 |
September 30, 2019 | December 31, 2018 | |||||||
FCC licenses | $ | 131.4 | $ | 120.6 | ||||
State licenses | 2.5 | 2.5 | ||||||
Total | $ | 133.9 | $ | 123.1 |
Weighted-Average Original Useful Life | September 30, 2019 | December 31, 2018 | ||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | |||||||||||||||||||||
Customer relationships | 10 Years | $ | 53.5 | $ | (13.6 | ) | $ | 39.9 | $ | 53.6 | $ | (7.2 | ) | $ | 46.4 | |||||||||||
Channel sharing arrangements | 40 Years | 28.3 | (0.7 | ) | 27.6 | 25.2 | — | 25.2 | ||||||||||||||||||
Trade names | 13 Years | 26.0 | (7.5 | ) | 18.5 | 25.9 | (5.9 | ) | 20.0 | |||||||||||||||||
Developed technology | 5 Years | 1.2 | (1.2 | ) | — | 1.2 | (1.2 | ) | — | |||||||||||||||||
Other | 6 Years | 5.5 | (1.7 | ) | 3.8 | 5.5 | (1.0 | ) | 4.5 | |||||||||||||||||
Total | $ | 114.5 | $ | (24.7 | ) | $ | 89.8 | $ | 111.4 | $ | (15.3 | ) | $ | 96.1 |
Fiscal Year | Estimated Amortization Expense | |||
2020 | $ | 8.3 | ||
2021 | $ | 8.1 | ||
2022 | $ | 7.9 | ||
2023 | $ | 7.8 | ||
2024 | $ | 7.3 |
September 30, 2019 | December 31, 2018 | |||||||
Long-term care insurance reserves | $ | 4,175.5 | $ | 4,142.5 | ||||
Traditional life insurance reserves | 175.0 | 196.8 | ||||||
Other accident and health insurance reserves | 193.0 | 222.8 | ||||||
Total life, accident and health reserves | $ | 4,543.5 | $ | 4,562.1 |
Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Beginning balance | $ | 738.5 | $ | 243.5 | ||||
Less: recoverable from reinsurers | (136.4 | ) | (100.6 | ) | ||||
Beginning balance, net | 602.1 | 142.9 | ||||||
Incurred related to insured events of: | ||||||||
Current year | 159.2 | 54.5 | ||||||
Prior years | (46.9 | ) | 6.0 | |||||
Total incurred | 112.3 | 60.5 | ||||||
Paid related to insured events of: | ||||||||
Current year | (8.4 | ) | (3.9 | ) | ||||
Prior years | (106.9 | ) | (36.9 | ) | ||||
Total paid | (115.3 | ) | (40.8 | ) | ||||
Interest on liability for policy and contract claims | 16.2 | 4.1 | ||||||
Reserve for business acquired during the current period | — | 341.2 | ||||||
Ending balance, net | 615.3 | 507.9 | ||||||
Add: recoverable from reinsurers | 129.6 | 159.1 | ||||||
Ending balance | $ | 744.9 | $ | 667.0 |
September 30, 2019 | December 31, 2018 | |||||||
Accounts payable | $ | 129.3 | $ | 104.7 | ||||
Accrued expenses and other current liabilities | 84.2 | 83.4 | ||||||
Accrued interconnection costs | 49.4 | 103.0 | ||||||
Accrued payroll and employee benefits | 40.8 | 44.2 | ||||||
Accrued interest | 24.3 | 8.8 | ||||||
Accrued income taxes | 1.1 | 0.8 | ||||||
Total accounts payable and other current liabilities | $ | 329.1 | $ | 344.9 |
September 30, 2019 | December 31, 2018 | |||||||
Construction | ||||||||
LIBOR plus 5.85% Note, due 2023 | $ | 78.0 | $ | 80.0 | ||||
LIBOR plus 1.50% Line of Credit | 39.9 | 34.0 | ||||||
Other | 0.3 | — | ||||||
Marine Services | ||||||||
Obligations under capital leases | 34.4 | 40.4 | ||||||
7.49% Note, due 2020 | 20.9 | 14.0 | ||||||
Notes payable and revolving lines of credit, various maturity dates | 10.5 | 12.9 | ||||||
Energy | ||||||||
LIBOR plus 3.00% Term Loan, due 2023 | 27.4 | — | ||||||
5.00% Term Loan, due 2022 | 11.5 | 12.4 | ||||||
4.50% Note, due 2022 | 10.5 | 11.3 | ||||||
Other, various maturity dates | 3.0 | 3.2 | ||||||
Life Sciences | ||||||||
Notes payable, due 2019 | — | 1.7 | ||||||
Broadcasting | ||||||||
8.50% Notes due 2019 (1) | 64.3 | 35.0 | ||||||
Other, various maturity dates | 10.3 | 11.1 | ||||||
Non-Operating Corporate | ||||||||
11.5% Senior Secured Notes, due 2021 | 470.0 | 470.0 | ||||||
7.5% Convertible Senior Notes, due 2022 | 55.0 | 55.0 | ||||||
LIBOR plus 6.75% Line of Credit | 15.0 | — | ||||||
Total | 851.0 | 781.0 | ||||||
Issuance discount, net and deferred financing costs | (30.6 | ) | (37.1 | ) | ||||
Debt obligations | $ | 820.4 | $ | 743.9 |
Operating Leases | ||||
2019 | $ | 22.0 | ||
2020 | 18.7 | |||
2021 | 16.4 | |||
2022 | 8.8 | |||
2023 | 6.8 | |||
Thereafter | 20.3 | |||
Total obligations | $ | 93.0 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Service cost - benefits earning during the period | $ | — | $ | — | $ | — | $ | — | ||||||||
Interest cost on projected benefit obligation | 1.3 | 1.3 | 4.0 | 4.1 | ||||||||||||
Expected return on assets | (1.6 | ) | (1.9 | ) | (5.0 | ) | (5.7 | ) | ||||||||
Actuarial gain | — | — | — | — | ||||||||||||
Foreign currency gain (loss) | — | — | — | (0.1 | ) | |||||||||||
Net periodic benefit | $ | (0.3 | ) | $ | (0.6 | ) | $ | (1.0 | ) | $ | (1.7 | ) |
September 30, 2019 | September 30, 2018 | |||
Expected option life (in years) | — | 0.88 - 5.84 | ||
Risk-free interest rate | —% | 2.24 - 2.85% | ||
Expected volatility | —% | 47.51 - 47.89% | ||
Dividend yield | —% | —% |
Shares | Weighted Average Grant Date Fair Value | ||||||
Unvested - December 31, 2018 | 3,031,469 | $ | 5.93 | ||||
Granted | 542,450 | $ | 2.57 | ||||
Vested | (1,144,831 | ) | $ | 6.07 | |||
Forfeited | (10,613 | ) | $ | 2.91 | |||
Unvested - September 30, 2019 | 2,418,475 | $ | 5.12 |
Shares | Weighted Average Exercise Price | ||||||
Outstanding - December 31, 2018 | 7,160,861 | $ | 6.51 | ||||
Granted | — | $ | — | ||||
Exercised | — | $ | — | ||||
Forfeited | — | $ | — | ||||
Expired | (93,269 | ) | $ | 5.47 | |||
Outstanding - September 30, 2019 | 7,067,592 | $ | 6.52 | ||||
Eligible for exercise | 6,613,099 | $ | 6.59 |
September 30, 2019 | December 31, 2018 | |||||
Preferred shares authorized, $0.001 par value | 20,000,000 | 20,000,000 | ||||
Series A shares issued and outstanding | 6,375 | 6,375 | ||||
Series A-2 shares issued and outstanding | 4,000 | 14,000 |
• | 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. |
• | The Company agreed that it will issue to Corrib and Luxor, on each quarterly anniversary commencing 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). |
Declaration Date | March 31, 2019 | June 30, 2019 | September 30, 2019 | |||||||||
Holders of Record Date | March 31, 2019 | June 30, 2019 | September 30, 2019 | |||||||||
Payment Date | April 15, 2019 | July 15, 2019 | October 15, 2019 | |||||||||
Total Dividend | $ | 0.2 | $ | 0.2 | $ | 0.2 |
Declaration Date | March 31, 2018 | June 30, 2018 | September 30, 2018 | |||||||||
Holders of Record Date | March 31, 2018 | June 30, 2018 | September 30, 2018 | |||||||||
Payment Date | April 16, 2018 | July 16, 2018 | October 15, 2018 | |||||||||
Total Dividend | $ | 0.5 | $ | 0.5 | $ | 0.5 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net revenue | $ | 2.6 | $ | 5.7 | $ | 5.6 | $ | 13.3 | ||||||||
Operating expenses | $ | 0.1 | $ | 0.3 | $ | 0.8 | $ | 1.4 | ||||||||
Interest expense | $ | 0.3 | $ | 0.3 | $ | 0.8 | $ | 1.0 | ||||||||
Dividends | $ | 1.9 | $ | 21.9 | $ | 3.0 | $ | 24.3 |
September 30, 2019 | December 31, 2018 | |||||||
Accounts receivable | $ | 1.8 | $ | 5.0 | ||||
Long-term obligations | $ | 23.6 | $ | 28.5 | ||||
Accounts payable | $ | 0.1 | $ | 2.2 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||
Segment | 2019 | 2018 | 2019 | 2018 | ||||||
Customer A | Telecommunications | * | 11.6% | * | 11.4% |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net Revenue by Geographic Region | ||||||||||||||||
United States | $ | 419.3 | $ | 450.2 | $ | 1,329.8 | $ | 1,285.6 | ||||||||
United Kingdom | 46.3 | 45.1 | 127.3 | 146.8 | ||||||||||||
Other | 10.1 | 6.1 | 28.6 | 19.4 | ||||||||||||
Total | $ | 475.7 | $ | 501.4 | $ | 1,485.7 | $ | 1,451.8 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net revenue | ||||||||||||||||
Construction | $ | 168.4 | $ | 195.3 | $ | 556.2 | $ | 531.2 | ||||||||
Marine Services | 48.2 | 44.8 | 130.0 | 149.9 | ||||||||||||
Energy | 8.7 | 4.6 | 19.3 | 16.2 | ||||||||||||
Telecommunications | 162.2 | 187.8 | 507.0 | 580.6 | ||||||||||||
Insurance | 80.4 | 77.2 | 251.3 | 161.1 | ||||||||||||
Broadcasting | 10.0 | 12.0 | 29.8 | 33.7 | ||||||||||||
Other | — | 0.3 | — | 3.7 | ||||||||||||
Eliminations (*) | (2.2 | ) | (20.6 | ) | (7.9 | ) | (24.6 | ) | ||||||||
Total net revenue | $ | 475.7 | $ | 501.4 | $ | 1,485.7 | $ | 1,451.8 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Income (loss) from operations | ||||||||||||||||
Construction | $ | 12.4 | $ | 12.5 | $ | 34.3 | $ | 30.3 | ||||||||
Marine Services | 2.2 | (8.5 | ) | (4.6 | ) | (8.5 | ) | |||||||||
Energy | 0.4 | (0.4 | ) | (0.3 | ) | 0.5 | ||||||||||
Telecommunications | (0.4 | ) | 1.3 | 0.4 | 3.4 | |||||||||||
Insurance | 10.6 | 7.5 | 75.9 | 14.5 | ||||||||||||
Life Sciences | (3.0 | ) | (2.2 | ) | (6.6 | ) | (12.0 | ) | ||||||||
Broadcasting | (3.8 | ) | (5.3 | ) | (8.8 | ) | (21.4 | ) | ||||||||
Other | — | (1.0 | ) | — | (2.4 | ) | ||||||||||
Non-operating Corporate | (6.6 | ) | (7.6 | ) | (20.3 | ) | (23.4 | ) | ||||||||
Eliminations (*) | (2.2 | ) | (20.6 | ) | (7.9 | ) | (24.6 | ) | ||||||||
Total income (loss) from operations | $ | 9.6 | $ | (24.3 | ) | $ | 62.1 | $ | (43.6 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Income (loss) from operations | $ | 9.6 | $ | (24.3 | ) | $ | 62.1 | $ | (43.6 | ) | ||||||
Interest expense | (24.0 | ) | (17.5 | ) | (69.3 | ) | (54.0 | ) | ||||||||
Gain on sale and deconsolidation of subsidiary | — | 3.0 | — | 105.1 | ||||||||||||
Income from equity investees | 0.3 | 8.1 | 1.5 | 13.7 | ||||||||||||
Gain on bargain purchase | — | 109.1 | 1.1 | 109.1 | ||||||||||||
Other income, net | 6.8 | 63.9 | 5.4 | 64.0 | ||||||||||||
(Loss) income from continuing operations | (7.3 | ) | 142.3 | 0.8 | 194.3 | |||||||||||
Income tax (expense) benefit | (1.0 | ) | 9.2 | (6.2 | ) | (1.9 | ) | |||||||||
Net (loss) income | (8.3 | ) | 151.5 | (5.4 | ) | 192.4 | ||||||||||
Net loss (income) attributable to noncontrolling interest and redeemable noncontrolling interest | 1.2 | 2.0 | 4.9 | (18.6 | ) | |||||||||||
Net (loss) income attributable to HC2 Holdings, Inc. | (7.1 | ) | 153.5 | (0.5 | ) | 173.8 | ||||||||||
Less: Preferred dividends, deemed dividends, and repurchase gains | 0.4 | 0.7 | (0.4 | ) | 2.1 | |||||||||||
Net (loss) income attributable to common stock and participating preferred stockholders | $ | (7.5 | ) | $ | 152.8 | $ | (0.1 | ) | $ | 171.7 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Depreciation and Amortization | ||||||||||||||||
Construction | $ | 3.9 | $ | 1.9 | $ | 11.8 | $ | 5.0 | ||||||||
Marine Services | 6.4 | 6.9 | 19.4 | 20.1 | ||||||||||||
Energy | 2.0 | 1.4 | 4.9 | 4.1 | ||||||||||||
Telecommunications | 0.1 | 0.1 | 0.3 | 0.3 | ||||||||||||
Insurance (*) | (5.7 | ) | (4.8 | ) | (18.2 | ) | (7.1 | ) | ||||||||
Life Sciences | — | — | 0.1 | 0.1 | ||||||||||||
Broadcasting | 1.8 | 0.7 | 4.7 | 2.3 | ||||||||||||
Other | — | — | — | 0.1 | ||||||||||||
Non-operating Corporate | 0.1 | — | 0.1 | 0.1 | ||||||||||||
Total | $ | 8.6 | $ | 6.2 | $ | 23.1 | $ | 25.0 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Capital Expenditures (*) | ||||||||||||||||
Construction | $ | 1.4 | $ | 6.6 | $ | 6.8 | $ | 10.8 | ||||||||
Marine Services | 2.7 | 4.7 | 10.9 | 18.8 | ||||||||||||
Energy | 0.1 | 0.3 | 0.4 | 1.5 | ||||||||||||
Telecommunications | — | — | — | 0.1 | ||||||||||||
Insurance | 0.4 | — | 0.6 | 0.3 | ||||||||||||
Life Sciences | 0.1 | — | 0.1 | 0.1 | ||||||||||||
Broadcasting | 3.5 | 0.5 | 8.6 | 0.7 | ||||||||||||
Total | $ | 8.2 | $ | 12.1 | $ | 27.4 | $ | 32.3 |
September 30, 2019 | December 31, 2018 | |||||||
Investments | ||||||||
Construction | $ | 0.9 | $ | 0.9 | ||||
Marine Services | 63.0 | 58.3 | ||||||
Insurance | 4,361.1 | 3,821.4 | ||||||
Life Sciences | 22.9 | 16.3 | ||||||
Other | 2.6 | 5.6 | ||||||
Eliminations | (101.5 | ) | (80.5 | ) | ||||
Total | $ | 4,349.0 | $ | 3,822.0 |
September 30, 2019 | December 31, 2018 | |||||||
Property, plant and equipment, net | ||||||||
United States | $ | 218.5 | $ | 178.2 | ||||
United Kingdom | 182.9 | 192.7 | ||||||
Other | 4.4 | 5.4 | ||||||
Total | $ | 405.8 | $ | 376.3 |
September 30, 2019 | December 31, 2018 | |||||||
Total Assets | ||||||||
Construction | $ | 508.7 | $ | 537.9 | ||||
Marine Services | 378.4 | 368.6 | ||||||
Energy | 120.4 | 77.6 | ||||||
Telecommunications | 107.9 | 139.9 | ||||||
Insurance | 5,617.7 | 5,213.1 | ||||||
Life Sciences | 32.2 | 35.6 | ||||||
Broadcasting | 255.0 | 202.8 | ||||||
Other | 2.6 | 5.6 | ||||||
Non-operating Corporate | 24.1 | 9.2 | ||||||
Eliminations | (101.5 | ) | (86.5 | ) | ||||
Total | $ | 6,945.5 | $ | 6,503.8 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net (loss) income attributable to common stock and participating preferred stockholders | $ | (7.5 | ) | $ | 152.8 | $ | (0.1 | ) | $ | 171.7 | ||||||
Earnings allocable to common shares: | ||||||||||||||||
Numerator for basic and diluted earnings per share | ||||||||||||||||
Participating shares at end of period: | ||||||||||||||||
Weighted-average common stock outstanding | 45.7 | 44.3 | 45.4 | 44.2 | ||||||||||||
Unvested restricted stock | 0.6 | 0.4 | 0.5 | 0.3 | ||||||||||||
Preferred stock (as-converted basis) | 2.1 | 4.8 | 2.1 | 4.8 | ||||||||||||
Total | 48.4 | 49.5 | 48.0 | 49.3 | ||||||||||||
Percentage of loss allocated to: | ||||||||||||||||
Common stock | 94.4 | % | 89.5 | % | 94.6 | % | 89.6 | % | ||||||||
Unvested restricted stock | 1.2 | % | 0.8 | % | 1.0 | % | 0.7 | % | ||||||||
Preferred stock | 4.4 | % | 9.7 | % | 4.4 | % | 9.7 | % | ||||||||
Net (loss) income attributable to common stock, basic | $ | (7.1 | ) | $ | 136.7 | $ | (0.1 | ) | $ | 153.8 | ||||||
Distributed and Undistributed earnings to Common Shareholders: | ||||||||||||||||
Effect of assumed shares under treasury stock method for stock options and restricted shares and if-converted method for convertible instruments | — | 0.4 | — | 0.3 | ||||||||||||
Income from the dilutive impact of subsidiary securities | — | — | — | — | ||||||||||||
Net (loss) income attributable to common stock, diluted | $ | (7.1 | ) | $ | 137.1 | $ | (0.1 | ) | $ | 154.1 | ||||||
Denominator for basic and dilutive earnings per share | ||||||||||||||||
Weighted average common shares outstanding - basic | 45.7 | 44.3 | 45.4 | 44.2 | ||||||||||||
Effect of assumed shares under treasury stock method for stock options and restricted shares and if-converted method for convertible instruments | — | 1.9 | — | 1.4 | ||||||||||||
Weighted average common shares outstanding - diluted | 45.7 | 46.2 | 45.4 | 45.6 | ||||||||||||
Net (loss) income attributable to participating security holders - Basic | $ | (0.16 | ) | $ | 3.09 | $ | — | $ | 3.48 | |||||||
Net (loss) income attributable to participating security holders - Diluted | $ | (0.16 | ) | $ | 2.97 | $ | — | $ | 3.38 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2019 | 2018 | Increase / (Decrease) | 2019 | 2018 | Increase / (Decrease) | |||||||||||||||||||
Net revenue | ||||||||||||||||||||||||
Construction | $ | 168.4 | $ | 195.3 | $ | (26.9 | ) | $ | 556.2 | $ | 531.2 | $ | 25.0 | |||||||||||
Marine Services | 48.2 | 44.8 | 3.4 | 130.0 | 149.9 | (19.9 | ) | |||||||||||||||||
Energy | 8.7 | 4.6 | 4.1 | 19.3 | 16.2 | 3.1 | ||||||||||||||||||
Telecommunications | 162.2 | 187.8 | (25.6 | ) | 507.0 | 580.6 | (73.6 | ) | ||||||||||||||||
Insurance | 80.4 | 77.2 | 3.2 | 251.3 | 161.1 | 90.2 | ||||||||||||||||||
Broadcasting | 10.0 | 12.0 | (2.0 | ) | 29.8 | 33.7 | (3.9 | ) | ||||||||||||||||
Other | — | 0.3 | (0.3 | ) | — | 3.7 | (3.7 | ) | ||||||||||||||||
Eliminations (1) | (2.2 | ) | (20.6 | ) | 18.4 | (7.9 | ) | (24.6 | ) | 16.7 | ||||||||||||||
Total net revenue | 475.7 | 501.4 | (25.7 | ) | 1,485.7 | 1,451.8 | 33.9 | |||||||||||||||||
Income (loss) from operations | ||||||||||||||||||||||||
Construction | $ | 12.4 | $ | 12.5 | $ | (0.1 | ) | $ | 34.3 | $ | 30.3 | $ | 4.0 | |||||||||||
Marine Services | 2.2 | (8.5 | ) | 10.7 | (4.6 | ) | (8.5 | ) | 3.9 | |||||||||||||||
Energy | 0.4 | (0.4 | ) | 0.8 | (0.3 | ) | 0.5 | (0.8 | ) | |||||||||||||||
Telecommunications | (0.4 | ) | 1.3 | (1.7 | ) | 0.4 | 3.4 | (3.0 | ) | |||||||||||||||
Insurance | 10.6 | 7.5 | 3.1 | 75.9 | 14.5 | 61.4 | ||||||||||||||||||
Life Sciences | (3.0 | ) | (2.2 | ) | (0.8 | ) | (6.6 | ) | (12.0 | ) | 5.4 | |||||||||||||
Broadcasting | (3.8 | ) | (5.3 | ) | 1.5 | (8.8 | ) | (21.4 | ) | 12.6 | ||||||||||||||
Other | — | (1.0 | ) | 1.0 | — | (2.4 | ) | 2.4 | ||||||||||||||||
Non-operating Corporate | (6.6 | ) | (7.6 | ) | 1.0 | (20.3 | ) | (23.4 | ) | 3.1 | ||||||||||||||
Eliminations (1) | (2.2 | ) | (20.6 | ) | 18.4 | (7.9 | ) | (24.6 | ) | 16.7 | ||||||||||||||
Total income (loss) from operations | 9.6 | (24.3 | ) | 33.9 | 62.1 | (43.6 | ) | 105.7 | ||||||||||||||||
Interest expense | (24.0 | ) | (17.5 | ) | (6.5 | ) | (69.3 | ) | (54.0 | ) | (15.3 | ) | ||||||||||||
Gain on sale and deconsolidation of subsidiary | — | 3.0 | (3.0 | ) | — | 105.1 | (105.1 | ) | ||||||||||||||||
Income from equity investees | 0.3 | 8.1 | (7.8 | ) | 1.5 | 13.7 | (12.2 | ) | ||||||||||||||||
Gain on bargain purchase | — | 109.1 | (109.1 | ) | 1.1 | 109.1 | (108.0 | ) | ||||||||||||||||
Other income, net | 6.8 | 63.9 | (57.1 | ) | 5.4 | 64.0 | (58.6 | ) | ||||||||||||||||
(Loss) income from continuing operations | (7.3 | ) | 142.3 | (149.6 | ) | 0.8 | 194.3 | (193.5 | ) | |||||||||||||||
Income tax (expense) benefit | (1.0 | ) | 9.2 | (10.2 | ) | (6.2 | ) | (1.9 | ) | (4.3 | ) | |||||||||||||
Net (loss) income | (8.3 | ) | 151.5 | (159.8 | ) | (5.4 | ) | 192.4 | (197.8 | ) | ||||||||||||||
Net loss (income) attributable to noncontrolling interest and redeemable noncontrolling interest | 1.2 | 2.0 | (0.8 | ) | 4.9 | (18.6 | ) | 23.5 | ||||||||||||||||
Net (loss) income attributable to HC2 Holdings, Inc. | (7.1 | ) | 153.5 | (160.6 | ) | (0.5 | ) | 173.8 | (174.3 | ) | ||||||||||||||
Less: Preferred dividends, deemed dividends, and repurchase gains | 0.4 | 0.7 | (0.3 | ) | (0.4 | ) | 2.1 | (2.5 | ) | |||||||||||||||
Net (loss) income attributable to common stock and participating preferred stockholders | $ | (7.5 | ) | $ | 152.8 | $ | (160.3 | ) | $ | (0.1 | ) | $ | 171.7 | $ | (171.8 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2019 | 2018 | Increase / (Decrease) | 2019 | 2018 | Increase / (Decrease) | |||||||||||||||||||
Net revenue | $ | 168.4 | $ | 195.3 | $ | (26.9 | ) | $ | 556.2 | $ | 531.2 | $ | 25.0 | |||||||||||
Cost of revenue | 130.8 | 166.5 | (35.7 | ) | 448.9 | 451.3 | (2.4 | ) | ||||||||||||||||
Selling, general and administrative | 21.3 | 15.2 | 6.1 | 61.3 | 44.8 | 16.5 | ||||||||||||||||||
Depreciation and amortization | 3.9 | 1.9 | 2.0 | 11.8 | 5.0 | 6.8 | ||||||||||||||||||
Other operating (income) | — | (0.8 | ) | 0.8 | (0.1 | ) | (0.2 | ) | 0.1 | |||||||||||||||
Income from operations | $ | 12.4 | $ | 12.5 | $ | (0.1 | ) | $ | 34.3 | $ | 30.3 | $ | 4.0 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2019 | 2018 | Increase / (Decrease) | 2019 | 2018 | Increase / (Decrease) | |||||||||||||||||||
Net revenue | $ | 48.2 | $ | 44.8 | $ | 3.4 | $ | 130.0 | $ | 149.9 | $ | (19.9 | ) | |||||||||||
Cost of revenue | 35.7 | 41.7 | (6.0 | ) | 99.5 | 125.7 | (26.2 | ) | ||||||||||||||||
Selling, general and administrative | 3.7 | 4.9 | (1.2 | ) | 15.7 | 15.4 | 0.3 | |||||||||||||||||
Depreciation and amortization | 6.4 | 6.9 | (0.5 | ) | 19.4 | 20.1 | (0.7 | ) | ||||||||||||||||
Other operating expense (income) | 0.2 | (0.2 | ) | 0.4 | — | (2.8 | ) | 2.8 | ||||||||||||||||
Income (loss) from operations | $ | 2.2 | $ | (8.5 | ) | $ | 10.7 | $ | (4.6 | ) | $ | (8.5 | ) | $ | 3.9 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2019 | 2018 | Increase / (Decrease) | 2019 | 2018 | Increase / (Decrease) | |||||||||||||||||||
Net revenue | $ | 8.7 | $ | 4.6 | $ | 4.1 | $ | 19.3 | $ | 16.2 | $ | 3.1 | ||||||||||||
Cost of revenue | 5.1 | 2.7 | 2.4 | 11.6 | 8.4 | 3.2 | ||||||||||||||||||
Selling, general and administrative expenses | 1.3 | 0.9 | 0.4 | 3.2 | 3.2 | — | ||||||||||||||||||
Depreciation and amortization | 2.0 | 1.4 | 0.6 | 4.9 | 4.1 | 0.8 | ||||||||||||||||||
Other operating (income) expense | (0.1 | ) | — | (0.1 | ) | (0.1 | ) | — | (0.1 | ) | ||||||||||||||
Income (loss) from operations | $ | 0.4 | $ | (0.4 | ) | $ | 0.8 | $ | (0.3 | ) | $ | 0.5 | $ | (0.8 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2019 | 2018 | Increase / (Decrease) | 2019 | 2018 | Increase / (Decrease) | |||||||||||||||||||
Net revenue | $ | 162.2 | $ | 187.8 | $ | (25.6 | ) | $ | 507.0 | $ | 580.6 | $ | (73.6 | ) | ||||||||||
Cost of revenue | 159.8 | 184.1 | (24.3 | ) | 498.5 | 569.5 | (71.0 | ) | ||||||||||||||||
Selling, general and administrative | 1.8 | 2.3 | (0.5 | ) | 6.4 | 7.5 | (1.1 | ) | ||||||||||||||||
Depreciation and amortization | 0.1 | 0.1 | — | 0.3 | 0.2 | 0.1 | ||||||||||||||||||
Other operating expense | 0.9 | — | 0.9 | 1.4 | — | 1.4 | ||||||||||||||||||
(Loss) income from operations | $ | (0.4 | ) | $ | 1.3 | $ | (1.7 | ) | $ | 0.4 | $ | 3.4 | $ | (3.0 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2019 | 2018 | Increase / (Decrease) | 2019 | 2018 | Increase / (Decrease) | |||||||||||||||||||
Life, accident and health earned premiums, net | $ | 28.8 | $ | 25.4 | $ | 3.4 | $ | 88.7 | $ | 65.3 | $ | 23.4 | ||||||||||||
Net investment income | 53.5 | 31.7 | 21.8 | 159.0 | 68.8 | 90.2 | ||||||||||||||||||
Net realized and unrealized (losses) gains on investments | (1.9 | ) | 20.1 | (22.0 | ) | 3.6 | 27.0 | (23.4 | ) | |||||||||||||||
Net revenue | 80.4 | 77.2 | 3.2 | 251.3 | 161.1 | 90.2 | ||||||||||||||||||
Policy benefits, changes in reserves, and commissions | 66.1 | 66.4 | (0.3 | ) | 166.8 | 134.0 | 32.8 | |||||||||||||||||
Selling, general and administrative | 9.4 | 8.1 | 1.3 | 26.8 | 19.7 | 7.1 | ||||||||||||||||||
Depreciation and amortization | (5.7 | ) | (4.8 | ) | (0.9 | ) | (18.2 | ) | (7.1 | ) | (11.1 | ) | ||||||||||||
Income from operations (1) | $ | 10.6 | $ | 7.5 | $ | 3.1 | $ | 75.9 | $ | 14.5 | $ | 61.4 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2019 | 2018 | Increase / (Decrease) | 2019 | 2018 | Increase / (Decrease) | |||||||||||||||||||
Selling, general and administrative | $ | 3.0 | $ | 2.2 | $ | 0.8 | $ | 6.4 | $ | 11.9 | $ | (5.5 | ) | |||||||||||
Depreciation and amortization | — | — | — | 0.1 | 0.1 | — | ||||||||||||||||||
Other operating income | — | — | — | 0.1 | — | 0.1 | ||||||||||||||||||
Loss from operations | $ | (3.0 | ) | $ | (2.2 | ) | $ | (0.8 | ) | $ | (6.6 | ) | $ | (12.0 | ) | $ | 5.4 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2019 | 2018 | Increase / (Decrease) | 2019 | 2018 | Increase / (Decrease) | |||||||||||||||||||
Net revenue | $ | 10.0 | $ | 12.0 | $ | (2.0 | ) | $ | 29.8 | $ | 33.7 | $ | (3.9 | ) | ||||||||||
Cost of revenue | 5.6 | 7.5 | (1.9 | ) | 17.4 | 21.4 | (4.0 | ) | ||||||||||||||||
Selling, general and administrative | 7.4 | 9.1 | (1.7 | ) | 19.4 | 31.3 | (11.9 | ) | ||||||||||||||||
Depreciation and amortization | 1.8 | 0.7 | 1.1 | 4.7 | 2.3 | 2.4 | ||||||||||||||||||
Other operating (income) expense | (1.0 | ) | — | (1.0 | ) | (2.9 | ) | 0.1 | (3.0 | ) | ||||||||||||||
Loss from operations | $ | (3.8 | ) | $ | (5.3 | ) | $ | 1.5 | $ | (8.8 | ) | $ | (21.4 | ) | $ | 12.6 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2019 | 2018 | Increase / (Decrease) | 2019 | 2018 | Increase / (Decrease) | |||||||||||||||||||
Selling, general and administrative | $ | 6.5 | $ | 7.6 | $ | (1.1 | ) | $ | 20.2 | $ | 23.3 | $ | (3.1 | ) | ||||||||||
Depreciation and amortization | 0.1 | — | 0.1 | 0.1 | 0.1 | — | ||||||||||||||||||
Loss from operations | $ | (6.6 | ) | $ | (7.6 | ) | $ | 1.0 | $ | (20.3 | ) | $ | (23.4 | ) | $ | 3.1 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2019 | 2018 | Increase / (Decrease) | 2019 | 2018 | Increase / (Decrease) | |||||||||||||||||||
Construction | $ | — | $ | — | $ | — | $ | — | $ | (0.1 | ) | $ | 0.1 | |||||||||||
Marine Services | 1.5 | 9.1 | (7.6 | ) | 4.0 | 16.9 | (12.9 | ) | ||||||||||||||||
Life Sciences | (1.2 | ) | (0.9 | ) | (0.3 | ) | (2.5 | ) | (3.0 | ) | 0.5 | |||||||||||||
Other | — | (0.1 | ) | 0.1 | — | (0.1 | ) | 0.1 | ||||||||||||||||
Income from equity investees | $ | 0.3 | $ | 8.1 | $ | (7.8 | ) | $ | 1.5 | $ | 13.7 | $ | (12.2 | ) |
(in millions) | Three Months Ended September 30, 2019 | |||||||||||||||||||||||||||||||||||
Core Operating Subsidiaries | Early Stage & Other | Total HC2 | ||||||||||||||||||||||||||||||||||
Construction | Marine Services | Energy | Telecom | Life Sciences | Broadcasting | Other & Elimination | Non-operating Corporate | |||||||||||||||||||||||||||||
Net Loss attributable to HC2 Holdings, Inc. | $ | (7.1 | ) | |||||||||||||||||||||||||||||||||
Less: Net Income attributable to HC2 Holdings Insurance segment | 10.5 | |||||||||||||||||||||||||||||||||||
Less: Consolidating eliminations attributable to HC2 Holdings Insurance segment | (2.1 | ) | ||||||||||||||||||||||||||||||||||
Net Income (loss) attributable to HC2 Holdings, Inc., excluding Insurance segment | $ | 7.0 | $ | 2.6 | $ | (0.1 | ) | $ | (0.3 | ) | $ | 5.6 | $ | (6.2 | ) | $ | (0.2 | ) | $ | (23.9 | ) | $ | (15.5 | ) | ||||||||||||
Adjustments to reconcile net income (loss) to Adjusted EBITDA: | ||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 3.9 | 6.4 | 2.0 | 0.1 | — | 1.8 | — | 0.1 | 14.3 | |||||||||||||||||||||||||||
Depreciation and amortization (included in cost of revenue) | 2.2 | — | — | — | — | — | — | — | 2.2 | |||||||||||||||||||||||||||
Amortization of equity method fair value adjustment at acquisition | — | (0.4 | ) | — | — | — | — | — | — | (0.4 | ) | |||||||||||||||||||||||||
Other operating (income) expense | — | 0.2 | (0.2 | ) | 0.8 | — | (0.8 | ) | — | — | — | |||||||||||||||||||||||||
Gain on sale and deconsolidation of subsidiary | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Interest expense | 2.3 | 1.2 | 1.0 | — | — | 2.4 | — | 17.1 | 24.0 | |||||||||||||||||||||||||||
Other (income) expense, net | (0.1 | ) | (1.1 | ) | (0.3 | ) | — | (8.2 | ) | 0.9 | 0.2 | 2.9 | (5.7 | ) | ||||||||||||||||||||||
Loss on early extinguishment or restructuring of debt | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Net loss on contingent consideration | — | — | — | (0.1 | ) | — | — | — | — | (0.1 | ) | |||||||||||||||||||||||||
Foreign currency (gain) loss (included in cost of revenue) | — | 0.1 | — | 0.1 | — | — | — | — | 0.2 | |||||||||||||||||||||||||||
Income tax (benefit) expense | 2.9 | — | — | — | — | — | — | (2.8 | ) | 0.1 | ||||||||||||||||||||||||||
Noncontrolling interest | 0.5 | 0.9 | (0.1 | ) | — | (1.4 | ) | (1.1 | ) | — | — | (1.2 | ) | |||||||||||||||||||||||
Bonus to be settled in equity | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Share-based payment expense | — | 0.5 | — | — | — | 0.1 | — | 1.5 | 2.1 | |||||||||||||||||||||||||||
Non-recurring items | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Acquisition and disposition costs | 0.7 | 1.3 | — | 0.2 | — | 1.0 | — | 0.4 | 3.6 | |||||||||||||||||||||||||||
Adjusted EBITDA | $ | 19.4 | $ | 11.7 | $ | 2.3 | $ | 0.8 | $ | (4.0 | ) | $ | (1.9 | ) | $ | — | $ | (4.7 | ) | $ | 23.6 | |||||||||||||||
Total Core Operating Subsidiaries | $ | 34.2 |
(in millions) | Three Months Ended September 30, 2018 | |||||||||||||||||||||||||||||||||||
Core Operating Subsidiaries | Early Stage & Other | Total HC2 | ||||||||||||||||||||||||||||||||||
Construction | Marine Services | Energy | Telecom | Life Sciences | Broadcasting | Other & Elimination | Non-operating Corporate | |||||||||||||||||||||||||||||
Net Income attributable to HC2 Holdings, Inc. | $ | 153.5 | ||||||||||||||||||||||||||||||||||
Less: Net Income attributable to HC2 Holdings Insurance segment | 141.1 | |||||||||||||||||||||||||||||||||||
Less: Consolidating eliminations attributable to HC2 Holdings Insurance segment | 23.1 | |||||||||||||||||||||||||||||||||||
Net Income (loss) attributable to HC2 Holdings, Inc., excluding Insurance segment | $ | 9.2 | $ | (0.5 | ) | $ | (0.6 | ) | $ | 1.3 | $ | (2.6 | ) | $ | (4.7 | ) | $ | 4.5 | $ | (17.3 | ) | $ | (10.7 | ) | ||||||||||||
Adjustments to reconcile net income (loss) to Adjusted EBITDA: | ||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 1.9 | 6.9 | 1.4 | 0.1 | — | 0.8 | — | — | 11.1 | |||||||||||||||||||||||||||
Depreciation and amortization (included in cost of revenue) | 1.8 | — | — | — | — | — | — | — | 1.8 | |||||||||||||||||||||||||||
Amortization of equity method fair value adjustment at acquisition | — | (0.4 | ) | — | — | — | — | — | — | (0.4 | ) | |||||||||||||||||||||||||
Other operating (income) expense | (0.7 | ) | (0.1 | ) | — | — | — | — | — | — | (0.8 | ) | ||||||||||||||||||||||||
Gain on sale and deconsolidation of subsidiary | — | — | — | — | — | — | (1.5 | ) | — | (1.5 | ) | |||||||||||||||||||||||||
Interest expense | 0.6 | 1.2 | 0.4 | — | — | 0.5 | — | 14.6 | 17.3 | |||||||||||||||||||||||||||
Other (income) expense, net | (2.0 | ) | (0.2 | ) | 0.1 | — | — | 0.4 | (3.6 | ) | 1.5 | (3.8 | ) | |||||||||||||||||||||||
Loss on early extinguishment or restructuring of debt | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Net loss on contingent consideration | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Foreign currency (gain) loss (included in cost of revenue) | — | 0.2 | — | — | — | — | — | — | 0.2 | |||||||||||||||||||||||||||
Income tax (benefit) expense | 3.8 | 0.1 | — | — | — | — | — | (6.4 | ) | (2.5 | ) | |||||||||||||||||||||||||
Noncontrolling interest | 0.8 | — | (0.3 | ) | — | (0.5 | ) | (1.5 | ) | (0.4 | ) | — | (1.9 | ) | ||||||||||||||||||||||
Bonus to be settled in equity | — | — | — | — | — | — | — | 0.2 | 0.2 | |||||||||||||||||||||||||||
Share-based payment expense | — | 0.5 | — | — | 0.1 | 1.7 | — | 1.0 | 3.3 | |||||||||||||||||||||||||||
Non-recurring items | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Acquisition and disposition costs | 0.5 | 0.2 | — | 0.1 | — | 0.4 | — | 0.2 | 1.4 | |||||||||||||||||||||||||||
Adjusted EBITDA | $ | 15.9 | $ | 7.9 | $ | 1.0 | $ | 1.5 | $ | (3.0 | ) | $ | (2.4 | ) | $ | (1.0 | ) | $ | (6.2 | ) | $ | 13.7 | ||||||||||||||
Total Core Operating Subsidiaries | $ | 26.3 |
(in millions) | Nine Months Ended September 30, 2019 | |||||||||||||||||||||||||||||||||||
Core Operating Subsidiaries | Early Stage & Other | Total HC2 | ||||||||||||||||||||||||||||||||||
Construction | Marine Services | Energy | Telecom | Life Sciences | Broadcasting | Other & Elimination | Non-operating Corporate | |||||||||||||||||||||||||||||
Net Loss attributable to HC2 Holdings, Inc. | $ | (0.5 | ) | |||||||||||||||||||||||||||||||||
Less: Net Income attributable to HC2 Holdings Insurance segment | 74.6 | |||||||||||||||||||||||||||||||||||
Less: Consolidating eliminations attributable to HC2 Holdings Insurance segment | (7.6 | ) | ||||||||||||||||||||||||||||||||||
Net Income (loss) attributable to HC2 Holdings, Inc., excluding Insurance segment | $ | 18.0 | $ | (1.9 | ) | $ | (1.4 | ) | $ | 0.7 | $ | 1.6 | $ | (14.1 | ) | $ | (0.4 | ) | $ | (70.0 | ) | $ | (67.5 | ) | ||||||||||||
Adjustments to reconcile net income (loss) to Adjusted EBITDA: | ||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 11.8 | 19.4 | 4.9 | 0.3 | 0.1 | 4.7 | — | 0.1 | 41.3 | |||||||||||||||||||||||||||
Depreciation and amortization (included in cost of revenue) | 6.7 | — | — | — | — | — | — | — | 6.7 | |||||||||||||||||||||||||||
Amortization of equity method fair value adjustment at acquisition | — | (1.1 | ) | — | — | — | — | — | — | (1.1 | ) | |||||||||||||||||||||||||
Other operating (income) expense | (0.1 | ) | — | (0.1 | ) | 1.3 | — | (2.7 | ) | — | — | (1.6 | ) | |||||||||||||||||||||||
Gain on sale and deconsolidation of subsidiary | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Interest expense | 7.0 | 3.3 | 1.9 | — | — | 6.3 | — | 51.1 | 69.6 | |||||||||||||||||||||||||||
Other (income) expense, net | 0.1 | (1.4 | ) | (0.1 | ) | — | (8.3 | ) | 1.3 | 0.4 | 3.9 | (4.1 | ) | |||||||||||||||||||||||
Loss on early extinguishment or restructuring of debt | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Net loss on contingent consideration | — | — | — | (0.3 | ) | — | — | — | — | (0.3 | ) | |||||||||||||||||||||||||
Foreign currency (gain) loss (included in cost of revenue) | — | 0.4 | — | 0.1 | — | — | — | — | 0.5 | |||||||||||||||||||||||||||
Income tax (benefit) expense | 8.0 | 0.1 | — | — | — | 0.1 | — | (5.3 | ) | 2.9 | ||||||||||||||||||||||||||
Noncontrolling interest | 1.4 | (0.7 | ) | (0.7 | ) | — | (2.2 | ) | (2.7 | ) | — | — | (4.9 | ) | ||||||||||||||||||||||
Bonus to be settled in equity | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Share-based payment expense | — | 1.3 | — | — | 0.1 | 0.5 | — | 4.0 | 5.9 | |||||||||||||||||||||||||||
Non-recurring items | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Acquisition and disposition costs | 2.0 | 2.0 | 0.1 | 0.3 | — | 1.3 | — | 1.0 | 6.7 | |||||||||||||||||||||||||||
Adjusted EBITDA | $ | 54.9 | $ | 21.4 | $ | 4.6 | $ | 2.4 | $ | (8.7 | ) | $ | (5.3 | ) | $ | — | $ | (15.2 | ) | $ | 54.1 | |||||||||||||||
Total Core Operating Subsidiaries | $ | 83.3 |
(in millions) | Nine Months Ended September 30, 2018 | |||||||||||||||||||||||||||||||||||
Core Operating Subsidiaries | Early Stage & Other | Total HC2 | ||||||||||||||||||||||||||||||||||
Construction | Marine Services | Energy | Telecom | Life Sciences | Broadcasting | Other & Elimination | Non-operating Corporate | |||||||||||||||||||||||||||||
Net Income attributable to HC2 Holdings, Inc. | $ | 173.8 | ||||||||||||||||||||||||||||||||||
Less: Net Income attributable to HC2 Holdings Insurance segment | 142.9 | |||||||||||||||||||||||||||||||||||
Less: Consolidating eliminations attributable to HC2 Holdings Insurance segment | 19.0 | |||||||||||||||||||||||||||||||||||
Net Income (loss) attributable to HC2 Holdings, Inc., excluding Insurance segment | $ | 20.1 | $ | 4.1 | $ | (0.6 | ) | $ | 3.4 | $ | 67.5 | $ | (29.2 | ) | $ | 3.8 | $ | (57.2 | ) | $ | 11.9 | |||||||||||||||
Adjustments to reconcile net income (loss) to Adjusted EBITDA: | ||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 5.0 | 20.1 | 4.1 | 0.2 | 0.1 | 2.3 | 0.1 | 0.1 | 32.0 | |||||||||||||||||||||||||||
Depreciation and amortization (included in cost of revenue) | 5.1 | — | — | — | — | — | — | — | 5.1 | |||||||||||||||||||||||||||
Amortization of equity method fair value adjustment at acquisition | — | (1.1 | ) | — | — | — | — | — | — | (1.1 | ) | |||||||||||||||||||||||||
Other operating (income) expenses | (0.3 | ) | (2.8 | ) | 0.1 | — | — | 0.1 | — | — | (2.9 | ) | ||||||||||||||||||||||||
Gain on sale and deconsolidation of subsidiary | — | — | — | — | (102.1 | ) | — | (1.6 | ) | — | (103.7 | ) | ||||||||||||||||||||||||
Interest expense | 1.5 | 3.7 | 1.2 | — | — | 7.7 | — | 39.8 | 53.9 | |||||||||||||||||||||||||||
Other (income) expense, net | (1.9 | ) | (1.3 | ) | 0.2 | — | 0.1 | 0.4 | (3.4 | ) | 1.0 | (4.9 | ) | |||||||||||||||||||||||
Loss on early extinguishment or restructuring of debt | — | — | — | — | — | 2.5 | — | — | 2.5 | |||||||||||||||||||||||||||
Net loss on contingent consideration | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Foreign currency (gain) loss (included in cost of revenue) | — | (0.4 | ) | — | — | — | — | — | — | (0.4 | ) | |||||||||||||||||||||||||
Income tax (benefit) expense | 9.0 | 0.2 | — | — | — | — | (0.3 | ) | (7.0 | ) | 1.9 | |||||||||||||||||||||||||
Noncontrolling interest | 1.6 | 1.7 | (0.3 | ) | — | 19.5 | (2.8 | ) | (1.1 | ) | — | 18.6 | ||||||||||||||||||||||||
Bonus to be settled in equity | — | — | — | — | — | — | — | 0.5 | 0.5 | |||||||||||||||||||||||||||
Share-based payment expense | — | 1.4 | — | — | 0.2 | 2.3 | 0.3 | 3.9 | 8.1 | |||||||||||||||||||||||||||
Non-recurring items | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Acquisition and disposition costs | 1.4 | 0.2 | — | 0.2 | 2.5 | 3.0 | — | 0.6 | 7.9 | |||||||||||||||||||||||||||
Adjusted EBITDA | $ | 41.5 | $ | 25.8 | $ | 4.7 | $ | 3.8 | $ | (12.2 | ) | $ | (13.7 | ) | $ | (2.2 | ) | $ | (18.3 | ) | $ | 29.4 | ||||||||||||||
Total Core Operating Subsidiaries | $ | 75.8 |
(in millions): | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2019 | 2018 | Increase / (Decrease) | 2019 | 2018 | Increase / (Decrease) | |||||||||||||||||||
Construction | $ | 19.4 | $ | 15.9 | $ | 3.5 | $ | 54.9 | $ | 41.5 | $ | 13.4 | ||||||||||||
Marine Services | 11.7 | 7.9 | 3.8 | 21.4 | 25.8 | (4.4 | ) | |||||||||||||||||
Energy | 2.3 | 1.0 | 1.3 | 4.6 | 4.7 | (0.1 | ) | |||||||||||||||||
Telecommunications | 0.8 | 1.5 | (0.7 | ) | 2.4 | 3.8 | (1.4 | ) | ||||||||||||||||
Total Core Operating Subsidiaries | 34.2 | 26.3 | 7.9 | 83.3 | 75.8 | 7.5 | ||||||||||||||||||
Life Sciences | (4.0 | ) | (3.0 | ) | (1.0 | ) | (8.7 | ) | (12.2 | ) | 3.5 | |||||||||||||
Broadcasting | (1.9 | ) | (2.4 | ) | 0.5 | (5.3 | ) | (13.7 | ) | 8.4 | ||||||||||||||
Other and Eliminations | — | (1.0 | ) | 1.0 | — | (2.2 | ) | 2.2 | ||||||||||||||||
Total Early Stage and Other | (5.9 | ) | (6.4 | ) | 0.5 | (14.0 | ) | (28.1 | ) | 14.1 | ||||||||||||||
Non-Operating Corporate | (4.7 | ) | (6.2 | ) | 1.5 | (15.2 | ) | (18.3 | ) | 3.1 | ||||||||||||||
Adjusted EBITDA | $ | 23.6 | $ | 13.7 | $ | 9.9 | $ | 54.1 | $ | 29.4 | $ | 24.7 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2019 | 2018 | Increase / (Decrease) | 2019 | 2018 | Increase / (Decrease) | |||||||||||||||||||
