| Out of Period Adjustments, Changes in Accounting Principles and Reclassifications |
Out of Period Adjustments, Changes in Accounting Principles and Reclassifications
Management is presenting these tables to provide a clear understanding of out of period adjustments, the adoption of accounting principles and reclassifications to the Company’s historical results for the three and nine months ended September 30, 2014.
As it relates to the Consolidated Statements of Operations for the three months ended September 30, 2014, the Company has revised its prior year financial statements for an immaterial uncorrected misstatement. The revision, related to the Company’s real estate segment, increased depreciation and amortization expense by $852, and decreased net (loss) income attributable to noncontrolling interests - Tiptree Financial Partners, L.P. by $396 and decreased net (loss) income attributable to noncontrolling interests - Other by $170. As it relates to the Consolidated Statements of Operations for the nine months ended September 30, 2014, the Company has revised its prior year financial statements for an immaterial uncorrected misstatement. The revision, related to the Company’s real estate segment, increased depreciation and amortization expense by $2,556, and decreased net (loss) income attributable to noncontrolling interests - Tiptree Financial Partners, L.P. by $1,412 and decreased net (loss) income attributable to noncontrolling interests - Other by $510. The effects of these adjustments are presented below.
As it relates to the Statements of Cash Flows, the Company has revised its prior year presentation for an immaterial uncorrected misstatement. This revision, related to the presentation of its activities from CLOs, reduced operating activities from CLOs by $12,959 and increased investing activities from CLOs by $12,959. As mentioned in Note 2, in the Annual Report on Form 10-K for 2014, the Company elected to early adopt ASU 2014-13, Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity. The effects of these adjustments are presented below.
The sale of PFG is a transaction that qualifies to be treated as discontinued operations. This reclassification is reflected below (see Note 5—Dispositions, Assets Held for Sale and Discontinued Operations).
Certain prior period amounts have been reclassified to conform to the current year presentation. These amounts are identified under the reclassification heading in the tables below. | | | | | | | | | | | | | | | | | | | | | | | | | For the Three Months Ended September 30, 2014 | | As previously filed | | Out of period adjustments | | ASU 2014-13 adoption | | Discontinued operations | | Reclassifications(1) | | As adjusted | Revenues: | | | | | | | | | | | | Net realized (loss) gain on investments | $ | 7,909 |
| | $ | — |
| | $ | — |
| | $ | (31 | ) | | $ | (7,878 | ) | | $ | — |
| Change in unrealized appreciation on investments | (1,819 | ) | | — |
| | — |
| | 14 |
| | 1,805 |
| | — |
| Income from investments in partially owned entities | 2,204 |
| | — |
| | — |
| | — |
| | (2,204 | ) | | — |
| Net realized and unrealized gains | 8,294 |
| | — |
| | — |
| | (17 | ) | | (8,277 | ) | | — |
| | | | | | | | | | | | | Net realized and unrealized gains from investments | — |
| | — |
| | — |
| | — |
| | 9,274 |
| | 9,274 |
