Attached files
| file | filename |
|---|---|
| 8-K - 8-K - TIPTREE INC. | d577785d8k.htm |
| EX-99.1 - EX-99.1 - TIPTREE INC. | d577785dex991.htm |
| EX-99.2 - EX-99.2 - TIPTREE INC. | d577785dex992.htm |
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On July 1, 2013, Tiptree Financial Inc. (formerly known as Care Investment Trust Inc.) ( “TFI” or “the Company”) completed the combination with Tiptree Financial Partners, L.P. (“TFP”) pursuant to the Contribution Agreement, dated as of December 31, 2012, as amended by Amendment No. 1 to the Contribution Agreement, dated as of February 14, 2013 (the “Contribution Agreement”), among TFI, TFP and Tiptree Operating Company, LLC (the “Operating Subsidiary”). Pursuant to the Contribution Agreement, TFI contributed substantially all of its assets to the Operating Subsidiary in exchange for 10,289,192 common units in the Operating Subsidiary (representing an approximately 25% interest in Operating Subsidiary), and TFP contributed substantially all of its assets to Operating Subsidiary in exchange for 31,147,371 common units in the Operating Subsidiary (representing an approximately 75% interest in Operating Subsidiary) and 31,147,371 shares of the Company’s newly classified Class B Common Stock (the “Contribution Transactions”).
The Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2013 giving effect to the Contribution Transactions as if they had occurred on the balance sheet date, and Statements of Operations for the three months ended March 31, 2013 include the historical consolidated statements of operations of the combined TFI and TFP, giving effect to the Contribution Transactions as if they had occurred at the beginning of the period. This information is only a summary, and you should read it in conjunction with the Company’s historical consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in TFI’s annual reports, quarterly reports and other information on file with the SEC and TFP’s historical consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations filed as Exhibit 99.2 to TFI’s Form 8-K filed on August 6, 2013. Prior to the Contribution Transactions TFI was majority owned by TFP. As a result, the combination of TFP and TFI pursuant to the Contribution Agreement is considered a business combination of companies under common control and will be accounted for in a manner similar to a pooling-of-interests.
We have prepared the unaudited pro forma condensed combined financial statements based on available information, using assumptions that we believe are reasonable. These unaudited pro forma condensed combined financial statements are being provided for informational purposes only. They do not purport to represent our actual financial position or results of operations had the Contribution Transactions occurred on the dates specified, nor do they project our results of operations or financial position for any future period or date.
The Unaudited Pro Forma Condensed Combined Statements of Operations do not reflect any adjustments for non-recurring items or anticipated synergies resulting from the combination. Pro forma adjustments are based on certain assumptions and other information that are subject to change as additional information becomes available. Accordingly, the adjustments included in our financial statements published after the completion of the combination may vary from the adjustments included in these unaudited pro forma condensed combined financial statements below.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 2013
| TFP | TFI | Eliminations | Historical Combined |
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| (in thousands) | ||||||||||||||||
| ASSETS |
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| Cash and cash equivalents – unrestricted |
$ | 61,255 | $ | 27,757 | $ | (27,757 | ) | $ | 61,255 | |||||||
| Cash and cash equivalents – restricted |
230,903 | — | — | 230,903 | ||||||||||||
| Due from brokers, dealers, trustees, separate accounts |
13,217 | — | — | 13,217 | ||||||||||||
| Accrued interest, dividends and management fees receivable |
5,590 | — | — | 5,590 | ||||||||||||
| Investments in trading securities and derivative financial instruments, at fair value |
80,788 | — | — | 80,788 | ||||||||||||
| Investments in available for sale securities, at fair value (amortized cost: $15,187) |
15,725 | — | — | 15,725 | ||||||||||||
| Investments in loans, at fair value |
1,013,991 | — | — | 1,013,991 | ||||||||||||
| Held-to-maturity securities — pledged |
— | — | — | — | ||||||||||||
| Loans owned, at amortized cost — pledged, net of allowance |
22,576 | 22,576 | (22,576 | ) | 22,576 | |||||||||||
| Investments in partially-owned entities |
8,395 | 2,493 | (2,493 | ) | 8,395 | |||||||||||
| Real estate |
140,959 | 140,959 | (140,959 | ) | 140,959 | |||||||||||