Net income - Insurance segment | $ | 10.5 | $ | 141.1 | $ | (130.6 | ) | $ | 74.6 | $ | 142.9 | $ | (68.3 | ) | ||||||||||
Effect of investment (gains) (1) | 1.9 | (20.1 | ) | 22.0 | (3.6 | ) | (27.1 | ) | 23.5 | |||||||||||||||
Bargain purchase gain | — | (109.1 | ) | 109.1 | (1.1 | ) | (109.1 | ) | 108.0 | |||||||||||||||
Reinsurance gain | — | (17.8 | ) | 17.8 | — | (17.8 | ) | 17.8 | ||||||||||||||||
Acquisition costs | 0.2 | 1.3 | (1.1 | ) | 2.0 | 2.4 | (0.4 | ) | ||||||||||||||||
Insurance AOI | 12.6 | (4.6 | ) | 17.2 | 71.9 | (8.7 | ) | 80.6 | ||||||||||||||||
Income tax expense (benefit) | 0.9 | (6.7 | ) | 7.6 | 3.3 | — | 3.3 | |||||||||||||||||
Pre-tax Insurance AOI | $ | 13.5 | $ | (11.3 | ) | $ | 24.8 | $ | 75.2 | $ | (8.7 | ) | $ | 83.9 |
Nine Months Ended September 30, | Increase / (Decrease) | |||||||||||
2019 | 2018 | |||||||||||
Operating activities | $ | 95.5 | $ | 136.7 | $ | (41.2 | ) | |||||
Investing activities | (201.5 | ) | 525.4 | (726.9 | ) | |||||||
Financing activities | 53.4 | 75.7 | (22.3 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 0.6 | (0.5 | ) | 1.1 | ||||||||
Net change in cash, cash equivalents and restricted cash | $ | (52.0 | ) | $ | 737.3 | $ | (789.3 | ) |
September 30, 2019 | December 31, 2018 | |||||||||||||||
Measurement Alternative | Equity Method | Measurement Alternative | Equity Method | |||||||||||||
Common Equity | $ | — | $ | 2.3 | $ | — | $ | 2.1 | ||||||||
Preferred Equity | — | 16.9 | 1.6 | 9.6 | ||||||||||||
Other | — | 65.2 | — | 59.2 | ||||||||||||
Total | $ | — | $ | 84.4 | $ | 1.6 | $ | 70.9 |
September 30, 2019 | December 31, 2018 | |||||||||||||
Fair Value | Percent | Fair Value | Percent | |||||||||||
U.S. Government and government agencies | $ | 7.2 | 0.2 | % | $ | 25.4 | 0.7 | % | ||||||
States, municipalities and political subdivisions | 447.9 | 10.3 | % | 421.9 | 11.0 | % | ||||||||
Residential mortgage-backed securities | 75.4 | 1.7 | % | 94.4 | 2.5 | % | ||||||||
Commercial mortgage-backed securities | 103.8 | 2.4 | % | 93.9 | 2.5 | % | ||||||||
Asset-backed securities | 528.6 | 12.1 | % | 511.5 | 13.4 | % | ||||||||
Corporate and other (*) | 2,831.8 | 64.9 | % | 2,250.5 | 58.8 | % | ||||||||
Common stocks (*) | 31.6 | 0.7 | % | 25.5 | 0.7 | % | ||||||||
Perpetual preferred stocks | 142.8 | 3.3 | % | 240.9 | 6.3 | % | ||||||||
Mortgage loans | 165.7 | 3.8 | % | 137.6 | 3.6 | % | ||||||||
Policy loans | 19.1 | 0.4 | % | 19.8 | 0.5 | % | ||||||||
Other invested assets | 7.2 | 0.2 | % | — | — | % | ||||||||
Total | $ | 4,361.1 | 100.0 | % | $ | 3,821.4 | 100.0 | % |
September 30, 2019 | December 31, 2018 | |||||||||||||
Fair Value | Percent | Fair Value | Percent | |||||||||||
AAA, AA, A | $ | 1,923.3 | 48.1 | % | $ | 1,742.4 | 51.4 | % | ||||||
BBB | 1,842.8 | 46.1 | % | 1,444.1 | 42.5 | % | ||||||||
Total investment grade | 3,766.1 | 94.2 | % | 3,186.5 | 93.9 | % | ||||||||
BB | 158.1 | 4.0 | % | 143.8 | 4.2 | % | ||||||||
B | 17.8 | 0.4 | % | 14.7 | 0.4 | % | ||||||||
CCC, CC, C | 38.5 | 1.0 | % | 44.4 | 1.3 | % | ||||||||
D | 14.2 | 0.4 | % | 8.2 | 0.2 | % | ||||||||
Total non-investment grade | 228.6 | 5.8 | % | 211.1 | 6.1 | % | ||||||||
Total | $ | 3,994.7 | 100.0 | % | $ | 3,397.6 | 100.0 | % |
• | 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; |
• | our possible inability to generate sufficient liquidity, margins, earnings per share, cash flow and working capital from our operating segments; |
• | 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 Indenture governing HC2’s Notes, the Certificates of Designation governing HC2’s Preferred Stock and all other subsidiary debt obligations as summarized in Note 13. Debt Obligations and future financing agreements on our ability to operate our business and finance our pursuit of acquisition opportunities; |
• | our dependence on certain key personnel, in particular, our Chief Executive Officer, Philip Falcone; |
• | 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 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; |
• | 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; |
• | our expectations and timing with respect to our ordinary course acquisition activity and whether such acquisitions are accretive or dilutive to stockholders; |
• | our expectations and timing with respect to any strategic dispositions and sales of our operating subsidiaries including GMSL, or businesses that we may make in the future and the effect of any such dispositions or sales on our results of operations; |
• | our expectations and timing with respect to any strategic dispositions and sales of our operating subsidiaries or businesses that we may make in the future and the effect of any such dispositions or sales on our results of operations; |
• | the possibility of indemnification claims arising out of divestitures of businesses; |
• | tax consequences associated with our acquisition, holding and disposition of target companies and assets; |
• | the effect any interests our officers, directors, stockholders and their respective affiliates may have in certain transactions in which we are involved; |
• | our ability to effectively increase the size of our organization, if needed, and manage our growth; |
• | the potential for, and our ability to, remediate future material weaknesses in our internal controls over financial reporting; |
• | 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. |
• | its ability to realize cost savings from expected performance of contracts, whether as a result of improper estimates, performance, or otherwise; |
• | potential impediments and limitations on our ability to complete ordinary course acquisitions in anticipated time frames or at all; |
• | 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 DBMG 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 DBMG’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 DBMG’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 DBMG’s obligations under bids and contracts or to finance expenditures prior to the receipt of payment for the performance of contracts. |
• | its ability to realize cost savings from expected performance of contracts, whether as a result of improper estimates, performance, or otherwise; |
• | the possibility of global recession or market downturn with a reduction in capital spending within the targeted market segments in which the business operates; |
• | 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 two equity method investments that operate in China (i.e., Huawei Marine Systems Co. Limited, a Hong Kong holding company with a Chinese operating subsidiary and SB Submarine Systems Co. Ltd.); |
• | risks related to noncompliance with a wide variety of anti-corruption laws; |
• | 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 come due. |
• | automobile and engine manufacturers’ limited production of originally manufactured natural gas vehicles and engines for the markets in which ANG participates; |
• | environmental regulations and programs mandating the use of cleaner burning fuels; |
• | competition from oil and gas companies, retail fuel providers, industrial gas companies, natural gas utilities and other organizations; |
• | the infrastructure for natural gas vehicle fuels; |
• | the safety and environmental risks of natural gas fueling operations and vehicle conversions; |
• | our Energy segment’s ability to implement its business plan in a regulated environment; |
• | the adoption, modification or repeal in environmental, tax, government regulations, and other programs and incentives that encourage the use of clean fuel and alternative vehicles; |
• | demand for natural gas vehicles; |
• | advances in other alternative vehicle fuels or technologies, or improvements in gasoline, diesel or hybrid engines; and |
• | increases, decreases and general volatility in oil, gasoline, diesel and natural gas prices. |
• | 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 of ICS’ suppliers to obtain credit insurance on ICS in determining whether or not to extend credit. |
• | our Insurance segment’s ability to maintain statutory capital and maintain or improve their financial strength; |
• | our Insurance segment’s reserve adequacy, including the effect of changes to accounting or actuarial assumptions or methodologies; |
• | the accuracy of our Insurance segment’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; |
• | extensive regulation and numerous legal restrictions on our Insurance segment; |
• | our Insurance segment’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; |
• | our Insurance segment’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, our Insurance segment’s ability to access capital resources and the costs associated therewith, the fair value of our Insurance segment’s investments, which could result in impairments and other-than-temporary impairments, and certain liabilities; |
• | our Insurance segment’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 Insurance segment’s 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 our Insurance segment, and our Insurance segment’s ability to mitigate such requirements; |
• | our Insurance segment’s ability to effectively implement its business strategy or be successful in the operation of its business; |
• | our Insurance segment’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. |
• | our Life Sciences segment’s ability to invest in development stage companies; |
• | our Life Sciences segment’s ability to develop products and treatments related to its portfolio companies; |
• | medical advances in healthcare and biotechnology; and |
• | governmental regulation in the healthcare industry. |
• | our Broadcasting segment’s ability to integrate our recent and pending broadcasting acquisitions; |
• | our Broadcasting segment’s ability to operate in highly competitive markets and maintain market share; |
• | our Broadcasting segment’s ability to effectively implement its business strategy or be successful in the operation of its business; |
• | new and growing sources of competition in the broadcasting industry; and |
• | FCC regulation of the television broadcasting industry. |
• | our Other segment’s ability to operate in highly competitive markets and maintain market share; and |
• | our Other segment’s ability to effectively implement its business strategy or be successful in the operation of its business. |
Decline in equity market prices | ||||||||||||
10% | 20% | 30% | ||||||||||
Fixed Maturity Securities | $ | 397.5 | $ | 795.1 | $ | 1,192.6 | ||||||
Equity Securities | $ | 10.4 | $ | 20.9 | $ | 31.3 |
Exhibit Number | Description | |
4.1 | ||
4.2 | ||
10.1 | ||
10.2 | ||
10.3 | ||
10.4 | ||
10.5 | ||
31.1 | ||
31.2 | ||
32* | ||
101 | The following materials from the registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2019, formatted in extensible business reporting language (XBRL); (i) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018, (ii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2019 and 2018 (iii) Condensed Consolidated Balance Sheets at September 30, 2019 and December 31, 2018, (iv) Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2019 and 2018, (v) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018, and (vi) Notes to 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. |
HC2 Holdings, Inc. | ||
Date: November 5, 2019 | By: | /s/ Michael J. Sena |
Michael J. Sena | ||
Chief Financial Officer | ||
(Duly Authorized Officer and Principal Financial and Accounting Officer) |
1. | Definitions. Capitalized terms used herein shall have the meanings set forth in this Section 1. |
1.1 | “Additional Collateral” means: |
(a) | All FCC Licenses and all proceeds from the sale, lease, assignment or transfer of such FCC Licenses to a third party to the fullest extent that the creation of a security interest in any such FCC License would be permitted by applicable Law as in effect in any applicable jurisdiction, including after giving effect to Section 9-408 of the Uniform Commercial Code as in effect in any applicable jurisdiction; |
(b) | all accounts, chattel paper, deposit accounts, documents, equipment, general intangibles, payment intangibles, software, commercial tort claims, instruments, inventory, investment property, letter of credit rights, letters of credit, money and any supporting obligations related to any of the foregoing (each as defined in the Uniform Commercial Code of the State of New York (“UCC”)); |
(c) | all books and records pertaining to the property described in this Section; |
(d) | all Intellectual Property pertaining to the property described in this Section; and |
(e) | to the extent not otherwise included, all proceeds of the foregoing in whatever form, including, without limitation any insurance, indemnity, warranty or guaranty payable with respect to any Additional Collateral, any awards or payments due or payable in connection with any condemnation, requisition, confiscation, seizure or forfeiture of any Additional Collateral by any person acting under Governmental Authority or color thereof, and any damages or other amounts payable to Borrowers in connection with any lawsuit regarding any of the Additional Collateral. |
1.2 | “Affiliate” means as to any Person, any other Person that, directly or indirectly through one or more intermediaries, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote ten (10%) percent or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. |
1.3 | “Agreement Re: Secured Notes” means the Fifth Omnibus Amendment to Secured Notes and Amended and Restated Agreement Re: Secured Notes, dated as of August 2, 2019, among the Borrowers and the lenders from time to time party thereto, as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof. |
1.4 | “Borrower” and “Borrowers” have the meaning set forth in the introductory paragraph. |
1.5 | “Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by Law to close. |
1.6 | “Capital Lease” means any lease of personal property, the obligations with respect to which are required to be capitalized on a balance sheet of the lessee in accordance with GAAP, provided that if any operating lease is reclassified as a capital lease under GAAP subsequent to the date hereof or, if a lease entered into subsequent to the date hereof would have been classified as an operating lease if it existed on the date hereof, then such leases shall continue to be treated as an operating lease for all purposes hereunder. |
1.7 | “Capital Lease Obligations” means the obligations of lessee relating to a Capital Lease determined in accordance with GAAP. |
1.8 | “Collateral” means, collectively, the Pledged Stock and the Additional Collateral. |
1.9 | “Common Stock Equivalents” means any securities of a Borrower or its subsidiaries which would entitle the holder thereof to acquire at any time common stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, common stock. |
1.10 | “Copyright” means all domestic and foreign copyrights, whether registered or not or the subject of a pending application, owned by the Borrowers, all applications, registrations and recordings thereof, and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof. |
1.11 | “Default” means any of the events specified in Section 8 which constitutes an Event of Default or which, upon the giving of notice, the lapse of time, or both pursuant to Section 8 would, unless cured or waived, become an Event of Default. |
1.12 | “Default Rate” means, at any time, a rate per annum equal to the Interest Rate plus 2.00% per annum. |
1.13 | “Event of Default” has the meaning set forth in Section 8. |
1.14 | “FCC Licenses” means licenses, permits, and other authorizations granted by the Federal Communications Commission. |
1.15 | “First Omnibus Amendment” means the First Omnibus Amendment to Secured Notes, dated as of May 3, 2019, among the Borrowers, the lenders party thereto, as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof. |
1.16 | “GAAP” means generally accepted accounting principles in effect in the United States of America as in effect on the date of this Note applied on a consistent basis. |
1.17 | “Governmental Authority” means the government of any nation or any political subdivision thereof, whether at the national, state, territorial, provincial, municipal or any other level, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of, or pertaining to, government. |
1.18 | “Great American Notes” means the US $35,000,000 secured note, dated as of August 7, 2018, and the US $7,500,000 secured note, dated as of January 22, 2019, each among the Borrowers and the Initial Lenders, each as amended by the Omnibus Amendments. |
1.19 | “Indemnified Person” has the meaning set forth in Section 10.1. |
1.20 | “Initial Lender” and “Initial Lenders” means Great American Life Insurance Company, an Ohio corporation, and Great American Insurance Company, an Ohio corporation, and their respective successors and permitted assigns under the Great American Notes. |
1.21 | “Intellectual Property” means all intangible assets, intellectual property, Copyrights, Trademarks, and Patents. |
1.22 | “Interest Payment Date” means earlier of (a) the Maturity Date and (b) with respect to any portion of the Note that is prepaid prior to the Maturity Date, the applicable prepayment date. |
1.23 | “Interest Rate” has the meaning set forth in the introductory paragraph. |
1.24 | “Law” as to any Person, means any law (including common law), statute, ordinance, treaty, rule, regulation, policy or requirement of any Governmental Authority and authoritative interpretations thereon, whether now or hereafter in effect, in each case, applicable to or binding on such Person or any of its properties or to which such Person or any of its properties is subject. |
1.25 | “Lender” and “Lenders” has the meaning set forth in the introductory paragraph. |
1.26 | “Lien” means any mortgage, pledge, hypothecation, encumbrance, lien (statutory or other), charge or other security interest. |
1.27 | “Loan” means the principal amount outstanding under this Note together with accrued interest thereon. |
1.28 | “Material Adverse Change” means a material adverse change in, or a material adverse effect upon, (a) the operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of the Borrowers, taken as a whole; (b) the validity or enforceability of this Note; (c) the ability of the Borrowers, taken as a whole, to perform their obligations under this Note or (d) any right or remedy of a Lender under this Note. |
1.29 | “Maturity Date” means the earlier of (a) August 31, 2019 and (b) the date on which all amounts under this Note shall become due and payable. |
1.30 | “Note” has the meaning set forth in the introductory paragraph. |
1.31 | “Omnibus Amendments” means the First Omnibus Amendment and the Agreement Re: Secured Notes. |
1.32 | “Operating Documents” are, for any Person, such Person’s formation documents, as certified by the Secretary of State (or equivalent agency) of such Person’s jurisdiction of organization on a date that is no earlier than thirty (30) Business Days prior to the delivery thereof, certificate of incorporation, bylaws, or similar governing agreement with all current amendments or modifications thereto. |
1.33 | “Operating Subsidiaries” means, collectively, HC2 Station Group, Inc., HC2 Broadcasting Inc., HC2 Network Inc. and HC2 LPTV Holdings, Inc., each a Delaware corporation. |
1.34 | “Parent” means HC2 Broadcasting Intermediate Holdings Inc., a Delaware corporation. |
1.35 | “Parent Borrower” has the meaning set forth in the introductory paragraph. |
1.36 | “Parties” means the Lender and the Borrowers. |
1.37 | “Patents” means all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, and other general intangibles of like nature, whether now existing or hereafter acquired, all applications, registrations and recordings thereof, and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof, in each case, to the extent owned by the Borrowers. |
1.38 | “Permitted Indebtedness” means (i) (a) the indebtedness incurred pursuant to this Note representing “First-Out Debt” (as defined in the Agreement Re: Secured Notes), (b) additional indebtedness secured by the Collateral (including “First-Out Obligations,” “Pari Passu Debt” and “Pari Passu Obligations,” each as defined in the Agreement Re: Secured Notes) in an aggregate principal amount at any time outstanding of $59,325,000 minus the principal amount of this Note and (c) any refinancing or replacement indebtedness in respect of indebtedness incurred pursuant to the foregoing clauses (a) and (b), plus all refinancing fees, expenses, costs and premiums in connection with any such refinancing or replacement, (ii) indebtedness in respect of Capital Lease Obligations and Purchase Money Obligations, in an aggregate principal amount not to exceed $5,000,000, financing an acquisition, construction, repair, replacement, lease or improvement of a fixed or capital asset incurred by any Borrower after the acquisition, construction, repair, replacement, lease or improvement of the applicable asset and (iii) unsecured intercompany indebtedness between or among the Borrowers or unsecured intercompany indebtedness of the Parent Borrower pursuant to the intercompany note, executed as of April 30, 2019 and effective as of June 30, 2018 (and any refinancing or replacement indebtedness in respect thereof). |
1.39 | “Person” means any individual, corporation, limited liability company, trust, joint venture, association, company, limited or general partnership, unincorporated organization, Governmental Authority or other entity. |
1.40 | “Permitted Liens” means (i) Liens securing indebtedness incurred pursuant to clause (i) of the definition of “Permitted Indebtedness,” (ii) Liens of lessors, lessees, sublessors, sublessees, licensors or licensees arising under real estate lease or license arrangements entered into in the ordinary course of business of the Borrowers, (iii) inchoate mechanics and similar Liens for labor, materials or supplies to the extent securing amounts which are not yet due and payable, (iv) Liens under Capital Lease Obligations, provided, that (1) any such Lien attaches to such property concurrently with the acquisition thereof and (2) such Lien attaches solely to the property so acquired in such transaction (and the proceeds therefrom), (v) Liens for taxes, assessments and other governmental charges or levies (1) not yet due or for which installments have been paid based on reasonable estimates pending final assessments or (2) the validity, applicability or amount of which is being contested diligently and in good faith by appropriate proceedings by that Person and in respect of which adequate reserves under GAAP are established and maintained and (vi) Liens on equipment arising from precautionary UCC financing statements regarding operating leases of equipment. |
1.41 | “Pledged Stock” means all shares of capital stock issued by each of the Operating Subsidiaries, any certificates evidencing any such shares, and any distribution of property and dividends made on, in respect of or in exchange for the foregoing from time to time. |
1.42 | “Purchase Money Obligation” means, for any Person, the obligations of such Person in respect of indebtedness (including Capital Lease Obligations) incurred for the purpose of financing all or any part of the purchase price of any fixed or capital assets or the cost of installation, construction or improvement of any fixed or capital assets; provided, however, that (i) such indebtedness is incurred within 30 days after such acquisition, installation, construction or improvement of such fixed or capital assets by such Person and (ii) the amount of such indebtedness does not exceed the lesser of 100% of the fair market value of such fixed or capital asset or the cost of the acquisition, installation, construction or improvement thereof, as the case may be. |
1.43 | “Subsidiary Borrowers” has the meaning set forth in the introductory paragraph. |
1.44 | “Trademarks” means all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a’s, internet domain names, trade styles, designs, logos and other source or business identifiers and all general intangibles of like nature, which are the subject of a pending application, or now or hereafter owned, by the Borrowers, all applications, registrations and recordings thereof, and all reissues, extensions or renewals thereof, together with all goodwill of the business symbolized thereby. |
2. | Disbursement Mechanics; Conditions to Disbursement. |
2.1 | Disbursement. The entire principal amount of the Note will be disbursed on the date of this Note. The Borrowers shall not have the right to redraw any amount prepaid hereunder. |
2.2 | Conditions to Disbursement. Each Lender’s obligation to make the disbursement of the principal sums set forth on Annex I hereto on the date hereof is subject to the condition precedent that such Lender shall have received, in form and substance satisfactory to such Lender, such documents, and the completion of such other matters, as such Lender may reasonably deem necessary or appropriate, including, without limitation: |
(a) | this Note duly executed; and |
(b) | the Operating Documents and a good standing certificate of each Borrower certified by the Secretary of State of the State of Delaware as of a date no earlier than thirty (30) Business Days prior to the date hereof, together with duly authorized resolutions of the board of directors for each Borrower in form and substance acceptable to the Lender in its sole discretion. |
3. | Interest. |
3.1 | Interest Rate. Except as otherwise provided herein, the outstanding principal amount of the Note shall bear interest at the Interest Rate from the date hereof until the Note is paid in full, whether at maturity, upon prepayment or acceleration, or otherwise. |
3.2 | Interest Payment. Interest shall be due and payable on the Interest Payment Date. All interest, if any, that may accrue after the Maturity Date shall be payable on demand. |
3.3 | Default Interest. If any amount payable hereunder (including, without limitation, interest and principal) is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such overdue amount shall bear interest at the Default Rate from the date of such non-payment until such amount is paid in full. |
3.4 | Computation of Interest. All computations of interest shall be made on the basis of a year of 365 days, and the actual number of days elapsed. Interest shall accrue on the date hereof, and shall not accrue on the day on which the Loan is paid. |
3.5 | Interest Rate Limitation. In no event whatsoever shall the amount of interest charged, taken or received hereunder exceed the maximum amount permitted by Law. If at any time and for any reason whatsoever, the Interest Rate payable under this Note shall exceed the maximum rate of interest permitted to be charged by the Lender to the Borrowers under applicable Law, such interest rate shall be reduced automatically to the maximum rate of interest permitted to be charged under applicable Law, and that portion of each sum paid attributable to that portion of such interest rate that exceeds the maximum rate of interest permitted by applicable Law shall be deemed a voluntary prepayment of principal. |
4. | Final Payment Date; Prepayment. |
4.1 | Final Payment Date. The aggregate of the unpaid principal, all accrued and unpaid interest, and all other amounts payable, but unpaid, under this Note shall be due and payable on the Maturity Date. |
4.2 | Prepayment. |
(a) | [Reserved]. |
(b) | The Borrowers may on any one or more occasions voluntarily prepay the Note in whole or in part at a prepayment price equal to 100% of the principal amount of the Note, plus accrued and unpaid interest on the principal amount of the Note being prepaid to, but not including, the date of prepayment. |
(c) | Any such prepayment will be preceded by at least five (5) Business Day’s prior written notice, with such notice specifying the planned prepayment date. Any such notice may be conditional. |
5. | Payment Mechanics. |
5.1 | Manner of Payments. All payments of interest and principal shall be made in lawful money of the United States of America on the date on which such payment is due by wire transfer of immediately available funds to the applicable Lender’s account at a bank specified by such Lender in writing to the Borrowers from time to time. All payments hereunder shall be made without deduction or setoff of any kind, provided however, that if applicable Law requires the Borrowers to withhold or deduct any tax, levy or fee of any kind, such tax shall be withheld or deducted in accordance with such law. If the Borrowers’ are required to deduct any amount in respect of any tax, levy or fee of any kind, the Borrowers’ shall pay such additional amount so that, after deduction of any required amount, the Lender receives the full amount due hereunder; provided, however, the Borrowers shall not be required to pay any additional amounts with respect to taxes, levies or fees imposed on or measured by net income (however denominated) and similar taxes, levies or fees imposed on or measured by net income (however denominated). |
5.2 | Application of Payments. All partial payments made hereunder shall be applied first to the payment of any fees or charges outstanding hereunder, second to accrued but unpaid interest, and third to the payment of the principal amount outstanding under this Note. |
5.3 | Business Day Convention. Whenever any payment to be made hereunder shall be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension will be taken into account in calculating the amount of interest payable under this Note. |
5.4 | Rescission of Payments. If at any time any payment made by the Borrowers under this Note is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy or reorganization of any Borrower or otherwise, the Borrowers’ obligation to make such payment shall be reinstated as though such payment had not been made. |
5.5 | Right of Contribution. If any payment is made under this Note by a Borrower, including pursuant to a collection under Section 9: |
(a) | Subject to Section 5.5(c), such Borrower shall be entitled to contribution in respect of such payment and shall be entitled to demand and enforce contribution in respect of such payment from each other Borrower which has not paid its fair share of such payment, as necessary to ensure that (after giving effect to any enforcement of reimbursement rights provided hereby) each Borrower pays its fair share of such payment. |
(b) | If and whenever any right of reimbursement or contribution becomes enforceable by any Borrower against the other Borrowers, such Borrower shall be entitled, subject to and upon (but not before) the indefeasible payment in full to the Lender by of all of the outstanding obligations of the Borrowers under this Note, to be subrogated to the security interest that may then be held by the Lender upon the Collateral securing or purporting to secure the Note. If subrogation is demanded by any Borrower, then, after discharge of the Note following payment in full to the Lender by of all of the outstanding obligations of the Borrowers under this Note, the Lender shall deliver to the Borrower making such demand (at the cost of such Borrower) an instrument satisfactory to the Lender transferring, on a quitclaim basis without any recourse, representation, warranty or any other obligation whatsoever, whatever security interest the Lender then may hold in the Collateral securing the Note. |
(c) | All rights and claims arising under this Section 5.5 shall be fully subordinated to the rights of the Lender under this Note prior to the indefeasible payment in full to Lender of the principal amount of, and interest on, the Note and the payment in full of all other outstanding obligations of the Borrowers under this Note. Prior to such payment, no Borrower may demand, enforce or receive any collateral security, payment or distribution whatsoever on account of any such right or claim. |
6. | Security Interest; Intercreditor Matters. |
6.1 | Grant. Subject to the Agreement Re: Secured Notes, the Parent Borrower, as collateral security for the prompt and complete payment and performance when due of the obligations of the Borrowers hereunder, whether now existing or hereafter incurred, matured or unmatured, direct or indirect, primary or secondary or due or to become due, hereby grants to the Lenders a lien on and security interest in all of Parent Borrower’s right, title and interest, whether now owned or hereafter acquired, in the Pledged Stock. Subject to the Agreement Re: Secured Notes, each Subsidiary Borrower, as collateral security for the prompt and complete payment and performance when due of the obligations of the Borrowers hereunder, whether now existing or hereafter incurred, matured or unmatured, direct or indirect, primary or secondary or due or to become due, hereby grants to the Lender a lien on and security interest in, all of such Subsidiary Borrower’s right, title and interest in, to and under the Additional Collateral, whether now owned or hereafter acquired. |
6.2 | Filings. Subject to the Agreement Re: Secured Notes, if either the Great American Notes have been repaid, discharged, defeased or otherwise paid in full or if otherwise permitted by the Initial Lenders, each Borrower hereby authorizes the Lender to file, in any filing office as “Secured Party”, (a) financing statements, amendments to financing statements, and continuations thereof without such Borrower’s signature in accordance with the UCC and (b) financing statements and amendments to financing statements describing the Collateral as the Lender determines in its sole discretion, including financing statements listing “All Assets” in the collateral description therein. |
6.3 | Further Assurances; Expenses. Subject to the Agreement Re: Secured Notes, each Borrower shall (a) promptly, upon the reasonable request of the Lender, and at the Borrowers’ expense, execute, acknowledge and deliver, and thereafter register, file or record, or cause to be registered, filed or recorded, in an appropriate governmental office, any document or instrument supplemental to or confirmatory of the Note or otherwise necessary or deemed by the Lender reasonably desirable for the continued validity, enforceability, perfection and priority of the Liens on the Collateral covered thereby subject to no other Liens except Permitted Liens, or obtain any consents or waivers as may be necessary or appropriate in connection therewith; and |
(a) | Deliver or cause to be delivered to the Lender from time to time such other documentation, instruments, consents, authorizations and approvals in form and substance reasonably satisfactory to the Lender as the Lender shall reasonably deem necessary or advisable to perfect or maintain the validity, enforceability, perfection and priority of the Liens on the Collateral pursuant to the Note. Upon payment in full to Lender by the Borrowers of all of the outstanding obligations of the Borrowers under this Note, the Lender shall take all action and execute and deliver all documents to immediately discharge and release all Liens granted under this Note. |
6.4 | Agreement Re: Secured Notes. This Note is subject to the Agreement Re: Secured Notes, and the “Lender” hereunder shall be deemed to be an “Additional Lender” under and as defined in the Agreement Re: Secured Notes. In the event of any conflict between this Note and the Agreement Re: Secured Notes, the Agreement Re: Secured Notes shall govern and be controlling. |
7. | Covenants and Representations and Warranties. |
7.1 | Affirmative Covenants. Each Borrower covenants and agrees that it shall: |
(a) | commencing with the fiscal quarter ending September 30, 2019 (if applicable), provide, or shall cause to be provided, to the Lender, as soon as available, but in any event within 90 days after the end of each fiscal quarter of each Borrowers and 120 days after the fiscal year of each Borrower, a balance sheet of each Borrower as at the end of such fiscal quarter or year, and the related statements of income or operations, shareholders’ equity and cash flows for such fiscal quarter or year all in reasonable detail and prepared in accordance with GAAP (subject, in the case of quarterly statements, to usual year-end adjustments and the absence of full notes and deferred tax disclosure) together with a certification from an officer of each Borrower that such statements fairly present, in all material respects, the financial condition, results of operations, shareholders’ equity and cash flows of each Borrower in accordance with GAAP and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. |
(b) | provide to the Lender, promptly after the commencement thereof, notice of all actions, suits, and proceedings before any Governmental Authority affecting Borrowers or any of their assets that has a claim for damages in excess of $1,000,000 or that could otherwise result in a cost, expense or loss to Borrowers in excess of $1,000,000; |
