A history
of victory
2020 Annual Report
A culture of
performance
Cannae’s book value per share rose from
$18.72 at the beginning of the year to $41.22
by the end of 2020. We made several new
portfolio investments including:
• $504 million committed to Paysafe;
• $404 million committed to Alight;
• $289 million in Optimal Blue;
• $201 million in CoreLogic, of which
$199 million was returned in the
fourth quarter 2020;
Dear valued shareholders,
• $121 million in AmeriLife Group;
2020 was best defined as a year of
disruption. Employees found new ways
to work (e.g. remotely), capital markets
found new ways to raise money (SPACs or
Special Purpose Acquisition Companies),
and in many ways the future came to us
faster than we anticipated, best reflected
in accelerating valuations for technology
companies. It is in these times of
disruption when I have historically made
some of my best investments, serving as a
catalyst for many of our 2020 investments.
Cannae’s successful model is reinforced
by our approach to Environmental, Social
and Governance (ESG) factors across our
Company, and in the ESG due diligence
process we utilize when we select
companies in which to invest.
• And, subsequent to year-end we
invested a combined $31 million
upfront in two new SPACs discussed
below, receiving founder’s shares
and warrants, and committing to
associated forward commitments
totaling $175 million.
Paysafe
Our strategy in 2020 was to use the robust
SPAC market as a capital multiplier for
Cannae, enabling us to establish large and
often controlling positions in high quality
public-ready companies at favorable
prices that we would otherwise not have
been able to acquire on our own. A great
example of this strategy is our investment in
Paysafe (NYSE: PSFE), highlighting our
WILLIAM P. FOLEY, II
Chairman
ON THE COVER:
Hannibal's crossing of the Alps
in 218 BC was one of the major
events of the Second Punic War,
and one of the most celebrated
achievements of any military force
in ancient warfare.
Military camp at the Battle of
Cannae, where the Carthaginians
and their allies, led by Hannibal,
defeated the much larger Roman
and Italian army.
CANNAE HOLDINGS, INC. / 2020 AR team’s ability to adapt to market conditions
and disruptive environments, applying the
principles I have honed over the course of
the last three decades. Foley Trasimene
Acquisition Corp II completed its upsized
IPO in August of 2020 and announced its
merger with Paysafe prior to year-end, four
months after its initial SPAC listing. Cannae
was able to deliver to its shareholders
a 7.5% interest in Paysafe and an 8.3%
interest in Alight (discussed in the next
section), subsequent to year-end, at $9.11
and $8.82 per share respectively, implying
gross out of the box gains of approximately
$430 million combined, without accounting
for the warrants.
Paysafe and Alight are industry
utilities and will continue to grow their
margins with technology efficiencies
and economies of scale. We have high
ambitions for both companies to achieve
organic growth trajectories as well as
robust M&A pipelines, in which we are
well on our way towards executing.
The success and progression achieved in a
year that was dynamic and unprecedented
is a testament to our disciplined, value-
based approach that will continue to
unearth opportunities and deliver value to
our shareholders for years to come.
Alight / Foley Trasimene
Acquisition Corp
In the second quarter of 2020, we
made our first move in the SPAC arena,
sponsoring Foley Trasimene Acquisition
Corp (NYSE: WPF). This offering was
upsized and the underwriters exercised
their full over allotment. As a founder,
Cannae held a 20% economic interest
in the sponsor and committed to a $150
million forward purchase agreement.
Eight months after launching our first
SPAC, we announced a $7.3 billion
agreement with Alight Solutions, a cloud-
based employee engagement partner
provider of healthcare, benefits and payroll
solutions. As I previously mentioned, Alight
is a terrific example of an industry utility;
has a large install base embedded within
the heart of our nation’s largest employers,
counting 70 of the Fortune 100, and half
of the Fortune 500 as clients. Alight has
long-term contracts with high customer
retention, generating EBITDA of more than
$560 million in 2020.
At a 12x valuation multiple combined with
Cannae’s sponsor shares, this will prove to
be a particularly rewarding investment for
our shareholders from the onset. We have
many ideas on how to accelerate Alight's
growth and expand their offerings that will
further enhance Cannae’s returns. This
deal is expected to close in the second
quarter of 2021.
Optimal Blue
Another example of our ability to move
swiftly and purposefully is Optimal Blue,
one of the most embedded mortgage
marketplace platforms in the country. We
were familiar admirers of Optimal Blue
from past investment reviews and were
excited when the opportunity arose to own
significant equity in the company. This was
a competitive bid and our team worked
feverishly with our long-time investment
partners at Thomas H. Lee (THL) and
1
1
CANNAE HOLDINGS, INC. / 2020 AR Black Knight, Inc. (NYSE: BKI) to complete
due diligence and present an attractive
package to Optimal Blue’s owners. That
value was recognized, and our offer was
accepted in September 2020.
The investment has been performing well
in excess of our collective expectations,
displaying its client value with a 100%
retention rate after a price increase. Both
Cannae and THL own a 20% interest in
Optimal Blue, coupled with a call/put
agreement that allows 60% owner BKI
to call our holdings for the greater of 2x
our investment or fair value in years 3
to 5, and provides us with a put to sell
at 2x or fair value in years 4 to 6. I am
confident Cannae shareholders will realize
a significant gain on this investment within
the option periods.
CoreLogic
With our partners at Senator, we initiated
a plan at the close of 2019 to acquire
CoreLogic (NYSE: CLGX), as an attractive
investment opportunity. We ultimately
acquired 5.8 million share equivalents,
representing an approximately 7.5% stake
in the company at an average price of
approximately $45.00 per share. While
we were unsuccessful in convincing
CoreLogic’s board to open themselves
up to a sale process, it turns out we were
not the highest bidder for the company
and decided to exit our position. We
began liquidating our position in mid-
November, and closed out our position
in early February 2021, selling shares at
an average price of approximately $77.00
per share, representing total proceeds
of $479 million on an investment of $292
million for an IRR of 77% and gross cash
gains of $187 million.
AmeriLife
Cannae’s investment in AmeriLife in March
of 2020 totaled $120 million (20% interest)
along with Thomas H. Lee (80%), and has
outperformed our expectations both in
the pace and quality of its acquisitions, in
addition to its organic sales performance,
particularly in the fixed income annuities
and Medicare Advantage plan sales.
Today, AmeriLife has more than 200,000
agents nationwide in nearly 60 insurance
agency offices and 35 marketing
organizations, covering 43 states, and is in
its 51st year of business.
Dun & Bradstreet
Our investment in Dun & Bradstreet
(NYSE: DNB) hit several milestones in
2020. In July, DNB completed its initial
public offering at an enterprise value of
$9.1 billion, representing an approximately
3x return to equity holders, the largest
of which is Cannae. At the onset of that
acquisition we set a goal of reducing
annualized expenses by $200 million,
and by the end of 2020 the annualized
savings realized exceeded $241 million.
DNB announced an agreement to acquire
Bisnode, a leading European provider of
data and analytics for businesses and a
two-decade partner of DNB, bringing a
more than 110,000 customer base and 33
million records into the fold.
We believe this investment has a lot of
room to grow, as evidenced by our $200
million additional investment at the public
offering date. Cannae now has $726.1
million invested in DNB and holds 76.6
million shares, or approximately 18% of
the company. Our average cost per share
of DNB is approximately $9.50, compared
to DNB’s closing price on 12/31/20 of
$24.90 per share.
Ceridian
Ceridian (NSYE: CDAY) is the second
largest holding on a fair value basis and
the longest held investment of significance,
having made our initial investment in
2007. Ceridian’s industry-leading cloud-
based human capital management
platform, Dayforce, continues to grow its
install base at an annualized double-digit
pace despite the challenges posed by
COVID. The need for cloud-based flexible
solutions was glaringly apparent during
the pandemic, showcasing the ability of
Dayforce to address ever-changing needs
of businesses globally.
2
CANNAE HOLDINGS, INC. / 2020 AR The company made several acquisitions
outside of the North American market in
2019 and continues to do so, announcing
the acquisition of Ascender, an HCM-
provider serving over 1.3 million employees
in Asia, and nearly doubling the number
Ceridian serves in the region.
After Ceridian’s IPO, Cannae began
converting portions of investment in
the ensuing year and continued that
process in 2020, selling more than 9.7
million CDAY shares for gross proceeds
of approximately $721 million, or
approximately $74 per share. I believe this
company has a great future in expanding
its growth accordingly at the close of 2020,
Cannae remains a significant shareholder
of Ceridian with 14.0 million shares, or
approximately 9.5% of the company.
Trebia
In addition to the SPAC investments noted
above, Cannae was an anchor investor
of the founder consortium in Trebia
Acquisition Corp. (NYSE: TREB) mid-
year, with a 15% economic interest in the
founders equity and a $75 million forward
purchase commitment. The offering raised
$517 million after upsizing and full exercise
of the underwriter options.
Recent Developments
Austerlitz I and II
Soon after the year closed, Cannae
announced sponsor group investments
in two new SPACs, Austerlitz Acquisition
Corporation I (NYSE: AUS) and Austerlitz
Acquisition Corporation II (NYSE: ASZ),
both of which closed on their upsized
initial public offerings with full exercise
of the underwriters' over allotment,
raising $690 million and $1.38 billion,
respectively. While these SPACs have yet
to announce agreements with a target, I
am gratified by the investor confidence
signified by the consistent upsizing and
underwriter over allotment exercise, and
the validation of our management team
and investment philosophy.