| Reinsurance receivables |
8,810 | — | — | 8,810 | ||||||||||||
| Policy loans |
101,585 | — | — | 101,585 | ||||||||||||
| Insurance policies and contracts acquired |
40,926 | — | — | 40,926 | ||||||||||||
| Separate account assets |
4,306,914 | — | — | 4,306,914 | ||||||||||||
| Deferred tax assets |
4,117 | — | — | 4,117 | ||||||||||||
| Intangible assets |
125,332 | 6,167 | (6,167 | ) | 125,332 | |||||||||||
| Deferred policy acquisition costs |
4,128 | — | — | 4,128 | ||||||||||||
| Other assets |
20,537 | 8,408 | (8,408 | ) | 20,537 | |||||||||||
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| Total Assets |
$ | 6,205,748 | $ | 208,360 | $ | (208,360 | ) | $ | 6,205,748 | |||||||
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| LIABILITIES AND EQUITY |
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| Liabilities |
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| Due to brokers, dealers and trustees |
$ | 66,625 | $ | — | $ | — | $ | 66,625 | ||||||||
| Derivative financial instruments, at fair value |
2,909 | — | — | 2,909 | ||||||||||||
| U.S. Treasuries, short position |
20,065 | — | — | 20,065 | ||||||||||||
| Mortgage Notes payable |
112,884 | 112,884 | (112,884 | ) | 112,884 | |||||||||||
| Notes payable |
1,020,701 | — | — | 1,020,701 | ||||||||||||
| Policy liabilities |
111,343 | — | — | 111,343 | ||||||||||||
| Separate account liabilities |
4,306,914 | — | — | 4,306,914 | ||||||||||||
| Accrued interest payable |
7,935 | — | — | 7,935 | ||||||||||||
| Other liabilities and accrued expenses |
13,054 | 3,754 | (3,754 | ) | 13,054 | |||||||||||
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| Total Liabilities |
5,662,430 | 116,638 | (116,638 | ) | 5,662,430 | |||||||||||
| Stockholders’ Equity |
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| Limited partnership units |
211,800 | — | (211,800 | ) | — | |||||||||||
| Common stock |
— | 11 | — | 11 | ||||||||||||
| Additional paid-in capital |
— | 84,146 | 173,930 | 258,076 | ||||||||||||
| Convertible preferred units |
38,128 | — | (38,128 | ) | — | |||||||||||
| Warrants |
3,540 | — | — | 3,540 | ||||||||||||
| Accumulated other comprehensive income |
4,735 | — | — | 4,735 | ||||||||||||
| Appropriated retained earnings of consolidated TAMCO |
101,424 | — | — | 101,424 | ||||||||||||
| Accumulated income |
172,809 | 2,338 | (2,338 | ) | 172,809 | |||||||||||
| Incentive allocation |
(11,475 | ) | — | — | (11,475 | ) | ||||||||||
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| Total stockholders’ equity |
520,961 | 86,495 | (78,336 | ) | 529,120 | |||||||||||
| Non-controlling interest |
22,357 | 5,227 | (13,386 | ) | 14,198 | |||||||||||
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| Total equity |
543,318 | 91,722 | (91,722 | ) | 543,318 | |||||||||||
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| Total liabilities and equity |
$ | 6,205,748 | $ | 208,360 | $ | (208,360 | ) | $ | 6,205,748 | |||||||
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2013
| TFP | TFI | Eliminations | Historical Combined |
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| (in thousands, except per share data) | ||||||||||||||||
| Net realized gains/(losses)—trading securities and available for sale securities, loans & derivatives |
$ | (509 | ) | $ | — | $ | — | $ | (509 | ) | ||||||
| Net realized gains/(losses)—extinguishment of note payable |
— | — | — | — | ||||||||||||
| Income/(loss) from investments in partially-owned entities, net |
89 | 83 | (83 | ) | 89 | |||||||||||
| Realized gain/loss—disposition of real estate |
— | — | — | — | ||||||||||||
| Other than temporary impairment—held-to-maturity securities and partially-owned entities |
— | — | — | — | ||||||||||||
| Change in unrealized appreciation—trading securities, loans, derivatives and foreign exchange |
3,674 | — | — | 3,674 | ||||||||||||
| Bargain purchase of subsidiaries |
— | — | — | — | ||||||||||||
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| Net realized and unrealized gains |
$ | 3,254 | $ | 83 | $ | (83 | ) | $ | 3,254 | |||||||
| Loan and security interest income |
17,136 | 324 | (324 | ) | 17,136 | |||||||||||
| Fees on separate accounts |
17,237 | — | — | 17,237 | ||||||||||||
| Rental revenue |
3,841 | 3,841 | (3,841 | ) | 3,841 | |||||||||||
| Management Fee Income |
137 | — | — | 137 | ||||||||||||
| Commission income |
— | — | — | — | ||||||||||||
| Other income |
410 | 366 | (366 | ) | 410 | |||||||||||
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| Total investment income |
$ | 38,761 | $ | 4,531 | $ | (4,531 | ) | $ | 38,761 | |||||||
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| Total revenues |
$ | 42,015 | $ | 4,614 | $ | (4,614 | ) | $ | 42,015 | |||||||
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| Compensation and Benefits |