(c) | provide to the Lender immediate written notice of any event, development of circumstance that would (with the passage of time or the giving of notice or both) constitute an Event of Default or that has had a Material Adverse Change; |
(d) | provide to the Lender such other information respecting the business, operations, or property of Borrowers, financial or otherwise, as such Lender may reasonably request. |
(e) | comply with, and require all of its subsidiaries, to comply with, all federal, state, and local laws and regulations, which are applicable to the operations and property of borrowers and maintain all related permits necessary for the ownership and operation of Borrowers’ property and business. |
(f) | pay all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, such Borrower’s personal property, equipment and inventory (other than taxes the amounts of which are not material and do not constitute a Lien on such Borrower’s property that is not a Permitted Lien), except to the extent the validity thereof is being contested in good faith by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves in accordance with GAAP, have been set aside for the payment thereof. |
(g) | at its own expense, maintain insurance (including, without limitation, comprehensive general liability and property insurance) with respect to the real and personal property of such Borrower in such amounts, against such risks, in such form and with responsible and reputable insurance companies or associations as is required by any Governmental Authority, contracts to which each Borrower is a party, or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated and otherwise in amounts and with carriers reasonably acceptable to the Lender and the Lender shall be named as the sole loss payee with respect to all insurance relating to loss of any Collateral and shall be included as an additional insured under each liability policy. |
(h) | comply with all agreements with the Lender under this Note. |
(i) | comply with all applicable Laws in all material respects. |
(j) | pay all material obligations as they become due. |
(k) | permit the Lender access to the Collateral and otherwise provide such information as the Lender shall reasonably request. |
(l) | use the net proceeds of the Note to pay fees, costs and expenses related to the Note, including interest and principal payments, to pay the cash consideration for acquisitions, including fees, costs and expenses related to such acquisitions, to pay dividends or make other distributions to the Parent Borrower or Parent, and for general corporate purposes. |
7.2 | Restrictions. Each Borrower covenants and agrees that it shall not without the prior written consent of the Lender: |
(a) | permit any other Lien of any kind to attach to or be imposed upon any of the Collateral except for Permitted Liens. |
(b) | incur any indebtedness other than Permitted Indebtedness and accounts payable incurred in the ordinary course on customary terms. |
(c) | change its legal name, form of legal entity, or jurisdiction of organization. |
(d) | make or pay or declare any dividends, return any capital, or make any other payment of cash or distribution of property on account of its equity interests, except for any such dividends or distributions made by one Borrower that are substantially concurrently invested in the common equity capital of, or contributed to the equity capital of, the other Borrower, and as set forth under Section 7.1(l) or purchase or acquire any of its own equity interests |
(e) | operate outside the ordinary course of business consistent with past practice (it being understood and agreed that, for absence of doubt, the ordinary course of the Borrowers’ business consistent with past practice includes the consummation of acquisitions of broadcasting businesses and assets and related businesses and assets) or make any investment in, or acquire all or substantially all of the assets of any other person or entity (including, without limitation, any subsidiary) outside the ordinary course of business consistent with past practice (it being understood and agreed that, for absence of doubt, the ordinary course of the Borrowers’ business consistent with past practice includes the consummation of acquisitions of broadcasting businesses and assets and related businesses and assets). |
(f) | permit or cause the sale of any assets of such Borrower or its subsidiaries, except (i) as set forth on Schedule 7.2(e) hereto, (ii) as permitted by Section 7.2(g) or (iii) for sales of any such assets not constituting Collateral in a single transaction or series of related transactions with a fair market value not to exceed $2,500,000. |
(g) | sell, transfer, lease, change the registration, if any, dispose of, attempt to dispose of, modify, amend or abandon the Collateral, including the FCC Licenses, except to the extent mandated by the FCC pursuant to a consent decree, agreement or order entered into with the FCC after the date of this Note and approved by the Lender or otherwise applicable to other similarly situated holders of FCC Licenses; provided, however, that, the Borrowers may (i) change the registration (other than in connection with a sale or transfer), amend or modify FCC Licenses in the ordinary course of business consistent with past practice; (ii) change the registration (other than in connection with a sale or transfer), amend or modify an FCC License if such change of registration, amendment or modification would be reasonably expected to preserve or increase the value of such FCC License; (iii) abandon any FCC License which has a nominal value (taking into account the intended use of such License to any Borrower) or which is duplicative with other FCC Licenses owned by the Borrowers; or (iv) exchange an FCC License and any assets related to such FCC License with a fair market value not to exceed $5,000,000 for assets in an amount not less than the fair market value of the FCC License and related assets being exchanged, in the case of clause (iii) or (iv) if such transaction exceeds $100,000, as determined by the board of directors of the applicable Borrower. |
(h) | in any single transaction or series of transactions, directly or indirectly (1) wind up its affairs, liquidate or dissolve or (2) be a party to any merger or consolidation. |
(i) | enter into or permit to exist any transaction or series of transactions (including, but not limited to, the purchase, sale, lease or exchange of property, the making of any investment, the giving of any guaranty, the assumption of any obligation or the rendering of any service) with any of its Affiliates (other than transactions between the Borrowers); provided, that the restrictions in this Section 7.2(i) shall not apply to: (a) any transaction or series of transactions for fair value that is on terms no less favorable to such Borrower than those that could be obtained in a comparable arm’s length transaction with a Person that is not an Affiliate and in connection therewith such Borrower provide written notice to the Lender at least 3 Business Days prior to the consummation of such transaction (which such notice shall include all material terms and conditions of such transaction), (b) any other transaction or series of transactions approved by Lender and (c) the agreements set forth in Schedule 7.2(i) (to the extent performed in accordance with past practice). |
7.3 | Representations and Warranties. As an inducement for the transactions in connection with this Note, each Borrower shall cause the following representations and warranties to be true until the indebtedness under this Note is discharged in full: |
(a) | Each Borrower is a corporation, duly organized, validly existing and in good standing under the Laws of Delaware and has the power and authority to own its property and to carry on its business in each jurisdiction in which such Borrower does a material volume of business. |
(b) | Each Borrower has full power and authority to execute and deliver this Note and to incur and perform the obligations provided for herein, all of which have been duly authorized by all proper and necessary action of the board of directors of such Borrower. No consent or approval of any public authority or other third party is required as a condition to the validity of this Note, and each Borrower is in compliance with all Laws and regulatory requirements to which it is subject. |
(c) | This Note constitutes the valid and legally binding obligation of each Borrower, enforceable against such Borrower in accordance with its terms. |
(d) | Except as disclosed to the Lender in writing and acknowledged by the Lender prior to the date of this Note as set forth on Schedule 7.3(d) hereto, (1) there is no action, claim, notice of violation, order to show cause, complaint, investigation, or proceeding involving any Borrower pending or, to the knowledge of any Borrower, threatened before any court or Governmental Authority, agency or arbitration authority that could result in a Material Adverse Change or (2) there is no material outstanding decree, decision, judgment, or order that has been issued by any court, Governmental Authority, agency or arbitration authority against such Borrower or its FCC Licenses. |
(e) | There is no charter, bylaw, stock provision, partnership agreement or other document pertaining to the organization, power or authority of each Borrower and no provision of any existing agreement, mortgage, indenture or contract binding on such Borrower or affecting its property, which would conflict with or in any way prevent the execution, delivery or carrying out of the terms of this Note. |
(f) | Except as set forth on Schedule 7.3(f) hereto or as would not result in a Material Adverse Change, all taxes and assessments due and payable by each Borrower have been paid or are being contested in good faith by appropriate proceedings and such Borrower has filed all tax returns which it is required to file. |
(g) | [Reserved]. |
(h) | Each Borrower’s chief executive office is located at its address for notice herein. |
(i) | On the date of this Agreement, (i) the capitalization of each Borrower is as set forth on Schedule 7.3(h), which Schedule 7.3(h) shall also include the number of shares of common stock of each Borrower outstanding as of the date hereof. No Person has any right of first refusal, preemptive right, right of participation, or any similar right in respect of the capital stock of such Borrower or any subsidiary of either Borrower. Except as set forth on Schedule 7.3(h), there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of common stock, or contracts, commitments, understandings or arrangements by which each Borrower or any of its subsidiaries is or may become bound to issue additional shares of common stock or Common Stock Equivalents (as defined below) (ii) all of the outstanding shares of capital stock of each Borrower are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities, (iii) except as set forth on Schedule 7.3(h), there are no stockholders agreements, voting agreements or other similar agreements with respect to the such Borrower’s capital stock to which either Borrower is a party or, to the knowledge of either Borrower, between or among any of Borrowers’ stockholders, (iv) no Person has any right to cause either Borrower to effect the registration under the Securities Act of any securities of either Borrower or any of its subsidiaries and (v) neither Borrower has any subsidiaries. |
8. | Events of Default. The occurrence of any of the following shall constitute an Event of Default hereunder: |
8.1 | Failure to Pay. The Borrowers fail to pay any principal amount of or interest on the Loan when due. |
8.2 | Breach of Covenants. Except for matters addressed in Sections 8.1, 8.3 or 8.4 hereof, the Borrowers fail to observe or perform any covenant, condition or agreement contained in this Note, and such failure continues for thirty (30) days. |
8.3 | Bankruptcy. Either Borrower files a petition in bankruptcy or under any similar insolvency Law, makes of an assignment for the benefit of creditors, if any petition in bankruptcy or under any similar insolvency Law is filed against either Borrower and such petition is not dismissed within thirty (30) days after the filing thereof, or either Borrower is generally not, or shall be unable to, or admits in writing its inability to, pay its debts as they become due. |
8.4 | Judgments. One or more judgments, orders, decisions or decrees shall be entered against any Borrower and all of such judgments, orders, decisions or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within thirty (30) days from the entry thereof. |
9. | Remedies. |
9.1 | Remedies. Upon the occurrence of any Event of Default and at any time thereafter during the continuance of such Event of Default, the Lender(s) holding a majority of the outstanding principal amount of the Note may at its option, (a) declare the entire principal amount of this Note, together with all accrued interest thereon and all other amounts payable hereunder, immediately due and payable, and/or (b) exercise any or all of its rights, powers or remedies under applicable Law, including, without limitation, the rights of a secured party under the UCC; provided, however that, if an Event of Default described in Section 8.3 shall occur, the principal of and accrued interest on the Loan shall become immediately due and payable without any notice, declaration or other act on the part of the Lender. The Borrowers waive demand, notice of Default or dishonor, notice of payment and nonpayment, notice of any Default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Lender on which the Borrowers are liable. |
9.2 | Other Rights. In addition to all other rights, options and remedies granted to the Lender under this Note (each of which is also then exercisable by the Lender), the Lender may, upon the occurrence of an Event of Default, exercise any other rights granted to the Lender under the UCC and any other applicable Law, including, without limitation, each and all of the following rights and remedies: |
(a) | the right to take possession of, send notices, and collect directly the Collateral, with or without judicial process (including, without limitation the right to notify the United States postal authority to redirect all mail addressed to the Borrowers to an address designated by the Lender). |
(b) | by the Lender’s own means or with judicial assistance, enter the Borrowers’ premises and take possession of the Collateral, or render it unusable, or dispose of the Collateral on such premises without any liability for rent, storage, utilities or other sums, and the Borrowers shall not resist or interfere with such action. |
(c) | require the Borrowers at its expense to assemble all or any part of the Collateral and make it available to the Lender at any place designated by the Lender. |
9.3 | Notice of Sale; Non-Interference. The Borrowers hereby agrees that a notice received by it at least ten (10) days before the time of any intended public sale or of the time after which any private sale or other disposition of the Collateral is to be made, shall be deemed to be reasonable notice of such sale or other disposition. The Borrowers covenant and agree not to interfere with or impose any obstacle to a Lender’s exercise |
9.4 | No Obligation. The Lender shall have no obligation to prepare the Collateral for sale, including repair of damaged Collateral or completion of work in progress into finished goods for disposition. |
9.5 | Other Provisions. If the Lender sell any of the Collateral upon credit, the Borrowers will only be credited with payments actually made by the purchaser thereof that are received by the Lender. The Lender may, in connection with any sale of the Collateral, specifically disclaim any warranties of title, possession, quiet enjoyment or the like. In the event that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the Lender is legally entitled, the Borrowers shall be liable for the deficiency, together with interest thereon at the highest rate allowed by applicable Law for interest on overdue principal thereof or such other rate as shall be fixed by applicable Law, together with the costs of collection and the reasonable fees, costs, expenses and other charges of any attorneys employed by a Lender to collect such deficiency. |
9.6 | Order; Remedies Cumulative. The Lender shall have the right to proceed against all or any portion of the Collateral in any order. All rights and remedies granted the Lender hereunder and under any agreement referred to herein, or otherwise available at law or in equity, shall be deemed concurrent and cumulative, and not alternative remedies, and the Lender may proceed with any number of remedies at the same time until all obligations under this Note are satisfied in full. |
9.7 | No Duties. The powers conferred on the Lender in this Section 9 are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Lender shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. |
9.8 | FCC Compliance. Notwithstanding anything to the contrary contained herein or in any other agreement, instrument or document executed in connection herewith, no party hereto shall take any actions hereunder that would constitute or result in a transfer or assignment of any FCC License or a change of control over such FCC License requiring the prior approval of the FCC without first obtaining such prior approval of the FCC. In addition, the parties acknowledge that the voting rights of any equity interests shall remain with the relevant Borrower thereof even upon the occurrence and during the continuance of an Event of Default until the FCC shall have given its prior consent to the exercise of stockholder rights by a purchaser at a public or private sale of such equity interests or the exercise of such rights by the Lender or by a receiver, trustee, conservator or other agent duly appointed pursuant to applicable law. |
10. | Indemnification. |
10.1 | Generally. The Borrowers hereby agree to indemnify and hold harmless the Lender and its Affiliates, and each of their respective direct and indirect directors, managers, officers, members, beneficiaries, partners, employees, agents, advisors, representatives, attorneys, successors and assigns (each an “Indemnified Person”) to the fullest extent permitted by Law, against all expenses, liabilities and losses (including, but not limited to, attorney fees, judgments, fines, fees, excise taxes or penalties) incurred or suffered by such Person (or one or more of such Person’s Affiliates) by reason of the fact that such Person is a Lender to or equityholder of the Borrowers (or an Affiliate thereof) or in connection with, arising under, resulting from, or relating to this Note or the Loan, the use of proceeds of the Note by the Borrowers or their respective subsidiaries, or the Borrowers’ obligations hereunder, including, without limitation, claims of third parties. Expenses, including attorneys’ fees and expenses, incurred by any such Indemnified Person in defending a proceeding shall be paid by the Borrowers in advance of the final disposition of such proceeding, including any appeal therefrom, upon receipt of an undertaking by or on behalf of such Indemnified Person to repay such amount if it shall ultimately be determined that such Indemnified Person is not entitled to be indemnified by the Borrowers. The right to indemnification and the advancement of expenses conferred in this Section 10.1 shall survive payment in full of this Note and shall not be exclusive of any other right which the Lender may have or hereafter acquire under any statute, agreement, Law, or otherwise. This Section 10.1 shall not apply with respect to taxes other than any taxes that represent losses, claims, damages, etc. arising from any non-tax claim. |
10.2 | Savings Clause. If this Section 10 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Borrowers shall nevertheless indemnify and hold harmless each Indemnified Person pursuant to this Section 10 to the fullest extent permitted by any applicable portion of this Section 10 that shall not have been invalidated and to the fullest extent permitted by applicable Law. |
11. | Miscellaneous. |
11.1 | Notices. |
(a) | All notices, requests or other communications required or permitted to be delivered hereunder shall be delivered in writing and shall be given by personal delivery or nationally recognized overnight courier, in each case to the address specified below or to such other address as such Party may from time to time specify in writing in compliance with this provision: |
(i) | If to the Borrowers: |
(ii) | If to the Lender: |
(b) | Notices are deemed received (i) when delivered, if personally delivered, (ii) on the next Business Day after tender for delivery if delivered by reputable overnight courier service. |
11.2 | Governing Law. THIS NOTE AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION BASED UPON, ARISING OUT OF OR RELATING TO THIS NOTE AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES WHICH WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION OTHER THAN THE STATE OF NEW YORK. |
11.3 | Submission to Jurisdiction. Each Borrower hereby irrevocably and unconditionally (i) agrees that any legal action, suit or proceeding arising out of or relating to this Note may be brought in the state and federal courts located in the State of New York, County of New York, Borough of Manhattan and (ii) submits to the jurisdiction of any such court in any such action, suit or proceeding. Final judgment against any Borrower in any action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment. Nothing in this Section 11.3 shall affect the right of the Lender to (i) commence legal proceedings or otherwise sue the Borrowers in any other court having jurisdiction over the Borrowers or (ii) serve process upon the Borrowers in any manner authorized by the Laws of any such jurisdiction. |
11.4 | Venue. The Borrowers irrevocably and unconditionally waive, to the fullest extent permitted by applicable Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Note in |
11.5 | Waiver of Jury Trial. EACH BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY. |
11.6 | Counterparts; Integration; Effectiveness. This Note and any amendments, waivers, consents or supplements hereto may be executed in counterparts, each of which shall constitute an original, but all taken together shall constitute a single instrument. This Note and the Agreement Re: Secured Notes constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all previous agreements and understandings, oral or written, with respect thereto. Delivery of an executed counterpart of a signature page to this Note by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Note. |
11.7 | Costs. The Borrowers agree to pay to the Lender the costs and expenses (excluding, for the avoidance of doubt, net income and other taxes) incurred by the Lender, including legal fees, in connection with (a) preparation, negotiation, and execution of this Note and any other documents executed in connection herewith, (b) the transactions contemplated by this Note, including, but not limited to amendments to this Note, and any other document executed in connection herewith, (c) monitoring the Lender’s rights with respect to the obligations under this Note, and (d) enforcement or collection of this Note or any rights hereunder, in each case, including reasonable attorneys’ fees, expenses, and court costs through all appellate proceedings. |
11.8 | Successors and Assigns. The Borrowers may not assign or transfer this Note or any of its rights hereunder without the prior written consent of the Lender. Except for an assignment or transfer of this Note to one of its controlled affiliates (or in the event of any foreclosure or exercise of rights or remedies with respect to the Collateral permitted by the Agreement Re: Secured Notes, to one of its affiliates), the Lender may not otherwise assign or transfer this Note or any of its rights hereunder without the prior written consent of the Borrowers. This Note shall inure to the benefit of, and be binding upon, the Borrowers’ and the Lender’s respective permitted assigns. |
11.9 | Waiver of Notice. The Borrowers hereby waive demand for payment, presentment for payment, protest, notice of payment, notice of dishonor, notice of nonpayment, notice of acceleration of maturity and diligence in taking any action to collect sums owing hereunder. |
11.10 | Interpretation. For purposes of this Note: (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” |
11.11 | Amendments and Waivers. No term of this Note may be waived, modified or amended except by an instrument in writing signed by all of the Parties hereto. Any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. |
11.12 | Headings. The headings of the various Sections and subsections herein are for reference only and shall not define, modify, expand or limit any of the terms or provisions hereof. |
11.13 | No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising on the part of any Lender, of any right, remedy, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Law. |
11.14 | Severability. If any term or provision of this Note is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Note or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the Parties hereto shall negotiate in good faith to modify this Note so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible. |
11.15 | Further Assurances. The Parties irrevocably (i) consent to the transactions contemplated hereby and (ii) shall sign (or cause to be signed) all further documents, do (or cause to be done) all further acts, and provide all assurances as may reasonably be necessary or desirable to give effect to the terms of this Note. |
Lender | Jurisdiction of Organization | Principal Amount |
Arena Limited SPV, LLC | Delaware | $5,375,000 |
(1) | Shared Services Agreement, dated December 13, 2017, by and among HC2 Broadcasting Holdings Inc., HC2 Broadcasting Inc., HC2 LPTV Holdings, Inc., HC2 Station Group, Inc. and HC2 Network Inc. |
(1) | DTV America Corp., et al., Order and Consent Decree, 32 FCC Rcd 9129 (MB Oct. 31, 2017); |
(2) | Mako Communications LLC, Order and Consent Decree, 31 FCC Rcd 112 (MB Jan. 13, 2016); |
(3) | Una Vez Mas Las Vegas License, LLC Licensee of KHDF-CA, Las Vegas, NV Facility Id No. 66807, Forfeiture Order, 22 FCC Rcd 6355 (EB Mar. 28, 2007). |
1 | The Parties to the Order and Consent Decree include DTV America Corporation, King Forward, Inc., Tiger Eye Broadcasting Corporation, and Tiger Eye Licensing, LLC, as licensees, and HC2 Broadcasting Inc. and HC2 Broadcasting License Inc., as proposed assignees/transferees and successors-in-interest. The Parties agreed to implement a compliance plan for three years (i.e. until October 31, 2020). The FCC authorizations subject to the Consent Decree are listed in Appendix A to the Consent Decree. |
2 | Mako Communications LLC (“Mako”), predecessor-in-interest to HC2 LPTV Station Group, entered into a Consent Decree with the FCC’s Media Bureau to resolve alleged violations of the FCC’s public inspection file rules by station KNBX-CD (FID 33819). Mako and its successors-in-interest agreed to implement a compliance plan for two years (i.e., until January 13, 2018) under the terms of the Consent Decree. The requirements of this Order and Consent Decree have likely been satisfied or expired but are noted here out of an abundance of caution. |
3 | The FCC found Una Vez Mas Las Vegas License, LLC, predecessor-in-interest to HC2 Station Group, liable for a monetary forfeiture in the amount of $6,400 for willful and repeated violation of section 73.3526 of the FCC’s rules by KHDF-CA (FID 66807). The requirements of this Order and Consent Decree have likely been satisfied or expired but are noted here out of an abundance of caution. |
Shareholder | # of Shares | % of Shares | |
HC2 Broadcasting Intermediate Holdings Inc. | 100 | 100 | % |
Total Issued | 100 | 100.00 | % |
Shareholder | # of Shares | % of Shares | |
HC2 Broadcasting Intermediate Holdings Inc. | 100 | 100 | % |
Total Issued | 100 | 100.00 | % |
1. | Definitions. Capitalized terms used herein shall have the meanings set forth in this Section 1. |
1.1 | “Additional Collateral” means: |
(a) | All FCC Licenses and all proceeds from the sale, lease, assignment or transfer of such FCC Licenses to a third party to the fullest extent that the creation of a security interest in any such FCC License would be permitted by applicable Law as in effect in any applicable jurisdiction, including after giving effect to Section 9-408 of the Uniform Commercial Code as in effect in any applicable jurisdiction; |
(b) | all accounts, chattel paper, deposit accounts, documents, equipment, general intangibles, payment intangibles, software, commercial tort claims, instruments, inventory, investment property, letter of credit rights, letters of credit, money and any supporting obligations related to any of the foregoing (each as defined in the Uniform Commercial Code of the State of New York (“UCC”)); |
(c) | all books and records pertaining to the property described in this Section; |
(d) | all Intellectual Property pertaining to the property described in this Section; and |
(e) | to the extent not otherwise included, all proceeds of the foregoing in whatever form, including, without limitation any insurance, indemnity, warranty or guaranty payable with respect to any Additional Collateral, any awards or payments due or payable in connection with any condemnation, requisition, confiscation, seizure or forfeiture of any Additional Collateral by any person acting under Governmental Authority or color thereof, and any damages or other amounts payable to Borrowers in connection with any lawsuit regarding any of the Additional Collateral. |
1.2 | “Affiliate” means as to any Person, any other Person that, directly or indirectly through one or more intermediaries, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote ten (10%) percent or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. |
1.3 | “Agreement Re: Secured Notes” means the Seventh Omnibus Amendment to Secured Notes and Amended and Restated Agreement Re: Secured Notes, dated as of September 10, 2019, among the Borrowers and the lenders from time to time party thereto, as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof. |
1.4 | “Borrower” and “Borrowers” have the meaning set forth in the introductory paragraph. |
1.5 | “Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by Law to close. |
1.6 | “Capital Lease” means any lease of personal property, the obligations with respect to which are required to be capitalized on a balance sheet of the lessee in accordance with GAAP, provided that if any operating lease is reclassified as a capital lease under GAAP subsequent to the date hereof or, if a lease entered into subsequent to the date hereof would have been classified as an operating lease if it existed on the date hereof, then such leases shall continue to be treated as an operating lease for all purposes hereunder. |
1.7 | “Capital Lease Obligations” means the obligations of lessee relating to a Capital Lease determined in accordance with GAAP. |
1.8 | “Collateral” means, collectively, the Pledged Stock and the Additional Collateral. |
1.9 | “Common Stock Equivalents” means any securities of a Borrower or its subsidiaries which would entitle the holder thereof to acquire at any time common stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, common stock. |
1.10 | “Copyright” means all domestic and foreign copyrights, whether registered or not or the subject of a pending application, owned by the Borrowers, all applications, registrations and recordings thereof, and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof. |
1.11 | “Default” means any of the events specified in Section 8 which constitutes an Event of Default or which, upon the giving of notice, the lapse of time, or both pursuant to Section 8 would, unless cured or waived, become an Event of Default. |
1.12 | “Default Rate” means, at any time, a rate per annum equal to the Interest Rate plus 2.00% per annum. |
1.13 | “Event of Default” has the meaning set forth in Section 8. |
1.14 | “FCC Licenses” means licenses, permits, and other authorizations granted by the Federal Communications Commission. |
1.15 | “First Omnibus Amendment” means the First Omnibus Amendment to Secured Notes, dated as of May 3, 2019, among the Borrowers, the lenders party thereto, as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof. |
1.16 | “GAAP” means generally accepted accounting principles in effect in the United States of America as in effect on the date of this Note applied on a consistent basis. |
1.17 | “Governmental Authority” means the government of any nation or any political subdivision thereof, whether at the national, state, territorial, provincial, municipal or any other level, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of, or pertaining to, government. |
1.18 | “Great American Notes” means the US $35,000,000 secured note, dated as of August 7, 2018, and the US $7,500,000 secured note, dated as of January 22, 2019, each among the Borrowers and the Initial Lenders, each as amended by the Omnibus Amendments. |
1.19 | “Indemnified Person” has the meaning set forth in Section 10.1. |
1.20 | “Initial Lender” and “Initial Lenders” means Great American Life Insurance Company, an Ohio corporation, and Great American Insurance Company, an Ohio corporation, and their respective successors and permitted assigns under the Great American Notes. |
1.21 | “Intellectual Property” means all intangible assets, intellectual property, Copyrights, Trademarks, and Patents. |
1.22 | “Interest Payment Date” means earlier of (a) the Maturity Date and (b) with respect to any portion of the Note that is prepaid prior to the Maturity Date, the applicable prepayment date. |
1.23 | “Interest Rate” has the meaning set forth in the introductory paragraph. |
1.24 | “Law” as to any Person, means any law (including common law), statute, ordinance, treaty, rule, regulation, policy or requirement of any Governmental Authority and authoritative interpretations thereon, whether now or hereafter in effect, in each case, applicable to or binding on such Person or any of its properties or to which such Person or any of its properties is subject. |
1.25 | “Lender” and “Lenders” has the meaning set forth in the introductory paragraph. |
1.26 | “Lien” means any mortgage, pledge, hypothecation, encumbrance, lien (statutory or other), charge or other security interest. |
1.27 | “Loan” means the principal amount outstanding under this Note together with accrued interest thereon. |
1.28 | “Material Adverse Change” means a material adverse change in, or a material adverse effect upon, (a) the operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of the Borrowers, taken as a whole; (b) the validity or enforceability of this Note; (c) the ability of the Borrowers, taken as a whole, to perform their obligations under this Note or (d) any right or remedy of a Lender under this Note. |
1.29 | “Maturity Date” means the earlier of (a) September 30, 2019 and (b) the date on which all amounts under this Note shall become due and payable. |
1.30 | “Note” has the meaning set forth in the introductory paragraph. |
1.31 | “Omnibus Amendments” means the First Omnibus Amendment and the Agreement Re: Secured Notes. |
1.32 | “Operating Documents” are, for any Person, such Person’s formation documents, as certified by the Secretary of State (or equivalent agency) of such Person’s jurisdiction of organization on a date that is no earlier than thirty (30) Business Days prior to the delivery thereof, certificate of incorporation, bylaws, or similar governing agreement with all current amendments or modifications thereto. |
1.33 | “Operating Subsidiaries” means, collectively, HC2 Station Group, Inc., HC2 Broadcasting Inc., HC2 Network Inc. and HC2 LPTV Holdings, Inc., each a Delaware corporation. |
1.34 | “Parent” means HC2 Broadcasting Intermediate Holdings Inc., a Delaware corporation. |
1.35 | “Parent Borrower” has the meaning set forth in the introductory paragraph. |
1.36 | “Parties” means the Lender and the Borrowers. |
1.37 | “Patents” means all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, and other general intangibles of like nature, whether now existing or hereafter acquired, all applications, registrations and recordings thereof, and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof, in each case, to the extent owned by the Borrowers. |
