Document
Table of Contents


 
 
 
 
 
 
 
 
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
þ
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018

OR
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-38300
CANNAE HOLDINGS, INC.
______________________________________________________________________________________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware
 
82-1273460
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
 
 
 
1701 Village Center Circle, Las Vegas, Nevada
 
89134
(Address of principal executive offices)
 
(Zip Code)
(702) 323-7330
___________________________________________________________________
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit). YES þ NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer," “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o
 
Accelerated filer o
 
Non-accelerated filer þ
 
Smaller reporting company o
 
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO þ
As of October 31, 2018 there were 71,861,598 shares of the Registrant's common stock outstanding.


 
 
 
 
 
 
 
 
 
 



FORM 10-Q
QUARTERLY REPORT
Quarter Ended September 30, 2018
TABLE OF CONTENTS
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


i


Table of Contents


Part I: FINANCIAL INFORMATION

Item 1.
Condensed Consolidated and Combined Financial Statements

CANNAE HOLDINGS, INC.
CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS
(In millions)
(Unaudited)
 
September 30,
2018

December 31,
2017
 
 
 
 
ASSETS
Current assets:
 

 
 

Cash and cash equivalents
$
57.8

 
$
245.6

Short-term investments
32.2

 

Trade receivables
34.2

 
35.8

Inventory
43.3

 
29.7

Equity securities, at fair value

 
17.7

Income taxes receivable
0.2

 

Prepaid expenses and other current assets
84.7

 
21.4

Total current assets
252.4

 
350.2

Investments in unconsolidated affiliates
450.9

 
424.9

Property and equipment, net
186.0

 
218.8

Other intangible assets, net
194.6

 
214.5

Goodwill
197.2

 
202.7

Fixed maturity securities available for sale, at fair value
23.5

 
14.8

Deferred tax asset
8.4

 
10.6

Other long term investments and non-current assets
51.7

 
50.7

Total assets
$
1,364.7

 
$
1,487.2

 
 
 
 
LIABILITIES AND EQUITY
Current liabilities:
 

 
 

Accounts payable and other accrued liabilities, current
$
99.4

 
$
100.7

Income taxes payable

 
0.8

Deferred revenue
19.4

 
26.1

Notes payable, current
0.5

 
122.2

Total current liabilities
119.3

 
249.8

Deferred revenue, long term
2.9

 
9.1

Notes payable, long term
11.6

 
12.7

Accounts payable and other accrued liabilities, long term
58.4

 
62.5

Total liabilities
192.2

 
334.1

Commitments and contingencies - see Note G


 


Equity:
 

 
 
Cannae common stock, $0.0001 par value; authorized 115,000,000 shares as of September 30, 2018 and December 31, 2017; issued and outstanding of 71,861,598 and 70,858,143 as of September 30, 2018 and December 31, 2017, respectively

 

Preferred stock, $0.0001 par value; authorized 10,000,000 shares; issued and outstanding, none as of September 30, 2018 and December 31, 2017

 

Retained earnings
1.2

 
0.2

Additional paid-in capital
1,157.4

 
1,130.2

Accumulated other comprehensive loss
(67.5
)
 
(71.0
)
Total Cannae shareholders' equity
1,091.1

 
1,059.4

Noncontrolling interests
81.4

 
93.7

Total equity
1,172.5

 
1,153.1

Total liabilities and equity
$
1,364.7

 
$
1,487.2

See Notes to Condensed Consolidated and Combined Financial Statements

1

Table of Contents


CANNAE HOLDINGS, INC.
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(In millions)
(Unaudited)

Three months ended September 30,
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
 

 

Revenues:
 
 
 
Restaurant revenue
$
269.3

 
$
270.0

 
$
819.3

 
$
830.4

Other operating revenue
24.2

 
11.3

 
72.0

 
21.7

Total operating revenues
293.5

 
281.3

 
891.3

 
852.1

Operating expenses:
 
 
 
 
 
 
 
Cost of restaurant revenue
244.5

 
242.9

 
725.4

 
727.7

Personnel costs
30.6

 
18.7

 
145.0

 
79.2

Depreciation and amortization
16.7

 
11.9

 
46.9

 
34.9

Other operating expenses
27.6

 
28.6

 
73.9

 
72.8

Total operating expenses
319.4

 
302.1

 
991.2

 
914.6

Operating loss
(25.9
)
 
(20.8
)
 
(99.9
)
 
(62.5
)
Other income (expense):
 
 
 
 
 
 
 
Interest and investment income
1.6

 
1.6

 
4.5

 
3.9

Interest expense
(0.4
)
 
(1.8
)
 
(3.6
)
 
(5.2
)
Realized gains (losses), net
11.3

 
(0.2
)
 
77.8

 
4.9

Total other income (expense)
12.5

 
(0.4
)
 
78.7

 
3.6

Loss from continuing operations before income taxes and equity in losses of unconsolidated affiliates
(13.4
)
 
(21.2
)
 
(21.2
)
 
(58.9
)
Income tax benefit
(1.1
)
 
(2.6
)
 
(2.3
)
 
(27.0
)
Loss from continuing operations before equity in losses of unconsolidated affiliates
(12.3
)
 
(18.6
)
 
(18.9
)
 
(31.9
)
Equity in earnings (losses) of unconsolidated affiliates
3.8

 
(6.1
)
 
(16.9
)
 
(16.3
)
Loss from continuing operations
(8.5
)
 
(24.7
)
 
(35.8
)
 
(48.2
)
Net earnings from discontinued operations, net of tax - see Note J

 

 

 
147.7

Net (loss) earnings
(8.5
)
 
(24.7
)
 
(35.8
)
 
99.5

Less: Net loss attributable to non-controlling interests
(9.6
)
 
(8.1
)
 
(16.4
)
 
(10.8
)
Net earnings (loss) attributable to Cannae Holdings, Inc. common shareholders
$
1.1

 
$
(16.6
)
 
$
(19.4
)
 
$
110.3

 

 

 
 
 

Amounts attributable to Cannae Holdings, Inc. common shareholders
 
 
 
 
 
 
 
Net earnings (loss) from continuing operations attributable to Cannae Holdings, Inc. common shareholders
$
1.1

 
$
(16.6
)

$
(19.4
)

$
(37.4
)
Net earnings from discontinued operations attributable to Cannae Holdings, Inc. common shareholders

 

 

 
147.7

Net earnings (loss) attributable to Cannae Holdings, Inc. common shareholders
$
1.1

 
$
(16.6
)

$
(19.4
)

$
110.3

Earnings per share
 
 
 
 
 
 
 
Basic
 
 
 
 
 
 
 
Net earnings (loss) per share from continuing operations
$
0.02

 
$
(0.24
)
 
$
(0.27
)
 
$
(0.53
)
Net earnings per share from discontinued operations

 

 

 
2.09

Net earnings (loss) per share
$
0.02

 
$
(0.24
)
 
$
(0.27
)
 
$
1.56

Diluted

 

 

 

Net earnings (loss) per share from continuing operations
$
0.02

 
$
(0.24
)
 
$
(0.27
)
 
$
(0.53
)
Net earnings per share from discontinued operations

 

 

 
2.09

Net earnings (loss) per share
$
0.02

 
$
(0.24
)
 
$
(0.27
)
 
$
1.56

 
 
 
 
 
 
 
 
Weighted average shares outstanding Cannae Holdings common stock, basic basis
71.6

 
70.6

 
71.1

 
70.6

Weighted average shares outstanding Cannae Holdings common stock, diluted basis
71.6

 
70.6

 
71.1

 
70.6

See Notes to Condensed Consolidated and Combined Financial Statements

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Table of Contents


CANNAE HOLDINGS, INC.
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)
(In millions)
(Unaudited)

 
Three months ended September 30,
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
Net (loss) earnings
$
(8.5
)
 
$
(24.7
)
 
$
(35.8
)
 
$
99.5

Other comprehensive earnings, net of tax:
 

 
 

 
 

 
 

Unrealized gain (loss) on investments and other financial instruments, net (excluding investments in unconsolidated affiliates) (1)
1.5

 
(3.3
)
 
3.3

 
(4.2
)
Unrealized gain (loss) relating to investments in unconsolidated affiliates (2)
1.0

 
4.7

 
(5.9
)
 
10.0

Reclassification adjustments for unrealized gains and losses on investments and other financial instruments, net of tax, (excluding investments in unconsolidated affiliates) included in net earnings (3)
7.0

 

 
7.0

 
(3.1
)
Reclassification adjustments for unrealized gains and losses on unconsolidated affiliates, net of tax, included in net earnings (4)
(1.5
)
 

 
15.2

 

Other comprehensive earnings
8.0

 
1.4

 
19.6

 
2.7

Comprehensive (loss) earnings
(0.5
)
 
(23.3
)
 
(16.2
)
 
102.2

Less: Comprehensive loss attributable to noncontrolling interests
(9.6
)
 
(8.1
)
 
(16.4
)
 
(10.8
)
Comprehensive earnings (loss) attributable to Cannae Holdings, Inc.
$
9.1

 
$
(15.2
)
 