Tailwind/QOMPLX
QOMPLX announced in March 2021 that
it would merge with Tailwind Acquisition
Corp (NYSE: TWND) at a $1.4 billion
post-equity valuation that equates to
an approximately 6x return on Cannae’s
historical investment. We are confident
in the QOMPLX team and agreed to be
an anchor investor in a fully-committed
$180 million PIPE and receive additional
founder shares as consideration. Cannae’s
$80 million total investment for 23.7 million
shares equates to a cost per share of $3.38,
or an implied gain of over $156 million upon
closing of the business combination.
Sightline Payments
Additionally, on April 1, 2021, we
announced a $32 million investment
in Sightline Payments as part of a
completed $100 million funding round.
This investment comes following the surge
in consumer interest in online sports
wagering and iGaming over the last twelve
months, in part due to the expansion of
legalized mobile gaming opportunities
in many states across the United States.
The company’s seasoned leadership team
has a proven track record and a vision to
capitalize on many of the highest growth
sectors in the entertainment industry. We
look forward to working with the team at
Sightline as they seek to take advantage of
the current market opportunity.
Liquidity
Cannae made several opportunistic
actions throughout the year to create
adequate liquidity to fund our previously
mentioned investments as well as our
SPAC commitments. As noted, we reduced
our position in CDAY, creating $721 million
of gross proceeds; we exited our process
with CoreLogic with nearly half a billion in
gross proceeds; we concluded a follow-on
equity offering, mid-year that raised $455
million; and arranged for a $500 million
margin loan in November. Cannae ended
the year with $666 million in corporate
The Battle of Cannae is regarded
as one of the greatest tactical feats
in military history.
3
CANNAE HOLDINGS, INC. / 2020 AR cash, and after exiting CoreLogic, ended
February 2021 with more than $951 million
in corporate cash, supplemented by the
$500 million margin loan and our $100
million revolver, both untapped.
Sum of The Parts
We continue to believe Cannae trades
at a meaningful discount to the after-
tax value of its component investments.
We are strong believers in the future
growth prospects of all of our portfolio
companies and expect this discount to
narrow over time as we continue to tell
our story and deliver superior returns to
our shareholders. As value investors, we
cannot pass up such a great bargain and
announced on March 1, 2021 a three year,
10 million share repurchase program.
Future
Although 2020 was an uncertain and
challenging year, I am pleased to report
that Cannae accomplished many
important goals. Early in 2021, we have
already been rewarded for some of our
investments made in 2020, most notably
SPAC agreements with Alight and
Tailwind, two new SPAC investments in
AUS and ASZ, and our investment and
subsequent monetization of our position in
CoreLogic. Additionally, as we navigated
the COVID-19 pandemic, we worked to
protect our employees and their families,
as well as the employees, customers and
communities of our portfolio companies.
Cannae shareholders, including myself
as one of the largest, have many reasons
to be confident that 2021 and beyond will
present additional opportunities that will
offer superior returns.
Sincerely,
William P. Foley, II
Chairman of the Board
Cannae Intrinsic
Value per Share
$16.42
$52.90
$44.27
$12.12
$8.02
$5.28
$5.35
$1.82
$1.32
$2.57
Other,
Net Cash1, 5
Amerilife2
Senator/
CoreLogic3
Optimal Blue4
FTAC I/Alight5
FTAC II /
Paysafe5
Ceridian6
Dun &
Bradstreet7
Total
Intrinsic
Value
Share Price
12/31/2020
Note: Per share amount is based on 91.7M CNNE shares outstanding as
of 12/31/20.
1 Primarily represents: Restaurant Group, CorroHealth, TripleTree, Colt and real
estate all at cost, as well as Trebia (see note 5). Includes net cash less capital
committed but not yet funded in connection with WPF, BFT and TREB, including
the PIPE commitment of WPF announced on 01/25/21. Funding of commitments
to occur concurrently with the closing of the business combinations.
5 SPACs: Cost basis of common/warrants is based on combined capital
committed/cost of private placement warrants across the five SPACs as of
12/31/20 (i.e., approximately $500M for Paysafe/BFT, approximately $400M
for Alight/WPF, and $80M for Trebia. FV of common/warrants is based on
shares expected to be received in connection with the Company’s committed
investments/private placement warrants and respective share prices as of
12/31/20 (i.e., Paysafe: BFT/BFT-W, Alight: WPF/WPF-W, Trebia: TREB/TREB-W).
2 Private investment. Presented at cost.
3 Based on the Company’s approximately 3.4M shares and share equivalents of
CLGX held indirectly as of 12/31/20.
4 Optimal Blue presented at 2x cost less applicable taxes and carried interest. FV
estimated from multiples for similar businesses, value at BKI call and business
outperformance since acquisition.
4
6 Based on the Company’s approximately 14M shares of CDAY.
7 Based on the Company’s approximately 76.6M shares of DNB.
CANNAE HOLDINGS, INC. / 2020 AR UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the Fiscal Year Ended December 31, 2020
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Commission File No. 1-38300
_________________________________
CANNAE HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
82-1273460
(I.R.S. Employer Identification No.)
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)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Cannae Common Stock, $0.0001 par value
Trading Symbol
CNNE
Name of Each Exchange on Which Registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ☐ No ☑
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 ☑ No ☐
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 such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting 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.
Large
accelerated filer ☑
Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting
company
☐
Emerging growth
company
☐
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. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No ☑
The aggregate market value of the shares of Cannae Common Stock held by non-affiliates of the registrant as of June 30,
2020, was $3,536,132,331 based on the closing price of $41.10 as reported by the New York Stock Exchange.
As of January 31, 2021 there were 91,651,257 shares of Cannae common stock outstanding.
The information in Part III hereof for the fiscal year ended December 31, 2020, will be filed within 120 days after the close of
the fiscal year that is the subject of this Report.
CANNAE HOLDINGS, INC.
FORM 10-K
TABLE OF CONTENTS
PART I
Business.................................................................................................................................................
Risk Factors...........................................................................................................................................
Unresolved Staff Comments..................................................................................................................
Properties...............................................................................................................................................
Legal Proceedings..................................................................................................................................
Mine Safety Disclosures........................................................................................................................
PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities....................................................................................................................................
Selected Financial Data.........................................................................................................................
Management’s Discussion and Analysis of Financial Condition and Results of Operations................
Quantitative and Qualitative Disclosure About Market Risk................................................................
Financial Statements and Supplementary Data.....................................................................................
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure...............
Controls and Procedures........................................................................................................................
Other Information..................................................................................................................................
PART III
Directors and Executive Officers of the Registrant...............................................................................
Executive Compensation.......................................................................................................................
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters...................................................................................................................................................
Certain Relationships and Related Transactions, and Director Independence......................................
Principal Accounting Fees and Services................................................................................................
Page
Number
1
9
28
28
28
28
29
31
34
49
51
95
95
95
96
96
96
96
96
Exhibits, Financial Statement Schedules...............................................................................................
Form 10-K Summary
97
100
PART IV
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
i
Item 1.
Business
Introductory Note
PART I
The following describes the business of Cannae Holdings, Inc. and its subsidiaries. Except where otherwise noted, all
references to “we,” “us,” “our,” "Cannae", "Cannae Holdings", or the "Company," are to Cannae Holdings, Inc. and its
subsidiaries, taken together.
Company Background
On November 17, 2017, Fidelity National Financial, Inc. (“FNF”, NYSE: FNF) redeemed each outstanding share of its
FNF Ventures ("FNFV") Group common stock, par value $0.0001, for one share of common stock, par value $0.0001, of a
newly formed entity, Cannae (the "Split-Off"). In conjunction with the Split-Off, FNF contributed to us its portfolio of
investments unrelated to its primary insurance and real estate operations, which included majority and minority equity
investment stakes in a number of entities and certain fixed income investments. On November 20, 2017, Cannae common stock
began “regular-way” trading on The New York Stock Exchange under the “CNNE” stock symbol.
Description of Business
We are engaged in actively managing and operating a group of companies and investments, 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. Our primary investments as of December 31, 2020 include our minority ownership interests
in The Dun & Bradstreet Corporation ("Dun & Bradstreet" or "D&B", NYSE: DNB), Ceridian HCM Holding, Inc. ("Ceridian",
NYSE: CDAY), Optimal Blue Holdco, LLC ("Optimal Blue") and AmeriLife Group, LLC ("AmeriLife"); majority equity
ownership stakes in O'Charley's Holdings, LLC ("O'Charley's") and 99 Restaurants Holdings, LLC ("99 Restaurants"); and
various other equity and debt investments primarily in the real estate, financial services and healthcare technology industries.
The Company conducts its business through our wholly-owned subsidiary Cannae Holdings, LLC ("Cannae LLC"), a
Delaware limited liability company. The Company’s board of directors ("Board") oversees the management of the Company,
Cannae LLC and its businesses, and the performance of Trasimene Capital Management, LLC (“Trasimene” or our
“Manager”). During the fiscal year ended December 31, 2019, the Company transitioned to an externally managed structure
(such externalization of certain management functions, the “Externalization”). In connection with the Externalization, the
Company, Cannae LLC, and our Manager entered into a Management Services Agreement dated as of August 27, 2019, as
amended on January 27, 2021 (as amended, the “Management Services Agreement”).