8,242 | — | — | 8,242 | ||||||||||||
| Professional and management fees |
1,581 | 118 | (118 | ) | 1,581 | |||||||||||
| Interest expense |
17,141 | 1,651 | (1,651 | ) | 17,141 | |||||||||||
| Mortality expenses |
2,614 | — | — | 2,614 | ||||||||||||
| Commission expense |
555 | — | — | 555 | ||||||||||||
| Depreciation, amortization expenses |
1,269 | 1,094 | (1,094 | ) | 1,269 | |||||||||||
| Change in future policy benefits |
1,117 | — | — | 1,117 | ||||||||||||
| Other expenses |
4,717 | 1,899 | (1,899 | ) | 4,717 | |||||||||||
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| Total expenses |
$ | 37,236 | $ | 4,762 | $ | (4,762 | ) | $ | 37,236 | |||||||
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| Pre-tax Net income |
$ | 4,779 | $ | (148 | ) | $ | 148 | $ | 4,779 | |||||||
| Income tax |
(1,299 | ) | (1,299 | ) | ||||||||||||
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| Net Income attributable to the Partnership |
$ | 3,480 | $ | (148 | ) | $ | 148 | $ | 3,480 | |||||||
| Less: Net income attributable to the noncontrolling interest |
77 | — | 14 | 91 | ||||||||||||
| Less: Net Income attributable to the VIE subordinated noteholders |
(1,211 | ) | — | — | (1,211 | ) | ||||||||||
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| Net income |
$ | 4,614 | $ | (148 | ) | $ | 134 | $ | 4,600 | |||||||
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| Net income per share of common stock |
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| Basic |
$ | (0.01 | ) | $ | 0.11 | |||||||||||
| Diluted |
$ | (0.01 | ) | $ | 0.11 | |||||||||||
| Weighted average number of common LP units: |
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| Basic |
10,242 | 31,195 | 41,437 | |||||||||||||
| Diluted |
10,242 | 31,195 | 41,437 |
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
| 1. | Description of the transaction and basis of presentation |
The unaudited pro forma condensed combined financial statements give effect to the Contribution Transactions as if they had occurred at the beginning of the period.
| 2. | Eliminations in the Unaudited Pro Forma Combined Balance Sheet and Statements of Operations |
The eliminations column in the unaudited pro forma combined financial statements reflects the elimination of TFI’s financial statement balances which are incorporated in TFP’s financial results. Prior to the Contribution Transactions, as an owner of approximately 91% of TFI’s common stock TFP has historically consolidated TFI’s financial results.
The table below details the adjustment to the additional paid in capital on a pro forma basis as of March 31, 2013 assuming conversion of the convertible preferred units and TFP limited partnership units.
As of March 31, 2013
| (in thousands) | ||||||||
| TFP |
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| Limited partnership units |
$ | 211,800 | ||||||
| Convertible preferred units |
38,128 | |||||||
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| $ | 249,928 | |||||||
| TFI |
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| Common stock |
$ | (11 | ) | |||||
| Additional paid-in capital |
(84,146 | ) | ||||||
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| $ | (84,156 | ) | ||||||
| Eliminations |
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| Non-controlling interest |
$ | 13,386 | ||||||
| Reverse TFI non-controlling interest |
(5,227 | ) | ||||||
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| $ | 8,159 | |||||||
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| Adjustment to Additional paid-in capital |
$ | 173,930 | ||||||
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| 3. | We determine the pro forma per share net income (loss) by dividing the pro forma net income (loss) by the pro forma weighted average number of shares outstanding, assuming the combination had occurred at the beginning of the earliest period presented. |
We assume that the share count is increased by approximately 31 million shares per the terms of the transaction. At March 31, 2013 there are 10,241,502 weighted average common shares outstanding basic and diluted at TFI. The Operating Subsidiary membership units total 41,436,563; of which, 10,289,192 were issued to TFI and 31,147,371 were issued to TFP.
Further these pro forma statements assume the full exchange of TFP LP units for Class A shares of TFI. The Operating Subsidiary membership units not held by TFI (that is, those held by TFP or its LP unit holders) may be redeemed for Class A shares of TFI on a one-to-one basis (and cancellation of one share of Class B common stock) following July 1, 2014. These units enter into the computation of basic and diluted net income / (loss) per common share when the effect is dilutive using the if-converted method.