$
0.2

 
$
113.0

_________________________________
 
(1)
Net of income tax expense (benefit) of $0.5 million and $(2.0) million for the three months ended September 30, 2018 and 2017, respectively, and $1.1 million and $(2.6) million for the nine months ended September 30, 2018 and 2017, respectively.
(2)
Net of income tax expense (benefit) of $0.3 million and $2.7 million for the three months ended September 30, 2018 and 2017, respectively, and $(1.5) million and $6.2 million for the nine months ended September 30, 2018 and 2017, respectively.
(3)
Net of income tax expense (benefit) of $2.5 million for the three months ended September 30, 2018 and $2.5 million and $(1.9) million for the nine months ended September 30, 2017.
(4)
Net of income tax (benefit) expense of $(0.4) million for the three months ended September 30, 2018 and $4.0 million for the nine months ended September 30, 2018.
See Notes to Condensed Consolidated and Combined Financial Statements




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CANNAE HOLDINGS, INC.
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY
(In millions)
(Unaudited)
 
Parent Investment in FNFV
 
Accumulated Other Comp (Loss) Earnings
 
Non-controlling
Interests
 
Total
Equity
 
 
 
 
 
 
Balance, December 31, 2016
$
961.6

 
$
(68.1
)
 
$
116.3

 
$
1,009.8

Other comprehensive earnings—unrealized loss on investments and other financial instruments, net of tax

 
(4.2
)
 

 
(4.2
)
Other comprehensive earnings—unrealized gain on investments in unconsolidated affiliates, net of tax

 
10.0

 

 
10.0

Reclassification adjustments for change in unrealized gains and losses included in net earnings, net of tax

 
(3.1
)
 

 
(3.1
)
Subsidiary stock-based compensation

 

 
0.4

 
0.4

Sale of OneDigital

 

 
(6.2
)
 
(6.2
)
Net change in Parent investment in FNFV Group
(39.5
)
 

 

 
(39.5
)
Subsidiary dividends paid to noncontrolling interests

 

 
(0.1
)
 
(0.1
)
Ceridian stock-based compensation
4.5

 

 

 
4.5

Net earnings (loss)
110.3

 

 
(10.8
)
 
99.5

Balance, September 30, 2017
$
1,036.9

 
$
(65.4
)
 
$
99.6

 
$
1,071.1


 
Common Stock
 
Additional Paid-in Capital
 
Retained Earnings
 
Accumulated Other Comp (Loss) Earnings
 
Non-controlling
Interests
 
Total
Equity
 
Shares
 
$
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2017
70.9

 
$

 
$
1,130.2

 
$
0.2

 
$
(71.0
)
 
$
93.7

 
$
1,153.1

Adjustment for cumulative effect of adoption of ASC Topic 606

 

 

 
4.3

 

 

 
4.3

Adjustment for adoption of ASU 2018-02

 

 

 
16.1

 
(16.1
)
 

 

Reclassification of unrealized losses on investments in unconsolidated affiliates, net of tax, included in net earnings

 

 

 

 
15.2

 

 
15.2

Reclassification of unrealized losses on investments and other financial instruments, net of tax, included in net earnings

 

 

 

 
7.0

 

 
7.0

Other comprehensive earnings — unrealized gain on investments and other financial instruments, net of tax

 

 

 

 
3.3

 

 
3.3

Other comprehensive earnings — unrealized loss on investments in unconsolidated affiliates, net of tax

 

 

 

 
(5.9
)
 

 
(5.9
)
Stock-based compensation

 

 
1.3

 

 

 

 
1.3

Shares issued for investment success bonuses, net of issuance costs
1.0

 

 
19.8

 

 

 

 
19.8

Contribution of CSA services from FNF

 

 
0.9

 

 

 

 
0.9

Ceridian stock-based compensation

 

 
5.2

 

 

 

 
5.2

Sale of noncontrolling interest in consolidated subsidiary

 

 

 

 

 
4.1

 
4.1

Net loss

 

 

 
(19.4
)
 

 
(16.4
)
 
(35.8
)
Balance, September 30, 2018
71.9

 
$

 
$
1,157.4

 
$
1.2

 
$
(67.5
)
 
$
81.4

 
$
1,172.5


See Notes to Condensed Consolidated and Combined Financial Statements

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Table of Contents


CANNAE HOLDINGS, INC.
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 
Nine months ended September 30,
 
 
2018
 
2017
 
 
Cash flows from operating activities:
 
 
 
Net (loss) earnings
$
(35.8
)
 
$
99.5

Adjustments to reconcile net (loss) earnings to net cash used in operating activities:
 
 
 
            Depreciation and amortization
46.9

 
43.6

            Equity in losses of unconsolidated affiliates
16.9

 
16.3

            Distributions from investments in unconsolidated affiliates
1.2

 

            Realized gains and asset impairments, net
(71.0
)
 
(1.1
)
            Gain on sale of OneDigital

 
(276.0
)
            Stock-based compensation cost
21.0

 
0.4

Changes in assets and liabilities, net of effects from acquisitions:
 
 
 
Net decrease in trade receivables
1.6

 
8.1

Net increase in inventory, prepaid expenses and other assets
(10.6
)
 
(18.7
)
Net (decrease) increase in accounts payable, accrued liabilities, deferred revenue and other
(12.8
)
 
3.0

Net change in income taxes
(6.2
)
 
13.5

Net cash used in operating activities
(48.8
)
 
(111.4
)
Cash flows from investing activities:
 
 
 
Proceeds from sale of investment securities
17.7

 
31.6

Additions to property and equipment
(10.3
)
 
(28.4
)
Additions to other intangible assets

 
(1.1
)
Proceeds from sales of property and equipment
3.2

 

Purchases of investment securities available for sale

 
(1.3
)
Additional investments in unconsolidated affiliates

 
(1.4
)
Proceeds from the sale of investments in unconsolidated affiliates and other long term investments
7.0

 

Purchases of other long-term investments
(5.5
)
 
(3.6
)
Distributions from investments in unconsolidated affiliates
0.3

 
1.0

Net purchases of short-term investment securities
(32.2
)
 

Net other investing activities
0.7

 

Proceeds from sale of OneDigital

 
326.0

Other acquisitions of businesses, net of cash acquired

 
(21.1
)
Net cash (used in) provided by investing activities
(19.1
)
 
301.7

Cash flows from financing activities:
 
 
 
Borrowings
0.1

 
74.8

Debt service payments
(124.1
)
 
(32.5
)
Subsidiary distributions paid to noncontrolling interest shareholders

 
(0.1
)
Sale of noncontrolling interest in consolidated subsidiary
4.1

 

Payment of contingent consideration for prior period acquisitions

 
(4.0
)
Equity transactions with Parent, net

 
(39.4
)
Net cash used in financing activities
(119.9
)
 
(1.2
)
Net (decrease) increase in cash and cash equivalents
(187.8
)
 
189.1

Cash and cash equivalents at beginning of period
245.6

 
146.4

Cash and cash equivalents at end of period
$
57.8

 
$
335.5


See Notes to Condensed Consolidated and Combined Financial Statements

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Table of Contents


CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

Note A — Basis of Financial Statements
Description of the Business
We are a holding company engaged in actively managing and operating a group of companies and investments with a net asset value of approximately $1.1 billion as of September 30, 2018. Our business consists of managing and operating certain majority-owned subsidiaries, as well as making additional majority and minority equity portfolio investments in businesses, in order to achieve superior financial performance and maximize the value of these assets. As of September 30, 2018, our primary majority and minority-owned subsidiaries include American Blue Ribbon Holdings, LLC and its affiliates ("ABRH"), T-System Holdings, LLC ("T-System"), Ceridian HCM Holding, Inc. ("Ceridian HCM"), and various other controlled portfolio companies and minority equity investments.

See Note H for further discussion of the businesses comprising our reportable segments.

Split-off of Cannae from FNF
During December 2016, the board of directors of Fidelity National Financial, Inc. (“FNF” or “Parent”) authorized its management to pursue a plan to redeem each outstanding share of its Fidelity National Financial Ventures Group ("FNFV Group") common stock, par value $0.0001, for one share of common stock, par value $0.0001, of a newly formed entity, Cannae Holdings, Inc. (“Cannae” or the "Company"), with cash in lieu of fractional shares (the "Split-Off"). On November 17, 2017, FNF contributed to Cannae its majority and minority equity investment stakes in a number of entities, including ABRH, T-System, Ceridian Holding LLC ("Ceridian"), the former corporate parent of Ceridian HCM, and various other controlled portfolio companies and minority equity investments. The Split-Off was tax-free to stockholders of FNFV Group common stock.

Following the Split-Off, FNF and Cannae operate as separate, publicly traded companies. In connection with the Split-Off, FNF and Cannae entered into certain agreements in order to govern certain of the ongoing relationships between the two companies after the Split-Off and to provide for an orderly transition. These agreements include a reorganization agreement, a corporate services agreement, a registration rights agreement, a voting agreement and a tax matters agreement.

The reorganization agreement provides for, among other things, the principal corporate transactions (including the internal restructuring) required to effect the Split-Off, certain conditions to the Split-Off and provisions governing the relationship between Cannae and FNF with respect to and resulting from the Split-Off. The tax matters agreement provides for the allocation and indemnification of tax liabilities and benefits between FNF and Cannae and other agreements related to tax matters. The voting agreement and registration rights agreement provide for certain appearance and voting restrictions and registration rights on shares of Cannae owned by FNF after consummation of the Split-Off. Pursuant to the corporate services agreement (the "CSA"), FNF provides Cannae with certain "back office" services including legal, tax, accounting, and treasury support. FNF will generally provide these services at no-cost for up to three years. We record an expense and an offsetting increase to Additional paid-in-capital for contributed services. Cannae will reimburse FNF for direct, out-of-pocket expenses incurred by FNF in providing these services.

The Split-Off was accounted for at historical cost due to the pro rata nature of the distribution to holders of FNFV Group common stock.