We believe our operating structure provides our investors with a compelling opportunity to participate in the acquisition
and growth of businesses by a world-class management team. Fundamentally, the Company seeks to take meaningful equity
ownership stakes where we have an ability to control or significantly influence quality companies that are well-positioned in
their respective industries, run by best-in-class management teams and that operate in industries that have attractive organic and
acquired growth opportunities. Led by William P. Foley II ("Bill Foley") and facilitated through our Manager, we leverage our
management team's operational expertise, long-term relationships and industry connections and capital sourcing capabilities to
identify, structure and execute on investments with these characteristics.
Our management team has a proven track record of growing industry-leading companies and we actively interact with and
support management of our portfolio companies, directly or through our board of directors, to ultimately provide value for our
shareholders. Bill Foley-led management teams are responsible for the growth of publicly traded companies such as FNF, Black
Knight, Inc. ("Black Knight", NYSE: BKI), Ceridian, D&B and Fidelity National Information Services (NYSE: FIS), which
collectively had a market capitalization of approximately $139 billion as of December 31, 2020.
As of December 31, 2020, we had the following reportable segments:
Dun & Bradstreet. This segment consists of our 18.1% ownership interest in D&B. Dun & Bradstreet is a leading global
provider of business decisioning data and analytics. Its mission is to deliver a global network of trust, enabling clients to
transform uncertainty into confidence, risk into opportunity and potential into prosperity. Clients embed D&B's trusted, end-to-
end solutions into their daily workflows to enhance salesforce productivity, gain visibility into key markets, inform commercial
credit decisions and confirm that suppliers are financially viable and compliant with laws and regulations. Dun & Bradstreet's
solutions support its clients’ mission critical business operations by providing proprietary and curated data and analytics to help
drive informed decisions and improved outcomes.
Dun & Bradstreet is differentiated by the scale, depth, diversity and accuracy of its constantly expanding business database
that contains comprehensive information on more than 420 million total businesses as of December 31, 2020. Access to
longitudinal curated data is critical for global commerce, and with only a small percentage of the world’s businesses filing
1
public financial statements, D&B data is a trusted source for reliable information about both public and private businesses. By
building such a set of data over time, D&B was able to establish a unique identifier that creates a single thread connecting
related corporate entities allowing its clients to form a holistic view of an enterprise. This unique identifier, which D&B refers
to as the D-U-N-S Number, is a corporate ‘‘fingerprint’’ or ‘‘Social Security Number’’ of businesses. D&B believes that it is
the only scale provider to possess both worldwide commercial credit data and comprehensive public records data that are linked
together by a unique identifier allowing for an accurate assessment of public and private businesses globally. D&B generates its
revenue primarily through subscription-based contractual arrangements that it enters into with its clients to provide data,
analytics and analytics-related services either individually, or as part of an integrated offering of multiple services. These
arrangements occasionally include offerings from more than one business unit to the same client.
We account for our investment in Dun & Bradstreet using the equity method of accounting; therefore, its results of
operations do not consolidate into ours.
Optimal Blue. This segment consists of our 20.0% ownership interest in Optimal Blue. Optimal Blue is a leading provider
of secondary market solutions and actionable data services. They operate a software-as-a-service, subscription-based mortgage
marketplace, which supports a network of originators and investors in the residential mortgage market. The marketplace
provides a broad set of critical functions utilized by banks, credit unions and mortgage brokerage companies throughout the
mortgage processing life cycle.
We account for our investment in Optimal Blue using the equity method of accounting; therefore, its results of operations
do not consolidate into ours.
Restaurant Group. This segment consists of the operations of O'Charley's, 99 Restaurants, Legendary Baking Holdings I,
LLC ("Legendary Baking") and VIBSQ Holdco, LLC ("VIBSQ") in which we have 65.4%, 88.5%, 100% and 100% equity
ownership interests, respectively. O'Charley's, 99 Restaurants, Legendary Baking, VIBSQ and their affiliates are the owners
and operators of the O'Charley's restaurant concept, Ninety Nine Restaurants restaurant concept, Legendary Baking bakery and
the Village Inn and Bakers Square restaurant concepts.
Corporate and Other. This aggregation of nonreportable operating segments consists of our share in the operations of
controlled and uncontrolled portfolio companies including our 9.5% ownership interest in Ceridian, 20.0% ownership interest in
AmeriLife, 21.7% ownership interest in Coding Solutions Topco, Inc. ("CorroHealth"), 49.2% ownership interest in a joint
venture (the "Senator JV") with affiliates of Senator Investment Group, LP ("Senator"), 22.5% voting equity interest in
preferred stock of QOMPLX, Inc. ("QOMPLX"), 30.5% equity interest in Triple Tree Holdings, LLC ("Triple Tree"), majority-
owned real estate and resort development businesses ("Cannae RE"), interests in sponsors of special purpose acquisition
companies ("SPACs") and other various minority equity and debt investments.
Ceridian is a global human capital management (“HCM”) software company that offers a broad range of services and
software designed to help employers more effectively manage employment processes, such as payroll, payroll-related tax filing,
human resource information systems, employee self-service, time and labor management, employee assistance programs, and
recruitment and applicant screening. Ceridian's technology-based services are typically provided through long-term customer
relationships that are anticipated to result in a high level of recurring revenue.
AmeriLife is a leader in marketing and distributing life, health, and retirement solutions.
CorroHealth (formerly known as Coding Solutions) is a joint venture that has various medical coding technology platforms
and back office functions supporting the health care revenue and billing cycles and focuses on acquiring and operating
synergistic health care services companies in the provider and payer space.
The Senator JV is an investment fund in partnership with Senator designed to provide a mechanism to allow us and Senator
to jointly invest in CoreLogic, Inc. ("CoreLogic"). As of the date of this Annual Report on Form 10-K ("Annual Report"), we
exited our investment in CoreLogic completely and have no further material interest in the Senator JV. See further discussion
under the header Recent Developments in Item 7 of Part II of this Annual Report.
QOMPLX, formerly Fractal Industries, Inc., is an intelligent decision and analytics platform used by businesses for
modeling and planning. QOMPLX offers an enterprise operating system and application platforms with capabilities ranging
from data handling, analytics, and reporting to advanced algorithms, simulations, and machine learning, which have business
uses for cybersecurity, insurance underwriting and quantitative finance.
Triple Tree is an independent, research-driven investment banking firm focused on mergers and acquisitions, financial
restructuring, and principal investing services for innovative, high-growth businesses in the healthcare industry.
Cannae RE and its subsidiaries operate and invest in golf and real estate properties and develop, manage and operate
residential and recreational properties, including a 1,800-acre ranch-style luxury resort and residential community in Oregon
and an 18-hole championship golf facility in Idaho.
2
Refer to Item 7 of Part II of this Annual Report for further information on recent results of operations and transactions and
other activity of our operating segments.
Strategy
Our strategy for the Company is to continue our activities with respect to the above described business investments to
achieve superior financial performance, maximize and ultimately monetize the value of those assets and to continue to pursue
similar investments in businesses and to grow and achieve superior financial performance with respect to such newly acquired
businesses.
Dun & Bradstreet. We believe that Dun & Bradstreet has an attractive business model that is underpinned by highly
recurring, diversified revenues, significant operating leverage, low capital requirements and strong free cash flow. The
proprietary and embedded nature of its data and analytics solutions and the integral role that D&B plays in its clients’ decision-
making processes have translated into high client retention and revenue visibility. D&B has had relationships with 21 of its top
25 clients by revenue for the year ended December 31, 2020 for more than 20 years, which reflects how deeply embedded D&B
is in its clients daily workflows and decisioning processes. For both 2020 and 2019, D&B's annual revenue retention rate,
reflecting the percentage of prior year revenue from its clients who were retained in the current year, was 96%. Dun &
Bradstreet also benefits from strong operating leverage given its centralized database and solutions, which allows it to generate
strong contribution margins and free cash flow.
Subsequent to our investment in D&B in the first quarter of 2019, D&B quickly began implementing changes to address
operational and execution issues at D&B that led to stagnant revenue growth and declining profitability over the last decade.
The new investors in D&B immediately brought in a new senior leadership team, which commenced a comprehensive
transformation to improve and revitalize D&B's business for long-term success. The new senior leadership team saw significant
opportunity to create value by transforming the organization and improving the platform with new business unit leaders,
enhanced technology and data, solution innovation and a client-centric go-to-market strategy.
D&B's transformation strategy is based on a proven playbook of enhancing stockholder value through organizational re-
alignment and re-investment. As of December 31, 2020, these initiatives have resulted in approximately $242.0 million of net
annualized run-rate savings, and D&B believes there are incremental opportunities to further rationalize its cost structure. In
light of the changes that have been made or identified by D&B's management team, we believe D&B is well-positioned to
execute on its strategies of driving stockholder value through consistent revenue growth, managing cost initiatives and
innovating and improving the way it adds value and solves the increasingly challenging and complex needs of its clients.
Restaurant Group. Our restaurant operations are focused in the family dining and casual dining segments of the restaurant
industry. The Restaurant Group's strategy is to achieve long-term profit growth and drive increases in same store sales and guest
counts. We have a highly experienced management team that is focused on enhancing the guest experience at our restaurants
and building team member engagement. We also utilize a shared service platform that takes advantage of the combined back-
office synergies of our restaurant operating companies. Our goal is to maintain a strong balance sheet for our Restaurant Group
to provide stability in all operating environments.
On January 27, 2020, American Blue Ribbon Holdings, LLC ("Blue Ribbon") and its wholly-owned subsidiaries, filed
voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the
District of Delaware (the "Blue Ribbon Reorganization"). The Blue Ribbon Reorganization did not involve or affect the
operations of O’Charley’s or 99 Restaurants, which are not part of Blue Ribbon.