| Net realized and unrealized gains on mortgage pipeline and associated hedging instruments | — |
| | — |
| | — |
| | — |
| | (273 | ) | | (273 | ) | Interest income | 7,363 |
| | — |
| | — |
| | (1,131 | ) | | (2,889 | ) | | 3,343 |
| Gain on sale of loans held for sale, net | 2,383 |
| | — |
| | — |
| | — |
| | 42 |
| | 2,425 |
| Net Credit derivative losses | — |
| | — |
| | — |
| | — |
| | (786 | ) | | (786 | ) | Separate account fees | 5,931 |
| | — |
| | — |
| | (5,931 | ) | | — |
| | — |
| Administrative service fees | 12,845 |
| | — |
| | — |
| | (12,845 | ) | | — |
| | — |
| Loan fee income | — |
| | — |
| | — |
| | — |
| | 1,476 |
| | 1,476 |
| Rental revenue | 4,469 |
| | — |
| | — |
| | — |
| | — |
| | 4,469 |
| Other income | 1,537 |
| | — |
| | — |
| | (1 | ) | | (1,138 | ) | | 398 |
| Total revenues | 42,822 |
|
| — |
|
| — |
|
| (19,925 | ) |
| (2,571 | ) |
| 20,326 |
| Expenses: | | | | | | | | | | | | Interest expense | 8,500 |
| | — |
| | — |
| | (2,873 | ) | | (2,571 | ) | | 3,056 |
| Payroll expense | 12,559 |
| | — |
| | — |
| | (4,889 | ) | | — |
| | 7,670 |
| Professional fees | 3,420 |
| | — |
| | — |
| | (419 | ) | | — |
| | 3,001 |
| Change in future policy benefits | 1,063 |
| | — |
| | — |
| | (1,063 | ) | | — |
| | — |
| Mortality expenses | 2,667 |
| | — |
| | — |
| | (2,667 | ) | | — |
| | — |
| Commission expense | 679 |
| | — |
| | — |
| | (679 | ) | | — |
| | — |
| Depreciation and amortization expenses | 2,290 |
| | 852 |
| | — |
| | (1,409 | ) | | — |
| | 1,733 |
| Other expenses | 5,505 |
| | — |
| | — |
| | (2,774 | ) | | — |
| | 2,731 |
| Total expenses | 36,683 |
| | 852 |
| | — |
| | (16,773 | ) | | (2,571 | ) | | 18,191 |
| Results of consolidated CLOs: | | | | | | | | | | | | Income attributable to consolidated CLOs | (4,093 | ) | | — |
| | 18,569 |
| | — |
| | — |
| | 14,476 |
| Expenses attributable to consolidated CLOs | 15,552 |
| | — |
| | (3,812 | ) | | — |
| | — |
| | 11,740 |
| Net (loss) income attributable to consolidated CLOs | (19,645 | ) | | — |
| | 22,381 |
| | — |
| | — |
| | 2,736 |
| (Loss) income before taxes from continuing operations | (13,506 | ) | | (852 | ) | | 22,381 |
| | (3,152 | ) | | — |
| | 4,871 |
| Provision (benefit) for income taxes | (20 | ) | | — |
| | — |
| | (1,345 | ) | | — |
| | (1,365 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | For the Three Months Ended September 30, 2014 | | As previously filed | | Out of period adjustments | | ASU 2014-13 adoption | | Discontinued operations | | Reclassifications(1) | | As adjusted | (Loss) income from continuing operations | (13,486 | ) | | (852 | ) | | 22,381 |
| | (1,807 | ) | | — |
| | 6,236 |
| Discontinued operations: | | | | | | | | | | | | Income from discontinued operations, net | — |
| | — |
| | — |
| | 1,807 |
| | — |
| | 1,807 |
| Discontinued operations, net | — |
| | — |
| | — |
| | 1,807 |
| | — |
| | 1,807 |
| Net (loss) income before noncontrolling interest | (13,486 | ) | | (852 | ) | | 22,381 |
| | — |
| | — |
| | 8,043 |
| Less: net (loss) income attributable to noncontrolling interests | (1,904 | ) | | — |
| | — |
| | — |
| | 1,904 |
| | — |
| Less net (loss) income attributable to VIE subordinated noteholders | (11,854 | ) | | — |
| | 11,854 |
| | — |
| | — |
| | — |
| Less: net (loss) income attributable to noncontrolling interests - Tiptree Financial Partners, L.P. | — |