Principles of Consolidation and Combination and Basis of Presentation
The accompanying Condensed Consolidated and Combined Financial Statements are prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and the instructions to Form 10-Q and Article 10 of Regulation S-X and include the historical accounts as well as wholly-owned and majority-owned subsidiaries of the Company. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All adjustments made were of a normal, recurring nature. This report should be read in conjunction with our Annual Report on Form 10-K (our "Annual Report") for the year ended December 31, 2017.
Prior to the Split-Off, these financial statements represent a combination of the historical financial information of the operations attributed to FNFV Group, of which Cannae is comprised. The Company is allocated certain corporate overhead and management services expenses from FNF based on the terms of the CSA and our proportionate share of the expense determined on actual usage and our best estimate of management's allocation of time. Both FNF and Cannae believe such allocations are reasonable; however, they may not be indicative of the actual results of operations or cash flows of the Company had the Company been operating as an independent, publicly traded company for the periods presented or the amounts that will be incurred by the Company in the future.

6

Table of Contents
CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED) — continued

All intercompany profits, transactions and balances have been eliminated. Our investments in non-majority-owned partnerships and affiliates are accounted for using the equity method until such time that they may become wholly or majority-owned. Earnings attributable to noncontrolling interests are recorded on the Condensed Consolidated and Combined Statements of Operations relating to majority-owned subsidiaries with the appropriate noncontrolling interest that represents the portion of equity not related to our ownership interest recorded on the Condensed Consolidated and Combined Balance Sheets in each period.
Management Estimates
The preparation of these Condensed Consolidated and Combined Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated and Combined Financial Statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management include the valuation of goodwill and acquired intangible assets (Note B) and fair value measurements (Note C). Actual results may differ from estimates.
Recent Developments
Dun & Bradstreet
On August 8, 2018, we entered into an agreement to partner with an investment consortium (the “Consortium”) including CC Capital Partners LLC and Thomas H. Lee Partners along with other investors to acquire The Dun & Bradstreet Corporation, a Delaware corporation ("Dun & Bradstreet", NYSE:DNB) (the "DNB Acquisition"). Contemporaneously, Dun & Bradstreet entered into an Agreement and Plan of Merger (the "Merger Agreement") by and between Dun & Bradstreet, Star Parent, L.P. ("Star"), a Delaware limited partnership, and Star Merger Sub, Inc. ("Merger Sub"), a Delaware corporation and a wholly owned subsidiary of Star, and upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Dun & Bradstreet (the "Merger"), with Dun & Bradstreet surviving the Merger as a wholly owned subsidiary of Star.
Under the terms of the Merger, which has been unanimously approved by Dun & Bradstreet’s Board of Directors, Dun & Bradstreet shareholders will receive $145.00 in cash for each share of common stock they own.
The DNB Acquisition will be financed through a combination of committed equity financing provided by the Consortium, committed preferred equity from preferred equity sources and debt financing that has been committed to by Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc. and Royal Bank of Canada.
As of the date of this Quarterly Report, we have entered into certain non-binding commitments with various investors to syndicate $400 million of our Equity Commitment (as defined in Note G). We expect to retain the remaining $500 million investment in the DNB Acquisition, representing 25.7% of the outstanding common equity of Star and Dun & Bradstreet, and to fund such amount through cash and investments on hand and debt financing.
The DNB Acquisition is expected to close within six months, subject to regulatory clearances and other customary closing conditions. The Dun & Bradstreet board is unanimously recommending that stockholders vote to adopt the merger agreement.
On September 12, 2018, Dun & Bradstreet filed its preliminary proxy statement on Schedule 14A with the United States Securities and Exchange Commission ("SEC"). The definitive proxy statement was filed with the SEC on October 2, 2018.
On November 7. 2018, Dun & Bradstreet held a special meeting of its stockholders to consider and vote on a proposal to adopt the Merger Agreement and Dun & Bradstreet stockholders voted to approve the Merger.
See Note G for further discussion of our obligations under the DNB Acquisition, Merger Agreement and other related agreements.
Ceridian
On April 26, 2018, Ceridian HCM's previously announced registration statement on Form S-1 was declared effective by the SEC and Ceridian HCM priced its initial public offering of 21,000,000 shares of common stock at a price of $22.00 per share (the "Ceridian IPO"). In addition, the underwriters of the Ceridian IPO were granted and exercised a 30-day option to purchase up to an additional 3,150,000 shares at the initial public offering price, less underwriting discounts and commissions. The New York Stock Exchange ("NYSE") and the Toronto Stock Exchange ("TSX") have approved the listing of Ceridian HCM's shares. Ceridian HCM’s shares trade on the NYSE and TSX under the ticker symbol “CDAY.” In accordance with the terms of our management agreement with Ceridian, the agreement was terminated upon closing of the Ceridian IPO. The termination resulted in a termination fee of $5.6 million which was paid to us on May 1, 2018 and is included in Other operating revenue on the Condensed Consolidated and Combined Statement of Operations for the nine months ended September 30, 2018.

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As a result of the Ceridian IPO, and participation in a concurrent private placement investment in which we acquired 1,521,030 shares of CDAY representing an investment of $33.4 million from funds previously invested by us and held at Ceridian, we own a total of 37,135,921 shares of CDAY. We recorded a gain of $63.2 million related to our change in ownership of Ceridian which is included in Realized gains, net on the Condensed Consolidated and Combined Statement of Operations for the nine months ended September 30, 2018. The recorded gain is net of $21.1 million of losses (exclusive of $4.4 million of income tax benefit) related to reclassification adjustments from Other comprehensive income.
On May 7, 2018, the Compensation Committee of the Board of Directors approved a success bonus of up to $67.1 million resulting from the successful Ceridian IPO. The success bonus was calculated based on 10% of the value of our investment in Ceridian HCM in excess of our basis in Ceridian prior to the Ceridian IPO. The success bonus was paid to certain members of the Board of Directors and management who contributed to acquiring and growing Ceridian over Cannae’s and its predecessor’s ten year ownership of Ceridian and was paid in a combination of cash and stock. On May 16, 2018, we issued 991,906 shares of our common stock for the stock portion of the bonuses. The remaining $46.9 million was paid in cash during the nine months ended September 30, 2018. The expense resulting from the success bonus is included in Personnel expense on the Condensed Consolidated and Combined Statement of Operations for the nine months ended September 30, 2018.
LifeWorks Corporation Ltd. ("LifeWorks"), a former minority-owned subsidiary of Ceridian, was distributed pro-rata to Ceridian shareholders contemporaneously with the Ceridian IPO. On July 27, 2018, LifeWorks was sold to Morneau Shepell, Inc. for $325.0 million. Cannae's cash proceeds for its equity interest in LifeWorks were $56.2 million, of which $49.8 million was received in October 2018. A receivable for the proceeds is included in Prepaid expenses and other current assets on our Condensed Consolidated and Combined Balance Sheet as of September 30, 2018. The remainder of the proceeds is expected to be received in 2018. We recorded a gain of $23.7 million on the sale which is included in Realized gains (losses), net on the Condensed Consolidated and Combined Statements of Operations for the three and nine months ended September 30, 2018.
Restaurant Group
On November 6, 2018, we entered into various definitive agreements with Fidelity Newport Holdings, LLC ("FNH", a subsidiary of the Company and the direct parent of ABRH), ABRH and 99 Restaurants Holdings, LLC ("99 Holdings" and, together with its direct and indirect subsidiaries, the "99 Companies") pursuant to which the following occurred (collectively, the "ABRH-99 Restructuring"): (i) ABRH and certain of its direct and indirect subsidiaries transferred to the applicable 99 Companies those assets principally associated with the 99 Restaurants brand that were not already owned by the 99 Companies; (ii) the existing intercompany credit facility (with an outstanding balance of approximately $133.0 million in principal, plus accrued but unpaid interest and fees) under which we were the sole lender to ABRH, for the benefit of ABRH and its subsidiaries, including the 99 Companies (the “Intercompany Credit Facility”), was modified so that 99 Holdings became the direct borrower (and ABRH and all of its direct and indirect subsidiaries, other than the 99 Companies, were released from their obligations thereunder); (iii) $100.0 million of the outstanding balance due to Cannae under the Intercompany Credit Facility was exchanged for 66.7% of the direct equity interest in 99 Holdings (with ABRH being the direct holder of the remaining 33.3% of the equity interests in 99 Holdings); (iv) FNH paid a facilitation fee to us in the form of 18,023,407 Class A units of FNH and (v) ABRH agreed to continue to provide support services to the 99 Companies. As a result of the the ABRH-99 Restructuring, Cannae (x) owns 65.4% of FNH directly and (y) 88.5% of 99 Holdings beneficially (through a combination of its directly held equity interests in 99 Holdings and the equity interests it holds in FNH).
In the quarter ended September 30, 2018, we entered into a plan to sell certain real estate assets of ABRH including its corporate offices located in Nashville, Tennessee and Denver, Colorado. In conjunction with the plan of sale, we reclassified $8.3 million from Property and equipment, net to Prepaid expenses and other current assets on the Condensed Consolidated and Combined Balance Sheet as of September 30, 2018.
Other Developments
On November 7, 2018, Cannae Funding, LLC (the "Borrower"), a wholly-owned special purpose subsidiary of the Company, entered into a Margin Loan Agreement (the "Loan Agreement"), and certain other related agreements, with Credit Suisse AG (in such capacity, "Administrative Agent") and other lenders thereto. Pursuant to the Loan Agreement, the Borrower may borrow up to $300.0 million (the "Margin Facility") in term loans at an interest rate of the three-month LIBOR plus an applicable margin. Interest on term loans under the Margin Facility is payable in-kind or cash at the Borrower's election. The Margin Facility is collateralized by 25.0 million shares of Ceridian held by the Company which will be contributed to the Borrower prior to any draws under the Margin Facility. The Margin Facility is subject to maintenance and margin LTV ratios pursuant to which the Borrower will be required to maintain a certain loan to value ratio (based on the value of Ceridian common stock held by Borrower). In the event that this ratio is not maintained, the Borrower must post additional cash collateral under the Loan Agreement and/or elect to repay a portion of the term loans thereunder. The Loan Agreement contains customary representations and warranties,