As a result of the Blue Ribbon Reorganization, we deconsolidated Blue Ribbon as of January 27, 2020 because the
bankruptcy court and committee of creditors formed are deemed to have control of Blue Ribbon. On July 10, 2020, Blue
Ribbon filed its Debtor's Chapter 11 Plan (the "Chapter 11 Plan") with the U.S. Bankruptcy Court of Delaware (the
"Bankruptcy Court").
On October 2, 2020, the Chapter 11 Plan became effective and Blue Ribbon emerged from bankruptcy as a set of
reorganized companies, including VIBSQ and Legendary Baking. Upon Blue Ribbon's emergence from bankruptcy, we
acquired the assets and uncompromised liabilities of Legendary Baking and VIBSQ in exchange for $15.5 million of the
outstanding balance under our debtor in possession loan (the "DIP Loan") with Blue Ribbon. Subsequent to Blue Ribbon's
emergence from bankruptcy, we own 100% of the equity of VIBSQ and Legendary Baking. Refer to Note I to our Consolidated
Financial Statements included in Item 8 of Part II of this Annual Report for further discussion of our accounting for our
acquisition of VIBSQ and Legendary Baking upon their emergence from bankruptcy.
We believe the Blue Ribbon Reorganization will facilitate the Legendary Baking, Village Inn and Bakers Square brands'
evolution to a healthy core of restaurants and bakery operations and support an approach to the brands that is most beneficial
for all stakeholders.
3
Acquisitions, Dispositions, Minority Owned Operating Affiliates and Financings. Acquisitions are an important part of our
growth strategy and dispositions are an important aspect of our strategy of rebalancing our portfolio of companies and
providing our shareholders with prudent risk-based returns on investment. On an ongoing basis, with assistance from our
Manager and outside advisors, we actively evaluate possible transactions, such as acquisitions and dispositions of business units
and operating assets and business combination transactions.
In the future, we may seek to sell certain investments or other assets to increase our liquidity. Further, we may make
acquisitions in lines of business that are not directly tied to, or synergistic with, our current operating segments. In the past we
have obtained majority and minority investments in entities and securities where we see the potential to achieve above market
returns.
There can be no assurance that any suitable opportunities will arise or that any particular transaction will be completed. We
have made a number of acquisitions and dispositions over the past several years to strengthen and expand our investment base
and expand the service offerings and customer bases of our businesses, to expand into other businesses or where we otherwise
saw value, and to monetize investments in assets and businesses.
Special Purpose Acquisition Companies. In 2020 and early 2021, we made investments in the sponsors of, and forward
purchase commitments to purchase equity of, three SPACs, which are companies formed for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more
businesses. See discussion under the header Forward Purchases of Equity of Special Purpose Acquisition Companies in Item 7
of Part II of this Annual Report for further information on our investment commitments. The following summarizes the
Company's equity commitments by entity:
SPAC
Ticker
IPO Date
Cannae Equity Purchase
Commitment (1)
Foley Trasimene Acquisition Corp. II ("FTAC II")............................ BFT
August 21, 2020
$
Foley Trasimene Acquisition Corp. ("FTAC")................................... WPF
May 29, 2020
500.0
400.0
Trebia Acquisition Corp. ("Trebia")................................................... TREB
_____________________________________
(1) Represents Cannae's commitment as of the date of this Annual Report to purchase equity of the listed SPAC and its target
upon consummation of each SPACs initial business combination
June 19, 2020
75.0
SPACs have proven to be not only an efficient means for private entities to go public, but also a unique opportunity for
companies to partner with sponsors who provide invaluable industry, operational and capital market experience. We believe our
investments in the SPACs sponsored or co-sponsored by Trasimene and led by our chairman Bill Foley provide an opportunity
for Cannae to participate in the growth and transformation of businesses with compelling characteristics similar to other of our
management team’s prior investments, including Dun & Bradstreet, FNF, Black Knight and Ceridian. The sponsors intend to
focus on prospective target businesses that have unseen potential for revenue growth and/or operating margin expansion with
high recurring revenue and cash flow, defensible intellectual property and strong market positions within their industries.
On December 7, 2020, FTAC II entered into a definitive agreement and plan of merger with Paysafe Limited (“Paysafe”), a
leading integrated payments platform (the "FTAC II Paysafe Merger"). Upon closing of the FTAC II Paysafe Merger, the newly
combined company will operate as Paysafe and plans to list on the New York Stock Exchange under the symbol PSFE. The
FTAC II Paysafe Merger reflects an implied pro-forma enterprise value for Paysafe of approximately $9.0 billion. The FTAC II
Paysafe Merger will be funded with the cash held in trust at FTAC II, forward purchase commitments, private investment in
public equity ("PIPE") commitments and equity of Paysafe. Completion of the FTAC II Paysafe Merger is subject to approval
by FTAC II stockholders, the effectiveness of a registration statement to be filed with the SEC in connection with the
transaction, and other customary closing conditions, including the receipt of certain regulatory approvals. The FTAC II Paysafe
Merger is expected to close in the first half of 2021.
On December 7, 2020, Cannae entered into an agreement to purchase 35,000,000 shares of Paysafe for $350.0 million as
part of a subscription to the PIPE (the "Paysafe Subscription Agreement"). Paysafe has agreed to pay us a placement fee of
$5.6 million as consideration for our subscription. Upon consummation of the FTAC II Paysafe Merger, our aggregate
investment in Paysafe is expected to be $504.7 million in Paysafe, inclusive of Cannae's investment commitments under our
forward purchase agreement with FTAC II (the "FTAC II FPA") and Paysafe Subscription Agreement and our prior $4.7
million investment in the sponsor of FTAC II, and we are expected to receive 54,290,000 shares of common stock of Paysafe
which represents approximately 7.5% of the pro forma outstanding common equity of Paysafe and 8,134,067 warrants to
purchase one share of Paysafe common stock at $11.50 per share.
Further information on the FTAC II Paysafe Merger can be found in Paysafe's Registration Statement on Form F-4 filed
with the SEC on December 21, 2020 and amended on February 1, 2021.
4
On January 25, 2021, FTAC entered into a business combination agreement with Alight Solutions ("Alight"), a leading
cloud-based provider of integrated digital human capital and business solutions (the "FTAC Alight Business Combination").
Under the terms of the FTAC Alight Business Combination, FTAC will combine with Alight and Alight will become a publicly
traded entity under the name “Alight, Inc.” and symbol ALIT. The FTAC Alight Business Combination reflects an implied pro-
forma enterprise value for Alight of approximately $7.3 billion at closing. The FTAC Alight Business Combination will be
funded with the cash held in trust at FTAC, forward purchase commitments, PIPE commitments and equity of Alight.
Completion of the FTAC Alight Business Combination is subject to approval by FTAC stockholders, the effectiveness of a
registration statement to be filed with the SEC in connection with the transaction, and other customary closing conditions of
SPAC business combinations, including the receipt of certain regulatory approvals. The FTAC Alight Business Combination is
expected to close in the second quarter of 2021.
On January 25, 2021, Cannae entered into an agreement to purchase 25,000,000 shares of Alight for $250.0 million as part
of a subscription to the PIPE (the "Alight Subscription Agreement"). Alight has agreed to pay us a placement fee of
$6.3 million as consideration for our subscription. Upon consummation of the FTAC Alight Business Combination, our
aggregate investment in Alight is expected to be $404.5 million, inclusive of Cannae's investment commitments under our
forward purchase agreement with FTAC (the "FTAC FPA") and Alight Subscription Agreement and our previous $4.5 million
investment in a sponsor of FTAC, and we are expected to receive 44,639,500 shares of common stock of Alight which
represents approximately 8.6% of the pro forma outstanding common equity of Alight and 8,026,666 warrants to purchase one
share of Alight common stock at $11.50 per share.
Further information on the FTAC Alight Business Combination can be found in FTAC's current report on Form 8-K filed
with the SEC on January 27, 2021.
Business Trends and Conditions
Dun & Bradstreet. Businesses rely on business-to-business data and analytics providers to extract data-driven insights and
make better decisions. For example, in commercial lending and trade credit, the scarcity of readily available credit history
makes the extension of credit a time-consuming and imprecise process. In procurement, businesses face increasingly complex
and global supply chains, making the assessment of compliance and viability of all suppliers prohibitively difficult and
expensive if not conducted effectively. In sales and marketing, businesses have benefited from the proliferation of customer
relationship management, Marketing Automation and Sales Acceleration tools designed to help identify, track and improve
both customer management and prospecting growth activities. While these tools are helping to fill sales funnels and improve
the progression of opportunities, key challenges remain in salesforce productivity, effective client segmentation and marketing
campaign activation. Common stumbling blocks include incorrect, or outdated, contact information, duplicated or inaccurate
firmographic data and a lack of synchronization between the various platforms in the marketing technology ecosystem.
D&B helps its clients solve these mission critical business problems. D&B believes the total addressable market (‘‘TAM’’)
in which it operates is large, growing and significantly underpenetrated. D&B participates in the big data and analytics software
market, as defined by Interactive Data Corporation, or IDC, which represents a collection of software markets that functionally
address decision support and decision automation. This market includes business intelligence and analytics tools, analytic data
management and integration platforms and analytics and performance management applications. Within the broader market of
data and analytics solutions, D&B serves a number of different markets, including the commercial credit data, sales and
marketing data and Governance, Risk and Compliance ("GRC") markets to provide clients with decisioning support and
automation. As D&B continues to drive innovation in its solutions, it expects to address a greater portion of this TAM as new
use cases for its data assets and analytical capabilities are introduced.