1.38 | “Permitted Indebtedness” means (i) (a) the indebtedness incurred pursuant to this Note representing “First-Out Debt” (as defined in the Agreement Re: Secured Notes), (b) additional indebtedness secured by the Collateral (including “First-Out Obligations,” “Pari Passu Debt” and “Pari Passu Obligations,” each as defined in the Agreement Re: Secured Notes) in an aggregate principal amount at any time outstanding of $64,700,000 minus the principal amount of this Note and (c) any refinancing or replacement indebtedness in respect of indebtedness incurred pursuant to the foregoing clauses (a) and (b), plus all refinancing fees, expenses, costs and premiums in connection with any such refinancing or replacement, (ii) indebtedness in respect of Capital Lease Obligations and Purchase Money Obligations, in an aggregate principal amount not to exceed $5,000,000, financing an acquisition, construction, repair, replacement, lease or improvement of a fixed or capital asset incurred by any Borrower after the acquisition, construction, repair, replacement, lease or improvement of the applicable asset and (iii) unsecured intercompany indebtedness between or among the Borrowers or unsecured intercompany indebtedness of the Parent Borrower pursuant to the intercompany note, executed as of April 30, 2019 and effective as of June 30, 2018 (and any refinancing or replacement indebtedness in respect thereof). |
1.39 | “Person” means any individual, corporation, limited liability company, trust, joint venture, association, company, limited or general partnership, unincorporated organization, Governmental Authority or other entity. |
1.40 | “Permitted Liens” means (i) Liens securing indebtedness incurred pursuant to clause (i) of the definition of “Permitted Indebtedness,” (ii) Liens of lessors, lessees, sublessors, sublessees, licensors or licensees arising under real estate lease or license arrangements entered into in the ordinary course of business of the Borrowers, (iii) inchoate mechanics and similar Liens for labor, materials or supplies to the extent securing amounts which are not yet due and payable, (iv) Liens under Capital Lease Obligations, provided, that (1) any such Lien attaches to such property concurrently with the acquisition thereof and (2) such Lien attaches solely to the property so acquired in such transaction (and the proceeds therefrom), (v) Liens for taxes, assessments and other governmental charges or levies (1) not yet due or for which installments have been paid based on reasonable estimates pending final assessments or (2) the validity, applicability or amount of which is being contested diligently and in good faith by appropriate proceedings by that Person and in respect of which adequate reserves under GAAP are established and maintained and (vi) Liens on equipment arising from precautionary UCC financing statements regarding operating leases of equipment. |
1.41 | “Pledged Stock” means all shares of capital stock issued by each of the Operating Subsidiaries, any certificates evidencing any such shares, and any distribution of property and dividends made on, in respect of or in exchange for the foregoing from time to time. |
1.42 | “Purchase Money Obligation” means, for any Person, the obligations of such Person in respect of indebtedness (including Capital Lease Obligations) incurred for the purpose of financing all or any part of the purchase price of any fixed or capital assets or the cost of installation, construction or improvement of any fixed or capital assets; provided, however, that (i) such indebtedness is incurred within 30 days after such acquisition, installation, construction or improvement of such fixed or capital assets by such Person and (ii) the amount of such indebtedness does not exceed the lesser of 100% of the fair market value of such fixed or capital asset or the cost of the acquisition, installation, construction or improvement thereof, as the case may be. |
1.43 | “Subsidiary Borrowers” has the meaning set forth in the introductory paragraph. |
1.44 | “Trademarks” means all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a’s, internet domain names, trade styles, designs, logos and other source or business identifiers and all general intangibles of like nature, which are the subject of a pending application, or now or hereafter owned, by the Borrowers, all applications, registrations and recordings thereof, and all reissues, extensions or renewals thereof, together with all goodwill of the business symbolized thereby. |
2. | Disbursement Mechanics; Conditions to Disbursement. |
2.1 | Disbursement. The entire principal amount of the Note will be disbursed on the date of this Note. The Borrowers shall not have the right to redraw any amount prepaid hereunder. |
2.2 | Conditions to Disbursement. Each Lender’s obligation to make the disbursement of the principal sums set forth on Annex I hereto on the date hereof is subject to the condition precedent that such Lender shall have received, in form and substance satisfactory to such Lender, such documents, and the completion of such other matters, as such Lender may reasonably deem necessary or appropriate, including, without limitation: |
(a) | this Note duly executed; and |
(b) | the Operating Documents and a good standing certificate of each Borrower certified by the Secretary of State of the State of Delaware as of a date no earlier than thirty (30) Business Days prior to the date hereof, together with duly authorized resolutions of the board of directors for each Borrower in form and substance acceptable to the Lender in its sole discretion. |
3. | Interest. |
3.1 | Interest Rate. Except as otherwise provided herein, the outstanding principal amount of the Note shall bear interest at the Interest Rate from the date hereof until the Note is paid in full, whether at maturity, upon prepayment or acceleration, or otherwise. |
3.2 | Interest Payment. Interest shall be due and payable on the Interest Payment Date. All interest, if any, that may accrue after the Maturity Date shall be payable on demand. |
3.3 | Default Interest. If any amount payable hereunder (including, without limitation, interest and principal) is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such overdue amount shall bear interest at the Default Rate from the date of such non-payment until such amount is paid in full. |
3.4 | Computation of Interest. All computations of interest shall be made on the basis of a year of 365 days, and the actual number of days elapsed. Interest shall accrue on the date hereof, and shall not accrue on the day on which the Loan is paid. |
3.5 | Interest Rate Limitation. In no event whatsoever shall the amount of interest charged, taken or received hereunder exceed the maximum amount permitted by Law. If at any time and for any reason whatsoever, the Interest Rate payable under this Note shall exceed the maximum rate of interest permitted to be charged by the Lender to the Borrowers under applicable Law, such interest rate shall be reduced automatically to the maximum rate of interest permitted to be charged under applicable Law, and that portion of each sum paid attributable to that portion of such interest rate that exceeds the maximum rate of interest permitted by applicable Law shall be deemed a voluntary prepayment of principal. |
4. | Final Payment Date; Prepayment. |
4.1 | Final Payment Date. The aggregate of the unpaid principal, all accrued and unpaid interest, and all other amounts payable, but unpaid, under this Note shall be due and payable on the Maturity Date. |
4.2 | Prepayment. |
(a) | [Reserved]. |
(b) | The Borrowers may on any one or more occasions voluntarily prepay the Note in whole or in part at a prepayment price equal to 100% of the principal amount of the Note, plus accrued and unpaid interest on the principal amount of the Note being prepaid to, but not including, the date of prepayment. |
(c) | Any such prepayment will be preceded by at least five (5) Business Day’s prior written notice, with such notice specifying the planned prepayment date. Any such notice may be conditional. |
5. | Payment Mechanics. |
5.1 | Manner of Payments. All payments of interest and principal shall be made in lawful money of the United States of America on the date on which such payment is due by wire transfer of immediately available funds to the applicable Lender’s account at a bank specified by such Lender in writing to the Borrowers from time to time. All payments hereunder shall be made without deduction or setoff of any kind, provided however, that if applicable Law requires the Borrowers to withhold or deduct any tax, levy or fee of any kind, such tax shall be withheld or deducted in accordance with such law. If the Borrowers’ are required to deduct any amount in respect of any tax, levy or fee of any kind, the Borrowers’ shall pay such additional amount so that, after deduction of any required amount, the Lender receives the full amount due hereunder; provided, however, the Borrowers shall not be required to pay any additional amounts with respect to taxes, levies or fees imposed on or measured by net income (however denominated) and similar taxes, levies or fees imposed on or measured by net income (however denominated). |
5.2 | Application of Payments. All partial payments made hereunder shall be applied first to the payment of any fees or charges outstanding hereunder, second to accrued but unpaid interest, and third to the payment of the principal amount outstanding under this Note. |
5.3 | Business Day Convention. Whenever any payment to be made hereunder shall be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension will be taken into account in calculating the amount of interest payable under this Note. |
5.4 | Rescission of Payments. If at any time any payment made by the Borrowers under this Note is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy or reorganization of any Borrower or otherwise, the Borrowers’ obligation to make such payment shall be reinstated as though such payment had not been made. |
5.5 | Right of Contribution. If any payment is made under this Note by a Borrower, including pursuant to a collection under Section 9: |
(a) | Subject to Section 5.5(c), such Borrower shall be entitled to contribution in respect of such payment and shall be entitled to demand and enforce contribution in respect of such payment from each other Borrower which has not paid its fair share of such payment, as necessary to ensure that (after giving effect to any enforcement of reimbursement rights provided hereby) each Borrower pays its fair share of such payment. |
(b) | If and whenever any right of reimbursement or contribution becomes enforceable by any Borrower against the other Borrowers, such Borrower shall be entitled, subject to and upon (but not before) the indefeasible payment in full to the Lender by of all of the outstanding obligations of the Borrowers under this Note, to be subrogated to the security interest that may then be held by the Lender upon the Collateral securing or purporting to secure the Note. If subrogation is demanded by any Borrower, then, after discharge of the Note following payment in full to the Lender by of all of the outstanding obligations of the Borrowers under this Note, the Lender shall deliver to the Borrower making such demand (at the cost of such Borrower) an instrument satisfactory to the Lender transferring, on a quitclaim basis without any recourse, representation, warranty or any other obligation whatsoever, whatever security interest the Lender then may hold in the Collateral securing the Note. |
(c) | All rights and claims arising under this Section 5.5 shall be fully subordinated to the rights of the Lender under this Note prior to the indefeasible payment in full to Lender of the principal amount of, and interest on, the Note and the payment in full of all other outstanding obligations of the Borrowers under this Note. Prior to such payment, no Borrower may demand, enforce or receive any collateral security, payment or distribution whatsoever on account of any such right or claim. |
6. | Security Interest; Intercreditor Matters. |
6.1 | Grant. Subject to the Agreement Re: Secured Notes, the Parent Borrower, as collateral security for the prompt and complete payment and performance when due of the obligations of the Borrowers hereunder, whether now existing or hereafter incurred, matured or unmatured, direct or indirect, primary or secondary or due or to become due, hereby grants to the Lenders a lien on and security interest in all of Parent Borrower’s right, title and interest, whether now owned or hereafter acquired, in the Pledged Stock. Subject to the Agreement Re: Secured Notes, each Subsidiary Borrower, as collateral security for the prompt and complete payment and performance when due of the obligations of the Borrowers hereunder, whether now existing or hereafter incurred, matured or unmatured, direct or indirect, primary or secondary or due or to become due, hereby grants to the Lender a lien on and security interest in, all of such Subsidiary Borrower’s right, title and interest in, to and under the Additional Collateral, whether now owned or hereafter acquired. |
6.2 | Filings. Subject to the Agreement Re: Secured Notes, if either the Great American Notes have been repaid, discharged, defeased or otherwise paid in full or if otherwise permitted by the Initial Lenders, each Borrower hereby authorizes the Lender to file, in any filing office as “Secured Party”, (a) financing statements, amendments to financing statements, and continuations thereof without such Borrower’s signature in accordance with the UCC and (b) financing statements and amendments to financing statements describing the Collateral as the Lender determines in its sole discretion, including financing statements listing “All Assets” in the collateral description therein. |
6.3 | Further Assurances; Expenses. Subject to the Agreement Re: Secured Notes, each Borrower shall (a) promptly, upon the reasonable request of the Lender, and at the Borrowers’ expense, execute, acknowledge and deliver, and thereafter register, file or record, or cause to be registered, filed or recorded, in an appropriate governmental office, any document or instrument supplemental to or confirmatory of the Note or otherwise necessary or deemed by the Lender reasonably desirable for the continued validity, enforceability, perfection and priority of the Liens on the Collateral covered thereby subject to no other Liens except Permitted Liens, or obtain any consents or waivers as may be necessary or appropriate in connection therewith; and |
(a) | Deliver or cause to be delivered to the Lender from time to time such other documentation, instruments, consents, authorizations and approvals in form and substance reasonably satisfactory to the Lender as the Lender shall reasonably deem necessary or advisable to perfect or maintain the validity, enforceability, perfection and priority of the Liens on the Collateral pursuant to the Note. Upon payment in full to Lender by the Borrowers of all of the outstanding obligations of the Borrowers under this Note, the Lender shall take all action and execute and deliver all documents to immediately discharge and release all Liens granted under this Note. |
6.4 | Agreement Re: Secured Notes. This Note is subject to the Agreement Re: Secured Notes, and the “Lender” hereunder shall be deemed to be an “Additional Lender” under and as defined in the Agreement Re: Secured Notes. In the event of any conflict between this Note and the Agreement Re: Secured Notes, the Agreement Re: Secured Notes shall govern and be controlling. |
7. | Covenants and Representations and Warranties. |
7.1 | Affirmative Covenants. Each Borrower covenants and agrees that it shall: |
(a) | commencing with the fiscal quarter ending September 30, 2019 (if applicable), provide, or shall cause to be provided, to the Lender, as soon as available, but in any event within 90 days after the end of each fiscal quarter of each Borrowers and 120 days after the fiscal year of each Borrower, a balance sheet of each Borrower as at the end of such fiscal quarter or year, and the related statements of income or operations, shareholders’ equity and cash flows for such fiscal quarter or year all in reasonable detail and prepared in accordance with GAAP (subject, in the case of quarterly statements, to usual year-end adjustments and the absence of full notes and deferred tax disclosure) together with a certification from an officer of each Borrower that such statements fairly present, in all material respects, the financial condition, results of operations, shareholders’ equity and cash flows of each Borrower in accordance with GAAP and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. |
(b) | provide to the Lender, promptly after the commencement thereof, notice of all actions, suits, and proceedings before any Governmental Authority affecting Borrowers or any of their assets that has a claim for damages in excess of $1,000,000 or that could otherwise result in a cost, expense or loss to Borrowers in excess of $1,000,000; |
(c) | provide to the Lender immediate written notice of any event, development of circumstance that would (with the passage of time or the giving of notice or both) constitute an Event of Default or that has had a Material Adverse Change; |
(d) | provide to the Lender such other information respecting the business, operations, or property of Borrowers, financial or otherwise, as such Lender may reasonably request. |
(e) | comply with, and require all of its subsidiaries, to comply with, all federal, state, and local laws and regulations, which are applicable to the operations and property of borrowers and maintain all related permits necessary for the ownership and operation of Borrowers’ property and business. |
(f) | pay all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, such Borrower’s personal property, equipment and inventory (other than taxes the amounts of which are not material and do not constitute a Lien on such Borrower’s property that is not a Permitted Lien), except to the extent the validity thereof is being contested in good faith by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves in accordance with GAAP, have been set aside for the payment thereof. |
(g) | at its own expense, maintain insurance (including, without limitation, comprehensive general liability and property insurance) with respect to the real and personal property of such Borrower in such amounts, against such risks, in such form and with responsible and reputable insurance companies or associations as is required by any Governmental Authority, contracts to which each Borrower is a party, or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated and otherwise in amounts and with carriers reasonably acceptable to the Lender and the Lender shall be named as the sole loss payee with respect to all insurance relating to loss of any Collateral and shall be included as an additional insured under each liability policy. |
(h) | comply with all agreements with the Lender under this Note. |
(i) | comply with all applicable Laws in all material respects. |
(j) | pay all material obligations as they become due. |
(k) | permit the Lender access to the Collateral and otherwise provide such information as the Lender shall reasonably request. |
(l) | use the net proceeds of the Note to pay fees, costs and expenses related to the Note, including interest and principal payments, to pay the cash consideration for acquisitions, including fees, costs and expenses related to such acquisitions, to pay dividends or make other distributions to the Parent Borrower or Parent, and for general corporate purposes. |
7.2 | Restrictions. Each Borrower covenants and agrees that it shall not without the prior written consent of the Lender: |
(a) | permit any other Lien of any kind to attach to or be imposed upon any of the Collateral except for Permitted Liens. |
(b) | incur any indebtedness other than Permitted Indebtedness and accounts payable incurred in the ordinary course on customary terms. |
(c) | change its legal name, form of legal entity, or jurisdiction of organization. |
(d) | make or pay or declare any dividends, return any capital, or make any other payment of cash or distribution of property on account of its equity interests, except for any such dividends or distributions made by one Borrower that are substantially concurrently invested in the common equity capital of, or contributed to the equity capital of, the other Borrower, and as set forth under Section 7.1(l) or purchase or acquire any of its own equity interests |
(e) | operate outside the ordinary course of business consistent with past practice (it being understood and agreed that, for absence of doubt, the ordinary course of the Borrowers’ business consistent with past practice includes the consummation of acquisitions of broadcasting businesses and assets and related businesses and assets) or make any investment in, or acquire all or substantially all of the assets of any other person or entity (including, without limitation, any subsidiary) outside the ordinary course of business consistent with past practice (it being understood and agreed that, for absence of doubt, the ordinary course of the Borrowers’ business consistent with past practice includes the consummation of acquisitions of broadcasting businesses and assets and related businesses and assets). |
(f) | permit or cause the sale of any assets of such Borrower or its subsidiaries, except (i) as set forth on Schedule 7.2(e) hereto, (ii) as permitted by Section 7.2(g) or (iii) for sales of any such assets not constituting Collateral in a single transaction or series of related transactions with a fair market value not to exceed $2,500,000. |
(g) | sell, transfer, lease, change the registration, if any, dispose of, attempt to dispose of, modify, amend or abandon the Collateral, including the FCC Licenses, except to the extent mandated by the FCC pursuant to a consent decree, agreement or order entered into with the FCC after the date of this Note and approved by the Lender or otherwise applicable to other similarly situated holders of FCC Licenses; provided, however, that, the Borrowers may (i) change the registration (other than in connection with a sale or transfer), amend or modify FCC Licenses in the ordinary course of business consistent with past practice; (ii) change the registration (other than in connection with a sale or transfer), amend or modify an FCC License if such change of registration, amendment or modification would be reasonably expected to preserve or increase the value of such FCC License; (iii) abandon any FCC License which has a nominal value (taking into account the intended use of such License to any Borrower) or which is duplicative with other FCC Licenses owned by the Borrowers; or (iv) exchange an FCC License and any assets related to such FCC License with a fair market value not to exceed $5,000,000 for assets in an amount not less than the fair market value of the FCC License and related assets being exchanged, in the case of clause (iii) or (iv) if such transaction exceeds $100,000, as determined by the board of directors of the applicable Borrower. |
(h) | in any single transaction or series of transactions, directly or indirectly (1) wind up its affairs, liquidate or dissolve or (2) be a party to any merger or consolidation. |
(i) | enter into or permit to exist any transaction or series of transactions (including, but not limited to, the purchase, sale, lease or exchange of property, the making of any investment, the giving of any guaranty, the assumption of any obligation or the rendering of any service) with any of its Affiliates (other than transactions between the Borrowers); provided, that the restrictions in this Section 7.2(i) shall not apply to: (a) any transaction or series of transactions for fair value that is on terms no less favorable to such Borrower than those that could be obtained in a comparable arm’s length transaction with a Person that is not an Affiliate and in connection therewith such Borrower provide written notice to the Lender at least 3 Business Days prior to the consummation of such transaction (which such notice shall include all material terms and conditions of such transaction), (b) any other transaction or series of transactions approved by Lender and (c) the agreements set forth in Schedule 7.2(i) (to the extent performed in accordance with past practice). |
7.3 | Representations and Warranties. As an inducement for the transactions in connection with this Note, each Borrower shall cause the following representations and warranties to be true until the indebtedness under this Note is discharged in full: |
(a) | Each Borrower is a corporation, duly organized, validly existing and in good standing under the Laws of Delaware and has the power and authority to own its property and to carry on its business in each jurisdiction in which such Borrower does a material volume of business. |
(b) | Each Borrower has full power and authority to execute and deliver this Note and to incur and perform the obligations provided for herein, all of which have been duly authorized by all proper and necessary action of the board of directors of such Borrower. No consent or approval of any public authority or other third party is required as a condition to the validity of this Note, and each Borrower is in compliance with all Laws and regulatory requirements to which it is subject. |
(c) | This Note constitutes the valid and legally binding obligation of each Borrower, enforceable against such Borrower in accordance with its terms. |
(d) | Except as disclosed to the Lender in writing and acknowledged by the Lender prior to the date of this Note as set forth on Schedule 7.3(d) hereto, (1) there is no action, claim, notice of violation, order to show cause, complaint, investigation, or proceeding involving any Borrower pending or, to the knowledge of any Borrower, threatened before any court or Governmental Authority, agency or arbitration authority that could result in a Material Adverse Change or (2) there is no material outstanding decree, decision, judgment, or order that has been issued by any court, Governmental Authority, agency or arbitration authority against such Borrower or its FCC Licenses. |
(e) | There is no charter, bylaw, stock provision, partnership agreement or other document pertaining to the organization, power or authority of each Borrower and no provision of any existing agreement, mortgage, indenture or contract binding on such Borrower or affecting its property, which would conflict with or in any way prevent the execution, delivery or carrying out of the terms of this Note. |
(f) | Except as set forth on Schedule 7.3(f) hereto or as would not result in a Material Adverse Change, all taxes and assessments due and payable by each Borrower have been paid or are being contested in good faith by appropriate proceedings and such Borrower has filed all tax returns which it is required to file. |
(g) | [Reserved]. |
(h) | Each Borrower’s chief executive office is located at its address for notice herein. |
(i) | On the date of this Agreement, (i) the capitalization of each Borrower is as set forth on Schedule 7.3(h), which Schedule 7.3(h) shall also include the number of shares of common stock of each Borrower outstanding as of the date hereof. No Person has any right of first refusal, preemptive right, right of participation, or any similar right in respect of the capital stock of such Borrower or any subsidiary of either Borrower. Except as set forth on Schedule 7.3(h), there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of common stock, or contracts, commitments, understandings or arrangements by which each Borrower or any of its subsidiaries is or may become bound to issue additional shares of common stock or Common Stock Equivalents (as defined below) (ii) all of the outstanding shares of capital stock of each Borrower are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities, (iii) except as set forth on Schedule 7.3(h), there are no stockholders agreements, voting agreements or other similar agreements with respect to the such Borrower’s capital stock to which either Borrower is a party or, to the knowledge of either Borrower, between or among any of Borrowers’ stockholders, (iv) no Person has any right to cause either Borrower to effect the registration under the Securities Act of any securities of either Borrower or any of its subsidiaries and (v) neither Borrower has any subsidiaries. |
8. | Events of Default. The occurrence of any of the following shall constitute an Event of Default hereunder: |
8.1 | Failure to Pay. The Borrowers fail to pay any principal amount of or interest on the Loan when due. |
8.2 | Breach of Covenants. Except for matters addressed in Sections 8.1, 8.3 or 8.4 hereof, the Borrowers fail to observe or perform any covenant, condition or agreement contained in this Note, and such failure continues for thirty (30) days. |
8.3 | Bankruptcy. Either Borrower files a petition in bankruptcy or under any similar insolvency Law, makes of an assignment for the benefit of creditors, if any petition in bankruptcy or under any similar insolvency Law is filed against either Borrower and such petition is not dismissed within thirty (30) days after the filing thereof, or either Borrower is generally not, or shall be unable to, or admits in writing its inability to, pay its debts as they become due. |
8.4 | Judgments. One or more judgments, orders, decisions or decrees shall be entered against any Borrower and all of such judgments, orders, decisions or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within thirty (30) days from the entry thereof. |
9. | Remedies. |
9.1 | Remedies. Upon the occurrence of any Event of Default and at any time thereafter during the continuance of such Event of Default, the Lender(s) holding a majority of the outstanding principal amount of the Note may at its option, (a) declare the entire principal amount of this Note, together with all accrued interest thereon and all other amounts payable hereunder, immediately due and payable, and/or (b) exercise any or all of its rights, powers or remedies under applicable Law, including, without limitation, the rights of a secured party under the UCC; provided, however that, if an Event of Default described in Section 8.3 shall occur, the principal of and accrued interest on the Loan shall become immediately due and payable without any notice, declaration or other act on the part of the Lender. The Borrowers waive demand, notice of Default or dishonor, notice of payment and nonpayment, notice of any Default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Lender on which the Borrowers are liable. |
9.2 | Other Rights. In addition to all other rights, options and remedies granted to the Lender under this Note (each of which is also then exercisable by the Lender), the Lender may, upon the occurrence of an Event of Default, exercise any other rights granted to the Lender under the UCC and any other applicable Law, including, without limitation, each and all of the following rights and remedies: |
(a) | the right to take possession of, send notices, and collect directly the Collateral, with or without judicial process (including, without limitation the right to notify the United States postal authority to redirect all mail addressed to the Borrowers to an address designated by the Lender). |
(b) | by the Lender’s own means or with judicial assistance, enter the Borrowers’ premises and take possession of the Collateral, or render it unusable, or dispose of the Collateral on such premises without any liability for rent, storage, utilities or other sums, and the Borrowers shall not resist or interfere with such action. |
(c) | require the Borrowers at its expense to assemble all or any part of the Collateral and make it available to the Lender at any place designated by the Lender. |
9.3 | Notice of Sale; Non-Interference. The Borrowers hereby agrees that a notice received by it at least ten (10) days before the time of any intended public sale or of the time after which any private sale or other disposition of the Collateral is to be made, shall be deemed to be reasonable notice of such sale or other disposition. The Borrowers covenant and agree not to interfere with or impose any obstacle to a Lender’s exercise |
9.4 | No Obligation. The Lender shall have no obligation to prepare the Collateral for sale, including repair of damaged Collateral or completion of work in progress into finished goods for disposition. |
9.5 | Other Provisions. If the Lender sell any of the Collateral upon credit, the Borrowers will only be credited with payments actually made by the purchaser thereof that are received by the Lender. The Lender may, in connection with any sale of the Collateral, specifically disclaim any warranties of title, possession, quiet enjoyment or the like. In the event that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the Lender is legally entitled, the Borrowers shall be liable for the deficiency, together with interest thereon at the highest rate allowed by applicable Law for interest on overdue principal thereof or such other rate as shall be fixed by applicable Law, together with the costs of collection and the reasonable fees, costs, expenses and other charges of any attorneys employed by a Lender to collect such deficiency. |
9.6 | Order; Remedies Cumulative. The Lender shall have the right to proceed against all or any portion of the Collateral in any order. All rights and remedies granted the Lender hereunder and under any agreement referred to herein, or otherwise available at law or in equity, shall be deemed concurrent and cumulative, and not alternative remedies, and the Lender may proceed with any number of remedies at the same time until all obligations under this Note are satisfied in full. |
9.7 | No Duties. The powers conferred on the Lender in this Section 9 are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Lender shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. |
9.8 | FCC Compliance. Notwithstanding anything to the contrary contained herein or in any other agreement, instrument or document executed in connection herewith, no party hereto shall take any actions hereunder that would constitute or result in a transfer or assignment of any FCC License or a change of control over such FCC License requiring the prior approval of the FCC without first obtaining such prior approval of the FCC. In addition, the parties acknowledge that the voting rights of any equity interests shall remain with the relevant Borrower thereof even upon the occurrence and during the continuance of an Event of Default until the FCC shall have given its prior consent to the exercise of stockholder rights by a purchaser at a public or private sale of such equity interests or the exercise of such rights by the Lender or by a receiver, trustee, conservator or other agent duly appointed pursuant to applicable law. |
10. | Indemnification. |
10.1 | Generally. The Borrowers hereby agree to indemnify and hold harmless the Lender and its Affiliates, and each of their respective direct and indirect directors, managers, officers, members, beneficiaries, partners, employees, agents, advisors, representatives, attorneys, successors and assigns (each an “Indemnified Person”) to the fullest extent permitted by Law, against all expenses, liabilities and losses (including, but not limited to, attorney fees, judgments, fines, fees, excise taxes or penalties) incurred or suffered by such Person (or one or more of such Person’s Affiliates) by reason of the fact that such Person is a Lender to or equityholder of the Borrowers (or an Affiliate thereof) or in connection with, arising under, resulting from, or relating to this Note or the Loan, the use of proceeds of the Note by the Borrowers or their respective subsidiaries, or the Borrowers’ obligations hereunder, including, without limitation, claims of third parties. Expenses, including attorneys’ fees and expenses, incurred by any such Indemnified Person in defending a proceeding shall be paid by the Borrowers in advance of the final disposition of such proceeding, including any appeal therefrom, upon receipt of an undertaking by or on behalf of such Indemnified Person to repay such amount if it shall ultimately be determined that such Indemnified Person is not entitled to be indemnified by the Borrowers. The right to indemnification and the advancement of expenses conferred in this Section 10.1 shall survive payment in full of this Note and shall not be exclusive of any other right which the Lender may have or hereafter acquire under any statute, agreement, Law, or otherwise. This Section 10.1 shall not apply with respect to taxes other than any taxes that represent losses, claims, damages, etc. arising from any non-tax claim. |
10.2 | Savings Clause. If this Section 10 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Borrowers shall nevertheless indemnify and hold harmless each Indemnified Person pursuant to this Section 10 to the fullest extent permitted by any applicable portion of this Section 10 that shall not have been invalidated and to the fullest extent permitted by applicable Law. |
11. | Miscellaneous. |
11.1 | Notices. |