| | (396 | ) | | 5,957 |
| | — |
| | (1,653 | ) | | 3,908 |
| Less: net (loss) income attributable to noncontrolling interests - Other | — |
| | (170 | ) | | 271 |
| | — |
| | (251 | ) | | (150 | ) | Net income available to common stockholders | $ | 272 |
| | $ | (286 | ) | | $ | 4,299 |
| | $ | — |
| | $ | — |
| | $ | 4,285 |
| | | |
|
| | | | | | | | | Basic, continuing operations, net | $ | 0.02 |
| | $ | (0.03 | ) | | $ | 0.25 |
| | $ | (0.05 | ) | | $ | — |
| | $ | 0.19 |
| Basic, discontinued operations, net | — |
| | — |
| | — |
| | 0.05 |
| | — |
| | 0.05 |
| Basic earnings per share | $ | 0.02 |
| | $ | (0.03 | ) | | $ | 0.25 |
| | $ | — |
| | $ | — |
| | $ | 0.24 |
| | | | | | | | | | | | | Diluted, continuing operations, net | $ | 0.02 |
| | $ | (0.03 | ) | | $ | 0.25 |
| | $ | (0.05 | ) | | $ | — |
| | $ | 0.19 |
| Diluted, discontinued operations, net | — |
| | — |
| | — |
| | 0.05 |
| | — |
| | 0.05 |
| Diluted earnings per share | $ | 0.02 |
| | $ | (0.03 | ) | | $ | 0.25 |
| | $ | — |
| | $ | — |
| | $ | 0.24 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | For the Nine Months Ended September 30, 2014 | | As previously filed | | Out of period adjustments | | ASU 2014-13 adoption | | Discontinued operations | | Reclassifications (1) | | As adjusted | Revenues: | | | | | | | | | | | | Net realized (loss) gain on investments | $ | 7,007 |
| | $ | — |
| | $ | — |
| | $ | (31 | ) | | $ | (6,976 | ) | | $ | — |
| Change in unrealized appreciation on investments | (1,530 | ) | | — |
| | — |
| | — |
| | 1,530 |
| | — |
| Income from investments in partially owned entities | 2,884 |
| | — |
| | — |
| | — |
| | (2,884 | ) | | — |
| Net realized and unrealized gains | 8,361 |
| | — |
| | — |
| | (31 | ) | | (8,330 | ) | | — |
| | | | | | | | | | | | | Net realized and unrealized gains from investments | — |
| | — |
| | — |
| | — |
| | 10,034 |
| | 10,034 |
| Net realized and unrealized gains on mortgage pipeline and associated hedging instruments | — |
| | — |
| | — |
| | — |
| | (34 | ) | | (34 | ) | Interest income | 17,664 |
| | — |
| | — |
| | (3,464 | ) | | (3,681 | ) | | 10,519 |
| Gain on sale of loans held for sale, net | 5,117 |
| | — |
| | — |
| | — |
| | 108 |
| | 5,225 |
| Net Credit derivative losses | — |
| | — |
| | — |
| | — |
| | (2,307 | ) | | (2,307 | ) | Separate account fees | 16,943 |
| | — |
| | — |
| | (16,943 | ) | | — |
| | — |
| Administrative service fees | 37,786 |
| | — |
| | — |
| | (37,786 | ) | | — |
| | — |
| Loan fee income | — |
| | — |
| | — |
| | — |
| | 2,885 |
| | 2,885 |
| Rental revenue | 13,308 |
| | — |
| | — |
| | — |
| | — |
| | 13,308 |
| Other income | 3,404 |
| | — |
| | — |
| | (2 | ) | | (2,200 | ) | | 1,202 |
| Total revenues | 102,583 |
|
| — |
|
| — |
|
| (58,226 | ) |
| (3,525 | ) |
| 40,832 |
| Expenses: | | | | | | | | | | | | Interest expense | 20,721 |
| | — |
| | — |
| | (8,683 | ) | | (3,525 | ) | | 8,513 |
| Payroll expense | 35,642 |
| | — |
| | — |
| | (14,960 | ) | | — |
| | 20,682 |
| Professional fees | 7,334 |
| | — |
| | — |
| | (1,343 | ) | | — |
| | 5,991 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | For the Nine Months Ended September 30, 2014 | | As previously filed | | Out of period adjustments | | ASU 2014-13 adoption | | Discontinued operations | | Reclassifications (1) | | As adjusted | Change in future policy benefits | 3,260 |