D&B believes there are several key trends in the global macroeconomic environment generating additional growth in
D&B's TAM and increasing the demand for its solutions, including growing recognition by business of the value of analytics
and data-informed business decisioning, growth in data creation and applications driven by the proliferation of new
technologies with new data sets and applications, advances in analytical capabilities that are unlocking the value of data, and
heightened compliance requirements in the regulatory environment for business driven by the growth of new technologies.
Restaurant Group. The restaurant industry is highly competitive and is often affected by changes in consumer tastes and
discretionary spending patterns; changes in general economic conditions; public safety conditions or concerns; demographic
trends; weather conditions; the cost of food products, labor, energy and other operating costs; and governmental
regulations. Higher labor costs due to state and local minimum wage increases and shopping pattern shifts to e-commerce and
“ready to eat” grocery and convenience stores have had a negative impact on restaurant performance, particularly in the casual
and family dining restaurants in which the company operates.
The restaurant industry is also characterized by high capital investments for new restaurants and relatively high fixed or
semi-variable restaurant operating expenses. Because of the high fixed and semi-variable expenses, changes in sales in existing
restaurants are generally expected to significantly affect restaurant profitability because many restaurant costs and expenses are
not expected to change at the same rate as sales. The most significant commodities that may affect our cost of food and
5
beverage are beef, seafood, poultry, and dairy, which accounted for approximately half of our overall cost of food and beverage
in the past. Generally, temporary increases in these costs are not passed on to guests; however, in the past, we have adjusted
menu prices to compensate for increased costs of a more permanent nature.
Average weekly sales per restaurant are typically higher in the first and fourth quarters than in other quarters, and we
typically generate a disproportionate share of our earnings from operations in the first and fourth quarters. Holidays, severe
weather and other disruptive conditions may impact sales volumes seasonally in some operating regions.
Our revenues in future periods will continue to be subject to these and other factors that are beyond our control and, as a
result, are likely to fluctuate.
COVID-19. In March 2020, the outbreak of COVID-19 was declared a national health emergency in the United States and
worldwide. The ongoing COVID-19 global and national health emergency has caused significant disruption in the international
and United States economies and financial markets. The Company has been closely monitoring developments related to
COVID-19 and its impacts to our portfolio of investments and financial markets. We are working with management of our
subsidiaries to evaluate business-specific risks and respond to any financial and operational disruptions. At the holding
company level, we believe our operating model, low financial leverage and access to capital uniquely positions us to weather
economic disruptions. See further discussion of our financial resources in the Liquidity and Capital Resources subsection in
Item 7 of Part II of this Annual Report.
As a result of the unprecedented social restrictions related to COVID-19, our Restaurant Group brands experienced a
significant reduction in guest counts beginning in the last two weeks of March 2020 and continuing through the end of the year.
In response to the outbreak and these changing conditions, our Restaurant Group brands closed the dining rooms in
substantially all of our restaurants in late March 2020 with substantially all remaining closed to dine in customers through early
May 2020. During this time, most of our restaurants we were solely operating to-go and delivery services in the jurisdictions
where government regulations permit restaurants to continue to operate and where the guest demand made such operations
sustainable. We temporarily closed certain restaurants, modified work hours for our Restaurant Group employees and identified
and implemented cost savings measures throughout our Restaurant Group operations.
Timing of reopening stores and resulting guest traffic has varied by jurisdiction. In the second half of 2020, our Restaurant
Group experienced a gradual increase in guest traffic and revenues compared to the first half of 2020; however, the volume of
customers visiting our stores has remained below our historical levels. We have seen an increase in revenues from to-go and
delivery sales from historical experience; however, comparable store sales across all of our restaurant brands remained
depressed compared to previous years.
We have been in discussions with our Restaurant Group businesses’ major suppliers, and during the COVID-19 outbreak
we have not experienced and do not currently expect to experience material disruptions in our supply chain.
The COVID-19 outbreak and these responses have affected and are projected to continue to adversely affect our Restaurant
Group brands' guest traffic, sales and operating costs. See further discussion of the impact of COVID-19 on our Restaurant
Group in the Results of Operations subsection in Item 7 of Part II of this Annual Report.
See Item 1A of Part I of this Annual Report for further discussion of risk factors related to COVID-19.
Competition
Dun & Bradstreet. Dun & Bradstreet primarily competes on the basis of differentiated data sets, analytical capabilities,
solutions, client relationships, innovation and price. D&B believes that it competes favorably in each of these categories across
its business segments. D&B's competitors vary based on the client size and geographical market that its solutions cover.
For Dun & Bradstreet's finance and risk solutions segment, its competition generally varies by client size. D&B has a
leading presence in the enterprise market as clients place a high degree of value on our best-in-class commercial credit database
to inform their critical decisions around the extension of credit. D&B’s main competitors in the enterprise and mid-market
include Bureau van Dijk (owned by Moody’s Corporation) in Europe and Equifax and Experian in North America. In the small
and mid-size company market, commercial credit health becomes increasingly tied to consumer credit health. D&B's
competition in this market generally includes Equifax, Experian and other consumer credit providers that offer commercial
data. Additionally, there is a fragmented tail of low cost, vertical and regionally focused point solutions in this market that may
be attractive to certain clients, but lack the scale and coverage breadth to compete holistically.
For Dun & Bradstreet's sales and marketing solutions segment, its competition has historically been very fragmented with
many players offering varying levels of data quantity and quality, and with data being collected in ways that may cross ethical
and privacy boundaries. Dun & Bradstreet strives to protect the data and privacy of its clients and to maintain the highest
standards in the ethical acquisition, aggregation, curation and delivery of data. D&B's direct competitors vary depending on use
cases, such as market segmentation, digital marketing lead generation, lead enrichment, sales effectiveness and data
management. In the market for contact data, D&B's competition generally includes ZoomInfo and a few consultancies building
6
bespoke solutions. For other sales and marketing solutions such as customer data platform, visitor intelligence, audience
targeting and intent data, D&B faces a number of smaller competitors.
Overall, outside North America, D&B's competitive environment varies by region and country, and can be significantly
impacted by the legislative actions of local governments, availability of data and local business preferences. In the United
Kingdom and Ireland, D&B's direct competition for its finance and risk solutions segment is primarily from Bureau van Dijk,
Creditsafe and Experian. Additionally, in D&B's sales and marketing solutions segment, the landscape in these markets is both
localized and fragmented, where numerous local players of varying sizes compete for business. In Asia Pacific, D&B faces
competition in its finance and risk solutions segment from a mix of local and global providers. D&B competes with Sinotrust
International Information & Consulting (Beijing) Co., Ltd., in China and local competitors in India. In addition, as in the United
Kingdom, D&B's sales and marketing solutions landscape throughout Asia is localized and fragmented.
Restaurant Group. The restaurant industry is highly competitive and is often affected by changes in consumer tastes.
Competition for our restaurant brands varies by location. In general, our restaurant brands compete within each market with
national and regional chains and locally-owned restaurants for guests, management and hourly personnel and suitable real estate
sites. Restaurants are increasingly competing with grocery stores who are expanding their offerings of quick serve, ready-made
meals and meal kits and with meal kit delivery services, which have increased market share over the last couple years. We
expect to continue to compete in these areas.
Competitive Strengths
Proven management team. Our Board and executive management team, led by Bill Foley, has a proven track record of
investment identification and management. Bill Foley has led the creation of several multi-billion dollar companies with
hundreds of acquisitions across diverse platforms, including, FNF, Fidelity National Information Services, Inc., Black Knight,
Ceridian, D&B and FGL Holdings, Inc. Our Board and executive management's breadth of knowledge of capital markets allows
us to identify companies and strategic assets with attractive value propositions, to structure investments to maximize their value,
and to return the value created to shareholders. We believe the Externalization under the Management Services Agreement will
enhance our executive management team’s ability to provide these services.
Intellectual Property
Dun & Bradstreet. D&B owns and controls various intellectual property rights, such as trade secrets, confidential
information, trademarks, service marks, tradenames, copyrights, patents and applications to the foregoing. These rights, in the
aggregate, are of material importance to Dun & Bradstreet's business. D&B believes that the Dun & Bradstreet name and
related tradenames, marks and logos are also of material importance to its business. Dun & Bradstreet is licensed to use certain
technology and other intellectual property rights owned and controlled by others, and other companies are licensed to use
certain technology and other intellectual property rights owned and controlled by it. Dun & Bradstreet's trademarks, service
marks, databases, software, copyrights, patents, patent applications and other intellectual property are proprietary and
accordingly it relies on a combination of statutory (e.g., copyright, trademark, trade secret, patent, etc.) and contract and
liability safeguards for protecting them throughout the world.
Dun & Bradstreet owns patents and patent applications both in the U.S. and in other selected countries. The patents and
patent applications include claims, which pertain to certain technologies and inventions that D&B has determined are
proprietary and warrant patent protection. The protection of its innovative technology and inventions, such as its proprietary
methods for data curation and identity resolution, through the filing of patent applications, is part of Dun & Bradstreet's
business strategy. Filing of patent applications may or may not provide Dun & Bradstreet with a dominant position in the fields
of technology. However, these patents and/or patent applications may provide Dun & Bradstreet with legal defenses should
subsequent patents in these fields be issued to third-parties and later asserted against it. Where appropriate, Dun & Bradstreet
may also consider asserting or cross-licensing its patents.