(a) | All notices, requests or other communications required or permitted to be delivered hereunder shall be delivered in writing and shall be given by personal delivery or nationally recognized overnight courier, in each case to the address specified below or to such other address as such Party may from time to time specify in writing in compliance with this provision: |
(i) | If to the Borrowers: |
(ii) | If to the Lender: |
(b) | Notices are deemed received (i) when delivered, if personally delivered, (ii) on the next Business Day after tender for delivery if delivered by reputable overnight courier service. |
11.2 | Governing Law. THIS NOTE AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION BASED UPON, ARISING OUT OF OR RELATING TO THIS NOTE AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES WHICH WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION OTHER THAN THE STATE OF NEW YORK. |
11.3 | Submission to Jurisdiction. Each Borrower hereby irrevocably and unconditionally (i) agrees that any legal action, suit or proceeding arising out of or relating to this Note may be brought in the state and federal courts located in the State of New York, County of New York, Borough of Manhattan and (ii) submits to the jurisdiction of any such court in any such action, suit or proceeding. Final judgment against any Borrower in any action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment. Nothing in this Section 11.3 shall affect the right of the Lender to (i) commence legal proceedings or otherwise sue the Borrowers in any other court having jurisdiction over the Borrowers or (ii) serve process upon the Borrowers in any manner authorized by the Laws of any such jurisdiction. |
11.4 | Venue. The Borrowers irrevocably and unconditionally waive, to the fullest extent permitted by applicable Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Note in |
11.5 | Waiver of Jury Trial. EACH BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY. |
11.6 | Counterparts; Integration; Effectiveness. This Note and any amendments, waivers, consents or supplements hereto may be executed in counterparts, each of which shall constitute an original, but all taken together shall constitute a single instrument. This Note and the Agreement Re: Secured Notes constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all previous agreements and understandings, oral or written, with respect thereto. Delivery of an executed counterpart of a signature page to this Note by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Note. |
11.7 | Costs. The Borrowers agree to pay to the Lender the costs and expenses (excluding, for the avoidance of doubt, net income and other taxes) incurred by the Lender, including legal fees, in connection with (a) preparation, negotiation, and execution of this Note and any other documents executed in connection herewith, (b) the transactions contemplated by this Note, including, but not limited to amendments to this Note, and any other document executed in connection herewith, (c) monitoring the Lender’s rights with respect to the obligations under this Note, and (d) enforcement or collection of this Note or any rights hereunder, in each case, including reasonable attorneys’ fees, expenses, and court costs through all appellate proceedings. |
11.8 | Successors and Assigns. The Borrowers may not assign or transfer this Note or any of its rights hereunder without the prior written consent of the Lender. Except for an assignment or transfer of this Note to one of its controlled affiliates (or in the event of any foreclosure or exercise of rights or remedies with respect to the Collateral permitted by the Agreement Re: Secured Notes, to one of its affiliates), the Lender may not otherwise assign or transfer this Note or any of its rights hereunder without the prior written consent of the Borrowers. This Note shall inure to the benefit of, and be binding upon, the Borrowers’ and the Lender’s respective permitted assigns. |
11.9 | Waiver of Notice. The Borrowers hereby waive demand for payment, presentment for payment, protest, notice of payment, notice of dishonor, notice of nonpayment, notice of acceleration of maturity and diligence in taking any action to collect sums owing hereunder. |
11.10 | Interpretation. For purposes of this Note: (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” |
11.11 | Amendments and Waivers. No term of this Note may be waived, modified or amended except by an instrument in writing signed by all of the Parties hereto. Any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. |
11.12 | Headings. The headings of the various Sections and subsections herein are for reference only and shall not define, modify, expand or limit any of the terms or provisions hereof. |
11.13 | No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising on the part of any Lender, of any right, remedy, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Law. |
11.14 | Severability. If any term or provision of this Note is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Note or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the Parties hereto shall negotiate in good faith to modify this Note so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible. |
11.15 | Further Assurances. The Parties irrevocably (i) consent to the transactions contemplated hereby and (ii) shall sign (or cause to be signed) all further documents, do (or cause to be done) all further acts, and provide all assurances as may reasonably be necessary or desirable to give effect to the terms of this Note. |
Lender | Jurisdiction of Organization | Principal Amount |
Arena Limited SPV, LLC | Delaware | $5,375,000 |
(1) | DTV America Corp., et al., Order and Consent Decree, 32 FCC Rcd 9129 (MB Oct. 31, 2017); |
(2) | Mako Communications LLC, Order and Consent Decree, 31 FCC Rcd 112 (MB Jan. 13, 2016); |
(3) | Una Vez Mas Las Vegas License, LLC Licensee of KHDF-CA, Las Vegas, NV Facility Id No. 66807, Forfeiture Order, 22 FCC Rcd 6355 (EB Mar. 28, 2007). |
1 | The Parties to the Order and Consent Decree include DTV America Corporation, King Forward, Inc., Tiger Eye Broadcasting Corporation, and Tiger Eye Licensing, LLC, as licensees, and HC2 Broadcasting Inc. and HC2 Broadcasting License Inc., as proposed assignees/transferees and successors-in-interest. The Parties agreed to implement a compliance plan for three years (i.e. until October 31, 2020). The FCC authorizations subject to the Consent Decree are listed in Appendix A to the Consent Decree. |
2 | Mako Communications LLC (“Mako”), predecessor-in-interest to HC2 LPTV Station Group, entered into a Consent Decree with the FCC’s Media Bureau to resolve alleged violations of the FCC’s public inspection file rules by station KNBX-CD (FID 33819). Mako and its successors-in-interest agreed to implement a compliance plan for two years (i.e., until January 13, 2018) under the terms of the Consent Decree. The requirements of this Order and Consent Decree have likely been satisfied or expired but are noted here out of an abundance of caution. |
3 | The FCC found Una Vez Mas Las Vegas License, LLC, predecessor-in-interest to HC2 Station Group, liable for a monetary forfeiture in the amount of $6,400 for willful and repeated violation of section 73.3526 of the FCC’s rules by KHDF-CA (FID 66807). The requirements of this Order and Consent Decree have likely been satisfied or expired but are noted here out of an abundance of caution. |
Shareholder | # of Shares | % of Shares | |
HC2 Broadcasting Intermediate Holdings Inc. | 100 | 100 | % |
Total Issued | 100 | 100.00 | % |
Shareholder | # of Shares | % of Shares | |
HC2 Broadcasting Intermediate Holdings Inc. | 100 | 100 | % |
Total Issued | 100 | 100.00 | % |
(f) | permit or cause the sale of any assets of such Borrower or its subsidiaries, except (i) as set forth on Schedule 7.2(e) hereto, (ii) as permitted by Section 7.2(g) or (iii) for sales of any such assets not constituting Collateral in a single transaction or series of related transactions with a fair market value not to exceed $2,500,000; |
1. | US $35,000,000 secured note, dated as of August 7, 2018, among the Borrowers and the Initial Lenders (as amended by the Agreement Re: Secured Notes, the “$35,000,000 Secured Note”). |
2. | US $7,500,000 secured note, dated as of January 22, 2019, among the Borrowers and the Initial Lenders (the “$7,500,000 Secured Note” and, together with the $35,000,000 Secured Note, the “Great American Secured Notes”). |
3. | US $700,000 secured note, dated as of April 1, 2019, among the Borrowers and MBI (the “$700,000 Secured Note”). |
4. | US $10,750,000 secured note, dated as of May 31, 2019, among the Borrowers and the First-Out Lender (the “First-Out Secured Note” and, together with the $35,000,000 Secured Note, the $7,500,000 Secured Note and the $700,000 Secured Note, the “Secured Notes”). |
(1) | DTV America Corp., et al., Order and Consent Decree, 32 FCC Rcd 9129 (MB Oct. 31, 2017); |
(2) | Mako Communications LLC, Order and Consent Decree, 31 FCC Rcd 112 (MB Jan. 13, 2016); |
(3) | Una Vez Mas Las Vegas License, LLC Licensee of KHDF-CA, Las Vegas, NV Facility Id No. 66807, Forfeiture Order, 22 FCC Rcd 6355 (EB Mar. 28, 2007). |
1. | The Parties to the Order and Consent Decree include DTV America Corporation, King Forward, Inc., Tiger Eye Broadcasting Corporation, and Tiger Eye Licensing, LLC, as licensees, and HC2 Broadcasting Inc. and HC2 Broadcasting License Inc., as proposed assignees/transferees and successors-in-interest. The Parties agreed to implement a compliance plan for three years (i.e. until October 31, 2020). The FCC authorizations subject to the Consent Decree are listed in Appendix A to the Consent Decree. |
2 | Mako Communications LLC (“Mako”), predecessor-in-interest to HC2 LPTV Station Group, entered into a Consent Decree with the FCC’s Media Bureau to resolve alleged violations of the FCC’s public inspection file rules by station KNBX-CD (FID 33819). Mako and its successors-in-interest agreed to implement a compliance plan for two years (i.e., until January 13, 2018) under the terms of the Consent Decree. The requirements of this Order and Consent Decree have likely been satisfied or expired but are noted here out of an abundance of caution. |
3 | The FCC found Una Vez Mas Las Vegas License, LLC, predecessor-in-interest to HC2 Station Group, liable for a monetary forfeiture in the amount of $6,400 for willful and repeated violation of section 73.3526 of the FCC’s rules by KHDF-CA (FID 66807). The requirements of this Order and Consent Decree have likely been satisfied or expired but are noted here out of an abundance of caution. |
(f) | permit or cause the sale of any assets of such Borrower or its subsidiaries, except (i) as set forth on Schedule 7.2(e) hereto, (ii) as permitted by Section 7.2(g) or (iii) for sales of any such assets not constituting Collateral in a single transaction or series of related transactions with a fair market value not to exceed $2,500,000; |
1. | US $35,000,000 secured note, dated as of August 7, 2018, among the Borrowers and the Initial Lenders (as amended by the Agreement Re: Secured Notes, the “$35,000,000 Secured Note”). |
2. | US $7,500,000 secured note, dated as of January 22, 2019, among the Borrowers and the Initial Lenders (the “$7,500,000 Secured Note” and, together with the $35,000,000 Secured Note, the “Great American Secured Notes”). |
3. | US $700,000 secured note, dated as of April 1, 2019, among the Borrowers and MBI, as amended by the letter agreement, dated as of July 31, 2019 (the “MBI Secured Note”). |
4. | US $10,750,000 secured note, dated as of May 31, 2019, among the Borrowers and the First-Out Lender (the “$10,750,000 First-Out Secured Note” and, together with the Great American Secured Notes and the MBI Secured Note, the “Existing Secured Notes”). |
5. | US $5,375,000 secured note, dated as of August 2, 2019, among the Borrowers and the First-Out Lender (the “$5,375,000 First-Out Secured Note” and, together with the 10,750,000 First-Out Secured Note, the “First-Out Secured Notes” and, the First-Out Secured Notes together with the Great American Secured Notes and the MBI Secured Note, the “Secured Notes”). |
(1) | DTV America Corp., et al., Order and Consent Decree, 32 FCC Rcd 9129 (MB Oct. 31, 2017); |
(2) | Mako Communications LLC, Order and Consent Decree, 31 FCC Rcd 112 (MB Jan. 13, 2016); |
(3) | Una Vez Mas Las Vegas License, LLC Licensee of KHDF-CA, Las Vegas, NV Facility Id No. 66807, Forfeiture Order, 22 FCC Rcd 6355 (EB Mar. 28, 2007). |
1 | The Parties to the Order and Consent Decree include DTV America Corporation, King Forward, Inc., Tiger Eye Broadcasting Corporation, and Tiger Eye Licensing, LLC, as licensees, and HC2 Broadcasting Inc. and HC2 Broadcasting License Inc., as proposed assignees/transferees and successors-in-interest. The Parties agreed to implement a compliance plan for three years (i.e. until October 31, 2020). The FCC authorizations subject to the Consent Decree are listed in Appendix A to the Consent Decree. |
2 | Mako Communications LLC (“Mako”), predecessor-in-interest to HC2 LPTV Station Group, entered into a Consent Decree with the FCC’s Media Bureau to resolve alleged violations of the FCC’s public inspection file rules by station KNBX-CD (FID 33819). Mako and its successors-in-interest agreed to implement a compliance plan for two years (i.e., until January 13, 2018) under the terms of the Consent Decree. The requirements of this Order and Consent Decree have likely been satisfied or expired but are noted here out of an abundance of caution. |
3 | The FCC found Una Vez Mas Las Vegas License, LLC, predecessor-in-interest to HC2 Station Group, liable for a monetary forfeiture in the amount of $6,400 for willful and repeated violation of section 73.3526 of the FCC’s rules by KHDF-CA (FID 66807). The requirements of this Order and Consent Decree have likely been satisfied or expired but are noted here out of an abundance of caution. |
(f) | permit or cause the sale of any assets of such Borrower or its subsidiaries, except (i) as set forth on Schedule 7.2(e) hereto, (ii) as permitted by Section 7.2(g) or (iii) for sales of any such assets not constituting Collateral in a single transaction or series of related transactions with a fair market value not to exceed $2,500,000; |
1. | US $35,000,000 secured note, dated as of August 7, 2018, among the Borrowers and the Initial Lenders (as amended by the Agreement Re: Secured Notes, the “$35,000,000 Secured Note”). |
2. | US $7,500,000 secured note, dated as of January 22, 2019, among the Borrowers and the Initial Lenders (the “$7,500,000 Secured Note” and, together with the $35,000,000 Secured Note, the “Great American Secured Notes”). |
3. | US $700,000 secured note, dated as of April 1, 2019, among the Borrowers and MBI, as amended by the letter agreement, dated as of July 31, 2019 (the “MBI Secured Note”). |
4. | US $10,750,000 secured note, dated as of May 31, 2019, among the Borrowers and the First-Out Lender (the “$10,750,000 First-Out Secured Note”. |
5. | US $5,375,000 secured note, dated as of August 2, 2019, among the Borrowers and the First-Out Lender (the “$5,375,000 First-Out Secured Note” and, together with the 10,750,000 First-Out Secured Note, the “First-Out Secured Notes” and, the First-Out Secured Notes together with the Great American Secured Notes and the MBI Secured Note, the “Secured Notes”). |
(1) | DTV America Corp., et al., Order and Consent Decree, 32 FCC Rcd 9129 (MB Oct. 31, 2017); |
(2) | Mako Communications LLC, Order and Consent Decree, 31 FCC Rcd 112 (MB Jan. 13, 2016); |
(3) | Una Vez Mas Las Vegas License, LLC Licensee of KHDF-CA, Las Vegas, NV Facility Id No. 66807, Forfeiture Order, 22 FCC Rcd 6355 (EB Mar. 28, 2007). |
1 | The Parties to the Order and Consent Decree include DTV America Corporation, King Forward, Inc., Tiger Eye Broadcasting Corporation, and Tiger Eye Licensing, LLC, as licensees, and HC2 Broadcasting Inc. and HC2 Broadcasting License Inc., as proposed assignees/transferees and successors-in-interest. The Parties agreed to implement a compliance plan for three years (i.e. until October 31, 2020). The FCC authorizations subject to the Consent Decree are listed in Appendix A to the Consent Decree. |
2 | Mako Communications LLC (“Mako”), predecessor-in-interest to HC2 LPTV Station Group, entered into a Consent Decree with the FCC’s Media Bureau to resolve alleged violations of the FCC’s public inspection file rules by station KNBX-CD (FID 33819). Mako and its successors-in-interest agreed to implement a compliance plan for two years (i.e., until January 13, 2018) under the terms of the Consent Decree. The requirements of this Order and Consent Decree have likely been satisfied or expired but are noted here out of an abundance of caution. |
3 | The FCC found Una Vez Mas Las Vegas License, LLC, predecessor-in-interest to HC2 Station Group, liable for a monetary forfeiture in the amount of $6,400 for willful and repeated violation of section 73.3526 of the FCC’s rules by KHDF-CA (FID 66807). The requirements of this Order and Consent Decree have likely been satisfied or expired but are noted here out of an abundance of caution. |
(f) | permit or cause the sale of any assets of such Borrower or its subsidiaries, except (i) as set forth on Schedule 7.2(e) hereto, (ii) as permitted by Section 7.2(g) or (iii) for sales of any such assets not constituting Collateral in a single transaction or series of related transactions with a fair market value not to exceed $2,500,000; |
1. | US $35,000,000 secured note, dated as of August 7, 2018, among the Borrowers and the Initial Lenders (as amended by the Agreement Re: Secured Notes, the “$35,000,000 Secured Note”). |
2. | US $7,500,000 secured note, dated as of January 22, 2019, among the Borrowers and the Initial Lenders (the “$7,500,000 Secured Note” and, together with the $35,000,000 Secured Note, the “Great American Secured Notes”). |
3. | US $700,000 secured note, dated as of April 1, 2019, among the Borrowers and MBI, as amended by the letter agreement, dated as of July 31, 2019 and the letter agreement dated as of August 30, 2019 (the “MBI Secured Note”). |
4. | US $10,750,000 secured note, dated as of May 31, 2019, among the Borrowers and the First-Out Lender (the “May First-Out Secured Note”). |
5. | US $5,375,000 secured note, dated as of August 2, 2019, among the Borrowers and the First-Out Lender (the “August First-Out Secured Note” and, together with the May First-Out Secured Note, the “Existing First-Out Secured Notes” and, together with the Great American Secured Notes and the MBI Secured Note, the “Existing Secured Notes”). |
6. | US $5,375,000 secured note, dated as of September 10, 2019, among the Borrowers and the First-Out Lender (the “September First-Out Secured Note” and, together with the Existing First-Out Secured Notes, the “First-Out Secured Notes” and, the First-Out Secured Notes together with the Great American Secured Notes and the MBI Secured Note, the “Secured Notes”). |
(1) | DTV America Corp., et al., Order and Consent Decree, 32 FCC Rcd 9129 (MB Oct. 31, 2017); |
(2) | Mako Communications LLC, Order and Consent Decree, 31 FCC Rcd 112 (MB Jan. 13, 2016); |
(3) | Una Vez Mas Las Vegas License, LLC Licensee of KHDF-CA, Las Vegas, NV Facility Id No. 66807, Forfeiture Order, 22 FCC Rcd 6355 (EB Mar. 28, 2007). |
1 | The Parties to the Order and Consent Decree include DTV America Corporation, King Forward, Inc., Tiger Eye Broadcasting Corporation, and Tiger Eye Licensing, LLC, as licensees, and HC2 Broadcasting Inc. and HC2 Broadcasting License Inc., as proposed assignees/transferees and successors-in-interest. The Parties agreed to implement a compliance plan for three years (i.e. until October 31, 2020). The FCC authorizations subject to the Consent Decree are listed in Appendix A to the Consent Decree. |
2 | Mako Communications LLC (“Mako”), predecessor-in-interest to HC2 LPTV Station Group, entered into a Consent Decree with the FCC’s Media Bureau to resolve alleged violations of the FCC’s public inspection file rules by station KNBX-CD (FID 33819). Mako and its successors-in-interest agreed to implement a compliance plan for two years (i.e., until January 13, 2018) under the terms of the Consent Decree. The requirements of this Order and Consent Decree have likely been satisfied or expired but are noted here out of an abundance of caution. |
3 | The FCC found Una Vez Mas Las Vegas License, LLC, predecessor-in-interest to HC2 Station Group, liable for a monetary forfeiture in the amount of $6,400 for willful and repeated violation of section 73.3526 of the FCC’s rules by KHDF-CA (FID 66807). The requirements of this Order and Consent Decree have likely been satisfied or expired but are noted here out of an abundance of caution. |
(f) | permit or cause the sale of any assets of such Borrower or its subsidiaries, except (i) as set forth on Schedule 7.2(e) hereto, (ii) as permitted by Section 7.2(g) or (iii) for sales of any such assets not constituting Collateral in a |
1. | US $35,000,000 secured note, dated as of August 7, 2018, among the Borrowers and the Initial Lenders (as amended by the Agreement Re: Secured Notes, the “$35,000,000 Secured Note”). |
2. | US $7,500,000 secured note, dated as of January 22, 2019, among the Borrowers and the Initial Lenders (the “$7,500,000 Secured Note” and, together with the $35,000,000 Secured Note, the “Great American Secured Notes”). |
3. | US $700,000 secured note, dated as of April 1, 2019, among the Borrowers and MBI, as amended by the letter agreement, dated as of July 31, 2019 and the letter agreement, dated as of August 30, 2019 (the “MBI Secured Note”). |
4. | US $10,750,000 secured note, dated as of May 31, 2019, among the Borrowers and the First-Out Lender (the “May First-Out Secured Note”). |
5. | US $5,375,000 secured note, dated as of August 2, 2019, among the Borrowers and the First-Out Lender (the “August First-Out Secured Note). |
6. | US $5,375,000 secured note, dated as of September 10, 2019, among the Borrowers and the First-Out Lender (the “September First-Out Secured Note” and, together with the May First-Out Secured Note and the August First-Out Secured Note, the “First-Out Secured Notes” and, the First-Out Secured Notes together with the Great American Secured Notes and the MBI Secured Note, the “Secured Notes”). |
(1) | DTV America Corp., et al., Order and Consent Decree, 32 FCC Rcd 9129 (MB Oct. 31, 2017); |
(2) | Mako Communications LLC, Order and Consent Decree, 31 FCC Rcd 112 (MB Jan. 13, 2016); |
(3) | Una Vez Mas Las Vegas License, LLC Licensee of KHDF-CA, Las Vegas, NV Facility Id No. 66807, Forfeiture Order, 22 FCC Rcd 6355 (EB Mar. 28, 2007). |
1 | The Parties to the Order and Consent Decree include DTV America Corporation, King Forward, Inc., Tiger Eye Broadcasting Corporation, and Tiger Eye Licensing, LLC, as licensees, and HC2 Broadcasting Inc. and HC2 Broadcasting License Inc., as proposed assignees/transferees and successors-in-interest. The Parties agreed to implement a compliance plan for three years (i.e. until October 31, 2020). The FCC authorizations subject to the Consent Decree are listed in Appendix A to the Consent Decree. |
2 | Mako Communications LLC (“Mako”), predecessor-in-interest to HC2 LPTV Station Group, entered into a Consent Decree with the FCC’s Media Bureau to resolve alleged violations of the FCC’s public inspection file rules by station KNBX-CD (FID 33819). Mako and its successors-in-interest agreed to implement a compliance plan for two years (i.e., until January 13, 2018) under the terms of the Consent Decree. The requirements of this Order and Consent Decree have likely been satisfied or expired but are noted here out of an abundance of caution. |
3 | The FCC found Una Vez Mas Las Vegas License, LLC, predecessor-in-interest to HC2 Station Group, liable for a monetary forfeiture in the amount of $6,400 for willful and repeated violation of section 73.3526 of the FCC’s rules by KHDF-CA (FID 66807). The requirements of this Order and Consent Decree have likely been satisfied or expired but are noted here out of an abundance of caution. |
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. |
Dated: November 5, 2019 | 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. |
Dated: November 5, 2019 | By: | /s/ Michael J. Sena | |
Name: | Michael J. Sena | ||
Title: | Chief Financial Officer | ||
(Principal Financial and Accounting Officer) |
/s/ Philip A. Falcone | /s/ Michael J. Sena | ||
Philip A. Falcone | Michael J. Sena | ||
Chairman, President and Chief Executive Officer (Principal Executive Officer) | Chief Financial Officer (Principal Financial and Accounting Officer) |
Summary of Significant Accounting Policies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash to amounts reported within the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows (in millions):
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Schedule of Restrictions on Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash to amounts reported within the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows (in millions):
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Fair Value of Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets Measured on Recurring Basis | Assets and liabilities measured at fair value on a recurring basis are summarized below (in millions):
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Schedule of Changes in Balances of Level 3 Financial Assets at Fair Value | The following tables summarize changes to the Company’s financial instruments carried at fair value and classified within Level 3 of the fair value hierarchy for the three and nine months ended September 30, 2019 and 2018 (in millions):
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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. The table excludes carrying amounts for cash and cash equivalents, accounts receivable, accounts payable and other current liabilities, and other assets and liabilities approximate fair value due to relatively short periods to maturity (in millions):
(1) Excludes life contingent annuities in the payout phase. (2) Excludes certain lease obligations accounted for under ASC 842, Leases. |
Goodwill and Intangibles, net (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the Changes in the Carrying Amount of Goodwill by Reporting Unit | The carrying amount of goodwill by segment were as follows (in millions):
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Schedule of Indefinite-Lived Intangible Assets | Balances of indefinite-lived intangible assets as of September 30, 2019 and December 31, 2018 were as follows (in millions):
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Schedule of Intangible Assets Subject to Amortization | The gross carrying amount and accumulated amortization of amortizable intangible assets by major intangible asset class is as follows (in millions):
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Excluding the impact of any future acquisitions, dispositions or changes in foreign currency, the Company estimates the annual amortization expense of amortizable intangible assets for the next five fiscal years will be as follows (in millions):
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Property, Plant and Equipment, net |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, net | 9. Property, Plant and Equipment, net Property, plant and equipment consists of the following (in millions):
Depreciation expense was $13.5 million and $11.9 million for the three months ended September 30, 2019 and 2018, respectively. These amounts included $2.3 million and $1.8 million of depreciation expense within cost of revenue for the three months ended September 30, 2019 and 2018, respectively. Depreciation expense was $38.8 million and $34.2 million for the nine months ended September 30, 2019 and 2018, respectively. These amounts included $6.7 million and $5.1 million of depreciation expense within cost of revenue for the nine months ended September 30, 2019 and 2018, respectively. Total net book value of equipment, cable-ships, and submersibles under capital leases consisted of $37.0 million and $40.0 million as of September 30, 2019 and December 31, 2018, respectively. |
Investments |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | 5. Investments Fixed Maturity Securities The following tables provide information relating to investments in fixed maturity securities (in millions):
The amortized cost and fair value of fixed maturity securities available-for-sale as of September 30, 2019 are shown by contractual maturity in the table below (in millions). 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:
The tables below show the major industry types of the Company’s corporate and other fixed maturity securities (in millions):
A portion of certain other-than-temporary impairment ("OTTI") losses on fixed maturity securities is recognized in Accumulated Other Comprehensive Income ("AOCI"). For these securities the net amount represents the difference between the amortized cost of the security and the net present value of its projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. Any remaining difference between the fair value and amortized cost is recognized in AOCI. The Company recorded the following (in millions):
The following table presents the total unrealized losses for the 147 and 749 fixed maturity securities held by the Company as of September 30, 2019 and December 31, 2018, respectively, where the estimated fair value had declined and remained below amortized cost by the indicated amount (in millions):
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 mortgage-backed securities ("MBS") for OTTI 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, 2019. 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 147 and 749 fixed maturity securities held by the Company that have estimated fair values below amortized cost as of each of September 30, 2019 and December 31, 2018, 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 millions):
As of September 30, 2019, investment grade fixed maturity securities (as determined by nationally recognized rating agencies) represented approximately 77.1% of the gross unrealized loss and 87.6% of the fair value. As of December 31, 2018, investment grade fixed maturity securities represented approximately 87.9% of the gross unrealized loss and 93.1% 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. Equity Securities The following tables provide information relating to investments in equity securities measured at fair value (in millions):
Other Invested Assets Carrying values of other invested assets were as follows (in millions):
Net Investment Income The major sources of net investment income were as follows (in millions):
Net Realized and Unrealized Gains (Losses) on Investments The major sources of net realized and unrealized gains and losses on investments were as follows (in millions):
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Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax (expense) benefit | $ (1.0) | $ 9.2 | $ (6.2) | $ (1.9) |
Employee Retirement Plans - Narrative (Details) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Mar. 20, 2018
USD ($)
element
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Sep. 30, 2019
USD ($)
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Sep. 30, 2019
USD ($)
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Dec. 31, 2022
USD ($)
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Dec. 31, 2021
USD ($)
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Dec. 31, 2020
USD ($)
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Dec. 31, 2019
USD ($)
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Defined Contribution Plan Disclosure [Line Items] | |||||||
Contribution made | $ 1.6 | $ 5.3 | |||||
Contribution made, fixed contributions | 1.6 | 5.0 | |||||
Contribution made, profit related contributions | 0.3 | ||||||
Expected contributions | 1.7 | 1.7 | |||||
Expected contributions, fixed contributions | $ 1.7 | $ 1.7 | |||||
GMSL | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
Deferred contribution | $ 12.3 | ||||||
Number of elements | element | 3 | ||||||
Percent of operating profit (equal to) | 10.00% | ||||||
Years in arrears | 2 years | ||||||
Variable contribution, percent of dividends (equal to) | 50.00% | ||||||
GMSL | Scenario, Forecast | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
Fixed contributions | $ 3.0 | $ 6.8 | $ 6.6 | $ 6.4 |
Investments - Schedule of Other Invested Assets (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Summary of Investment Holdings [Line Items] | ||
Measurement Alternative | $ 0.0 | $ 1.6 |
Equity Method | 84.4 | 70.9 |
Common Equity | ||
Summary of Investment Holdings [Line Items] | ||
Measurement Alternative | 0.0 | 0.0 |
Equity Method | 2.3 | 2.1 |
Preferred Equity | ||
Summary of Investment Holdings [Line Items] | ||
Measurement Alternative | 0.0 | 1.6 |
Equity Method | 16.9 | 9.6 |
Other | ||
Summary of Investment Holdings [Line Items] | ||
Measurement Alternative | 0.0 | 0.0 |
Equity Method | $ 65.2 | $ 59.2 |
Acquisitions, Dispositions, and Deconsolidations - Other Segment (Details) - 704Games |
Aug. 14, 2018 |
---|---|
Business Acquisition [Line Items] | |
Percentage of proxy and voting rights from minority holders | 26.20% |
Motorsport Network | |
Business Acquisition [Line Items] | |
Ownership percentage | 53.50% |
Revenue - Schedule of Accounts Receivable (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Sep. 30, 2018 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Total accounts receivables with customers | $ 273.6 | $ 375.0 |
Construction | ||
Segment Reporting Information [Line Items] | ||
Total accounts receivables with customers | 163.0 | 196.6 |
Marine Services | ||
Segment Reporting Information [Line Items] | ||
Total accounts receivables with customers | 34.3 | 48.3 |
Energy | ||
Segment Reporting Information [Line Items] | ||
Total accounts receivables with customers | 7.4 | 3.3 |
Telecommunications | ||
Segment Reporting Information [Line Items] | ||
Total accounts receivables with customers | 61.1 | 117.6 |
Broadcasting | ||
Segment Reporting Information [Line Items] | ||
Total accounts receivables with customers | $ 7.8 | $ 9.2 |
Goodwill and Intangibles, net - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Acquired Indefinite-lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 3.1 | $ 1.1 | $ 9.4 | $ 3.2 |
FCC licenses | ||||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||||
Increase in licenses | 10.8 | |||
Increase in licenses through acquisitions | 12.9 | |||
Impairments of intangible assets | $ 2.1 |
Revenue - Broadcasting Segment Disaggregation of Revenue (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Segment Reporting Information [Line Items] | ||||
Total revenue from contracts with customers | $ 397.5 | $ 444.8 | $ 1,242.3 | $ 1,315.3 |
Net revenue | 475.7 | 501.4 | 1,485.7 | 1,451.8 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 397.5 | 444.8 | 1,242.3 | 1,315.3 |
Operating Segments | Broadcasting | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue from contracts with customers | 10.0 | 12.0 | 29.8 | 33.7 |
Other revenue | 0.0 | 0.0 | 0.0 | 0.0 |
Net revenue | 10.0 | 12.0 | 29.8 | 33.7 |
Operating Segments | Broadcasting | Network advertising | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue from contracts with customers | 5.1 | 7.4 | 15.9 | 21.2 |
Operating Segments | Broadcasting | Broadcast station | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue from contracts with customers | 3.1 | 2.5 | 8.7 | 8.0 |
Operating Segments | Broadcasting | Network distribution | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue from contracts with customers | 1.1 | 1.7 | 3.8 | 3.5 |
Operating Segments | Broadcasting | Other | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue from contracts with customers | $ 0.7 | $ 0.4 | $ 1.4 | $ 1.0 |
Revenue - Marine Segment Contract with Customer, Asset and Liability (Details) - Marine Services - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Contract assets | $ 12.1 | $ 5.2 |
Contract liabilities | $ (14.9) | $ (1.0) |
Property, Plant and Equipment, net - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|
Property, Plant and Equipment [Line Items] | |||||
Depreciation expense | $ 13.5 | $ 11.9 | $ 38.8 | $ 34.2 | |
Depreciation expense with cost of revenue | 2.3 | $ 1.8 | 6.7 | $ 5.1 | |
Property, plant and equipment, net | 405.8 | 405.8 | $ 376.3 | ||
Assets Held Under Finance Leases | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, net | $ 37.0 | $ 37.0 | |||
Net book value, prior year | $ 40.0 |
Related Parties - Summary of Balance Outstanding of Related Parties (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
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Related Party Transactions [Abstract] | |||||
Net revenue | $ 5.6 | $ 5.7 | $ 2.6 | $ 13.3 | |
Operating expenses | 0.8 | 0.3 | 0.1 | 1.4 | |