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covenants, event-of-default, and margin maintenance provisions for financings of this nature which, subject to certain terms and conditions, can result in the acceleration of the principal amount of, and accrued interest on, all outstanding term loans under the Margin Facility upon occurrence. As of the date of this Quarterly Report, there are no borrowings outstanding under the Margin Facility.
Concurrently with the Loan Agreement, Cannae entered into a Guaranty (the "Guaranty Agreement") in favor of the Administrative Agent and other lenders thereto pursuant to which Cannae absolutely, unconditionally and irrevocably guaranteed all of the Borrower's obligations under the Loan Agreement for a period of up to one year after the conditions to the effectiveness of the Loan Agreement have been met. During the period in which the Guaranty Agreement is enforceable, Cannae will be liable for all obligations payable by the Borrower under the Loan Agreement and other agreements entered into in connection therewith.
On August 10, 2018, our Board of Directors adopted a resolution increasing the size of the Company’s Board of Directors to eight, and elected Erika Meinhardt to serve on our Board of Directors. Ms. Meinhardt will serve in Class II of our Board of Directors, and her term will expire at the annual meeting of our shareholders to be held in 2019. Ms. Meinhardt has not been appointed to any committee of our Board.
Earnings Per Share
Basic earnings per share, as presented on the Condensed Consolidated and Combined Statement of Operations, is computed by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding during the period.
On November 17, 2017, the date of the consummation of the Split-Off, 70.6 million common shares of Cannae were distributed to FNFV Group shareholders. For comparative purposes, the weighted average number of common shares outstanding and basic and diluted earnings per share for the three and nine months ended September 30, 2017 were calculated using the number of shares distributed as if those shares were issued and outstanding beginning January 1, 2017.
In periods when earnings are positive, diluted earnings per share is calculated by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding plus the impact of assumed conversions of potentially dilutive securities. For periods when we recognize a net loss, diluted earnings per share is equal to basic earnings per share as the impact of assumed conversions of potentially dilutive securities is considered to be antidilutive. We have granted certain shares of restricted stock which have been treated as common share equivalents for purposes of calculating diluted earnings per share for periods in which positive earnings have been reported.
Instruments which provide the ability to purchase shares of our common stock that are antidilutive are excluded from the computation of diluted earnings per share. For the three months ended September 30, 2018, there were no antidilutive shares of restricted stock outstanding which were excluded from the calculation of diluted earnings per share. For the nine months ended September 30, 2018, there were 0.1 million antidilutive shares of restricted stock outstanding which were excluded from the calculation of diluted earnings per share.
Income Tax
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Reform Act”). Among other provisions, the Tax Reform Act reduced the Federal statutory corporate income tax rate from 35% to 21% and limited or eliminated certain deductions. Our effective tax rate was 8.2% and 12.3% in the three months ended September 30, 2018 and 2017, respectively, and 10.8% and 45.8% in the nine months ended September 30, 2018 and 2017, respectively. The decrease in the effective tax rate in the three-month period was attributable to the decrease in the statutory rate under the Tax Reform Act, partially offset by the discrete tax expense related to the sale of the Company’s LifeWorks investment. The decrease in the effective tax rate in the nine-month period was attributable to the Tax Reform Act and the impact of permanent differences primarily related to the wage and tip credits and losses in the Restaurant Group.
The Tax Reform Act significantly changes how the United States taxes corporations. The Company has analyzed and interpreted the current and future impacts of the Tax Reform Act and recorded the provisional effects in its financial statements as of September 30, 2018. However, the legislation remains subject to potential amendments, technical corrections and further guidance. Further, in connection with the filing of its tax return, the Company has the ability to change certain elections it has applied to the calculation of the year-end deferred tax assets and liabilities or amounts related to investments in subsidiaries.  When the impact of the Tax Reform Act is finalized, the Company will record any necessary adjustments in the period in which the change occurs. No adjustments related to the Tax Reform Act were recorded in the three and nine months ended September 30, 2018. The only area of continued analysis with respect to the Tax Reform Act is the final tax return to provision adjustments.


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NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED) — continued

Goodwill
Due to a significant decrease in the Restaurant Group's cash flows and unfavorable results of operations, the Company performed an interim impairment test of goodwill related to the Restaurant Group reporting unit in the third quarter of 2018. The results of the Company’s interim impairment test indicated the fair value of the Restaurant Group reporting unit exceeded its carrying value by 13%. Therefore, the Company concluded that the carrying value of goodwill of $103.1 million related to the Restaurant Group was not impaired based on the interim test. The valuation of goodwill requires the use of estimates of future results of reporting units. Due to uncertainty inherent in the estimation of the fair value of goodwill, should results of operations or cash flows of the Restaurant Group deteriorate in the near future we may be required to record material impairments in future periods. The Company will continue to monitor the results of this reporting unit.
Other Intangible Assets
We recorded $2.4 million of impairment expense related to a tradename in our Restaurant Group segment in the three months ended September 30, 2018 and an additional $3.4 million of impairment expense related to an abandoned software project in our Restaurant Group in the nine months ended September 30, 2018.
Property and Equipment, net
We recorded $1.7 million and $3.3 million of impairment expense related to Property and equipment in our Restaurant Group segment in the three and nine months ended September 30, 2018, respectively, which is recorded within Other operating expenses on our Condensed Consolidated and Combined Statements of Operations for the periods then ended.
Discontinued Operations
On June 6, 2017, we closed on the sale of Digital Insurance, Inc. ("OneDigital"). We retained no ownership in OneDigital and have no continuing involvement with OneDigital as of the date of the sale. As a result of the sale of OneDigital we have reclassified the financial results of OneDigital to discontinued operations for the nine months ended September 30, 2017 in our Condensed Consolidated and Combined Statement of Operations. See Note J for further details of the results of OneDigital.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU provides a new comprehensive revenue recognition model that requires companies to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. This update permits the use of either the retrospective or cumulative effect transition method. ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations was issued by FASB in March 2016 to clarify the principal versus agent considerations within ASU 2014-09. ASU 2016-10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing was issued by the FASB in April 2016 to clarify how to determine whether goods and services are separately identifiable and thus accounted for as separate performance obligations. ASU 2016-12 Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients was issued by the FASB in May 2016 to clarify certain terms from the aforementioned updates and to add practical expedients for contracts at various stages of completion. ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, was issued by the FASB in December 2016 which includes thirteen technical corrections and improvements affecting narrow aspects of the guidance issued in ASU 2014-09.
We adopted Accounting Standards Codification ("ASC") Topic 606 Revenue from Contracts with Customers ("ASC Topic 606") on January 1, 2018 using a modified retrospective approach with a cumulative-effect adjustment to the opening balance of retained earnings. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. The adoption of ASC Topic 606 did not have a significant impact on the timing or amount of recognition of revenue for our primary sources of revenue. As a result of the adoption of ASC Topic 606, we recorded a cumulative-effect adjustment of $4.3 million to increase Retained earnings and decrease Deferred revenue as of January 1, 2018. See Note K for further discussion of our revenue.
In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842). The amendments in this ASU introduce broad changes to the accounting and reporting for leases by lessees. The main provisions of the new standard include: clarifications to the definitions of a lease, components of leases, and criteria for determining lease classification; requiring virtually all leased assets, including operating leases and related liabilities, to be reflected on the lessee's balance sheet; and expanding and adding to the required disclosures for lessees. This update is effective for annual and interim periods beginning after December 15, 2018,