Restaurant Group. We regard our Restaurant Group's service marks, including "O'Charley's", "Ninety Nine", "Village Inn",
"Legendary Baking", "Bakers Square", and other service marks and trademarks as important factors in the marketing of our
restaurants. We have also obtained trademarks for several of our brands' menu items and for various advertising slogans. We
are aware of names and marks similar to our Restaurant Group's service marks and trademarks used by other persons in certain
geographic areas where we have restaurants. However, we believe such uses will not adversely affect us. Our policy is to
pursue registration of our marks whenever possible and to oppose vigorously any infringement of our marks.
We license the use of our registered trademarks and service marks to franchisees and third parties through franchise
arrangements and licenses. The franchise and license arrangements restrict franchisees' and licensees' activities with respect to
the use of our trademarks and service marks, and impose quality control standards in connection with goods and services
offered in connection with the trademarks and service marks.
7
Information Security
We and our unconsolidated affiliates are highly dependent on information technology networks and systems to securely
process, transmit and store electronic information. Attacks on information technology systems continue to grow in frequency,
complexity and sophistication. Such attacks have become a point of focus for individuals, businesses and governmental entities.
These attacks can create system disruptions, shutdowns or unauthorized disclosure of confidential information, including non-
public personal information, consumer data and proprietary business information.
We and our unconsolidated affiliates remain focused on making strategic investments in information security to protect the
clients and information systems of our operating subsidiaries and unconsolidated affiliates. This includes both capital
expenditures and operating expenses on hardware, software, personnel and consulting services. As the primary products and
services of our operating subsidiaries and unconsolidated affiliates evolve, we apply a comprehensive approach to the
mitigation of identified security risks. We have established risk management policies, including those related to information
security and cybersecurity, designed to monitor and mitigate information security related risks.
Human Capital Resources
Employees
As of January 31, 2021, Cannae and our consolidated subsidiaries had 14,509 employees, which includes 14,358 in our
Restaurant Group and 151 in the various majority-owned businesses comprising our Corporate and other segment. None of our
employees are unionized or represented by any collective agency. We believe that our relations with employees are generally
good.
Our Manager and Cannae LLC rely on the experience and expertise of a small number of highly qualified and experienced
employees which make up our management team. We continually assess our management team's capabilities and capacity with
a view toward the long term sustainability of the Company's operations.
Diversity
We stand committed to our philosophy that all employees deserve an inclusive workplace, one where each employee feels
heard and empowered. All employees – regardless of race, ethnicity, sexual orientation or gender identification – are given
equal access to opportunities throughout the organization. We believe that having a variety of employee ideas, perspectives, and
experiences are key components of our success. The diversity of our employees and directors allows us to connect to our
investees in important ways and offer them meaningful insights to our business operations. We have a written
nondiscrimination policy that is distributed to all employees as part of our employee handbook. Employees must acknowledge
our employee handbook and specifically our nondiscrimination policy annually.
Our Board leads by example in its commitment to diversity. In 2019, our Board codified its commitment to consider all
aspects of diversity when selecting new director nominees, including candidates with a diversity of race, ethnicity, sexual
orientation or gender identification by integrating it into the director selection criteria in our Corporate Governance Guidelines.
In February 2021, Barry Moullet and David Aung, both of whom identified themselves as having diverse backgrounds, joined
our Board.
Statement Regarding Forward-Looking Information
The statements contained in this Annual Report or in our other documents or in oral presentations or other statements made
by our management that are not purely historical are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
including statements regarding our expectations, hopes, intentions, or strategies regarding the future. These statements relate to,
among other things, future financial and operating results of the Company. In many cases, you can identify forward-looking
statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,”
“potential,” or “continue,” or the negative of these terms and other comparable terminology. Actual results could differ
materially from those anticipated in these statements as a result of a number of factors, including, but not limited to the
following:
•
•
•
•
changes in general economic, business, and political conditions, including changes in the financial markets and
changes in conditions resulting from the outbreak of a pandemic such as the novel coronavirus COVID-19;
the overall impact of the outbreak of COVID-19 and measures to curb its spread, including the effect of governmental
or voluntary mitigation measures such as business shutdowns, social distancing, and stay-at-home orders;
compliance with extensive government regulation of our operating subsidiaries and adverse changes in applicable laws
or regulations or in their application by regulators;
the effects of the Externalization and the Management Services Agreement;
8
•
•
•
loss of key personnel that could negatively affect our financial results and impair our operating abilities;
our potential inability to find suitable acquisition candidates, as well as the risks associated with acquisitions in lines of
business that will not necessarily be limited to our traditional areas of focus, or difficulties integrating acquisitions;
other risks detailed in "Risk Factors" below and elsewhere in this document and in our other filings with the SEC.
We are not under any obligation (and expressly disclaim any such obligation) to update or alter our forward-looking
statements, whether as a result of new information, future events or otherwise. You should carefully consider the possibility that
actual results may differ materially from our forward-looking statements.
Additional Information
The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and
amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Exchange Act, are filed with the Securities and
Exchange Commission (the "SEC"). The Company is subject to the informational requirements of the Exchange Act and files or
furnishes reports, proxy statements and other information with the SEC. The SEC maintains an internet site that contains
reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at
www.sec.gov.
Our website address is www.cannaeholdings.com. We make available free of charge on or through our website our Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports
filed or furnished pursuant to the Exchange Act as soon as reasonably practicable after such material is electronically filed with
or furnished to the SEC. However, the information found on our website is not part of this or any other report.
9
Item 1A.
Risk Factors
Risk Factor Summary
In the course of conducting our business operations, we are exposed to a variety of risks, some of which are inherent in our
industry and others of which are more specific to our own businesses. The risk factors summarized below could materially harm
our business, operating results and/or financial condition, impair our future prospects and/or cause the price of our common
stock to decline. These risks are discussed more fully in the section titled “Risk Factors.” Material risks that may affect our
business, operating results and financial condition include, but are not necessarily limited to, the following:
• We may become subject to the Investment Company Act of 1940.
•
Certain executive officers and members of our Board of Directors have or will have interests and positions that could
present potential conflicts.
The Management Service Agreement was negotiated between related parties and the terms, including fees payable,
may not be as favorable to us as if it were negotiated with an unaffiliated third party.
•
• Our executive officers, directors and Manager may allocate some of their time to other businesses, thereby causing
conflicts of interest in their determination as to how much time to devote to our affairs, which may materially
adversely affect our results of operations.
Conflicts of interest could arise in connection with certain of our directors’ and executive officers’ discharge of
fiduciary duties to our shareholders.
•
• Our Manager and members of our management team may engage in activities that compete with us or our businesses.
• We cannot remove our Manager solely for poor performance, which could limit our ability to improve our
performance and could adversely affect the market price of our shares.
• Our Manager can resign on 180 days’ notice, subject to a limited extension, and we may not be able to find a suitable
replacement, resulting in a disruption in our operations that could materially adversely affect our financial condition,
business and results of operations as well as the market price of our shares.
• We must pay our Manager the management fee regardless of our performance.
• We cannot determine the amount of the management fee that will be paid over time with any certainty, nor are we able
to determine with any certainty the amount of carried interest that will be paid over time, and our payment of such fees
and carried interest to the Manager may significantly reduce the amount of cash available for distribution to our
shareholders.
• Our profit allocation may induce our Manager to make suboptimal decisions regarding our operations.
•
The COVID-19 outbreak has disrupted and is expected to continue to disrupt the business of our Restaurant Group,
which has and could continue to materially affect our Restaurant Group's operations, financial condition and results
of operations for an extended period of time.
•
• General macroeconomic factors, including unemployment, energy prices and interest rates, and certain economic and
business factors specific to the restaurant and bakery industries that are largely out of our restaurant businesses'
control may have a material adverse effect on our business, financial condition and results of operations.
The Restaurant Group companies face significant competition for customers, real estate and employees and
competitive pressure to adapt to changes in conditions driving customer demand. The Restaurant Group companies'
inability to compete effectively may have a material adverse effect on our business, financial condition and results of
operations.
If our restaurant businesses are unable to effectively grow revenue and profitability, our Restaurant Group companies
may be required to record additional impairment charges to restaurant assets, the carrying value of goodwill or other
intangible assets, which could have a material adverse effect on our financial condition and results of operations.
Increased commodity, energy and other costs could decrease our Restaurant Group companies' profit margins or
cause the Restaurant Group companies to limit or otherwise modify their menus, which could have a material adverse
effect on our business, financial condition and results of operations.
Negative customer experiences or negative publicity surrounding our Restaurant Group companies' restaurants or
other restaurants could adversely affect sales in one or more of our Restaurant Group companies' restaurants and
•
•
•
10
make our concepts less valuable, which could have a material adverse effect on our business, financial condition and
results of operations.
• Our restaurant businesses could suffer due to reduced demand for our restaurant businesses' brands or specific menu
offerings if our restaurant businesses are the subject of negative publicity or litigation regarding allegations of food-
related contaminations or illnesses, which could have a material adverse effect on our business, financial condition
and results of operations.
• Our investment in D&B may expose us to certain risks, which could have a material adverse effect on our results of
operations or financial position.
• We share certain directors with D&B or its affiliated entities, which may lead to conflicting interests.