Interest expense | 0.8 | 0.3 | 0.3 | 1.0 | |
Dividends | 3.0 | $ 21.9 | 1.9 | $ 24.3 | |
Accounts receivable | 1.8 | 1.8 | $ 5.0 | ||
Long-term debt | 23.6 | 23.6 | 28.5 | ||
Accounts payable | $ 0.1 | $ 0.1 | $ 2.2 |
Equity - Preferred Stock (Details) - $ / shares |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Class of Stock [Line Items] | ||
Par value (in dollars per share) | $ 0.001 | $ 0.001 |
Shares authorized (in shares) | 20,000,000 | 20,000,000 |
Series A shares issued and outstanding | ||
Class of Stock [Line Items] | ||
Shares issued (in shares) | 6,375 | 6,375 |
Shares outstanding (in shares) | 6,375 | 6,375 |
Series A-2 shares issued and outstanding | ||
Class of Stock [Line Items] | ||
Shares issued (in shares) | 4,000 | 14,000 |
Shares outstanding (in shares) | 4,000 | 14,000 |
Accounts Payable and Other Current Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Payable and Other Current Liabilities | Accounts payable and other current liabilities consist of the following (in millions):
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Share-based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Valuation Assumptions | 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:
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Schedule of Company's Restricted Stock Activity | A summary of HC2’s restricted stock activity is as follows:
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Schedule of Company's Stock Option Activity | A summary of HC2’s stock option activity is as follows:
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Basic and Diluted Income Per Common Share (Tables) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule 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 millions, except per share amounts):
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Basic and Diluted Income Per Common Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted Income Per Common Share | 21. Basic and Diluted Income 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, shares of any 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 as this measurement was determined to be more dilutive between the two available methods in each period. The Company had no dilutive common share equivalents during the three and nine months ended September 30, 2019, due to the results of operations being a loss from continuing operations, net of tax. The following potential weighted common shares were excluded from diluted EPS for the three and nine months ended September 30, 2018 as the shares were antidilutive: 2,019,972 for outstanding warrants to purchase the Company's stock and 4,787,602 for convertible preferred stock. The following table presents a reconciliation of net income (loss) used in basic and diluted EPS calculations (in millions, except per share amounts):
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Share-based Compensation |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation | 17. Share-based Compensation The Company granted zero and 662,769 options during the three and nine months ended September 30, 2019 and 2018, respectively. For the nine months ended September 30, 2018, the weighted average fair value at date of grant for options granted was $2.91 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 was $2.0 million and $3.3 million for the three months ended September 30, 2019 and 2018, respectively. Total share-based compensation expense recognized by the Company and its subsidiaries under all equity compensation arrangements was $5.9 million and $8.1 million for the nine months ended September 30, 2019 and 2018, respectively. All grants are time based and vest either immediately or over a period established at grant. The Company recognizes compensation expense for equity awards, reduced by actual forfeitures, using the straight-line basis. Restricted Stock A summary of HC2’s restricted stock activity is as follows:
At September 30, 2019, the total unrecognized stock-based compensation expense related to unvested restricted stock was $6.7 million. The unrecognized compensation cost is expected to be recognized over the remaining weighted average period of 1.5 years. Stock Options A summary of HC2’s stock option activity is as follows:
At September 30, 2019, the intrinsic value and weighted average remaining life of the Company's outstanding options were zero and approximately 5.5 years, and intrinsic value and weighted average remaining life of the Company's exercisable options were zero and approximately 5.4 years. At September 30, 2019, total unrecognized stock-based compensation expense related to unvested stock options was $0.8 million. The unrecognized compensation cost is expected to be recognized over the remaining weighted average period of 1.4 years. There are 454,493 unvested stock options expected to vest, with a weighted average remaining life of 7.3 years, a weighted average exercise price of $5.46, and an intrinsic value of zero. |
Debt Obligations |
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Debt Obligations | 13. Debt Obligations Debt obligations consist of the following (in millions):
(1) In October 2019, our Broadcasting segment completed the issuance of $78.7 million of new notes. Net proceeds from the financing will be used to retire HC2 Broadcasting’s existing 8.5% Notes, as well as fund pending acquisitions, working capital and general corporate purposes. Marine Services In June 2019, GMSL refinanced the Shawbrook loan, increasing the principal balance to £17.0 million, or approximately $21.6 million, and extending the maturity to June 2020. Energy In June 2019, ANG entered into a term loan with M&T bank for $28.0 million. The loan bears variable interest annually at LIBOR plus 3.0% and matures in 2023. The term loan was used to finance the acquisition of ampCNG stations. Life Sciences In June 2019, R2 converted a portion of the $1.7 million secured convertible notes into shares of R2 preferred equity. The remaining portion was repaid. Broadcasting During the nine months ended September 30, 2019, HC2 Broadcasting issued an additional $29.7 million of 8.5% notes (the "8.5% Notes"), and the maturity dates of the 8.5% Notes were extended to October 31, 2019. A portion of the net proceeds from the additional 8.5% Notes were used to pay down existing debt and fund acquisitions and capital expenditures. Non-Operating Corporate In April 2019, HC2 entered into a $15.0 million secured revolving credit agreement (the “Revolving Credit Agreement”) with MSD PCOF Partners IX, LLC. The Revolving Credit Agreement matures on June 1, 2021. Loans under the Revolving Credit Agreement bear interest at a per annum rate equal to, at HC2's option, one, two or three month LIBOR plus a margin of 6.75%. In April 2019 and May 2019, HC2 drew $5.0 million and $10.0 million of the Revolving Credit Agreement, respectively. The Company used the proceeds for working capital and general corporate purposes. |
Operating Segment and Related Information - Narrative (Details) |
9 Months Ended |
---|---|
Sep. 30, 2019
segment
| |
Segment Reporting [Abstract] | |
Number of reportable geographic segments | 2 |
Number of reportable operating segments | 8 |
Equity - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Jan. 11, 2019 |
Aug. 02, 2016 |
Sep. 30, 2019 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|
Class of Warrant or Right [Line Items] | ||||||
Issuance of common stock | $ 0.0 | $ 0.0 | $ 0.0 | |||
CGI | Series A- 2 Preferred Stock | ||||||
Class of Warrant or Right [Line Items] | ||||||
Issuance and sale of common stock (in shares) | 10,000 | |||||
Number of shares of preferred stock converted (in shares) | 1,420,455 | |||||
Issuance of common stock | $ 8.3 | |||||
Deemed divided | $ 1.7 | |||||
Corrib Master Fund, Ltd. | Series A shares issued and outstanding | ||||||
Class of Warrant or Right [Line Items] | ||||||
Issuance and sale of common stock (in shares) | 1,000 | |||||
Number of shares of preferred stock converted (in shares) | 21,740 | |||||
Luxor Capital Partners, LP | Series A shares issued and outstanding | ||||||
Class of Warrant or Right [Line Items] | ||||||
Number of shares of preferred stock converted (in shares) | 193,229 | |||||
Luxor Capital Partners, LP | Series A-1 shares issued and outstanding | ||||||
Class of Warrant or Right [Line Items] | ||||||
Issuance and sale of common stock (in shares) | 9,000 | |||||
Corrib Master Fund, Ltd. and Luxor Capital Partners, LP | ||||||
Class of Warrant or Right [Line Items] | ||||||
Percent of accrued value | 1.875% | |||||
Recurring | ||||||
Class of Warrant or Right [Line Items] | ||||||
Additional share consideration valued at | $ 0.6 | $ 0.6 | $ 3.5 |
Goodwill and Intangibles, net - Schedule of Amortization Expense (Details) $ in Millions |
Sep. 30, 2019
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2020 | $ 8.3 |
2021 | 8.1 |
2022 | 7.9 |
2023 | 7.8 |
2024 | $ 7.3 |
Acquisitions, Dispositions, and Deconsolidations - Construction Segment (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
Nov. 30, 2018 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 177.1 | $ 171.7 | |
DBMG | |||
Business Acquisition [Line Items] | |||
Consideration transferred | $ 139.8 | ||
Goodwill | 50.7 | ||
DBMG | Assembled and Trained Workforce | |||
Business Acquisition [Line Items] | |||
Goodwill | $ 10.9 | ||
DBMG | GrayWolf Industrial | |||
Business Acquisition [Line Items] | |||
Acquisition costs | $ 4.2 |
Revenue - Schedule of Marine Segment Revenue (Details) - Marine Services $ in Millions |
Sep. 30, 2019
USD ($)
|
---|---|
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01 | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | $ 41.7 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 297.0 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 60.0 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 398.7 |
Telecommunication - Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01 | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 18.5 |
Telecommunication - Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 217.1 |
Telecommunication - Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 60.0 |
Telecommunication - Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 295.6 |
Telecommunication - Installation | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01 | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 4.8 |
Telecommunication - Installation | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 12.8 |
Telecommunication - Installation | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 0.0 |
Telecommunication - Installation | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 17.6 |
Power - Operations, Maintenance & Construction Support | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01 | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 3.1 |
Power - Operations, Maintenance & Construction Support | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 18.0 |
Power - Operations, Maintenance & Construction Support | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 0.0 |
Power - Operations, Maintenance & Construction Support | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 21.1 |
Power - Cable Installation & Repair | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01 | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 15.3 |
Power - Cable Installation & Repair | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 49.1 |
Power - Cable Installation & Repair | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | 0.0 |
Power - Cable Installation & Repair | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | |
Segment Reporting Information [Line Items] | |
Remaining performance obligations | $ 64.4 |
Goodwill and Intangibles, net - Changes in the Carrying Amount of Goodwill (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning balance | $ 171.7 |
Measurement period adjustment | 7.1 |
Impairments | (1.3) |
Effect of translation | (0.4) |
Ending balance | 177.1 |
Construction | |
Goodwill [Roll Forward] | |
Beginning balance | 82.2 |
Measurement period adjustment | 7.1 |
Impairments | 0.0 |
Effect of translation | (0.4) |
Ending balance | 88.9 |
Marine Services | |
Goodwill [Roll Forward] | |
Beginning balance | 14.3 |
Measurement period adjustment | 0.0 |
Impairments | 0.0 |
Effect of translation | 0.0 |
Ending balance | 14.3 |
Energy | |
Goodwill [Roll Forward] | |
Beginning balance | 2.1 |
Measurement period adjustment | 0.0 |
Impairments | 0.0 |
Effect of translation | 0.0 |
Ending balance | 2.1 |
Telecom | |
Goodwill [Roll Forward] | |
Beginning balance | 4.4 |
Measurement period adjustment | 0.0 |
Impairments | (1.3) |
Effect of translation | 0.0 |
Ending balance | 3.1 |
Insurance | |
Goodwill [Roll Forward] | |
Beginning balance | 47.3 |
Measurement period adjustment | 0.0 |
Impairments | 0.0 |
Effect of translation | 0.0 |
Ending balance | 47.3 |
Broadcasting | |
Goodwill [Roll Forward] | |
Beginning balance | 21.4 |
Measurement period adjustment | 0.0 |
Impairments | 0.0 |
Effect of translation | 0.0 |
Ending balance | $ 21.4 |
Operating Segment and Related Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of Concentration of Risk, by Risk Factor | The Company's revenue concentrations of 10% and greater are as follows:
* Less than 10% revenue concentration |
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Schedule of Company's Geographic and Operating Segments | Summary information with respect to the Company’s geographic and operating segments is as follows (in millions):
(*)The Insurance segment revenues are inclusive of realized and unrealized gains and net investment income for the three and nine months ended September 30, 2019 and 2018 which are related to entities under common control which are eliminated or are reclassified in consolidation.
(*) The Insurance segment revenues are inclusive of realized and unrealized gains and net investment income for the three and nine months ended September 30, 2019 and 2018 which are related to transactions between entities under common control which are eliminated or are reclassified in consolidation. A reconciliation of the Company's consolidated segment operating income to consolidated earnings before income taxes is as follows (in millions):
(*) Balance includes amortization of negative VOBA, which increases net income.
(*) The above capital expenditures exclude assets acquired under terms of capital lease and vendor financing obligations. |
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Schedule of Segment Reporting for Long-term investments, Property and Equipment - Net and Assets |
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Life, Accident and Health Reserves (Tables) |
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Insurance [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Life, Accident and Health Reserves | Life, accident and health reserves consist of the following (in millions):
The following table sets forth changes in the liability for claims for the portion of our long-term care insurance reserves (in millions):
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Employee Retirement Plans (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Net Periodic Benefit Cost | The following table presents the components of Net periodic benefit cost for the periods presented (in millions):
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Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | 18. Equity Series A Preferred Stock and Series A-2 Preferred Stock The Company’s preferred shares authorized, issued and outstanding consisted of the following:
Preferred Share Activity CGI Purchase On January 11, 2019, CGI purchased 10,000 shares of Series A-2 Preferred Stock, which are convertible into a total of 1,420,455 shares of the Company's common stock, for a total consideration of $8.3 million. The shares and dividends accrued related to the Series A-2 Preferred Stock owned by CGI are eliminated in consolidation. The shares were purchased at a discount of $1.7 million, which was recorded within the Preferred dividends, deemed dividends, and repurchase gains line item of the Condensed Consolidated Statements of Operations as a deemed dividend. Luxor and Corrib Conversions On August 2, 2016, the Company entered into separate agreements with each of Corrib Master Fund, Ltd. ("Corrib"), then a holder of 1,000 shares of Series A Preferred Stock, and certain investment entities managed by Luxor Capital Group, LP ( "Luxor"), that together then held 9,000 shares of Series A-1 Preferred Stock. In conjunction with the conversions, the Company 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"):
For the nine months ended September 30, 2019, 193,229 and 21,740 shares of the Company's common stock have been issued to Luxor and Corrib, respectively, in conjunction with the Conversion agreement. The fair value of the Additional Share Consideration was valued by the Company at $0.6 million on the date of issuance and was recorded within Preferred stock and deemed dividends from conversion line item of the Consolidated Statements of Operations as a deemed dividend. Preferred Share Dividends During the nine months ended September 30, 2019 and 2018, HC2's Board of Directors declared cash dividends with respect to HC2’s issued and outstanding Preferred Stock, excluding Preferred Stock owned by CGI which is eliminated in consolidation, as presented in the following table (in millions): 2019
2018
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Income Taxes |
9 Months Ended |
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Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 14. Income Taxes Income Tax Expense The Company used the Annual Effective Tax Rate ("ETR") approach of ASC 740-270, Interim Reporting, to calculate its 2019 interim tax provision. Income tax was an expense of $1.0 million and a benefit of $9.2 million for the three months ended September 30, 2019 and 2018, respectively. The income tax expense recorded for the three months ended September 30, 2019 relates to the projected expense as calculated under ASC 740 for taxpaying entities offset by a benefit from the release of the valuation allowance of the Insurance segment due to an increase in current year income. The income tax benefit recorded for the three months ended September 30, 2018 relates to the Insurance segment’s acquisition of Humana’s long term care business, KIC. The combined insurance entity projected a net operating loss for the year due to deductions for actuarial reserve strengthening. Income tax expense previously recorded was reversed in the period resulting in a benefit. Income tax was an expense of $6.2 million and $1.9 million for the nine months ended September 30, 2019 and 2018, respectively. The income tax expense recorded for the nine months ended September 30, 2019 relates to the projected expense as calculated under ASC 740 for taxpaying entities offset by a benefit from the release of the valuation allowance of the Insurance segment due to an increase in current year income. Additionally, the tax benefits associated with losses generated by the HC2 Holdings, Inc. U.S. consolidated income tax return and certain other businesses have been reduced by a full valuation allowance as we do not believe it is more-likely-than-not that the losses will be utilized prior to expiration. The income tax expense recorded for September 30, 2018 relates to the projected expense as calculated under ASC 740 for taxpaying entities. Additionally, previously recorded tax expense had been reversed as a result of the Insurance segment’s acquisition of Humana’s long term care business, KIC. The combined insurance entity projected a net operating loss for the year due to deductions for the actuarial reserve strengthening. No additional income tax benefit for the combined insurance entity was recorded as it was in a cumulative loss position and a valuation allowance continued to be maintained against its deferred tax assets. The income tax expense generated from the sale of BeneVir was offset by tax attributes for which a valuation allocation had been recorded. No benefit was recognized on the losses of the HC2 U.S. tax consolidated group and the losses of their subsidiaries as valuation allowances are recorded on the deferred tax assets of these companies. As a result of the enactment of Public Law 115-97, known informally as the Tax Cuts and Jobs Act (“TCJA”) on December 22, 2017, we are subject to several provisions of the TCJA including computations under the interest limitation rules. We have included the impact of each of these provisions in our overall tax expense for the nine months ended September 30, 2019. 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. 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 - 2018 remain open for examination. |
Subsequent Events |
9 Months Ended |
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Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 22. Subsequent Events On October 24, 2019, our Broadcasting segment completed the issuance of $78.7 million of new notes. The net proceeds from the financing will be used to retire HC2 Broadcasting’s existing 8.5% Notes, as well as fund pending acquisitions, working capital and general corporate purposes. The privately placed notes are comprised of a $36.2 million Tranche A piece funded by an affiliate of MSD Partners, L.P., along with a $42.5 million Tranche B piece funded by an institutional lender. The notes will have a blended PIK coupon rate of 9.6% and mature in October 2020. On October 30, 2019, our Marine Services segment announced the sale of its stake in Huawei Marine Networks Co., Limited (“HMN”), its 49% joint venture with Huawei Technologies Co., Ltd., to Hengtong Optic-Electric Co Ltd. The sale of GMSL's interest values HMN at $285 million, and GMSL's 49% stake at approximately $140.0 million. |
Property, Plant and Equipment, net (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property, Plant and Equipment | Property, plant and equipment consists of the following (in millions):
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Summary of Significant Accounting Policies (Policies) |
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Sep. 30, 2019 | |||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||
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, 2019, the results of DBMG, GMSL, ANG, ICS, CIG, Genovel, R2, and HC2 Broadcasting have been consolidated into the Company’s results based on guidance from the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC" 810, Consolidation). The remaining interests not owned by the Company are presented as a noncontrolling interest component of total equity. |
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Basis of Presentation | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements of the Company included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of such information. All such adjustments are of a normal recurring nature. Certain information and note disclosures, including a description of significant accounting policies normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), have been condensed or omitted pursuant to such rules and regulations. Certain prior amounts have been reclassified or combined to conform to the current year presentation. These reclassifications and combinations had no effect on previously reported net loss attributable to controlling interest or accumulated deficit. These interim financial statements should be read in conjunction with the Company’s annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on March 12, 2019. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the results for any subsequent periods or the entire fiscal year ending December 31, 2019. |
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Use of Estimates and Assumptions | Use of Estimates and Assumptions The preparation of the Company’s Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions used. |
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Accounting Pronouncements Adopted in the Current Year | Accounting Pronouncements Adopted in the Current Year The Company’s 2018 Form 10-K includes discussion of significant recent accounting pronouncements that either have impacted or may impact our financial statements in the future. The following discussion provides information about recently adopted and recently issued or changed accounting guidance (applicable to the Company) that have occurred since the Company filed its 2018 Form 10-K. The Company has implemented all new accounting pronouncements that are in effect and that may impact its Condensed Consolidated Financial Statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial condition, results of operations or liquidity. Effective January 1, 2019 the Company adopted the accounting pronouncements described below. Accounting for Leases ASU 2016-02, Leases, was issued by FASB in February 2016. This standard requires the Company, as the lessee, to recognize most leases on the balance sheet thereby resulting in the recognition of right of use assets and lease obligations for those leases currently classified as operating leases. The standard became effective for the Company on January 1, 2019 and the Company elected the optional transition method as well as the package of practical expedients upon adoption. Upon adoption, the Company recognized right of use ("ROU") assets and lease liabilities in the amount of $67.1 million and $74.1 million, respectively, within Other assets and Other liabilities lines of the Condensed Consolidated Financial Statements, respectively, and utilizing the modified retrospective approach, we evaluated ROU assets for impairment and determined that approximately $5.1 million of newly recognized ROU assets that existed immediately prior to the effective date were impaired. The impairment of ROU assets as of January 1, 2019, was recorded as a reduction to retained earnings and noncontrolling interests. Accounting Pronouncements to be Adopted Subsequent to December 31, 2019 Credit Loss Standard ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, was issued by FASB in June 2016. This standard is effective January 1, 2020 (with early adoption permitted), and will impact, at least to some extent, the Company's accounting and disclosure requirements for its recoverable from reinsurers, accounts receivable, and mortgage loans. Available for sale fixed maturity securities are not in scope of the new credit loss model but will undergo targeted improvements to the current reporting model including the establishment of a valuation allowance for credit losses versus the current direct write down approach. The Company will continue to identify any other financial assets not excluded from scope. The Company does not currently expect to early adopt this standard and is currently evaluating the impact of this new accounting guidance on its consolidated financial statements. Outlined below are key areas of change, although there are other changes not noted below: Financial assets (or a group of financial assets) measured at amortized cost will be required to be presented at the net amount expected to be collected, with an allowance for credit losses deducted from the amortized cost basis, resulting in a net carrying value that reflects the amount the entity expects to collect on the financial asset at purchase. Credit losses relating to available for sale fixed maturity securities will be recorded through an allowance for credit losses, rather than reductions in the amortized cost of the securities and is anticipated to increase volatility in the Company's Consolidated Statements of Operations. The allowance methodology recognizes that value may be realized either through collection of contractual cash flows or through the sale of the security. Therefore, the amount of the allowance for credit losses will be limited to the amount by which fair value is below amortized cost because the classification as available for sale is premised on an investment strategy that recognizes that the investment could be sold at fair value, if cash collection would result in the realization of an amount less than fair value. The Company's Consolidated Statements of Operations will reflect the measurement of expected credit losses for newly recognized financial assets as well as the expected increases or decreases (including the reversal of previously recognized losses) of expected credit losses that have taken place during the period. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Disclosures will be required to include information around how the credit loss allowance was developed, further details on information currently disclosed about credit quality of financing receivables and net investments in leases, and a rollforward of the allowance for credit losses for available for sale fixed maturity securities as well as an aging analysis for securities that are past due. The Company anticipates a significant impact on its systems, processes and controls. While the requirements of the new guidance represent a material change from existing GAAP, the underlying economics of items in scope and related cash flows are unchanged. The FASB has voted to delay the effective date of ASU 2016-13 to January 1, 2023 for smaller reporting companies with a revised ASU expected in the fourth quarter of 2019. Currently, the Company continues to focus on developing models and procedures, with testing and refinement of models occurring in 2020 and 2021 with parallel testing to performed in 2022. Focus areas will include, but not be limited to: (i) updating procedures to reflect new guidance requiring establishment of allowance for credit losses on available for sale debt securities; (ii) establishing procedures to review reinsurance risk to include but not limited to review of reinsurer ratings, trust agreements where applicable and historical and current performance; (iii) establishing procedures to identify and review all remaining financial assets within scope; and (iv) developing, testing, and implementing controls for newly developed procedures, as well as for additional annual reporting requirements. Long-Duration Contracts ASU 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, was issued by the FASB in August 2018 and is expected to have a significant impact on the Company’s Consolidated Financial Statements and Notes to Consolidated Financial Statements. The standard is effective January 1, 2021 (with early adoption permitted), and will impact, at least to some extent, Company's accounting and disclosure requirements for its long-duration insurance contracts. The Company does not currently expect to early adopt this standard and is currently evaluating the impact of this new accounting guidance on its consolidated financial statements. Outlined below are key areas of change, although there are other changes not noted below:
The Company anticipates that the requirement to update assumptions for liability for future policy benefits will increase volatility in the Company's Consolidated Statements of Operations while the requirement to update the discount rate will increase volatility in the Company's Consolidated Statements of Stockholders' Equity. The Company anticipates a significant impact on the systems, processes and controls. While the requirements of the new guidance represent a material change from existing GAAP, the underlying economics of the Company's Insurance segment and related cash flows are unchanged. The FASB has voted to delay the effective date of ASU 2018-12 to January 1, 2024 for smaller reporting companies with a revised ASU expected in the fourth quarter of 2019. Currently, the Company plans to focus on developing models and procedures through 2021, with testing and refinement of models occurring in 2022 and parallel testing to performed in 2023. Focus areas will include, but not be limited to: (i) determining an appropriate upper-medium grade fixed income instrument yield source from the market; (ii) establishing appropriate aggregation of liabilities; (iii) establishing liability models for each contract grouping identified that may be quickly updated to reflect current inforce listing and new discount rates on a quarterly basis; (iv) establishing appropriate best estimate assumptions with no provision for adverse deviation; (v) establishing procedures for annual review of assumptions including tracking of actual experience for enhanced reporting requirements; (vi) establishing new VOBA amortization that will align with new guidance for DAC amortization; and (vii) developing, testing, and implementing controls for newly developed procedures, as well as for additional annual reporting requirements. |
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Subsequent Events | Subsequent Events ASC 855, Subsequent Events requires the Company to evaluate events that occur after the balance sheet date as of which the financial statements are issued, and to determine whether adjustments to or additional disclosures in the financial statements are necessary. |
Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fixed Maturity and Equity Securities Available-for-Sale | The following tables provide information relating to investments in fixed maturity securities (in millions):
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Schedule of 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, 2019 are shown by contractual maturity in the table below (in millions). 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:
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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 (in millions):
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Other than Temporary Impairment, Credit Losses Recognized in Earnings | The Company recorded the following (in millions):
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Schedule of Unrealized Losses for Fixed Maturities and Equity Securities | The following table presents the total unrealized losses for the 147 and 749 fixed maturity securities held by the Company as of September 30, 2019 and December 31, 2018, respectively, where the estimated fair value had declined and remained below amortized cost by the indicated amount (in millions):
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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 147 and 749 fixed maturity securities held by the Company that have estimated fair values below amortized cost as of each of September 30, 2019 and December 31, 2018, 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 millions):
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Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following tables provide information relating to investments in equity securities measured at fair value (in millions):
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Schedule of Other Invested Assets | Carrying values of other invested assets were as follows (in millions):
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Schedule of Net Investment Income | The major sources of net investment income were as follows (in millions):
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Schedule of Net Realized Gain (Loss) on Investments | The major sources of net realized and unrealized gains and losses on investments were as follows (in millions):
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Goodwill and Intangibles, net |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangibles, net | 10. Goodwill and Intangibles, net Goodwill The carrying amount of goodwill by segment were as follows (in millions):
Indefinite-lived Intangible Assets Balances of indefinite-lived intangible assets as of September 30, 2019 and December 31, 2018 were as follows (in millions):
In 2019, FCC licenses increased $10.8 million, $12.9 million of which was through acquisitions, offset by $2.1 million of impairments. Definite Lived Intangible Assets The gross carrying amount and accumulated amortization of amortizable intangible assets by major intangible asset class is as follows (in millions):
Amortization expense for definite lived intangible assets for the three months ended September 30, 2019 and 2018 was $3.1 million and $1.1 million, respectively, and was included in Depreciation and amortization in the Condensed Consolidated Statements of Operations. Amortization expense for definite lived intangible assets for the nine months ended September 30, 2019 and 2018 was $9.4 million and $3.2 million, respectively, and was included in Depreciation and amortization in the Condensed Consolidated Statements of Operations. Excluding the impact of any future acquisitions, dispositions or changes in foreign currency, the Company estimates the annual amortization expense of amortizable intangible assets for the next five fiscal years will be as follows (in millions):