| | — |
| | — |
| | (3,260 | ) | | — |
| | — |
| Mortality expenses | 7,892 |
| | — |
| | — |
| | (7,892 | ) | | — |
| | — |
| Commission expense | 1,837 |
| | — |
| | — |
| | (1,837 | ) | | — |
| | — |
| Depreciation and amortization expenses | 5,656 |
| | 2,556 |
| | — |
| | (3,149 | ) | | — |
| | 5,063 |
| Other expenses | 15,562 |
| | — |
| | — |
| | (7,816 | ) | | — |
| | 7,746 |
| Total expenses | 97,904 |
| | 2,556 |
| | — |
| | (48,940 | ) | | (3,525 | ) | | 47,995 |
| Net (loss) before taxes and income attributable to consolidated CLOs from continuing operations | 4,679 |
|
| (2,556 | ) |
| — |
|
| (9,286 | ) |
| — |
|
| (7,163 | ) | Results of consolidated CLOs: | | | | | | | | | | | | Income attributable to consolidated CLOs | 20,742 |
| | — |
| | 26,432 |
| | — |
| | — |
| | 47,174 |
| Expenses attributable to consolidated CLOs | 44,541 |
| | — |
| | (11,817 | ) | | — |
| | — |
| | 32,724 |
| Net (loss) income attributable to consolidated CLOs | (23,799 | ) | | — |
| | 38,249 |
| | — |
| | — |
| | 14,450 |
| (Loss) income before taxes from continuing operations | (19,120 | ) |
| (2,556 | ) |
| 38,249 |
|
| (9,286 | ) |
| — |
|
| 7,287 |
| Provision (benefit) for income taxes | 906 |
| | — |
| | — |
| | (4,003 | ) | | — |
| | (3,097 | ) | (Loss) income from continuing operations | (20,026 | ) | | (2,556 | ) | | 38,249 |
| | (5,283 | ) | | — |
| | 10,384 |
| Discontinued operations: | | | | | | | | | | | | Gain (loss)on sale of discontinued operations, net | — |
| | — |
| | — |
| |
|
| | — |
| | — |
| Income from discontinued operations, net | — |
| | — |
| | — |
| | 5,283 |
| | — |
| | 5,283 |
| Discontinued operations, net | — |
| | — |
| | — |
| | 5,283 |
| | — |
| | 5,283 |
| Net (loss) income before noncontrolling interest | (20,026 | ) | | (2,556 | ) | | 38,249 |
|
| — |
| | — |
| | 15,667 |
| Less: net (loss) income attributable to noncontrolling interests | (2,353 | ) | |
|
| | — |
| | — |
| | — |
| | (2,353 | ) | Less net (loss) income attributable to VIE subordinated noteholders | (20,041 | ) | | — |
| | 20,041 |
| | — |
| | 2,353 |
| | 2,353 |
| Less: net (loss) income attributable to noncontrolling interests - Tiptree Financial Partners, L.P. | — |
| | (1,412 | ) | | 11,536 |
| | — |
| | (1,665 | ) | | 8,459 |
| Less: net (loss) income attributable to noncontrolling interests - Other | — |
| | (510 | ) | | 456 |
| | — |
| | (688 | ) | | (742 | ) | Net income available to common stockholders | $ | 2,368 |
|
| $ | (634 | ) |
| $ | 6,216 |
|
| $ | — |
|
| $ | — |
|
| $ | 7,950 |
| | | | | | | | | | | | | Basic, continuing operations, net | $ | 0.18 |
| | $ | (0.05 | ) | | $ | 0.48 |
| | $ | (0.13 | ) | | $ | — |
| | $ | 0.48 |
| Basic, discontinued operations, net | — |
| | — |
| | — |
| | 0.13 |
| | — |
| | 0.13 |
| Basic earnings per share | $ | 0.18 |
| | $ | (0.05 | ) | | $ | 0.48 |
| | $ | — |
| | $ | — |
| | $ | 0.61 |
| | | | | | | | | | | | | Diluted, continuing operations, net | $ | 0.18 |
| | $ | (0.05 | ) | | $ | 0.48 |
| | $ | (0.13 | ) | | $ | — |
| | $ | 0.48 |
| Diluted, discontinued operations, net | — |
| | — |
| | — |
| | 0.13 |
| | — |
| | 0.13 |
| Diluted earnings per share | $ | 0.18 |
| | $ | (0.05 | ) | | $ | 0.48 |
| | $ | — |
| | $ | — |
| | $ | 0.61 |
|
Notes: (1) Prior period information reclassified to conform to the current year presentation. |