• D&B's ability to implement and execute its strategic plans to transform the business may not be successful and,
accordingly, D&B may not be successful in achieving its goals to transform its business, which could have a material
adverse effect on its business, financial condition and results of operations.
• Data security and integrity are critically important to D&B's business, and cybersecurity incidents, including
cyberattacks, breaches of security, unauthorized access to or disclosure of confidential information, business
disruption, or the perception that confidential information is not secure, could result in a material loss of business,
regulatory enforcement, substantial legal liability and/or significant harm to its reputation.
•
• D&B's substantial indebtedness could have a material adverse effect on its financial condition and its ability to
operate its business or react to changes in the economy or its industry, prevent them from fulfilling its obligations and
could divert its cash flow from operations for debt payments.
An outbreak of disease, global or localized health pandemic or epidemic or a similar public health threat, or the fear
of such an event, could have a material adverse effect on Dun & Bradstreet's business, financial condition and results
operations.
If Optimal Blue is unable to protect its information systems against data corruption, cyber-based attacks or network
security breaches; are unable to provide adequate security in the electronic transmission of sensitive data; or are
unable to prevent system failures or service interruptions, it could have a material adverse effect on its business,
financial condition and results of operations and ultimately, our investment.
The outbreak of COVID-19 and resulting government response have negatively affected the global economy, the
United States economy and the global financial markets, and may disrupt our operations, which could have an adverse
effect on our Corporate and Other businesses, financial condition and results of operations.
•
•
• We share certain directors and officers with FNF, which may lead to conflicting interests.
In addition to the other information set forth in this Annual Report and other filings we have made and make in the future
with the SEC, you should carefully consider the following risk factors and uncertainties, which could materially affect our
business, financial condition or results of operations in future periods. However, other factors not discussed below or elsewhere
in this Annual Report could also adversely affect our businesses, results of operations and financial condition. Therefore, the
risk factors below should not be considered a complete list of potential risks that we may face.
Risks Relating to the Company's Structure
We may become subject to the Investment Company Act of 1940.
We do not believe that we are subject to regulation under the Investment Company Act of 1940, as amended (the "40
Act"). We engage primarily in the business of managing and operating our controlled subsidiaries that make up a majority of
our portfolio of companies. Our officers, Manager and any employees who provide services to us pursuant to the terms of our
corporate services agreement with FNF devote their activities to the businesses of these portfolio companies. Our interest in
controlled portfolio companies comprises a substantial majority of our assets. Based on these factors, we believe that we are not
an investment company under the 40 Act, including under Section 3(b)(1) of the 40 Act. If, at any time, we become primarily
engaged in the business of investing, reinvesting or trading in securities, we could become subject to regulation under the 40
Act. Following any such change in our business and after giving effect to any applicable grace periods, we may be required to
register as an investment company, which could result in significant registration and compliance costs, could require changes to
our corporate governance structure and financial reporting, and could restrict our activities going forward. In addition, if we
were to become inadvertently subject to the 40 Act, any violation of the 40 Act could subject us to material adverse
consequences, including potentially significant regulatory penalties and the possibility that certain of our contracts would be
deemed unenforceable.
11
Certain executive officers and members of our Board of Directors have or will have interests and positions that could
present potential conflicts.
Certain executive officers and members of our Board serve on the boards of directors of other entities or are employed by
other entities, including D&B, Trasimene, FNF or Black Knight.
As a result of the foregoing, there may be circumstances where certain executive officers and directors may be subject to
conflicts of interest with respect to, among other things: (i) our ongoing relationships with D&B, Trasimene or FNF; (ii)
business opportunities arising for any of us, D&B, Trasimene, FNF or Black Knight; and (iii) conflicts of time with respect to
matters potentially or actually involving or affecting us.
We have in place a code of business conduct and ethics prescribing procedures for managing conflicts of interest and our
chief compliance officer and audit committee are responsible for the review, approval or ratification of any potential conflicts of
interest transactions. Additionally, we expect that interested directors will abstain from decisions with respect to conflicts of
interest as a matter of practice. However, there can be no assurance that such measures will be effective, that we will be able to
resolve all potential conflicts or that the resolution of any such conflicts will be no less favorable to us than if we were dealing
with an unaffiliated third party.
Refer to Note R to the Notes to Consolidated Financial Statements for more information related to our related party
relationships and transactions with FNF and our Manager.
Risks Relating to the Externalization and Our Manager
The Management Service Agreement was negotiated between related parties and the terms, including fees payable, may not
be as favorable to us as if it were negotiated with an unaffiliated third party.
Because our Manager is owned by certain of our directors and executive officers, the Management Services Agreement
was developed by related parties, although our independent directors reviewed and approved the Management Services
Agreement. The terms of the Management Services Agreement, including fees payable, may not reflect the terms we may have
received if it was negotiated with an unrelated third party. In addition, particularly as a result of our relationship with the
principal owners of the Manager, who are certain directors and members of our management team, our independent directors
may determine that it is in the best interests of our shareholders not to enforce, or to enforce less vigorously, our rights under
the Management Services Agreement because of our desire to maintain our ongoing relationship with our Manager.
Our executive officers, directors and Manager may allocate some of their time to other businesses, thereby causing conflicts
of interest in their determination as to how much time to devote to our affairs, which may materially adversely affect our
results of operations.
While the members of our management team anticipate devoting a substantial amount of their time to the affairs of the
Company, our executive officers, directors, Manager and other members of our management team may engage in other business
activities. This may result in a conflict of interest in allocating their time between our operations and our management and the
operations of other businesses. Their other business endeavors may involve related or unrelated parties. Conflicts of interest that
arise over the allocation of time may not always be resolved in our favor and may materially adversely affect our results of
operations. See the section entitled “Factors Relating to the Split-Off” included in Item 1A of our Annual Report for further
discussion of risks associated with our split-off from, and relationship with, FNF.
Conflicts of interest could arise in connection with certain of our directors’ and executive officers’ discharge of fiduciary
duties to our shareholders.
Certain of our directors and executive officers are members of the Manager. Such persons, by virtue of their positions with
us, have fiduciary duties to us and our shareholders. The duties of such persons as directors or executive officers to us and our
shareholders may conflict with the interests of such persons in their capacities as members or employees of the Manager.
Our Manager and members of our management team may engage in activities that compete with us or our businesses.
While the members of our management team intend to devote a substantial majority of their time to the affairs of the
Company, and while our Manager currently does not manage any other businesses that are in lines of business similar to our
businesses, neither our management team nor our Manager is expressly prohibited from investing in or managing other entities,
including those that are in the same or similar line of business as our businesses, or required to present any particular
investment or business opportunity to the Company. In this regard, the Management Services Agreement and the obligation
thereunder to provide management services to us will not create a mutually exclusive relationship between our Manager, on the
one hand, and the Company, on the other.
We cannot remove our Manager solely for poor performance, which could limit our ability to improve our performance and
could adversely affect the market price of our shares.
12
Under the terms of the Management Services Agreement, our Manager may not be removed as a result of
underperformance. Instead, the Company may only remove our Manager in certain limited circumstances or upon a vote by a
majority of the Company’s board of directors to terminate the Management Services Agreement. This limitation could
adversely affect the market price of our shares.
Our Manager can resign on 180 days’ notice, subject to a limited extension, and we may not be able to find a suitable
replacement, resulting in a disruption in our operations that could materially adversely affect our financial condition,
business and results of operations as well as the market price of our shares.
Our Manager has the right, under the Management Services Agreement, to resign at any time on 180 days’ written notice,
whether we have found a replacement or not, subject to the Company’s right to extend such period by an additional 180 days or
until a replacement manager has been in place for 30 days, if no replacement manager has been found by the 150th day
following the Manager’s notice of resignation. If our Manager resigns, we may not be able to contract with a new manager or
hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms
within 180 days (subject to possible extension), or at all, in which case our operations are likely to experience a disruption; our
financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely
affected; and the market price of our shares may decline. In addition, the coordination of our internal management, acquisition
activities and supervision of our businesses is likely to suffer if we are unable to identify and reach an agreement with a single
institution or group of executives having the expertise possessed by our Manager. Even if we are able to retain comparable
management, whether internal or external, the integration of such management and their lack of familiarity with our businesses
may result in additional costs and time delays that could materially adversely affect our financial condition, business and results
of operations.
We must pay our Manager the management fee regardless of our performance.
Our Manager is entitled to receive a management fee that is based on our cost of invested capital, as defined in the
Management Services Agreement, regardless of the performance of our businesses. The calculation of the management fee is
unrelated to the Company’s results of operations. As a result, the management fee may incentivize our Manager to increase the
amount of invested capital.
We cannot determine the amount of the management fee that will be paid over time with any certainty, nor are we able to
determine with any certainty the amount of carried interest that will be paid over time, and our payment of such fees and
carried interest to the Manager may significantly reduce the amount of cash available for distribution to our shareholders.
Under the Management Services Agreement, the Company will be obligated to pay a management fee to and, subject to
certain exceptions, reimburse the costs and out-of-pocket expenses of our Manager incurred on behalf of the Company in
connection with the provision of services to the Company. The management fee is calculated by reference to the Company’s
cost of invested capital, which will be impacted by the acquisition or disposition of, and additional capital contributions and
investments in, businesses, which can be significantly influenced by our Manager, as well as the performance of our businesses
and other businesses we may acquire in the future. Changes in cost of invested capital and in the resulting management fee
could be significant, resulting in a material adverse effect on the Company’s results of operations. In addition, if the
performance of the Company declines, assuming cost of invested capital remains the same, management fees will increase as a
percentage of the Company’s net income.