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Fair Value of Financial Instruments |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | 6. Fair Value of Financial Instruments Assets by Hierarchy Level Assets and liabilities measured at fair value on a recurring basis are summarized below (in millions):
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 at the beginning fair value for the reporting period in which the changes occur. 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 $41.6 million primarily related to corporate securities during the nine months ended September 30, 2019. The Company’s assessment resulted in a net transfer into Level 3 of $31.2 million primarily related to corporate securities during the nine months ended September 30, 2018. 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. Level 3 Measurements and Transfers The following tables summarize changes to the Company’s financial instruments carried at fair value and classified within Level 3 of the fair value hierarchy for the three and nine months ended September 30, 2019 and 2018 (in millions):
Internally developed fair values of Level 3 assets 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 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. The table excludes carrying amounts for cash and cash equivalents, accounts receivable, accounts payable and other current liabilities, and other assets and liabilities approximate fair value due to relatively short periods to maturity (in millions):
(1) Excludes life contingent annuities in the payout phase. (2) Excludes certain lease obligations accounted for under ASC 842, 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. 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. |
Investments - Equity Securities (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Securities, Available-for-sale [Line Items] | ||
Equity securities | $ 104.3 | $ 200.5 |
Common stocks | ||
Debt Securities, Available-for-sale [Line Items] | ||
Equity securities | 17.4 | 15.0 |
Perpetual preferred stocks | ||
Debt Securities, Available-for-sale [Line Items] | ||
Equity securities | $ 86.9 | $ 185.5 |
Acquisitions, Dispositions, and Deconsolidations - Broadcasting Segment (Details) - USD ($) $ in Millions |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|
Business Acquisition [Line Items] | |||
Asset acquisitions, cash consideration transferred | $ 27.4 | $ 32.3 | |
Broadcasting | |||
Business Acquisition [Line Items] | |||
Asset acquisitions, cash consideration transferred | $ 16.1 | $ 71.4 |
Investments - Schedule of Maturities of Fixed Maturity (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Amortized Cost | ||
Amortized Cost | $ 3,694.0 | |
Fair Value | ||
Total | 3,975.5 | $ 3,391.6 |
Corporate, Municipal, U.S. Government and Other securities | ||
Amortized Cost | ||
Due in one year or less | 31.2 | |
Due after one year through five years | 252.5 | |
Due after five years through ten years | 355.1 | |
Due after ten years | 2,338.5 | |
Subtotal | 2,977.3 | |
Fair Value | ||
Due in one year or less | 32.0 | |
Due after one year through five years | 259.6 | |
Due after five years through ten years | 375.5 | |
Due after ten years | 2,600.6 | |
Subtotal | 3,267.7 | |
Mortgage-backed securities | ||
Amortized Cost | ||
Amortized cost, without single maturity date | 171.0 | |
Fair Value | ||
Fair value, without single maturity date | 179.2 | |
Asset-backed securities | ||
Amortized Cost | ||
Amortized cost, without single maturity date | 545.7 | |
Amortized Cost | 545.7 | 540.8 |
Fair Value | ||
Fair value, without single maturity date | 528.6 | |
Total | $ 528.6 | $ 511.5 |
Fair Value of Financial Instruments - Measured on Recurring Basis (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Jun. 30, 2019 |
Dec. 31, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Assets | ||||||||
Fixed maturity securities | $ 3,975,500 | $ 3,975,500 | $ 3,391,600 | |||||
Equity securities | 104,300 | 104,300 | 200,500 | |||||
Liabilities | ||||||||
Liabilities accounted for at fair value | 9,900 | $ 6,500 | 9,900 | $ 6,500 | $ 8,300 | 11,900 | $ 4,200 | $ 4,800 |
Transfer out of Level 3 | 129,500 | 0 | 173,600 | 12,200 | ||||
Transfer into Level 3 | 14,200 | 18,900 | 132,000 | 43,400 | ||||
U.S. Government and government agencies | ||||||||
Assets | ||||||||
Fixed maturity securities | 7,200 | 7,200 | 25,400 | |||||
Liabilities | ||||||||
Transfer out of Level 3 | 15 | 0 | ||||||
Transfer into Level 3 | 0 | 0 | ||||||
States, municipalities and political subdivisions | ||||||||
Assets | ||||||||
Fixed maturity securities | 447,900 | 447,900 | 421,900 | |||||
Liabilities | ||||||||
Transfer out of Level 3 | 3,800 | 0 | 3,800 | 6,000 | ||||
Transfer into Level 3 | 0 | 0 | 4,200 | 400 | ||||
Residential mortgage-backed securities | ||||||||
Assets | ||||||||
Fixed maturity securities | 75,400 | 75,400 | 94,400 | |||||
Liabilities | ||||||||
Transfer out of Level 3 | 3,500 | 0 | 9,500 | 3,300 | ||||
Transfer into Level 3 | 0 | 2,600 | 0 | 8,100 | ||||
Commercial mortgage-backed securities | ||||||||
Assets | ||||||||
Fixed maturity securities | 103,800 | 103,800 | 93,900 | |||||
Liabilities | ||||||||
Transfer out of Level 3 | 0 | 0 | 900 | 0 | ||||
Transfer into Level 3 | 0 | 1,800 | 0 | 1,700 | ||||
Asset-backed securities | ||||||||
Assets | ||||||||
Fixed maturity securities | 528,600 | 528,600 | 511,500 | |||||
Liabilities | ||||||||
Transfer out of Level 3 | 76,400 | 0 | 76,400 | 2,900 | ||||
Transfer into Level 3 | 14,200 | 0 | 19,800 | 0 | ||||
Corporate and other | ||||||||
Assets | ||||||||
Fixed maturity securities | 2,812,600 | 2,812,600 | 2,244,500 | |||||
Liabilities | ||||||||
Transfer out of Level 3 | 45,800 | 0 | 82,800 | 0 | ||||
Transfer into Level 3 | 0 | 9,100 | 105,000 | 24,900 | ||||
Common Stock | ||||||||
Assets | ||||||||
Equity securities | 17,400 | 17,400 | 15,000 | |||||
Liabilities | ||||||||
Transfer out of Level 3 | 0 | 0 | 200 | 0 | ||||
Transfer into Level 3 | 0 | 4,400 | 0 | 4,800 | ||||
Perpetual preferred stocks | ||||||||
Assets | ||||||||
Equity securities | 86,900 | 86,900 | 185,500 | |||||
Liabilities | ||||||||
Transfer out of Level 3 | 0 | 0 | 0 | 0 | ||||
Transfer into Level 3 | 0 | 1,000 | 3,000 | 3,500 | ||||
Embedded derivative | ||||||||
Liabilities | ||||||||
Liabilities accounted for at fair value | 4,500 | 4,500 | 2,900 | 8,400 | ||||
Other | ||||||||
Liabilities | ||||||||
Liabilities accounted for at fair value | 5,400 | $ 6,500 | 5,400 | 6,500 | $ 5,400 | 3,500 | $ 4,200 | $ 4,800 |
Equity securities | ||||||||
Liabilities | ||||||||
Transfer out of Level 3 | 41,600 | |||||||
Transfer into Level 3 | $ 31,200 | |||||||
Recurring | ||||||||
Assets | ||||||||
Fixed maturity securities | 3,975,500 | 3,975,500 | 3,391,600 | |||||
Equity securities | 104,300 | 104,300 | 200,500 | |||||
Total assets | 4,079,800 | 4,079,800 | 3,592,100 | |||||
Liabilities | ||||||||
Other | 600 | 600 | 3,500 | |||||
Liabilities accounted for at fair value | 9,900 | 9,900 | 11,900 | |||||
Recurring | Level 1 | ||||||||
Assets | ||||||||
Fixed maturity securities | 43,000 | 43,000 | 12,700 | |||||
Equity securities | 21,000 | 21,000 | 16,300 | |||||
Total assets | 64,000 | 64,000 | 29,000 | |||||
Liabilities | ||||||||
Other | 0 | |||||||
Liabilities accounted for at fair value | 0 | 0 | 0 | |||||
Recurring | Level 2 | ||||||||
Assets | ||||||||
Fixed maturity securities | 3,438,000 | 3,438,000 | 2,738,500 | |||||
Equity securities | 26,200 | 26,200 | 123,000 | |||||
Total assets | 3,464,200 | 3,464,200 | 2,861,500 | |||||
Liabilities | ||||||||
Other | 0 | |||||||
Liabilities accounted for at fair value | 0 | 0 | 0 | |||||
Recurring | Level 3 | ||||||||
Assets | ||||||||
Fixed maturity securities | 494,500 | 494,500 | 640,400 | |||||
Equity securities | 57,100 | 57,100 | 61,200 | |||||
Total assets | 551,600 | 551,600 | 701,600 | |||||
Liabilities | ||||||||
Other | 3,500 | |||||||
Liabilities accounted for at fair value | 9,900 | 9,900 | 11,900 | |||||
Recurring | U.S. Government and government agencies | ||||||||
Assets | ||||||||
Fixed maturity securities | 7,200 | 7,200 | 25,400 | |||||
Recurring | U.S. Government and government agencies | Level 1 | ||||||||
Assets | ||||||||
Fixed maturity securities | 4,200 | 4,200 | 6,100 | |||||
Recurring | U.S. Government and government agencies | Level 2 | ||||||||
Assets | ||||||||
Fixed maturity securities | 3,000 | 3,000 | 19,300 | |||||
Recurring | U.S. Government and government agencies | Level 3 | ||||||||
Assets | ||||||||
Fixed maturity securities | 0 | 0 | 0 | |||||
Recurring | States, municipalities and political subdivisions | ||||||||
Assets | ||||||||
Fixed maturity securities | 447,900 | 447,900 | 421,900 | |||||
Recurring | States, municipalities and political subdivisions | Level 1 | ||||||||
Assets | ||||||||
Fixed maturity securities | 0 | 0 | 0 | |||||
Recurring | States, municipalities and political subdivisions | Level 2 | ||||||||
Assets | ||||||||
Fixed maturity securities | 447,900 | 447,900 | 421,900 | |||||
Recurring | States, municipalities and political subdivisions | Level 3 | ||||||||
Assets | ||||||||
Fixed maturity securities | 0 | 0 | 0 | |||||
Recurring | Residential mortgage-backed securities | ||||||||
Assets | ||||||||
Fixed maturity securities | 75,400 | 75,400 | 94,400 | |||||
Recurring | Residential mortgage-backed securities | Level 1 | ||||||||
Assets | ||||||||
Fixed maturity securities | 0 | 0 | 0 | |||||
Recurring | Residential mortgage-backed securities | Level 2 | ||||||||
Assets | ||||||||
Fixed maturity securities | 67,200 | 67,200 | 75,400 | |||||
Recurring | Residential mortgage-backed securities | Level 3 | ||||||||
Assets | ||||||||
Fixed maturity securities | 8,200 | 8,200 | 19,000 | |||||
Recurring | Commercial mortgage-backed securities | ||||||||
Assets | ||||||||
Fixed maturity securities | 103,800 | 103,800 | 93,900 | |||||
Recurring | Commercial mortgage-backed securities | Level 1 | ||||||||
Assets | ||||||||
Fixed maturity securities | 0 | 0 | 0 | |||||
Recurring | Commercial mortgage-backed securities | Level 2 | ||||||||
Assets | ||||||||
Fixed maturity securities | 43,300 | 43,300 | 35,700 | |||||
Recurring | Commercial mortgage-backed securities | Level 3 | ||||||||
Assets | ||||||||
Fixed maturity securities | 60,500 | 60,500 | 58,200 | |||||
Recurring | Asset-backed securities | ||||||||
Assets | ||||||||
Fixed maturity securities | 528,600 | 528,600 | 511,500 | |||||
Recurring | Asset-backed securities | Level 1 | ||||||||
Assets | ||||||||
Fixed maturity securities | 0 | 0 | 0 | |||||
Recurring | Asset-backed securities | Level 2 | ||||||||
Assets | ||||||||
Fixed maturity securities | 209,700 | 209,700 | 33,300 | |||||
Recurring | Asset-backed securities | Level 3 | ||||||||
Assets | ||||||||
Fixed maturity securities | 318,900 | 318,900 | 478,200 | |||||
Recurring | Corporate and other | ||||||||
Assets | ||||||||
Fixed maturity securities | 2,812,600 | 2,812,600 | 2,244,500 | |||||
Recurring | Corporate and other | Level 1 | ||||||||
Assets | ||||||||
Fixed maturity securities | 38,800 | 38,800 | 6,600 | |||||
Recurring | Corporate and other | Level 2 | ||||||||
Assets | ||||||||
Fixed maturity securities | 2,666,900 | 2,666,900 | 2,152,900 | |||||
Recurring | Corporate and other | Level 3 | ||||||||
Assets | ||||||||
Fixed maturity securities | 106,900 | 106,900 | 85,000 | |||||
Recurring | Common Stock | ||||||||
Assets | ||||||||
Equity securities | 17,400 | 17,400 | 15,000 | |||||
Recurring | Common Stock | Level 1 | ||||||||
Assets | ||||||||
Equity securities | 13,100 | 13,100 | 9,100 | |||||
Recurring | Common Stock | Level 2 | ||||||||
Assets | ||||||||
Equity securities | 0 | 0 | 0 | |||||
Recurring | Common Stock | Level 3 | ||||||||
Assets | ||||||||
Equity securities | 4,300 | 4,300 | 5,900 | |||||
Recurring | Perpetual preferred stocks | ||||||||
Assets | ||||||||
Equity securities | 86,900 | 86,900 | 185,500 | |||||
Recurring | Perpetual preferred stocks | Level 1 | ||||||||
Assets | ||||||||
Equity securities | 7,900 | 7,900 | 7,200 | |||||
Recurring | Perpetual preferred stocks | Level 2 | ||||||||
Assets | ||||||||
Equity securities | 26,200 | 26,200 | 123,000 | |||||
Recurring | Perpetual preferred stocks | Level 3 | ||||||||
Assets | ||||||||
Equity securities | 52,800 | 52,800 | 55,300 | |||||
Recurring | Embedded derivative | ||||||||
Liabilities | ||||||||
Embedded derivative | 4,500 | 4,500 | 8,400 | |||||
Recurring | Embedded derivative | Level 1 | ||||||||
Liabilities | ||||||||
Embedded derivative | 0 | 0 | 0 | |||||
Recurring | Embedded derivative | Level 2 | ||||||||
Liabilities | ||||||||
Embedded derivative | 0 | 0 | 0 | |||||
Recurring | Embedded derivative | Level 3 | ||||||||
Liabilities | ||||||||
Embedded derivative | 4,500 | 4,500 | $ 8,400 | |||||
Recurring | Other | ||||||||
Liabilities | ||||||||
Other | 5,400 | 5,400 | ||||||
Recurring | Other | Level 1 | ||||||||
Liabilities | ||||||||
Other | 0 | 0 | ||||||
Recurring | Other | Level 2 | ||||||||
Liabilities | ||||||||
Other | 0 | 0 | ||||||
Recurring | Other | Level 3 | ||||||||
Liabilities | ||||||||
Other | $ 5,400 | $ 5,400 |
Debt Obligations - Narrative (Details) £ in Millions |
1 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Apr. 30, 2019
USD ($)
|
Sep. 30, 2019
USD ($)
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2019
GBP (£)
|
May 31, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
HC2 Broadcasting Holdings, Inc | Senior Notes | ||||||
Debt Instrument [Line Items] | ||||||
Additional borrowing capacity | $ 29,700,000 | |||||
Revolving Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Face amount | $ 15,000,000 | |||||
Basis spread on variable rate (as a percent) | 6.75% | |||||
Revolving Credit Facility | HC2 Broadcasting Holdings, Inc | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 5,000,000.0 | |||||
Revolving Credit Facility | HC2 Broadcasting Holdings, Inc | Senior Notes | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 10,000,000 | |||||
Marine Services | 7.49% Note, due 2020 | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | $ 20,900,000 | $ 21,600,000 | £ 17.0 | $ 14,000,000 | ||
Interest rate (as a percent) | 7.49% | |||||
Energy | LIBOR plus 3.00% Term Loan, due 2023 | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | 28,000,000 | |||||
Life Sciences Segment | Notes payable, due 2019 | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | $ 0 | $ 1,700,000 | 1,700,000 | |||
Broadcasting | Notes payable, due 2019 | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | $ 64,300,000 | 35,000,000 | ||||
Interest rate (as a percent) | 8.50% | |||||
LIBOR | Energy | LIBOR plus 3.00% Term Loan, due 2023 | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | $ 27,400,000 | $ 0 | ||||
Interest rate (as a percent) | 3.00% | 3.00% | ||||
Basis spread on variable rate (as a percent) | 3.00% |
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (8.3) | $ 151.5 | $ (5.4) | $ 192.4 |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustment | (2.7) | (2.0) | (2.5) | (3.7) |
Unrealized gain (loss) on available-for-sale securities | 82.4 | (22.7) | 312.0 | (74.2) |
Other comprehensive income (loss) | 79.7 | (24.7) | 309.5 | (77.9) |
Comprehensive income | 71.4 | 126.8 | 304.1 | 114.5 |
Net (income) loss attributable to noncontrolling interest and redeemable noncontrolling interest | 1.9 | 2.6 | 5.5 | (17.6) |
Comprehensive income attributable to HC2 Holdings, Inc. | $ 73.3 | $ 129.4 | $ 309.6 | $ 96.9 |
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Cash flows from operating activities | ||
Net (loss) income | $ (5.4) | $ 192.4 |
Adjustments to reconcile net income to cash provided by operating activities | ||
Provision for doubtful accounts receivable | (0.7) | 1.1 |
Share-based compensation expense | 5.9 | 8.1 |
Depreciation and amortization | 29.7 | 30.0 |
Amortization of deferred financing costs and debt discount | 9.9 | 5.6 |
Amortization of (discount) premium on investments | 6.2 | 4.4 |
Gain on embedded derivative | (4.0) | 0.0 |
Gain on sale or disposal of assets | (0.8) | (3.3) |
Gain on sale and deconsolidation of subsidiary | 0.0 | (105.1) |
Gain on bargain purchase | (1.1) | (109.1) |
Income from equity investees | (1.5) | (13.7) |
Net realized and unrealized gains on investments | (8.7) | (49.1) |
Receipt of dividends from equity investees | 7.6 | 11.4 |
Annuity benefits | 6.3 | 6.3 |
Other operating activities | 4.2 | 3.1 |
Changes in assets and liabilities, net of acquisitions | ||
Accounts receivable | 99.3 | (28.7) |
Recoverable from reinsurers | 7.1 | 122.3 |
Other assets | (4.6) | (52.1) |
Life, accident and health reserves | 24.5 | 82.0 |
Accounts payable and other current liabilities | (26.2) | 9.7 |
Other liabilities | (52.2) | 21.4 |
Cash provided by operating activities | 95.5 | 136.7 |
Cash flows from investing activities | ||
Purchase of property, plant and equipment | (27.4) | (32.3) |
Disposal of property, plant and equipment | 3.9 | 4.9 |
Purchase of investments | (806.4) | (515.6) |
Sale of investments | 565.0 | 192.3 |
Maturities and redemptions of investments | 100.1 | 56.5 |
Cash received from dispositions, net | 13.5 | 92.0 |
Cash (paid for) received from acquisitions, net | (56.9) | 729.1 |
Other investing activities | 6.7 | (1.5) |
Cash (used in) provided by investing activities | (201.5) | 525.4 |
Cash flows from financing activities | ||
Proceeds from debt obligations | 81.2 | 266.7 |
Principal payments on debt obligations | (16.3) | (163.7) |
Cash received by subsidiary to issue preferred stock | 8.9 | 0.0 |
Cash paid by subsidiary to purchase HC2 preferred stock | (8.3) | 0.0 |
Annuity receipts | 1.6 | 1.8 |
Annuity surrenders | (13.6) | (14.9) |
Transactions with noncontrolling interests | 3.5 | (11.8) |
Payment of dividends | (1.9) | (1.5) |
Other financing activities | (1.7) | (0.9) |
Cash provided by financing activities | 53.4 | 75.7 |
Effects of exchange rate changes on cash, cash equivalents and restricted cash | 0.6 | (0.5) |
Net change in cash, cash equivalents and restricted cash | (52.0) | 737.3 |
Cash, cash equivalents and restricted cash, beginning of period | 330.4 | 98.9 |
Cash, cash equivalents and restricted cash, end of period | 278.4 | 836.2 |
Supplemental cash flow information: | ||
Cash paid for interest | 42.3 | 36.2 |
Cash paid for taxes, net of refunds | 6.8 | 13.3 |
Non-cash investing and financing activities: | ||
Property, plant and equipment included in accounts payable | 5.7 | 2.6 |
Investments included in accounts payable | 14.6 | 35.0 |
Declared but unpaid dividends from equity method investments included in other assets | $ 2.0 | $ 13.3 |
Employee Retirement Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Retirement Benefits [Abstract] | ||||
Service cost - benefits earning during the period | $ 0.0 | $ 0.0 | $ 0.0 | $ 0.0 |
Interest cost on projected benefit obligation | 1.3 | 1.3 | 4.0 | 4.1 |
Expected return on assets | (1.6) | (1.9) | (5.0) | (5.7) |
Actuarial gain | 0.0 | 0.0 | 0.0 | 0.0 |
Foreign currency gain (loss) | 0.0 | 0.0 | 0.0 | (0.1) |
Net periodic benefit | $ (0.3) | $ (0.6) | $ (1.0) | $ (1.7) |
Revenue - Construction Segment Disaggregation of Revenue (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | $ 397.5 | $ 444.8 | $ 1,242.3 | $ 1,315.3 |
Net revenue | 475.7 | 501.4 | 1,485.7 | 1,451.8 |
Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 397.5 | 444.8 | 1,242.3 | 1,315.3 |
Operating Segments | Construction | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | 168.2 | 195.3 | 555.8 | 531.2 |
Other revenue | 0.2 | 0.0 | 0.4 | 0.0 |
Net revenue | 168.4 | 195.3 | 556.2 | 531.2 |
Operating Segments | Construction | Commercial | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | 50.6 | 65.2 | 162.9 | 202.6 |
Operating Segments | Construction | Convention | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | 9.7 | 54.2 | 66.8 | 108.0 |
Operating Segments | Construction | Healthcare | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | 12.1 | 28.4 | 34.5 | 85.5 |
Operating Segments | Construction | Industrial | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | 63.1 | 13.8 | 179.6 | 49.8 |
Operating Segments | Construction | Transportation | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | 14.4 | 17.4 | 48.8 | 31.0 |
Operating Segments | Construction | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | $ 18.3 | $ 16.3 | $ 63.2 | $ 54.3 |
Summary of Significant Accounting Policies - Schedule of Cash and Cash Equivalents (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
---|---|---|---|
Schedule Of Cash And Cash Equivalents [Roll Forward] | |||
Cash and cash equivalents, beginning of period | $ 325.0 | $ 831.7 | $ 97.9 |
Restricted cash included in other assets, beginning of period | 5.4 | 4.5 | 1.0 |
Cash, cash equivalents and restricted cash, beginning of period | 330.4 | 836.2 | 98.9 |
Cash and cash equivalents, end of period | 276.9 | 325.0 | 831.7 |
Restricted cash included in other assets, end of period | 1.5 | 5.4 | 4.5 |
Cash, cash equivalents and restricted cash, end of period | $ 278.4 | $ 330.4 | $ 836.2 |
Revenue - Performance Obligation, Narrative (Details) - Network, Advertising and Broadcasting |
Sep. 30, 2019 |
---|---|
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Remaining performance obligation period | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Remaining performance obligation period | 60 months |
Basic and Diluted Income Per Common Share - Narrative (Details) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Securities excluded from computation (in shares) | 0 | 0 | ||
Warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Securities excluded from computation (in shares) | 2,019,972 | 2,019,972 | ||
Convertible Debt Securities | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Securities excluded from computation (in shares) | 4,787,602 | 4,787,602 |
Debt Obligations (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Obligations | Debt obligations consist of the following (in millions):
(1) In October 2019, our Broadcasting segment completed the issuance of $78.7 million of new notes. Net proceeds from the financing will be used to retire HC2 Broadcasting’s existing 8.5% Notes, as well as fund pending acquisitions, working capital and general corporate purposes. |
Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock by Class | The Company’s preferred shares authorized, issued and outstanding consisted of the following:
|
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Schedule of Cash, PIK and Special Cash Dividends | During the nine months ended September 30, 2019 and 2018, HC2's Board of Directors declared cash dividends with respect to HC2’s issued and outstanding Preferred Stock, excluding Preferred Stock owned by CGI which is eliminated in consolidation, as presented in the following table (in millions): 2019
2018
|
Related Parties - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Nov. 30, 2017 |
|
Related Party Transaction [Line Items] | ||||||
Revenue from related parties | $ 5,600,000 | $ 5,700,000 | $ 2,600,000 | $ 13,300,000 | ||
Subsidiary Of Fugro N.V. (AMS:FUR) | ||||||
Related Party Transaction [Line Items] | ||||||
Ownership percent | 23.60% | |||||
Revenue from related parties | 800,000 | 0 | ||||
Expenses for services | 3,000,000 | 3,000,000 | 8,300,000 | 7,100,000 | ||
GMH | ||||||
Related Party Transaction [Line Items] | ||||||
Management fees paid | 200,000 | 200,000 | 500,000 | 500,000 | ||
Affiliated Entity | Harbinger Capital Partners | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses under service agreement | 600,000 | $ 1,000,000 | 2,500,000 | $ 2,900,000 | ||
Affiliated Entity | Triple Ring | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses under service agreement | $ 500,000 | $ 1,300,000 | ||||
Letter of Credit | Affiliated Entity | Harbinger Capital Partners | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses under service agreement | $ 800,000 |
Acquisitions, Dispositions, and Deconsolidations - Schedule of Purchase Price Allocations (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
Nov. 30, 2018 |
---|---|---|---|
Purchase price allocation | |||
Goodwill | $ 177.1 | $ 171.7 | |
DBMG | |||
Purchase price allocation | |||
Other invested assets | $ 0.9 | ||
Cash and cash equivalents | 8.6 | ||
Accounts receivable | 28.8 | ||
Property, plant and equipment | 15.4 | ||
Goodwill | 50.7 | ||
Intangibles | 44.1 | ||
Other assets | 18.9 | ||
Total assets acquired | 167.4 | ||
Accounts payable and other current liabilities | (23.7) | ||
Other liabilities | (3.9) | ||
Total liabilities assumed | (27.6) | ||
Total net assets acquired | $ 139.8 |
Life, Accident and Health Reserves - Liability for Claims of Long-Term Care Insurance Reserves (Details) - USD ($) $ in Millions |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||
Beginning balance | $ 4,562.1 | |||
Paid related to insured events of: | ||||
Reserve for business acquired during the current period | 0.0 | $ 341.2 | ||
Ending balance | 4,543.5 | |||
Other Long Duration Insurance Product Line | ||||
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||
Beginning balance | 738.5 | 243.5 | ||
Less: recoverable from reinsurers | (136.4) | (100.6) | ||
Beginning balance, net | 615.3 | 507.9 | $ 602.1 | $ 142.9 |
Incurred related to insured events of: | ||||
Current year | 159.2 | 54.5 | ||
Prior years | (46.9) | 6.0 | ||
Total incurred | 112.3 | 60.5 | ||
Paid related to insured events of: | ||||
Current year | (8.4) | (3.9) | ||
Prior years | (106.9) | (36.9) | ||
Total paid | (115.3) | (40.8) | ||
Interest on liability for policy and contract claims | 16.2 | 4.1 | ||
Ending balance, net | 615.3 | 507.9 | ||
Add: recoverable from reinsurers | 129.6 | 159.1 | ||
Ending balance | $ 744.9 | $ 667.0 |
Share-based Compensation - Summary of Company's Stock Option Activity (Details) - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Shares | ||||
Outstanding at beginning of period (in shares) | 7,160,861 | |||
Granted (in shares) | 0 | 662,769 | 0 | 662,769 |
Exercised (in shares) | 0 | |||
Forfeited (in shares) | 0 | |||
Expired (in shares) | (93,269) | |||
Outstanding at end of period (in shares) | 7,067,592 | 7,067,592 | ||
Eligible for exercise (in shares) | 6,613,099 | 6,613,099 | ||
Weighted Average Exercise Price | ||||
Outstanding at beginning of period (in usd per share) | $ 6.51 | |||
Granted (in usd per share) | 0.00 | |||
Exercised (in usd per share) | 0.00 | |||
Forfeited (in usd per share) | 0.00 | |||
Expired (in usd per share) | 5.47 | |||
Outstanding at end of period (in usd per share) | $ 6.52 | 6.52 | ||
Eligible for exercise (in usd per share) | $ 6.59 | $ 6.59 |
Goodwill and Intangibles, net - Definite Lived Intangible Assets (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Dec. 31, 2018 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 114.5 | $ 111.4 |
Accumulated Amortization | (24.7) | (15.3) |
Net | $ 89.8 | 96.1 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Original Useful Life | 10 years | |
Gross Carrying Amount | $ 53.5 | 53.6 |
Accumulated Amortization | (13.6) | (7.2) |
Net | $ 39.9 | 46.4 |
Channel sharing arrangements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Original Useful Life | 40 years | |
Gross Carrying Amount | $ 28.3 | 25.2 |
Accumulated Amortization | (0.7) | 0.0 |
Net | $ 27.6 | 25.2 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Original Useful Life | 13 years | |
Gross Carrying Amount | $ 26.0 | 25.9 |
Accumulated Amortization | (7.5) | (5.9) |
Net | $ 18.5 | 20.0 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Original Useful Life | 5 years | |
Gross Carrying Amount | $ 1.2 | 1.2 |
Accumulated Amortization | (1.2) | (1.2) |
Net | $ 0.0 | 0.0 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Original Useful Life | 6 years | |
Gross Carrying Amount | $ 5.5 | 5.5 |
Accumulated Amortization | (1.7) | (1.0) |
Net | $ 3.8 | $ 4.5 |
Operating Segment and Related Information - Geographic and Operating Segments (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | $ 475.7 | $ 501.4 | $ 1,485.7 | $ 1,451.8 |
Total revenue from contracts with customers | 397.5 | 444.8 | 1,242.3 | 1,315.3 |
Income (loss) from operations | 9.6 | (24.3) | 62.1 | (43.6) |
Interest expense | (24.0) | (17.5) | (69.3) | (54.0) |
Gain on sale and deconsolidation of subsidiary | 0.0 | 3.0 | 0.0 | 105.1 |
Income from equity investees | 0.3 | 8.1 | 1.5 | 13.7 |
Gain on bargain purchase | 0.0 | 109.1 | 1.1 | 109.1 |
Other income, net | 6.8 | 63.9 | 5.4 | 64.0 |
(Loss) income from continuing operations | (7.3) | 142.3 | 0.8 | 194.3 |
Income tax (expense) benefit | (1.0) | 9.2 | (6.2) | (1.9) |
Net (loss) income | (8.3) | 151.5 | (5.4) | 192.4 |
Net loss (income) attributable to noncontrolling interest and redeemable noncontrolling interest | 1.2 | 2.0 | 4.9 | (18.6) |
Net (loss) income attributable to HC2 Holdings, Inc. | (7.1) | 153.5 | (0.5) | 173.8 |
Less: Preferred dividends, deemed dividends, and repurchase gains | 0.4 | 0.7 | (0.4) | 2.1 |
Net (loss) income attributable to common stock and participating preferred stockholders | (7.5) | 152.8 | (0.1) | 171.7 |
Depreciation and Amortization | 8.6 | 6.2 | 23.1 | 25.0 |
Capital Expenditures | 8.2 | 0.0 | 27.4 | 0.0 |
Construction | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Depreciation and Amortization | 3.9 | 1.9 | 11.8 | 5.0 |
Capital Expenditures | 1.4 | 0.0 | 6.8 | 0.0 |
Marine Services | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Depreciation and Amortization | 6.4 | 6.9 | 19.4 | 20.1 |
Capital Expenditures | 2.7 | 0.0 | 10.9 | 0.0 |
Energy | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Depreciation and Amortization | 2.0 | 1.4 | 4.9 | 4.1 |
Capital Expenditures | 0.1 | 0.0 | 0.4 | 0.0 |
Telecommunications | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Depreciation and Amortization | 0.1 | 0.1 | 0.3 | 0.3 |
Capital Expenditures | 0.0 | 0.0 | 0.0 | 0.0 |
Insurance | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Depreciation and Amortization | (5.7) | (4.8) | (18.2) | (7.1) |
Capital Expenditures | 0.4 | 0.0 | 0.6 | 0.0 |
Life Sciences | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Depreciation and Amortization | 0.0 | 0.0 | 0.1 | 0.1 |
Capital Expenditures | 0.1 | 0.0 | 0.1 | 0.0 |
Broadcasting | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Depreciation and Amortization | 1.8 | 0.7 | 4.7 | 2.3 |
Capital Expenditures | 3.5 | 0.0 | 8.6 | 0.0 |
Other | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Depreciation and Amortization | 0.0 | 0.0 | 0.0 | 0.1 |
Non-operating Corporate | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Depreciation and Amortization | 0.1 | 0.0 | 0.1 | 0.1 |
United States | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | 419.3 | 450.2 | 1,329.8 | 1,285.6 |
United Kingdom | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | 46.3 | 45.1 | 127.3 | 146.8 |
Other | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | 10.1 | 6.1 | 28.6 | 19.4 |
Operating Segments | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | 397.5 | 444.8 | 1,242.3 | 1,315.3 |
Operating Segments | Construction | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | 168.4 | 195.3 | 556.2 | 531.2 |
Total revenue from contracts with customers | 168.2 | 195.3 | 555.8 | 531.2 |
Income (loss) from operations | 12.4 | 12.5 | 34.3 | 30.3 |
Operating Segments | Marine Services | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | 48.2 | 44.8 | 130.0 | 149.9 |
Total revenue from contracts with customers | 48.2 | 44.8 | 130.0 | 149.9 |
Income (loss) from operations | 2.2 | (8.5) | (4.6) | (8.5) |
Operating Segments | Energy | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | 8.7 | 4.6 | 19.3 | 16.2 |
Income (loss) from operations | 0.4 | (0.4) | (0.3) | 0.5 |
Operating Segments | Telecommunications | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | 162.2 | 187.8 | 507.0 | 580.6 |
Total revenue from contracts with customers | 162.2 | 187.8 | 507.0 | 580.6 |
Income (loss) from operations | (0.4) | 1.3 | 0.4 | 3.4 |
Operating Segments | Insurance | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | 80.4 | 77.2 | 251.3 | 161.1 |
Income (loss) from operations | 10.6 | 7.5 | 75.9 | 14.5 |
Operating Segments | Life Sciences | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Income (loss) from operations | (3.0) | (2.2) | (6.6) | (12.0) |
Operating Segments | Broadcasting | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | 10.0 | 12.0 | 29.8 | 33.7 |
Total revenue from contracts with customers | 10.0 | 12.0 | 29.8 | 33.7 |
Income (loss) from operations | (3.8) | (5.3) | (8.8) | (21.4) |
Operating Segments | Other | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | 0.0 | 0.3 | 0.0 | 3.7 |
Income (loss) from operations | 0.0 | (1.0) | 0.0 | (2.4) |
Operating Segments | Non-operating Corporate | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Income (loss) from operations | (6.6) | (7.6) | (20.3) | (23.4) |
Eliminations | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | (2.2) | (20.6) | (7.9) | (24.6) |
Income (loss) from operations | $ (2.2) | $ (20.6) | $ (7.9) | $ (24.6) |
Revenue - Telecommunications Segment Disaggregation of Revenue (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | $ 397.5 | $ 444.8 | $ 1,242.3 | $ 1,315.3 |
Net revenue | 475.7 | 501.4 | 1,485.7 | 1,451.8 |
Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 397.5 | 444.8 | 1,242.3 | 1,315.3 |
Operating Segments | Telecommunications | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | 162.2 | 187.8 | 507.0 | 580.6 |
Other revenue | 0.0 | 0.0 | 0.0 | 0.0 |
Net revenue | 162.2 | 187.8 | 507.0 | 580.6 |
Operating Segments | Termination of long distance minutes | Telecommunications | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | $ 162.2 | $ 187.8 | $ 507.0 | $ 580.6 |
Revenue - Marine Segment Disaggregation of Revenue (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Segment Reporting Information [Line Items] | ||||
Total revenue from contracts with customers | $ 397.5 | $ 444.8 | $ 1,242.3 | $ 1,315.3 |
Net revenue | 475.7 | 501.4 | 1,485.7 | 1,451.8 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 397.5 | 444.8 | 1,242.3 | 1,315.3 |
Operating Segments | Marine Services | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue from contracts with customers | 48.2 | 44.8 | 130.0 | 149.9 |
Other revenue | 0.0 | 0.0 | 0.0 | 0.0 |
Net revenue | 48.2 | 44.8 | 130.0 | 149.9 |
Operating Segments | Telecommunication - Maintenance | Marine Services | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue from contracts with customers | 21.6 | 21.9 | 62.6 | 65.8 |
Operating Segments | Telecommunication - Installation | Marine Services | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue from contracts with customers | 12.8 | 5.5 | 28.2 | 29.3 |
Operating Segments | Power - Operations, Maintenance & Construction Support | Marine Services | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue from contracts with customers | 6.0 | 9.3 | 15.2 | 25.9 |
Operating Segments | Power - Cable Installation & Repair | Marine Services | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue from contracts with customers | $ 7.8 | $ 8.1 | $ 24.0 | $ 28.9 |
Property, Plant and Equipment, net - Summary of Property, Plant and Equipment, net (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 560.3 | $ 504.1 |
Less: Accumulated depreciation | 154.5 | 127.8 |
Total | 405.8 | 376.3 |
Cable-ships and submersibles | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 242.2 | 251.1 |
Equipment, furniture and fixtures, and software | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 209.6 | 148.0 |
Building and leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 48.5 | 47.3 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 36.8 | 32.8 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 9.7 | 12.9 |
Plant and transportation equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 13.5 | $ 12.0 |
Operating Segment and Related Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Segment and Related Information | 20. Operating Segment and Related Information The Company currently has two primary reportable geographic segments - United States and United Kingdom. The Company has eight reportable operating segments based on management’s organization of the enterprise - Construction, Marine Services, Energy, Telecommunications, Insurance, Life Sciences, Broadcasting, Other, and a Non-operating Corporate segment. Net revenue and long-lived assets by geographic segment are reported on the basis of where the entity is domiciled. All inter-segment revenues are eliminated. The Company's revenue concentrations of 10% and greater are as follows:
* Less than 10% revenue concentration Summary information with respect to the Company’s geographic and operating segments is as follows (in millions):
(*)The Insurance segment revenues are inclusive of realized and unrealized gains and net investment income for the three and nine months ended September 30, 2019 and 2018 which are related to entities under common control which are eliminated or are reclassified in consolidation.