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including interim periods within those fiscal years. Early application of the standard is permitted. The ASU allows for a modified retrospective approach to transitioning which allows for the use of practical expedients to effectively account for leases commenced prior to the effective date in accordance with previous GAAP, except that lessees were required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. In July 2018, the FASB issued ASU 2018-11 Leases (Topic 842): Targeted Improvements which allows entities the option to adopt this standard prospectively with a cumulative-effect adjustment to opening equity and only include required disclosures for prior periods.
We are still evaluating the totality of the effects this new guidance will have on our business process and systems, financial statements and related disclosures. We have identified a vendor with software suited to track and account for leases under the new standard and are in process of transitioning our lease accounting within the software. We anticipate this standard will have a material impact on our consolidated balance sheets. However, while we are still completing our analysis, we do not anticipate that adoption of this ASU will have a material impact on our consolidated statements of operations. While we are continuing to assess all potential impacts of the standard, we currently believe the most significant impact relates to our accounting for leased real estate for our Restaurant Group. We plan to adopt this standard on January 1, 2019.
In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments. The amendments in this ASU introduce broad changes to accounting for credit impairment of financial instruments. The primary updates include the introduction of a new current expected credit loss ("CECL") model that is based on expected rather than incurred losses and amendments to the accounting for impairment of debt securities available for sale. This update is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the effect this new guidance will have on our financial statements and related disclosures and have not yet concluded on its effects. We do not expect to early adopt the standard.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.  The guidance simplifies the measurement of goodwill impairment by removing step 2 of the goodwill impairment test, which requires the determination of the fair value of individual assets and liabilities of a reporting unit.  The new guidance requires goodwill impairment to be measured as the amount by which a reporting unit’s carrying value exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendments should be applied on a prospective basis.  The new standard is effective for fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment tests performed after January 1, 2017. We have completed our evaluation of the effect this new guidance will have on our financial statements and related disclosures and have concluded that the effect will not be material. We do not expect to early adopt this standard.
In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.  The guidance allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Reform Act. The new standard is effective for fiscal years beginning after December 15, 2018 and interim periods in those fiscal years with early adoption permitted. We adopted this standard on April 1, 2018 resulting in a reclassification of $16.1 million of deferred taxes from Accumulated other comprehensive loss to Retained earnings. Other than the one-time reclassification resulting from the adoption of this standard, our policy is to release income tax effects from accumulated other comprehensive income at such time as the earnings or loss of the related activity are recognized in earnings (e.g., upon sale of an investment security).
Revision of Prior Period Financial Statements
Prior Year Revisions
In connection with the preparation of our Consolidated and Combined Financial Statements for the year ended December 31, 2017, we identified and corrected prior period errors pertaining to the accounting for our investment in Ceridian. Specifically, the adjustments related to: (1) our accounting for the equity pick-up related to stock-based compensation at Ceridian and (2) the timing of accounting adjustments made by Ceridian and by us. Adjustments in (1) above related to our accounting for the equity pick-up related to stock-based compensation at Ceridian had no impact to equity due to offsetting adjustments to Parent investment in FNFV Group.
These corrections resulted in the following changes:
i.an increase in Equity in losses of unconsolidated affiliates of $1.5 million and $2.4 million for the three and nine months ended September 30, 2017 respectively; and

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NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED) — continued

ii.a decrease in Income tax benefit of $0.8 million for the nine months ended September 30, 2017.
The effect of all prior period corrections, as disclosed in our Annual Report, decreased Parent investment in FNFV Group by $3.9 million as of December 31, 2016. The aggregate of these corrections and the corrections impacting the nine months ended September 30, 2017, as described above, decreased Parent investment in FNFV Group by $2.6 million at September 30, 2017.
No earnings per share data was affected as our shares began trading on November 20, 2017 and therefore was not previously presented.
Revisions to Prior Interim Periods of the Current Year
In connection with the preparation of our Condensed Consolidated Financial Statements for the quarter ended September 30, 2018, we identified and corrected an error pertaining to our presentation of comprehensive (loss) earnings for the three and six months ended June 30, 2018. The misstatement related to the reclassification of $16.7 million of unrealized losses of unconsolidated affiliates from accumulated other comprehensive loss to earnings in conjunction with the Ceridian IPO. The reclassification was properly reflected in the Condensed Consolidated Statement of Equity for the six months ended June 30, 2018; however, it was omitted from the Condensed Consolidated Statements of Comprehensive (Loss) Earnings. This omission resulted in a $16.7 million overstatement of the comprehensive loss and the comprehensive loss attributable to Cannae Holdings, Inc. for the three and six months ended June 30, 2018.
We have corrected the presentation of our comprehensive (loss) earnings for the nine months ended September 30, 2018 in the accompanying Condensed Consolidated Statement of Comprehensive (Loss) Earnings. The correction resulted in (i) an increase in the reclassification adjustments for unrealized gains and losses on unconsolidated affiliates, net of tax, included in net earnings, (ii) a decrease in comprehensive loss and (iii) an increase in comprehensive earnings attributable to Cannae Holdings, Inc. of $16.7 million.
Earnings from continuing operations, net earnings and earnings per share for the three and six months ended June 30, 2018 were not affected by the error and we have reflected the reclassification in the Condensed Consolidated and Combined Statement of Comprehensive (Loss) Earnings for the nine months ended September 30, 2018.
In accordance with accounting guidance found in ASC Topic 250-10 Accounting Changes and Error Corrections (SEC Staff Accounting Bulletin No. 99, Materiality), we assessed the materiality of the errors from quantitative and qualitative perspectives and concluded that the errors were not material, individually or in the aggregate, to any of our previously issued financial statements. Since the revision was not material to any prior period, no amendments to previously issued financial statements are required. Consequently, we have adjusted for these errors by revising the financial statement line items discussed above, including the related impacts to the statements of comprehensive loss, equity and cash flows and disclosures in our historical financial statements.
Note B — Acquisitions
The results of operations and financial position of the entities acquired during any period are included in the Condensed Consolidated and Combined Financial Statements from and after the date of acquisition.
T-System
On October 16, 2017, we completed the T-System Merger for aggregate merger consideration of $202.2 million. T-System is a provider of clinical documentation and coding solutions to hospital-based and free-standing emergency departments and urgent care facilities.
The Company paid total consideration, net of cash received, of $200.9 million in exchange for 100% of the equity ownership of T-System. The total consideration paid was as follows (in millions):
Cash paid
$
202.2

Less: Cash acquired
1.3

Total cash consideration paid
$
200.9

The purchase price has been allocated to T-System's assets acquired and liabilities assumed based on our best estimates of their fair values as of the acquisition date. Goodwill has been recorded based on the amount that the purchase price exceeds the fair value of the net assets acquired. $32.8 million of the goodwill recorded is deductible for tax purposes.


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CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED) — continued

The following table summarizes the total purchase price consideration and the final fair value amounts recognized for the assets acquired, excluding cash received, and liabilities assumed as of the acquisition date (in millions):
 
Fair Value
Trade receivables
$
11.3

Prepaid and other assets
2.0

Property and equipment
1.2

Goodwill
94.0

Other intangible assets
114.9

Total assets acquired
223.4

 
 
Accounts payable and accrued liabilities
6.6

Deferred revenue
11.0

Deferred tax liabilities
4.9

Total liabilities assumed
22.5

Net assets acquired
$
200.9

For comparative purposes, selected unaudited pro-forma combined results of operations of Cannae for the three and nine months ended September 30, 2017 are presented below (in millions). Pro-forma results presented assume the consolidation of T-System occurred as of the beginning of the 2017 period. Amounts are adjusted to exclude transaction costs directly attributable to the acquisition of T-System.
 
Three months ended September 30, 2017
Nine months ended September 30, 2017
 
(Unaudited)
Total revenues
$
295.1

$
895.0

Net (loss) earnings attributable to Cannae Holdings
(17.2
)
110.0

The gross carrying values and weighted average estimated useful lives of property and equipment and other intangible assets acquired in the T-System acquisition consists of the following (dollars in millions):
 
 
Gross Carrying Value
 
Weighted Average
Estimated Useful Life
(in years)
Property and equipment
 
$
1.2

 
3 - 5
Other intangible assets:
 
 
 
 
Customer relationships
 
59.2

 
10
Computer software
 
45.1

 
9
Tradename
 
10.6

 
10
Total other intangible assets
 
114.9

 
 
Total
 
$
116.1

 
 

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NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED) — continued

Note C — Fair Value Measurements

The fair value hierarchy established by the accounting standards on fair value measurements includes three levels which are based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. Financial assets and liabilities that are recorded in the Condensed Consolidated and Combined Balance Sheets are categorized based on the inputs to the valuation techniques as follows:
Level 1.  Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that we have the ability to access.
Level 2.  Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability.
Level 3.  Financial assets and liabilities whose values are based on model inputs that are unobservable.
Recurring Fair Value Measurements
The following table presents our fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of September 30, 2018 and December 31, 2017, respectively:
 
September 30, 2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(In millions)
Assets:
 
 
 
 
 
 
 
Fixed-maturity securities available for sale:
 

 
 

 
 

 
 

Corporate debt securities
$

 
$

 
$
23.5

 
$
23.5

Deferred compensation
4.2

 

 

 
4.2

     Total assets
$
4.2

 
$

 
$
23.5

 
$
27.7

Liabilities:
 
 
 
 
 
 
 
Deferred compensation
$
4.2

 
$

 
$

 
$
4.2

     Total liabilities
$
4.2

 
$

 
$

 
$
4.2


 
December 31, 2017
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(In millions)
Assets:
 
 
 
 
 
 
 
Fixed-maturity securities available for sale:
 

 
 

 
 

 
 

Corporate debt securities
$

 
$
14.8

 
$

 
$
14.8

Equity securities
17.7

 

 

 
17.7

Deferred compensation
4.4

 

 

 
4.4

     Total assets
$
22.1

 
$
14.8

 
$

 
$
36.9

Liabilities:
 
 
 
 
 
 
 
Deferred compensation
$
4.4

 
$

 
$

 
$
4.4

     Total liabilities
$
4.4

 
$

 
$

 
$
4.4


Our Level 3 fair value measurement for our fixed maturity securities available for sale are provided by a single third-party pricing service. Depending on security specific characteristics, either an income or a contingent claims approach was utilized in determining fair value of our Level 3 fixed-maturity securities available for sale. Discount rates are the primary unobservable inputs utilized for the securities valued using an income approach. The discount rates used are based on company-specific risk premiums, public company comparable securities, and leveraged loan indices. The discount rates used in our determination of the

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fair value of our Level 3 fixed-maturity securities available for sale varies by security type and was 11.8% to 17.0% as of September 30, 2018 and a weighted average of 11.9%. Based on the total fair value of our Level 3 fixed-maturity securities available for sale as of September 30, 2018, changes in the discount rate utilized will not result in a fair value significantly different than the amount recorded.
The following table presents a summary of the changes in the fair values of Level 3 assets, measured on a recurring basis, for the three and nine months ended September 30, 2018.
 
