CNO Financial Group, Inc. (Conseco, Inc.) - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K, dated October 13, 2009, concerns Conseco, Inc. (now CNO Financial Group, Inc.). The filing addresses the re-issuance of historical financial statements from the 2008 Annual Report (Form 10-K) to reflect the retroactive adoption of a new accounting standard effective January 1, 2009.
Key Financial Metrics and Adjustments
The filing details the impact of adopting FSP No. APB 14-1 regarding the accounting for 3.5% Convertible Debentures due 2035. The adoption increased the effective interest rate on these debentures to 7.4%, resulting in a $45 million discount recorded against the notes, with the offsetting after-tax amount recorded to paid-in capital.
| Period | Metric | Original Value ($M) | Adjustment ($M) | Adjusted Value ($M) |
|---|---|---|---|---|
| Year Ended Dec 31, 2008 | Interest Expense | 97.8 | 8.7 | 106.5 |
| Net Loss | (1,126.7) | (5.6) | (1,132.3) | |
| Year Ended Dec 31, 2007 | Interest Expense | 117.3 | 8.0 | 125.3 |
| Net Loss | (179.9) | (5.1) | (185.0) | |
| Year Ended Dec 31, 2006 | Interest Expense | 73.5 | 7.5 | 81.0 |
| Net Income | 106.0 | (4.8) | 101.2 | |
| As of Dec 31, 2008 | Total Assets | 28,769.7 | (6.4) | 28,763.3 |
| Notes Payable | 1,328.7 | (17.2) | 1,311.5 | |
| Accumulated Deficit | (688.0) | (17.2) | (705.2) |
Material Changes Versus Prior Period
The primary material change is the restatement of historical data for 2006, 2007, and 2008. The adoption of FSP APB 14-1 increased reported interest expense and widened net losses (or reduced net income) for all three years due to the amortization of the debt discount. Additionally, total assets and notes payable were reduced, while additional paid-in capital was increased to reflect the equity component of the convertible debt.
Guidance, Outlook, and Risks
The filing does not provide forward-looking guidance, management commentary on future operations, or new risk factors. It explicitly states that the 2008 Form 10-K remains unchanged except for the specific retrospective adjustments to Items 6, 7, and 8, and Exhibit 12.1. The filing notes that the discount on the debentures will be amortized as interest expense over the remaining life of the notes.
Key Facts for Investor Verification
- Verify the updated 2008 Form 10-K to ensure the restated financial figures are reflected in subsequent filings.
- Confirm the remaining life and amortization schedule of the $45 million discount on the 3.5% Convertible Debentures.
- Review the impact of the increased effective interest rate (7.4%) on future interest expense projections.
- Note that the filing does not update other operational matters or provide new liquidity data beyond the balance sheet adjustments.