(*) The Insurance segment revenues are inclusive of realized and unrealized gains and net investment income for the three and nine months ended September 30, 2019 and 2018 which are related to transactions between entities under common control which are eliminated or are reclassified in consolidation. A reconciliation of the Company's consolidated segment operating income to consolidated earnings before income taxes is as follows (in millions):
(*) Balance includes amortization of negative VOBA, which increases net income.
(*) The above capital expenditures exclude assets acquired under terms of capital lease and vendor financing obligations.
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Employee Retirement Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Retirement Plans | 16. Employee Retirement Plans The following table presents the components of Net periodic benefit cost for the periods presented (in millions):
For the three months ended September 30, 2019, $1.6 million of contributions have been made to the Company's pension plans, comprising $1.6 million of fixed contributions. For the nine months ended September 30, 2019, $5.3 million of contributions have been made to the Company's pension plans, comprising $5.0 million of fixed contributions and $0.3 million of variable contributions. The Company anticipates contributing an additional $1.7 million during 2019, comprising $1.7 million of fixed contributions. Under a revised deficit recovery plan agreed between GMSL and the trustees of GMSL's pension plan dated March 20, 2018, which was subsequently submitted to the UK government’s Pension Regulator, contributions of approximately $12.3 million deferred from 2016 and 2017 due in December 2017 were further deferred. To support this second deferral, the Company provided secured assets. These are the Q1400-1 trencher and the Q1400-2 trencher. Consistent with earlier recovery plans, the revised deficit recovery plan comprises three elements: fixed contributions, variable contributions (profit-related element) and variable contributions (dividend-related element), though the amounts and some definitions have been modified. The fixed contributions, payable in installments, comprise approximately $6.4 million in 2019, approximately $6.6 million in 2020, approximately $6.8 million in 2021 and approximately $3.0 million in 2022. The variable contributions (profit-related element) are calculated as 10% of GMSL's audited operating profit and paid two years in arrears in December each year from 2018. The variable contributions (dividend-related) equate to 50% of any future dividend paid by GMSL. |
Accounts Payable and Other Current Liabilities |
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Accounts Payable and Other Current Liabilities | 12. Accounts Payable and Other Current Liabilities Accounts payable and other current liabilities consist of the following (in millions):
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Recoverable from Reinsurers |
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Insurance [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recoverable from Reinsurers | 8. Recoverable from Reinsurers Recoverable from reinsurers consists of the following (in millions):
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Acquisitions, Dispositions, and Deconsolidations |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions, Dispositions, and Deconsolidations | 4. Acquisitions, Dispositions, and Deconsolidations Construction Segment On November 30, 2018, DBMG consummated acquisition of GrayWolf Industrial ("GrayWolf"), a premier specialty maintenance, repair and installation services provider, pursuant to that certain Agreement and Plan of Merger, dated October 10, 2018, as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated November 29, 2018. The aggregate fair value of the cash consideration paid in connection with the acquisition of GrayWolf was $139.8 million. The transaction was accounted for as business acquisition. The preliminary allocation of the fair value of consideration transferred among the identified assets acquired, liabilities assumed, intangibles and residual goodwill are summarized as follows (in millions):
The size and breadth of the GrayWolf acquisition necessitates use of the one year measurement period to adequately analyze all the factors used in establishing the asset and liability fair values as of the acquisition date, including, but not limited to deferred tax assets. Goodwill was determined based on the residual differences between fair value of consideration transferred and the value assigned to tangible and intangible assets and liabilities. Among the factors that contributed to goodwill was approximately $10.9 million assigned to the assembled and trained workforce. Goodwill is not amortized and is not deductible for tax purposes. Acquisition costs incurred by DBMG in connection with the acquisition of GrayWolf were approximately $4.2 million, which were included in selling, general and administrative expenses. The acquisition costs were primarily related to legal, accounting and valuation services. Results of GrayWolf were included in our Consolidated Statements of Operations since the acquisition date. Pro forma results of operations have not been presented because they are not material to our consolidated results of operations. Energy Segment On June 14, 2019, ANG acquired ampCNG's 20 natural gas fueling stations, located primarily in the Southeastern U.S. and Texas, for cash consideration of $41.2 million. ANG’s network reach expanded to over 60 stations, making it one of the largest owners and operators of compressed natural gas stations in the country. To finance the acquisition, ANG entered into a term loan with M&T bank for $28.0 million and issued preferred stock and ten year warrants for common stock for $14.0 million. The preferred stock bears a 14% coupon and is mandatorily redeemable in four years. The warrants are exercisable at $0.001 per share of common stock and will represent 6% of ANG when exercised. ANG received $5.0 million of proceeds from CGI. Consequently, related preferred stock and warrants are eliminated in consolidation. Preferred stock and warrants are recorded within Other liabilities. Insurance Segment On August 9, 2018, CGI completed the acquisition all of the outstanding shares of KMG America Corporation (“KMG”), the parent company of Kanawha Insurance Company (“KIC”), Humana Inc.’s ("Humana") long-term care insurance subsidiary for cash consideration of ten thousand dollars. The decision to acquire was made as part of CGI’s core strategy to acquire additional accretive LTC run-off businesses. The allocation of the fair value of consideration transferred among the identified assets acquired, liabilities assumed and bargain purchase gain are summarized as follows (in millions):
Gain on bargain purchase Gain on bargain purchase was driven by the Tax Cuts and Jobs Act, which was not stipulated in the negotiations for the transaction and resulted in a material decline in the Value of Business Acquired balance, corresponding deferred tax position and, ultimately, recognition of the bargain purchase gain, largely driven by the following attributes:
Reinsurance Recoverable The reinsurance recoverable balance represents amounts recoverable from third parties. U.S. GAAP requires insurance reserves and reinsurance recoverable 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 $902.5 million, to arrive at a gross insurance liability, and recognized an offsetting reinsurance recoverable amount of approximately $902.5 million. As part of this process, management considered 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 reinsurance recoverable on paid and unpaid losses, including an estimate for losses incurred but not reported. Reinsurance recoverable represent expected cash inflows from reinsurers for liabilities ceded and therefore incorporate uncertainties as to the timing and amount of claim payments. Reinsurance recoverable includes the balances due from reinsurers under the terms of the reinsurance agreements for these ceded balances as well as settlement amounts currently due. The Value of Business Acquired VOBA reflects the estimated fair value of in-force contracts in a life insurance company acquisition less the amount recorded as insurance contract liabilities. It represents the portion of the purchase price that is allocated to the value of the rights to receive future cash flows from the business in force at the acquisition date. A VOBA liability (negative asset) occurs when the estimated fair value of in-force contracts in a life insurance company acquisition is less than the amount recorded as insurance contract liabilities. HC2 calculated VOBA by adjusting the purchase price, which was derived on a statutory accounting basis, for differences between statutory and U.S. GAAP accounting requirements. Amortization is based on assumptions consistent with those used in the development of the underlying contract adjusted for emerging experience and expected trends. Life, accident and health reserves HC2 estimated the fair value of reserves on a fair value basis, using actuarial assumptions consistent with those used for the buyer’s valuation of the acquired business, and discount rates reflecting capital market conditions. The reserve accounts for the present value of all future cash flows, net of reinsurance, of the acquired block of insurance, including premium, benefit payments, and expenses. HC2 estimated the fair value of recoverable from reinsurers using the same assumptions as those for reserves of the net retained business, but applied to business ceded through various, existing reinsurance agreements. Life Sciences Segment On June 8, 2018, Pansend closed on the sale of its approximately 75.9% ownership in BeneVir to Janssen Biotech, Inc. (“Janssen”). In conjunction with the closing of the transaction, Janssen made an upfront cash payment of $140.0 million. Pansend received a cash payment of $93.4 million and received an additional cash payment of $13.3 million on September 16, 2019, which was previously held in an escrow, for a total consideration of $106.7 million. Pansend recorded a gain on the sale of $102.1 million, of which $21.7 million was allocated to noncontrolling interests. HC2 received a cash payment of $72.8 million and an additional cash payment of $9.8 million from the release of the escrow. Under the terms of the merger agreement, Pansend is eligible to receive payments of up to $189.7 million upon the achievement of specified development milestones and up to $493.1 million upon the achievement of specified levels of annual net sales of licensed products. From these potential milestone payments, HC2 is eligible to receive up to $512.2 million. Broadcasting Segment During the nine months ended September 30, 2019 and the year ended December 31, 2018, HC2 Broadcasting acquired a series of licenses for a total cash consideration of $16.1 million and $71.4 million, respectively. All transactions were accounted for as asset acquisitions. Other Segment On August 14, 2018, 704Games issued a 53.5% equity interest to international media and technology company Motorsport Network. As a result, HC2’s ownership percentage in 704Games was diluted to 26.2% resulting in the loss of control and deconsolidation of the entity. Pro Forma Adjusted Summary The following schedule presents unaudited consolidated pro forma results of operations data as if the acquisition of KMG had occurred on January 1, 2018. This information does not purport to be indicative of the actual results that would have occurred if the 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 millions):
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Revenue (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of Revenue from Segments to Consolidated | Segments with revenues in scope of ASC 606, Contracts with customers, consist of the following (in millions):
(1) The Insurance segment does not have revenues in scope of ASC 606. |
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Schedule of Accounts Receivable | Accounts receivables, net from contracts with customers consist of the following (in millions):
Accounts receivable, net consist of the following (in millions):
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Schedule of Disaggregation of Revenue | The following table disaggregates the Broadcasting segment's revenue by type (in millions):
The following table disaggregates ANG's revenue by type (in millions):
The following table disaggregates GMSL's revenue by market (in millions):
The following table disaggregates DBMG's revenue by market (in millions):
ICS's revenues are predominantly derived from wholesale of international long distance minutes (in millions):
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Schedule of Contract Assets and Contract Liabilities | Contract assets and contract liabilities consisted of the following (in millions):
Contract assets and contract liabilities consisted of the following (in millions):
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Schedule of Remaining Unsatisfied Performance Obligations | The transaction price allocated to remaining unsatisfied performance obligations consisted of the following (in millions):
The transaction price allocated to remaining unsatisfied performance obligations consisted of the following (in millions):
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Accounts Receivable, net (Tables) |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Receivable | Accounts receivables, net from contracts with customers consist of the following (in millions):
Accounts receivable, net consist of the following (in millions):
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Revenue - Narrative (Details) - Construction - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
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Revenue from External Customer [Line Items] | ||
Change in contract assets costs in excess of billings, new commercial contracts | $ 40.8 | |
Change in contract assets costs in excess of billings, transfer to receivables | 40.2 | |
Change in contract liabilities costs in excess of billings, new commercial contracts | 29.8 | |
Change in contract liabilities costs in excess of billings, transfer to receivables | 60.5 | |
Contract liabilities | 31.1 | $ 62.0 |
DBMG | ||
Revenue from External Customer [Line Items] | ||
Additional backlog not included in unsatisfied performance obligation | $ 22.5 |
Revenue - Reconciliation of Revenue from Segments to Consolidated (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Segment Reporting Information [Line Items] | ||||
Revenues | $ 475.7 | $ 501.4 | $ 1,485.7 | $ 1,451.8 |
Total revenue from contracts with customers | 397.5 | 444.8 | 1,242.3 | 1,315.3 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 397.5 | 444.8 | 1,242.3 | 1,315.3 |
Operating Segments | Construction | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 168.4 | 195.3 | 556.2 | 531.2 |
Total revenue from contracts with customers | 168.2 | 195.3 | 555.8 | 531.2 |
Operating Segments | Marine Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 48.2 | 44.8 | 130.0 | 149.9 |
Total revenue from contracts with customers | 48.2 | 44.8 | 130.0 | 149.9 |
Operating Segments | Energy | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 8.7 | 4.6 | 19.3 | 16.2 |
Operating Segments | Telecommunications | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 162.2 | 187.8 | 507.0 | 580.6 |
Total revenue from contracts with customers | 162.2 | 187.8 | 507.0 | 580.6 |
Operating Segments | Broadcasting | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 10.0 | 12.0 | 29.8 | 33.7 |
Total revenue from contracts with customers | 10.0 | 12.0 | 29.8 | 33.7 |
Operating Segments | Other | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 0.0 | $ 0.3 | $ 0.0 | $ 3.7 |
Subsequent Events (Details) - USD ($) $ in Millions |
Oct. 30, 2019 |
Oct. 24, 2019 |
Sep. 30, 2019 |
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Broadcasting | Senior Notes, due October 2020 | |||
Subsequent Event [Line Items] | |||
Interest rate (as a percent) | 8.50% | ||
Subsequent Event | Broadcasting | Senior Notes, due October 2020 | |||
Subsequent Event [Line Items] | |||
Short-term debt | $ 78.7 | ||
Interest rate (as a percent) | 9.60% | ||
Subsequent Event | Limited Partner | Broadcasting | Tranche A Senior Notes due October 2020 | |||
Subsequent Event [Line Items] | |||
Short-term debt | $ 36.2 | ||
Subsequent Event | Institutional Lender | Broadcasting | Tranche B Senior Notes due October 2020 | |||
Subsequent Event [Line Items] | |||
Short-term debt | $ 42.5 | ||
GMSL | |||
Subsequent Event [Line Items] | |||
Percentage of interest in joint venture | 73.00% | ||
GMSL | Subsequent Event | Marine Services | |||
Subsequent Event [Line Items] | |||
Percentage of interest in joint venture | 49.00% | ||
Sale Of ownership interests | $ 140.0 | ||
Huawei Marine Networks Co., Limited | GMSL | Subsequent Event | Marine Services | |||
Subsequent Event [Line Items] | |||
Percentage of interest in joint venture | 49.00% | ||
Sale Of ownership interests | $ 285.0 |
Investments - Schedule of Unrealized Losses for Fixed Maturities Securities (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Unrealized Losses | ||
Less than 20% | $ (49.9) | $ (116.0) |
20% or more for less than six months | (0.1) | (0.8) |
20% or more for six months or greater | $ (0.8) | $ (0.6) |
Percentage of Total | ||
Less than 20% | 98.20% | 98.80% |
20% or more for less than six months | 0.20% | 0.70% |
20% or more for six months or greater | 1.60% | 0.50% |
Unrealized Losses | $ (50.8) | $ (117.4) |
Total | 100.00% | 100.00% |
Acquisitions, Dispositions, and Deconsolidations - Insurance Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Aug. 09, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Business Acquisition [Line Items] | |||||
Gain on bargain purchase | $ 0 | $ 109,100 | $ 1,100 | $ 109,100 | |
KMG America | |||||
Business Acquisition [Line Items] | |||||
Fixed maturity securities, available-for-sale at fair value | $ 1,575,400 | ||||
Equity securities | 300 | ||||
Mortgage loans | 900 | ||||
Policy loans | 2,900 | ||||
Cash and cash equivalents | 806,600 | ||||
Recoverable from reinsurers | 902,500 | ||||
Other assets | 28,200 | ||||
Total assets acquired | 3,316,800 | ||||
Life, accident and health reserves | (2,931,300) | ||||
Annuity reserves | (11,300) | ||||
Value of business acquired | (214,400) | ||||
Accounts payable and other current liabilities | (6,500) | ||||
Deferred tax liability | (25,300) | ||||
Other liabilities | (11,500) | ||||
Total liabilities assumed | (3,200,300) | ||||
Total net assets acquired | 116,500 | ||||
Total fair value of consideration | 0 | ||||
Gain on bargain purchase | 116,500 | ||||
Kanawha Insurance Company | KMG America | |||||
Business Acquisition [Line Items] | |||||
Total fair value of consideration | $ 10 |
Share-based Compensation - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options granted (in shares) | 0 | 662,769 | 0 | 662,769 |
Weighted average fair value options granted (in dollars per share) | $ 2.91 | |||
Share-based compensation expense | $ 2,000,000 | $ 3,300,000 | $ 5,900,000 | $ 8,100,000 |
Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense | 6,700,000 | $ 6,700,000 | ||
Weighted average remaining period | 1 year 5 months 23 days | |||
Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted average remaining period | 1 year 4 months 14 days | |||
Intrinsic value of options outstanding | 0 | $ 0 | ||
Average remaining life of option outstanding | 5 years 6 months 4 days | |||
Intrinsic value of exercisable options | 0 | $ 0 | ||
Average remaining life of exercisable options | 5 years 4 months 17 days | |||
Unrecognized unvested compensation expense | $ 800,000 | $ 800,000 | ||
Unvested shares expected to vest (in shares) | 454,493 | 454,493 | ||
Weighted average remaining life | 7 years 3 months 22 days | |||
Weighted average exercise price (in usd per share) | $ 5.46 | $ 5.46 | ||
Intrinsic value | $ 0 | $ 0 |
Summary of Significant Accounting Policies |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies 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, 2019, the results of DBMG, GMSL, ANG, ICS, CIG, Genovel, R2, and HC2 Broadcasting have been consolidated into the Company’s results based on guidance from the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC" 810, Consolidation). The remaining interests not owned by the Company are presented as a noncontrolling interest component of total equity. Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements of the Company included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of such information. All such adjustments are of a normal recurring nature. Certain information and note disclosures, including a description of significant accounting policies normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), have been condensed or omitted pursuant to such rules and regulations. Certain prior amounts have been reclassified or combined to conform to the current year presentation. These reclassifications and combinations had no effect on previously reported net loss attributable to controlling interest or accumulated deficit. These interim financial statements should be read in conjunction with the Company’s annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on March 12, 2019. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the results for any subsequent periods or the entire fiscal year ending December 31, 2019. Use of Estimates and Assumptions The preparation of the Company’s Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions used. Statement of Cash Flows The following table provides a reconciliation of cash and cash equivalents and restricted cash to amounts reported within the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows (in millions):
Accounting Pronouncements Adopted in the Current Year The Company’s 2018 Form 10-K includes discussion of significant recent accounting pronouncements that either have impacted or may impact our financial statements in the future. The following discussion provides information about recently adopted and recently issued or changed accounting guidance (applicable to the Company) that have occurred since the Company filed its 2018 Form 10-K. The Company has implemented all new accounting pronouncements that are in effect and that may impact its Condensed Consolidated Financial Statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial condition, results of operations or liquidity. Effective January 1, 2019 the Company adopted the accounting pronouncements described below. Accounting for Leases ASU 2016-02, Leases, was issued by FASB in February 2016. This standard requires the Company, as the lessee, to recognize most leases on the balance sheet thereby resulting in the recognition of right of use assets and lease obligations for those leases currently classified as operating leases. The standard became effective for the Company on January 1, 2019 and the Company elected the optional transition method as well as the package of practical expedients upon adoption. Upon adoption, the Company recognized right of use ("ROU") assets and lease liabilities in the amount of $67.1 million and $74.1 million, respectively, within Other assets and Other liabilities lines of the Condensed Consolidated Financial Statements, respectively, and utilizing the modified retrospective approach, we evaluated ROU assets for impairment and determined that approximately $5.1 million of newly recognized ROU assets that existed immediately prior to the effective date were impaired. The impairment of ROU assets as of January 1, 2019, was recorded as a reduction to retained earnings and noncontrolling interests. Accounting Pronouncements to be Adopted Subsequent to December 31, 2019 Credit Loss Standard ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, was issued by FASB in June 2016. This standard is effective January 1, 2020 (with early adoption permitted), and will impact, at least to some extent, the Company's accounting and disclosure requirements for its recoverable from reinsurers, accounts receivable, and mortgage loans. Available for sale fixed maturity securities are not in scope of the new credit loss model but will undergo targeted improvements to the current reporting model including the establishment of a valuation allowance for credit losses versus the current direct write down approach. The Company will continue to identify any other financial assets not excluded from scope. The Company does not currently expect to early adopt this standard and is currently evaluating the impact of this new accounting guidance on its consolidated financial statements. Outlined below are key areas of change, although there are other changes not noted below: Financial assets (or a group of financial assets) measured at amortized cost will be required to be presented at the net amount expected to be collected, with an allowance for credit losses deducted from the amortized cost basis, resulting in a net carrying value that reflects the amount the entity expects to collect on the financial asset at purchase. Credit losses relating to available for sale fixed maturity securities will be recorded through an allowance for credit losses, rather than reductions in the amortized cost of the securities and is anticipated to increase volatility in the Company's Consolidated Statements of Operations. The allowance methodology recognizes that value may be realized either through collection of contractual cash flows or through the sale of the security. Therefore, the amount of the allowance for credit losses will be limited to the amount by which fair value is below amortized cost because the classification as available for sale is premised on an investment strategy that recognizes that the investment could be sold at fair value, if cash collection would result in the realization of an amount less than fair value. The Company's Consolidated Statements of Operations will reflect the measurement of expected credit losses for newly recognized financial assets as well as the expected increases or decreases (including the reversal of previously recognized losses) of expected credit losses that have taken place during the period. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Disclosures will be required to include information around how the credit loss allowance was developed, further details on information currently disclosed about credit quality of financing receivables and net investments in leases, and a rollforward of the allowance for credit losses for available for sale fixed maturity securities as well as an aging analysis for securities that are past due. The Company anticipates a significant impact on its systems, processes and controls. While the requirements of the new guidance represent a material change from existing GAAP, the underlying economics of items in scope and related cash flows are unchanged. The FASB has voted to delay the effective date of ASU 2016-13 to January 1, 2023 for smaller reporting companies with a revised ASU expected in the fourth quarter of 2019. Currently, the Company continues to focus on developing models and procedures, with testing and refinement of models occurring in 2020 and 2021 with parallel testing to performed in 2022. Focus areas will include, but not be limited to: (i) updating procedures to reflect new guidance requiring establishment of allowance for credit losses on available for sale debt securities; (ii) establishing procedures to review reinsurance risk to include but not limited to review of reinsurer ratings, trust agreements where applicable and historical and current performance; (iii) establishing procedures to identify and review all remaining financial assets within scope; and (iv) developing, testing, and implementing controls for newly developed procedures, as well as for additional annual reporting requirements. Long-Duration Contracts ASU 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, was issued by the FASB in August 2018 and is expected to have a significant impact on the Company’s Consolidated Financial Statements and Notes to Consolidated Financial Statements. The standard is effective January 1, 2021 (with early adoption permitted), and will impact, at least to some extent, Company's accounting and disclosure requirements for its long-duration insurance contracts. The Company does not currently expect to early adopt this standard and is currently evaluating the impact of this new accounting guidance on its consolidated financial statements. Outlined below are key areas of change, although there are other changes not noted below:
The Company anticipates that the requirement to update assumptions for liability for future policy benefits will increase volatility in the Company's Consolidated Statements of Operations while the requirement to update the discount rate will increase volatility in the Company's Consolidated Statements of Stockholders' Equity. The Company anticipates a significant impact on the systems, processes and controls. While the requirements of the new guidance represent a material change from existing GAAP, the underlying economics of the Company's Insurance segment and related cash flows are unchanged. The FASB has voted to delay the effective date of ASU 2018-12 to January 1, 2024 for smaller reporting companies with a revised ASU expected in the fourth quarter of 2019. Currently, the Company plans to focus on developing models and procedures through 2021, with testing and refinement of models occurring in 2022 and parallel testing to performed in 2023. Focus areas will include, but not be limited to: (i) determining an appropriate upper-medium grade fixed income instrument yield source from the market; (ii) establishing appropriate aggregation of liabilities; (iii) establishing liability models for each contract grouping identified that may be quickly updated to reflect current inforce listing and new discount rates on a quarterly basis; (iv) establishing appropriate best estimate assumptions with no provision for adverse deviation; (v) establishing procedures for annual review of assumptions including tracking of actual experience for enhanced reporting requirements; (vi) establishing new VOBA amortization that will align with new guidance for DAC amortization; and (vii) developing, testing, and implementing controls for newly developed procedures, as well as for additional annual reporting requirements. Subsequent Events ASC 855, Subsequent Events requires the Company to evaluate events that occur after the balance sheet date as of which the financial statements are issued, and to determine whether adjustments to or additional disclosures in the financial statements are necessary. See Note 22. Subsequent Events for the summary of the subsequent events. |
Acquisitions, Dispositions, and Deconsolidations - Business Acquisition, Pro Forma Information (Details) - KMG - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2018 |
|
Business Acquisition [Line Items] | ||
Net revenue | $ 509.2 | $ 1,581.5 |
Net income (loss) from operations | (43.2) | 9.2 |
Net income (loss) attributable to HC2 Holdings, Inc. | $ 139.8 | $ 215.4 |
Investments - Net Investment Income (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Investment [Line Items] | ||||
Gross investment income | $ 51.6 | $ 31.9 | $ 153.5 | $ 69.0 |
External investment expense | (0.4) | (0.2) | (0.9) | (0.2) |
Net investment income | 51.2 | 31.7 | 152.6 | 68.8 |
Fixed maturity securities, available-for-sale at fair value | ||||
Investment [Line Items] | ||||
Gross investment income | 45.2 | 26.7 | 132.5 | 58.6 |
Equity securities | ||||
Investment [Line Items] | ||||
Gross investment income | 1.9 | 1.5 | 6.5 | 2.7 |
Mortgage loans | ||||
Investment [Line Items] | ||||
Gross investment income | 3.4 | 2.0 | 10.2 | 4.8 |
Policy loans | ||||
Investment [Line Items] | ||||
Gross investment income | 0.3 | 0.3 | 0.9 | 0.9 |
Other invested assets | ||||
Investment [Line Items] | ||||
Gross investment income | $ 0.8 | $ 1.4 | $ 3.4 | $ 2.0 |
Accounts Payable and Other Current Liabilities (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accounts payable | $ 129.3 | $ 104.7 |
Accrued expenses and other current liabilities | 84.2 | 83.4 |
Accrued interconnection costs | 49.4 | 103.0 |
Accrued payroll and employee benefits | 40.8 | 44.2 |
Accrued interest | 24.3 | 8.8 |
Accrued income taxes | 1.1 | 0.8 |
Total accounts payable and other current liabilities | $ 329.1 | $ 344.9 |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Oct. 31, 2019 |
|
Cover page. | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | HC2 HOLDINGS, INC. | |
Entity Central Index Key | 0001006837 | |
Current Fiscal Year End Date | --12-31 | |
Entity Emerging Growth Company | false | |
Entity Smaller Reporting Company | true | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding (in shares) | 45,935,196 | |
Entity Shell Company | false | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes |
Fair Value of Financial Instruments - Measured on Nonrecurring Basis (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Assets | ||
Mortgage loans | $ 165.7 | $ 137.6 |
Policy loans | 19.1 | 19.8 |
Other invested assets | 84.4 | 72.5 |
Nonrecurring | Level 1 | ||
Assets | ||
Mortgage loans | 0.0 | 0.0 |
Policy loans | 0.0 | 0.0 |
Other invested assets | 0.0 | |
Total assets | 0.0 | 0.0 |
Liabilities | ||
Annuity benefits accumulated | 0.0 | 0.0 |
Debt obligations | 0.0 | 0.0 |
Total liabilities not accounted for at fair value | 0.0 | 0.0 |
Nonrecurring | Level 2 | ||
Assets | ||
Mortgage loans | 0.0 | 0.0 |
Policy loans | 19.1 | 19.8 |
Other invested assets | 0.0 | |
Total assets | 19.1 | 19.8 |
Liabilities | ||
Annuity benefits accumulated | 0.0 | 0.0 |
Debt obligations | 754.2 | 703.0 |
Total liabilities not accounted for at fair value | 754.2 | 703.0 |
Nonrecurring | Level 3 | ||
Assets | ||
Mortgage loans | 165.7 | 137.6 |
Policy loans | 0.0 | 0.0 |
Other invested assets | 1.6 | |
Total assets | 165.7 | 139.2 |
Liabilities | ||
Annuity benefits accumulated | 232.9 | 241.7 |
Debt obligations | 0.0 | 0.0 |
Total liabilities not accounted for at fair value | 232.9 | 241.7 |
Nonrecurring | Carrying Value | ||
Assets | ||
Mortgage loans | 165.7 | 137.6 |
Policy loans | 19.1 | 19.8 |
Other invested assets | 1.6 | |
Total assets | 184.8 | 159.0 |
Liabilities | ||
Annuity benefits accumulated | 235.5 | 244.0 |
Debt obligations | 784.1 | 702.5 |
Total liabilities not accounted for at fair value | 1,019.6 | 946.5 |
Nonrecurring | Estimated Fair Value | ||
Assets | ||
Mortgage loans | 165.7 | 137.6 |
Policy loans | 19.1 | 19.8 |
Other invested assets | 1.6 | |
Total assets | 184.8 | 159.0 |
Liabilities | ||
Annuity benefits accumulated | 232.9 | 241.7 |
Debt obligations | 754.2 | 703.0 |
Total liabilities not accounted for at fair value | $ 987.1 | $ 944.7 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock (in shares) | 80,000,000 | 80,000,000 |
Common stock, shares issued (in shares) | 46,554,499 | 45,391,397 |
Common stock, shares outstanding (in shares) | 45,850,584 | 44,907,818 |
Treasury stock (in shares) | 703,915 | 483,579 |
Commitments and Contingencies - Schedule Of Operating Lease Maturity (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 22.0 |
2020 | 18.7 |
2021 | 16.4 |
2022 | 8.8 |
2023 | 6.8 |
Thereafter | 20.3 |
Total obligations | $ 93.0 |
Investments - Schedule of Other-Than-Temporary Impairments (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Investment [Line Items] | ||||
Total Other-Than-Temporary Impairments | $ 0.0 | $ 0.6 | $ 0.0 | $ 0.6 |
Net realized and unrealized gains (losses) on investments | ||||
Investment [Line Items] | ||||
Total Other-Than-Temporary Impairments | $ 0.0 | $ 0.6 | $ 0.0 | $ 0.6 |
Accounts Receivable, net |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, net | 7. Accounts Receivable, net Accounts receivable, net consist of the following (in millions):
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Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | 3. Revenue Segments with revenues in scope of ASC 606, Contracts with customers, consist of the following (in millions):
(1) The Insurance segment does not have revenues in scope of ASC 606. Accounts receivables, net from contracts with customers consist of the following (in millions):
Construction Segment The following table disaggregates DBMG's revenue by market (in millions):
Contract Assets and Contract Liabilities Contract assets and contract liabilities consisted of the following (in millions):
The change in contract assets is a result of the recording of $40.8 million of costs in excess of billings driven by new commercial projects, offset by $40.2 million of costs in excess of billings transferred to receivables from contract assets recognized at the beginning of the period. The change in contract liabilities is a result of periodic billing in excess of costs of $29.8 million driven largely by new commercial projects, offset by revenue recognized that was included in the contract liability balance at the beginning of the period in the amount of $60.5 million. The transaction price allocated to remaining unsatisfied performance obligations consisted of the following (in millions):
DBMG includes an additional $22.5 million in its backlog that is not included in the remaining unsatisfied performance obligations noted above. This backlog represents commitments under master service agreements that are estimated amounts of work to be performed based on customer communications, historic experience and knowledge of our customers' intentions. Marine Services Segment The following table disaggregates GMSL's revenue by market (in millions):
Contract assets and contract liabilities consisted of the following (in millions):
The transaction price allocated to remaining unsatisfied performance obligations consisted of the following (in millions):
Energy Segment The following table disaggregates ANG's revenue by type (in millions):
Telecommunications Segment ICS's revenues are predominantly derived from wholesale of international long distance minutes (in millions):
Broadcasting Segment The following table disaggregates the Broadcasting segment's revenue by type (in millions):
The transaction price allocated to remaining unsatisfied performance obligations consisted of $3.5 million, $7.4 million, and $2.5 million of network advertising, broadcasting station revenues, and other revenue respectively of which $6.4 million is expected to be recognized within one year and $7.0 million is expected to be recognized within five years. |
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 millions):
The following table sets forth changes in the liability for claims for the portion of our long-term care insurance reserves (in millions):
The Insurance segment experienced a favorable claims reserve development of $46.9 million and an unfavorable claims reserve development of $6.0 million for the nine months ended September 30, 2019 and 2018, respectively. The reserve sufficiency is being driven by claim terminations and estimates for remaining benefits to be paid. Current experience has been favorable relative to the nine months ended September 30, 2018. This favorable development is attributable to the result of normal volatility in claims activity during the period and is expected to persist throughout the remainder of 2019. |
Acquisitions, Dispositions, and Deconsolidations (Tables) |
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Schedule of Purchase Price Allocation | The allocation of the fair value of consideration transferred among the identified assets acquired, liabilities assumed and bargain purchase gain are summarized as follows (in millions):
The preliminary allocation of the fair value of consideration transferred among the identified assets acquired, liabilities assumed, intangibles and residual goodwill are summarized as follows (in millions):
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Schedule of Business Acquisition, Pro Forma Information | The following schedule presents unaudited consolidated pro forma results of operations data as if the acquisition of KMG had occurred on January 1, 2018. This information does not purport to be indicative of the actual results that would have occurred if the 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 millions):
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Recoverable from Reinsurers (Tables) |
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Insurance [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Ceded Credit Risk | Recoverable from reinsurers consists of the following (in millions):
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