Three months ended September 30, 2018
 
Nine months ended September 30, 2018
 
Corporate debt
 
Corporate debt
 
securities
 
securities
 
 
 
 
Fair value, beginning of period
$
21.6

 
$

Transfers from Level 2

 
21.4

Paid-in-kind dividends (1)

 
0.1

Accretion of original purchase discount (1)
0.3

 
0.5

Net valuation gain included in other comprehensive earnings
1.6

 
1.5

Fair value, end of period
$
23.5

 
$
23.5

_____________________________________
(1) Included in Interest and investment income on the Condensed Consolidated and Combined Statements of Operations

Transfers into or out of the Level 3 fair value category occur when unobservable inputs become more or less significant to the fair value measurement or upon a change in valuation technique. For the nine months ended September 30, 2018, transfers between Level 2 and Level 3 were based on changes in significance of unobservable inputs used associated with a change in the service provider and in the valuation technique used to value our corporate debt securities. The Company’s policy is to recognize transfers between levels in the fair value hierarchy at the end of the reporting period which they occur.
As of December 31, 2017 and September 30, 2017, we held no material assets or liabilities measured at fair value using Level 3 inputs.
All of the unrealized gain (loss) on investments and other financial instruments, net (excluding investments in unconsolidated affiliates) on our Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2018 relate to fixed maturity securities considered Level 3 fair value measures.
Our Level 2 fair value measurement for our fixed-maturity securities available for sale as of December 31, 2017 was provided by a third-party provider. We relied on one price for the instruments to determine the carrying amount of the asset on our balance sheet. A blended comparable public company and discounted cash flow analysis was utilized to determine the fair value. The inputs utilized in the analysis included observable measures such as benchmark yields, benchmark securities, and reference data including public company operating results and market research publications. Other factors considered included the bond's yield, its terms and conditions, or any other feature which may influence its risk and thus marketability, as well as relative credit information and relevant sector news. We reviewed the pricing methodologies for our Level 2 securities by obtaining an understanding of the valuation models and assumptions used by the third-party as well as independently comparing the resulting prices to other publicly available measures of fair value.
Additional information regarding the fair value of our investment portfolio is included in Note D.
Deferred compensation plan assets are comprised of various investment funds which are valued based upon their quoted market prices.
The carrying amounts of trade receivables and notes receivable approximate fair value due to their short-term nature. The fair value of our notes payable is included in Note F.


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CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED) — continued

Note D — Investments

Available for Sale Securities
 The carrying amounts and fair values of our available for sale securities at September 30, 2018 and December 31, 2017 are as follows:
 
September 30, 2018
 
Carrying
Value
 
Cost Basis
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
(In millions)
Fixed maturity securities available for sale:
 

 
 

 
 

 
 

 
 

Corporate debt securities
$
23.5

 
$
21.4

 
$
2.1

 
$

 
$
23.5

  Total
$
23.5

 
$
21.4

 
$
2.1

 
$

 
$
23.5

 
December 31, 2017
 
Carrying
Value
 
Cost Basis
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
(In millions)
Fixed maturity securities available for sale:
 

 
 

 
 

 
 

 
 

Corporate debt securities
$
14.8

 
$
26.3

 
$
0.3

 
$
(11.8
)
 
$
14.8

Equity securities
17.7

 
17.7

 
0.3

 
(0.3
)
 
17.7

  Total
$
32.5

 
$
44.0

 
$
0.6

 
$
(12.1
)
 
$
32.5

 
The cost basis of fixed maturity securities available for sale includes an adjustment for amortized premium or discount since the date of purchase.
As of September 30, 2018 the fixed maturity securities in our investment portfolio had a maturity of greater than one year but less than five years. Expected maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.
Net unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2017 were as follows (in millions):
December 31, 2017
Less than 12 Months
 
Fair
 
Unrealized
 
Value
 
Losses
Corporate debt securities
$
14.3

 
$
(11.8
)
Equity securities
6.8

 
(0.3
)
Total temporarily impaired securities
$
21.1

 
$
(12.1
)

During the three and nine months ended September 30, 2018, we incurred $9.5 million of other-than-temporary impairment charges relating to corporate debt securities which is included in Realized gains (losses), net on the Condensed Consolidated and Combined Statements of Operations. The impairment recorded relates to a corporate debt holding which has experienced a prolonged period of declining earnings and which we are uncertain of our ability to recover our initial investment. All of the loss represents credit loss recognized in earnings and no portion of the loss was included in other comprehensive earnings. During the three and nine months ended September 30, 2017, we incurred no other-than-temporary impairment charges relating to investment securities.
During the nine months ended September 30, 2018, we sold equity securities for gross proceeds of $17.7 million, resulting in realized gains of less than $0.1 million. During the nine months ended September 30, 2017, we sold equity securities for gross proceeds of $31.6 million, resulting in realized gains of $5.1 million. We sold no securities in the three months ended September 30, 2018 or September 30, 2017.

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CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED) — continued

As of September 30, 2018, we held $5.1 million of corporate debt securities for which an other-than-temporary impairment had been previously recognized. It is possible that future events may lead us to recognize potential future impairment losses related to our investment portfolio and that unanticipated future events may lead us to dispose of certain investment holdings and recognize the effects of any market movements in our results of operations.
Investments in Unconsolidated Affiliates
Investments in unconsolidated affiliates recorded using the equity method of accounting as of September 30, 2018 and December 31, 2017 consisted of the following (in millions):
 
Ownership at September 30, 2018
 
September 30,
2018
 
December 31,
2017
Ceridian
%
 
$

 
$
324.9

Ceridian II
%
 

 
58.4

Ceridian HCM (CDAY)
26.9
%
 
413.9

 

Total investment in Ceridian


 
413.9

 
383.3

Other
various

 
37.0

 
41.6

Total
 

 
$
450.9

 
$
424.9

On March 30, 2016, Ceridian Holding II LLC ("Ceridian II"), an affiliate of Ceridian and Ceridian HCM, completed an offering of common stock (the “Offering”) for aggregate proceeds of $150.2 million. The proceeds of the Offering were used by Ceridian II to purchase shares of senior convertible preferred stock of Ceridian HCM, a wholly-owned subsidiary of Ceridian. As part of the Offering, FNF purchased a number of shares of common stock of Ceridian II equal to its pro-rata ownership in Ceridian.
As a result of an internal restructuring occurring upon the closing of the Ceridian IPO, Ceridian and Ceridian II were merged with and into Ceridian HCM and all ownership interests in Ceridian and Ceridian II were exchanged for common stock of Ceridian HCM.
Based on quoted market prices, the aggregate value of our ownership of Ceridian HCM common stock is $1.6 billion as of September 30, 2018.
Summarized financial information for Ceridian for the relevant dates and time periods included in Investments in unconsolidated affiliates and Equity in losses of unconsolidated affiliates in our Condensed Consolidated and Combined Balance Sheets and Statements of Operations, respectively, is presented below. As a result of the Ceridian IPO and associated internal restructuring of Ceridian HCM, financial information as of and for the three and nine months ended September 30, 2018 below represents the operating results and financial position of Ceridian HCM and financial information as of December 31, 2017, and for the three and nine months ended September 30, 2017, represents the operating results and financial position of Ceridian, adjusted to remove the effects of the discontinued operations of LifeWorks. See Note A for further discussion of Ceridian HCM's distribution of LifeWorks.
 
September 30,
2018
 
December 31,
2017
 
(In millions)
Total current assets before customer funds
$
291.7

 
$
459.3

Customer funds
3,426.6

 
4,099.7

Goodwill and other intangible assets, net
2,142.1

 
2,167.5

Other assets
102.4

 
104.1

Total assets
$
5,962.8

 
$
6,830.6

Current liabilities before customer obligations
$
139.3

 
$
177.7

Customer obligations
3,457.0

 
4,105.5

Long-term obligations, less current portion
665.0

 
1,119.8

Other long-term liabilities
163.0

 
197.9

Total liabilities
4,424.3

 
5,600.9

Equity
1,538.5

 
1,229.7

Total liabilities and equity
$
5,962.8

 
$
6,830.6


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CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED) — continued


 
Three months ended September 30, 2018
 
Three months ended September 30, 2017
 
Nine months ended September 30, 2018
 
Nine months ended September 30, 2017
 
(In millions)
 
(In millions)
Total revenues
$
179.6

 
$
163.5

 
$
546.1

 
$
488.4

Earnings (loss) before income taxes
6.5

 
(16.8
)
 
(43.1
)
 
(48.4
)
Net earnings (loss)
4.4

 
(20.1
)
 
(63.2
)
 
(54.2
)

Short-term Investments
Short-term investments consist primarily of commercial paper and short-duration U.S. agency securities which have an original maturity of greater than three months but less than one year. Short-term investments are carried at amortized cost, which approximates fair value.

Note E — Inventory
Inventory consists of the following:
 
September 30,
2018
 
December 31,
2017
 
(In millions)
Bakery inventory:
 
 
 
Raw materials
$
8.6

 
$
9.1

Semi-finished and finished goods
24.0

 
7.5

Packaging
3.1

 
2.8

Obsolescence reserve
(2.8
)
 
(0.6
)
Total bakery inventory
32.9

 
18.8

Other restaurant-related inventory
10.2

 
10.9

Other
0.2

 

Total inventory
$
43.3

 
$
29.7


Note F — Notes Payable
Notes payable consists of the following:
 
 
September 30,
2018
 
December 31,
2017
 
 
(In millions)
ABRH Term Loan, interest payable monthly at LIBOR + 3.0%, due August 2019
 
$

 
$
84.2

ABRH Revolving Credit Facility due August 2019 with interest payable monthly or quarterly at various rates
 

 
38.0

Brasada Cascades Credit Agreement, due January 2026 with interest payable monthly at varying rates
 
11.8

 
12.1

Corporate Revolver Note with FNF, Inc., unused portion of $100.0 million at September 30, 2018
 

 

Other
 
0.3

 
0.6

Notes payable, total
 
$
12.1

 
$
134.9

Less: Notes payable, current
 
0.5

 
122.2

Notes payable, long term
 
$
11.6

 
$
12.7

At September 30, 2018 the carrying value of our outstanding notes payable approximates fair value. The carrying values of the variable rate notes pursuant to the Brasada Cascades Credit Agreement approximate fair value as they are variable rate instruments with short reset periods (either monthly or quarterly) which reflect current market rates. The revolving credit facilities

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CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED) — continued

are considered Level 2 financial liabilities. The fixed-rate note pursuant to the Cascades Credit Agreement approximates fair value as of September 30, 2018.
On January 29, 2016, FNF NV Brasada, LLC, an Oregon limited liability company and majority-owned subsidiary of Cannae, entered into a credit agreement with an aggregate borrowing capacity of $17.0 million (the “Cascades Credit Agreement”) with Bank of the Cascades, an Oregon state-chartered commercial bank (“Bank of the Cascades”), as lender. On June 13, 2018, the Cascades Credit agreement was modified to add an additional line of credit of $3.6 million and to assign the loan from the Bank of the Cascades to First Interstate Bank. The material terms of the Cascades Credit Agreement are set forth in our Annual Report on Form 10-K for the year ended December 31, 2017. As of September 30, 2018, the variable rate notes incurred interest at 4.42%, and there is $4.4 million available to be drawn on the Line of Credit Loan.
On August 19, 2014, ABRH entered into a credit agreement (the “ABRH Credit Facility”) with Wells Fargo Bank, National Association as administrative agent, Swingline Lender and Issuing Lender (the “ABRH Administrative Agent”), Bank of America, N.A. as syndication agent and the other financial institutions party thereto. The ABRH Credit Facility was amended on February 24, 2017. The material terms of the ABRH Credit Facility are set forth in our Annual Report on Form 10-K for the year ended December 31, 2017. In March 2018, the ABRH Credit Facility was assigned to Cannae and the outstanding balance was paid off in its entirety. Subsequent to the assignment, Cannae and ABRH entered into an amendment to the Credit Facility to increase the interest rate to 10%, suspend the financial covenants until March 31, 2019 and require ABRH to pay to Cannae an amendment fee equal to 2% of the outstanding loan balance.
On June 30, 2014, FNF Group issued to Fidelity National Financial Ventures, LLC ("FNFV, LLC"), a former subsidiary of FNFV Group, a revolver note in an aggregate principal amount of up to $100.0 million (the “Revolver Note”), pursuant to FNF's revolving credit facility. On November 17, 2017, FNF issued to Cannae a revolver note in aggregate principal amount of up to $100.0 million (the "FNF Revolver") which replaced the Revolver Note. The material terms of the FNF Revolver are set forth in our Annual Report on Form 10-K for the year ended December 31, 2017. As of September 30, 2018, we have not made any borrowings under the FNF Revolver.
      Gross principal maturities of notes payable at September 30, 2018 are as follows (in millions):
 
2018 (remaining)
$
0.1

2019
0.6

2020
1.3

2021
0.5

2022
0.5

Thereafter
9.4

 
$
12.4


Note G — Commitments and Contingencies
Legal Contingencies
In the ordinary course of business, we are involved in various pending and threatened litigation and regulatory matters related to our operations, some of which include claims for punitive or exemplary damages. Our ordinary course litigation includes purported class action lawsuits, which make allegations related to various aspects of our business. From time to time, we also receive requests for information from various state and federal regulatory authorities, some of which take the form of civil investigative demands or subpoenas. Some of these regulatory inquiries may result in the assessment of fines for violations of regulations or settlements with such authorities requiring a variety of remedies. We believe that no actions, other than those discussed below, depart from customary litigation or regulatory inquiries incidental to our business.
Our Restaurant Group companies are a defendant from time to time in various legal proceedings arising in the ordinary course of business, including claims relating to injury or wrongful death under “dram shop” laws that allow a person to sue us based on any injury caused by an intoxicated person who was wrongfully served alcoholic beverages at one of the restaurants; individual and purported class or collective action claims alleging violation of federal and state employment, franchise and other laws; and claims from guests or employees alleging illness, injury or other food quality, health or operational concerns. Our Restaurant Group companies are also subject to compliance with extensive government laws and regulations related to employment practices and policies and the manufacture, preparation, and sale of food and alcohol. We may also become subject to lawsuits and other

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CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED) — continued

proceedings, as well as card network fines and penalties, arising out of the actual or alleged theft of our customers' credit or debit card information.
We review lawsuits and other legal and regulatory matters (collectively “legal proceedings”) on an ongoing basis when making accrual and disclosure decisions. When assessing reasonably possible and probable outcomes, management bases its decision on its assessment of the ultimate outcome assuming all appeals have been exhausted. For legal proceedings in which it has been determined that a loss is both probable and reasonably estimable, a liability based on known facts and which represents our best estimate is recorded. As of September 30, 2018 and December 31, 2017, we had $0.6 million and $0.2 million, respectively, accrued for legal proceedings. Actual losses may materially differ from the amounts recorded and the ultimate outcome of our pending legal proceedings is generally not yet determinable. While some of these matters could be material to our operating results or cash flows for any particular period if an unfavorable outcome results, at present we do not believe that the ultimate resolution of currently pending legal proceedings, either individually or in the aggregate, will have a material adverse effect on our financial condition, results of operations or cash flows.
O’Charley’s is the defendant in a lawsuit, Otis v. O’Charley’s, LLC, filed on July 13, 2016, in U.S. District Court, Central District of Illinois. The lawsuit purports to bring a national class action on behalf of all O’Charley’s servers and bartenders under the Fair Labor Standards Act and similar state laws. The complaint alleges that O'Charley's failed to pay plaintiffs the applicable minimum wage and overtime by requiring tipped employees to: (a) spend more than twenty percent of their time performing non-tipped duties, including dishwashing, food preparation, cleaning, maintenance, and other "back of the house" duties; and (b) perform “off the clock” work. Plaintiffs seek damages and declaratory relief. The named plaintiffs and members of the putative class are parties to employment agreements with O’Charley’s that provide, inter alia, for individual arbitration of potential claims and disputes. On October 25, 2016, the District Court entered an Order staying all proceedings in the Otis case pending the United States Supreme Court’s resolution of certain petitions for certiorari filed in several Circuit Courts of Appeals cases that address the issue of whether agreements between employers and employees to arbitrate disputes on an individual basis are enforceable under the Federal Arbitration Act. The Order provides that, if certiorari is granted in any of the Circuit Courts of Appeals cases, the stay of the Otis case will continue until the Supreme Court reaches a final decision on the merits in the cases. On January 13, 2017, the Supreme Court granted certiorari in three of the Circuit Courts of Appeals cases that address the enforceability of arbitration agreements. On May 21, 2018, the Supreme Court ruled on the issue, holding that class-action waivers in employment arbitration agreements are enforceable. The District Court has continued the stay pending the completion of such arbitration proceedings, which have not yet commenced.
Operating Leases
Future minimum operating lease payments as of September 30, 2018 are as follows (in millions):
2018 (remaining)
$
15.4

2019
60.0

2020
54.2

2021
47.4

2022
36.3

Thereafter
138.9

Total future minimum operating lease payments
$
352.2

Unconditional Purchase Obligations
The Restaurant Group has unconditional purchase obligations with various vendors.  These purchase obligations are primarily food and beverage obligations with fixed commitments in regards to the time period of the contract and the quantities purchased with annual price adjustments that can fluctuate. We used both historical and projected volume and pricing as of September 30, 2018 to determine the amount of the obligations.

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CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED) — continued

Purchase obligations as of September 30, 2018 are as follows (in millions):
2018 (remaining)
$
67.2

2019
45.2

2020
21.2

2021
8.5

2022
3.8

Thereafter
3.6

Total purchase commitments
$
149.5

DNB Acquisition
In connection with the DNB Acquisition, we entered into an equity commitment letter (the "Equity Commitment Letter"), a limited guarantee agreement (the "Limited Guarantee"), and a letter (the "Letter").
Equity Commitment Letter
On August 8, 2018, we entered into the Equity Commitment Letter with Star, pursuant to which the Company has committed, on the terms and subject to the conditions set forth therein, at the closing of the Merger (the “Closing”), to purchase, directly or indirectly, common equity of Star for an aggregate purchase price equal to $900.0 million (the “Equity Commitment”), subject to certain reductions for syndication sales to other investors as prescribed by the Letter (the terms of which are described more fully under “Letter” below). The Equity Commitment, together with the equity commitments of other members of the Consortium and other funding as contemplated by the Merger Agreement, will be used by Star, to fund, directly or indirectly, the Merger, to the extent necessary.
The obligation of the Company to fund the Equity Commitment will terminate automatically and immediately upon the earliest to occur of certain events including principally (a) the Closing (upon funding), (b) the termination of the Merger Agreement in accordance with its terms, or (c) Dun & Bradstreet or any of its affiliates or representatives asserting any claim, subject to certain exceptions, against the Company in connection with the Merger Agreement or any of the transactions contemplated by the Equity Commitment Letter, Limited Guarantee, or the Merger Agreement.
Limited Guarantee
In addition, on August 8, 2018, the Company executed a Limited Guarantee in favor of Dun & Bradstreet to guarantee payment of 46.31% of certain termination fees, summarized below, and other expenses payable by Star in the event that the Merger Agreement is terminated pursuant to certain provisions of the Merger, subject to the terms and conditions set forth therein.
The Merger Agreement includes the following termination rights and related termination fees, which are subject to the provisions of the Limited Guarantee:
if the Merger Agreement is terminated by Dun & Bradstreet (i) because Star or Merger Sub have breached their respective representations, warranties, covenants or other agreements in the Merger Agreement in certain circumstances and have failed to cure such breach within a certain period or (ii) because Star has failed to consummate the Merger pursuant to the Merger Agreement notwithstanding the satisfaction or waiver of the conditions to Star's and Merger Sub’s obligations to do so and certain notice of such failure from Dun & Bradstreet to Star, then Star will be required to pay Dun & Bradstreet a termination fee equal to $380.1 million and
if the Merger Agreement is terminated in certain circumstances related to the failure to receive certain regulatory approvals, then Star will be required to pay Dun & Bradstreet a termination fee equal to $380.1 million.
Letter
In connection with the execution of the Merger Agreement, we entered into the Letter with Star. The terms of the Letter stipulate that the Company, as soon as reasonably practicable following the execution of the Merger Agreement, shall use reasonable best efforts, in collaboration with Star, to syndicate at least $600.0 million of the Equity Commitment to other investors, subject to certain qualifications set forth therein. In addition, the Letter places certain restrictions on the Company's ability to sell or pledge any of our 37,135,921 shares of Ceridian other than for the purposes of funding the Equity Commitment, along with other restrictions.

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CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED) — continued

The obligations of the Company under the Letter will terminate automatically and immediately upon the earliest to occur of: (a) the Closing; (b) the reduction of the Equity Commitment to $300.0 million or less, subject to certain terms and conditions stipulated in the Letter; and (c) the termination of the Company's obligation to fund the Equity Commitment (as defined in the Equity Commitment Letter) pursuant to the terms of the Equity Commitment Letter. Additionally, the Company shall remain the primary obligor for the Equity Commitment (including to the extent syndicated) until the earlier of (i) the Closing and (ii) the termination of our obligation to fund the Equity Commitment pursuant to the terms of the Equity Commitment Letter. We are permitted to have our syndicated investors enter into an equity commitment with Star or the Company.
As of the date of this Quarterly Report, we have entered into non-binding commitments with various investors to syndicate $400 million of our Equity Commitment. We expect to retain the remaining $500 million investment in the DNB Acquisition, representing 25.7% of the outstanding common equity of Star and Dun & Bradstreet, and to fund such amount through cash and investments on hand and debt financing.




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CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED) — continued

Note H — Segment Information
Summarized financial information concerning our reportable segments is shown in the following tables.
As of and for the three months ended September 30, 2018:
 
Restaurant Group
 
T-System
 
Ceridian
 
Corporate and Other
 
Ceridian Elimination
 
Total
 
 
Restaurant revenues
$
269.3

 
$

 
$

 
$

 
$

 
$
269.3

Other operating revenues

 
14.1

 
179.6

 
10.1

 
(179.6
)
 
24.2

Revenues from external customers
269.3

 
14.1

 
179.6

 
10.1

 
(179.6
)
 
293.5

Interest and investment income, including realized gains and losses
(2.4
)
 

 

 
15.3

 

 
12.9

Total revenues
266.9

 
14.1

 
179.6

 
25.4

 
(179.6
)
 
306.4

Depreciation and amortization
11.8

 
4.5

 
14.3

 
0.4

 
(14.3
)
 
16.7

Interest expense
(4.1
)
 
(1.4
)
 
(8.8
)
 
5.1

 
8.8

 
(0.4
)
(Loss) earnings from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates
(21.7
)
 
(2.9
)
 
6.5

 
11.2

 
(6.5
)
 
(13.4
)
Income tax (benefit) expense

 
(0.7
)
 
(0.9
)
 
(0.4
)
 
0.9

 
(1.1
)
(Loss) earnings from continuing operations, before equity in earnings (losses) of unconsolidated affiliates
(21.7
)
 
(2.2
)
 
7.4

 
11.6

 
(7.4
)
 
(12.3
)
Equity in earnings of unconsolidated affiliates

 

 

 
2.6

 
1.2

 
3.8

(Loss) earnings from continuing operations
$
(21.7
)
 
$
(2.2
)
 
$
7.4

 
$
14.2

 
$
(6.2
)
 
$
(8.5
)
Assets
$
454.8


$
219.5


$
5,962.8

 
$
690.4

 
$
(5,962.8
)
 
$
1,364.7

Goodwill
103.1


94.0


1,949.8

 
0.1

 
(1,949.8
)
 
197.2

As of and for the three months ended September 30, 2017:
 
Restaurant Group
 
Ceridian
 
 Corporate
and Other
 
Ceridian Elimination
 
Total
 
 
Restaurant revenues
$
270.0

 
$

 
$

 
$

 
$
270.0

Other operating revenues

 
163.5

 
11.3

 
(163.5
)
 
11.3

Revenues from external customers
270.0

 
163.5

 
11.3

 
(163.5
)
 
281.3

Interest and investment income, including realized gains and losses

 

 
1.4

 

 
1.4

Total revenues
270.0

 
163.5

 
12.7

 
(163.5
)
 
282.7

Depreciation and amortization
11.2

 
13.6

 
0.7

 
(13.6
)
 
11.9

Interest expense
(1.6
)
 
(21.9
)
 
(0.2
)
 
21.9

 
(1.8
)
(Loss) earnings from continuing operations, before income taxes and equity in earnings (losses) of unconsolidated affiliates
(18.5
)
 
(16.8
)
 
(2.7
)
 
16.8

 
(21.2
)
Income tax expense (benefit)

 
0.9

 
(2.6
)
 
(0.9
)
 
(2.6
)
(Loss) earnings from continuing operations, before equity in earnings (losses) of unconsolidated affiliates
(18.5
)
 
(17.7
)
 
(0.1
)
 
17.7

 
(18.6
)
Equity in earnings (losses) of unconsolidated affiliates

 

 
0.2

 
(6.3
)
 
(6.1
)
(Loss) earnings from continuing operations
$
(18.5
)
 
$
(17.7
)
 
$
0.1

 
$
11.4

 
$
(24.7
)
Assets
$
490.1

 
$
6,195.7

 
$
879.6

 
$
(6,195.7
)
 
$
1,369.7

Goodwill
103.1

 
1,964.5

 

 
(1,964.5
)
 
103.1



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CANNAE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED) — continued

As of and for the nine months ended September 30, 2018:
 
Restaurant Group
 
T-System
 
Ceridian
 
Corporate and Other
 
Ceridian Elimination
 
Total
 
 
Restaurant revenues
$
819.3

 
$

 
$

 
$

 
$

 
$
819.3

Other operating revenues

 
47.4

 
546.1

 
24.6

 
(546.1
)
 
72.0

Revenues from external customers
819.3

 
47.4

 
546.1

 
24.6

 
(546.1
)
 
891.3

Interest and investment income, including realized gains and losses
(1.0
)
 

 

 
83.3

 

 
82.3

Total revenues
818.3

 
47.4

 
546.1

 
107.9

 
(546.1
)
 
973.6

Depreciation and amortization
33.2

 
12.8

 
42.4

 
0.9

 
(42.4
)
 
46.9

Interest expense
(11.6
)
 
(2.9
)
 
(74.4
)
 
10.9

 
74.4

 
(3.6
)
(Loss) earnings from continuing operations, before income taxes and equity in earnings (losses) of unconsolidated affiliates
(36.9
)
 
(4.2
)
 
(43.1
)
 
19.9

 
43.1

 
(21.2
)
Income tax (benefit) expense

 
(1.3
)
 
5.8

 
(1.0
)
 
(5.8
)
 
(2.3
)
(Loss) earnings from continuing operations, before equity in earnings (losses) of unconsolidated affiliates
(36.9
)
 
(2.9
)
 
(48.9
)
 
20.9

 
48.9

 
(18.9
)
Equity in earnings (losses) of unconsolidated affiliates
0.1

 

 

 
3.4

 
(20.4
)
 
(16.9
)
(Loss) earnings from continuing operations
$
(36.8
)
 
$
(2.9
)
 
$
(48.9
)
 
$
24.3

 
$
28.5

 
$
(35.8
)
Assets
$
454.8

 
$
219.5

 
$
5,962.8

 
$
690.4

 
$
(5,962.8
)
 
$
1,364.7

Goodwill
103.1

 
94.0

 
1,949.8

 
0.1

 
(1,949.8
)
 
197.2

As of and for the nine months ended September 30, 2017:
 
Restaurant Group
 
Ceridian
 
Corporate and Other
 
Ceridian Elimination
 
Total
 
 
Restaurant revenues
$
830.4

 
$

 
$

 
$

 
$
830.4

Other operating revenues

 
488.4

 
21.7

 
(488.4
)
 
21.7

Revenues from external customers
830.4

 
488.4

 
21.7

 
(488.4
)
 
852.1

Interest and investment income, including realized gains and losses