Furthermore, we cannot determine the amount of carried interest with respect to liquidity events involving investments of
the Company that will be paid over time with any certainty. Such determination would be dependent on the potential sale
proceeds received for any of our businesses and the performance of the Company and its businesses over a multi-year period of
time, among other factors that cannot be predicted with certainty at this time. Such factors may have a significant impact on the
amount of any carried interest to be paid to the Manager. Likewise, such determination would be dependent on whether certain
hurdles were surpassed giving rise to a payment of carried interest. Any amounts paid in respect of the carried interest are
unrelated to the management fee earned for performance of services under the Management Services Agreement.
While it is difficult to quantify with any certainty the actual amount of any such payments in the future, such amounts
could be substantial. The management fee and carried interest will be payment obligations of the Company and, as a result, will
be paid, along with other Company obligations, prior to the payment of distributions to shareholders. As a result the payment of
these amounts may significantly reduce the amount of cash flow available for distribution to our shareholders. If we do not have
sufficient liquid assets to pay the management fee and carried interest when such payments are due, we may be required to
liquidate assets or incur debt in order to make such payments. This circumstance could materially adversely affect our liquidity
and ability to make distributions to our shareholders.
Our profit allocation may induce our Manager to make suboptimal decisions regarding our operations.
Our Manager will receive carried interest based on profits in excess of an annualized hurdle rate upon a liquidity event
involving a Company investment. In this respect, a calculation and payment of carried interest may be triggered upon the sale of
13
one of our businesses. As a result, our Manager may be incentivized to recommend the sale of one or more of our businesses to
our Board of Directors at a time that may not be optimal for our shareholders.
Risks Relating to the Restaurant Group
The COVID-19 outbreak has disrupted and is expected to continue to disrupt the business of our Restaurant Group, which
has and could continue to materially affect our Restaurant Group's operations, financial condition and results of operations
for an extended period of time.
The COVID-19 outbreak, the federal, state and local government responses to COVID-19 and our responses to the
outbreak have all disrupted and will continue to disrupt our Restaurant Group businesses. In the United States, individuals are
being encouraged to practice social distancing, in most places are restricted from gathering in groups and in many cases, placed
on complete restriction from non-essential movements outside of their homes. In response to the COVID-19 outbreak and these
changing conditions, we closed the dining rooms in substantially all of our restaurants in late March 2020 with substantially all
remaining closed through early May 2020. Beginning in March 2020 and lasting into May 2020, in most of our restaurants we
were solely operating to-go and delivery services in the jurisdictions where government regulations permit restaurants to
continue to operate and where the guest demand makes such operations sustainable. We temporarily closed certain restaurants,
modified work hours for our Restaurant Group employees and identified and implemented cost savings measures throughout
our Restaurant Group operations. If the COVID-19 outbreak deteriorates again, we may again be required to close the dining
rooms in substantially all of our restaurants and solely operate to-go and delivery services, which would further adversely affect
the results of operations of our Restaurant Group.
The COVID-19 outbreak and these responses have affected and will continue to adversely affect our Restaurant Group
brands' guest traffic, sales and operating costs and we cannot predict how long the outbreak will last or what other government
responses may occur.
Suppliers of our Restaurant Group could be adversely impacted by the COVID-19 outbreak. If our Restaurant Group's
suppliers’ access to resources is constrained or their employees are unable to work, whether because of illness, quarantine,
limitations on travel or other government restrictions in connection with COVID-19, our Restaurant Group businesses could
face shortages of food items or other restaurant supplies and our Restaurant Group's operations and sales could be adversely
impacted by such supply interruptions.
The COVID-19 pandemic has negatively impacted the financial results of our Restaurant Group and depending on the
duration and scope, such impact could continue to have a material adverse impact on our results of operations.
See further discussion of the impact of COVID-19 on our Restaurant Group's results in the Results of Operations
subsection in Item 7 of Part II of this Annual Report.
General macroeconomic factors, including unemployment, energy prices and interest rates, and certain economic and
business factors specific to the restaurant and bakery industries that are largely out of our restaurant businesses' control
may materially and adversely affect consumer behavior and have a material adverse effect on our business, financial
condition and results of operations.
General economic conditions may materially and adversely affect the financial condition and results of operations of our
restaurant businesses, which we also refer to as our Restaurant Group companies. Recessionary economic cycles, a protracted
economic slowdown, a worsening economy, increased unemployment, increased energy prices, rising interest rates, a
downgrade of the United States ("U.S.") government's long-term credit rating, financial market volatility and unpredictability or
other national, regional and local regulatory and economic conditions or other industry-wide cost pressures could affect
consumer behavior and spending for restaurant dining occasions and result in increased pressure with respect to our Restaurant
Group companies' pricing, guest count levels and commodity costs, which could lead to a further decline in our Restaurant
Group companies' sales and earnings, beyond those that resulted in the Blue Ribbon Reorganization. Job losses, foreclosures,
bankruptcies and falling home prices could cause customers to make fewer discretionary purchases, and any significant
decrease in our Restaurant Group companies' guest counts or profit will negatively impact their financial performance. In
addition, if gasoline, natural gas, electricity and other energy costs increase, or credit card, home mortgage and other borrowing
costs increase with rising interest rates, our Restaurant Group companies' customers may have lower disposable income and
reduce the frequency with which they dine at restaurants, may spend less during each visit at our Restaurant Group companies'
restaurants or may choose more inexpensive restaurants. These factors could also cause the Restaurant Group companies to,
among other things, reduce the number and frequency of new restaurant openings, close additional restaurants, delay the
reimaging of the Restaurant Group companies' existing restaurant locations, or impede our ability to successfully execute, and
achieve the goals contemplated by, the Blue Ribbon Reorganization.
The business results of our Restaurant Group companies depend on a number of industry-specific factors as well, many of
which are beyond the Restaurant Group companies' control. The full service dining sector of the restaurant industry is affected
by seasonal fluctuation of sales volumes, consumer confidence, consumer spending patterns and consumer preferences,
14
including changes in consumer tastes and dietary habits, and the level of consumer acceptance of our restaurant brands. The
performance of individual restaurants may also be materially and adversely affected by factors applicable to those restaurants,
such as demographic trends, severe weather, traffic patterns and the type, number and location of competing restaurants.
The quarterly results of our Restaurant Group companies have been and may continue to be affected by restaurant closures
and exit-related costs, labor availability and costs for hourly and management personnel, changes in borrowings and interest
rates, changes in consumer preferences and competitive conditions, fluctuations in food and commodity prices, fluctuations in
costs attributable to public company compliance and impairments of goodwill, intangible assets and property, fixtures and
equipment. As a result of these and other factors, the Restaurant Group companies' financial results for any quarter may not be
indicative of the results that may be achieved for a full fiscal year.
Unfavorable changes in the above factors or in other business and economic conditions affecting our Restaurant Group
companies' customers or industry could increase costs, reduce guest counts in some or all restaurants or impose practical limits
on pricing, any of which could lower profit margins and have a material adverse effect on our business, financial condition and
results of operations.
The Restaurant Group companies face significant competition for customers, real estate and employees and competitive
pressure to adapt to changes in conditions driving customer demand. The Restaurant Group companies' inability to compete
effectively may affect guest counts, sales and profit margins, which could have a material adverse effect on our business,
financial condition and results of operations.
The restaurant industry is intensely competitive with a substantial number of restaurant operators that compete directly and
indirectly with the Restaurant Group companies with respect to price, service, ambiance, brand, customer service, dining
experience, location, food quality and variety and value perception of menu items and there are other well established
competitors with substantially greater financial and other resources than the Restaurant Group companies. Some of our
Restaurant Group companies' competitors advertise on national television, which may provide customers with greater
awareness and name recognition than our Restaurant Group companies can achieve through their advertising efforts. There is
also active competition for management personnel and attractive suitable real estate sites. Consumer tastes and perceptions,
nutritional and dietary trends, guest count patterns and the type, number and location of competing restaurants often affect the
restaurant business, and our Restaurant Group companies' competitors may react more efficiently and effectively to those
conditions. For instance, prevailing health or dietary preferences or perceptions of our Restaurant Group companies' products
may cause consumers to avoid certain menu items or products our Restaurant Group companies offer in favor of foods that are
perceived as more healthy, and such choices by consumers could have a material adverse effect on our business, financial
condition and results of operations. Further, our Restaurant Group companies face growing competition from the supermarket
industry, with the improvement of their "convenient meals" in the deli and prepared food sections, from quick service and fast
casual restaurants and online food delivery services as a result of food and beverage offerings by those food providers. As our
Restaurant Group companies' competitors expand operations in markets where our restaurant businesses operate or expect to
operate, we expect competition to intensify. If our Restaurant Group companies are unable to continue to compete effectively,
including following the completion of the Blue Ribbon Reorganization, their guest counts, sales and profit margins could
decline, which could have a material adverse effect on our business, financial condition and results of operations.
If our restaurant businesses are unable to effectively grow revenue and profitability, our Restaurant Group companies may
be required to record additional impairment charges to restaurant assets, the carrying value of goodwill or other intangible
assets, which could have a material adverse effect on our financial condition and results of operations.
Our Restaurant Group companies assess the potential impairment of their long-lived assets whenever events or changes in
circumstances indicate that the carrying value of the assets or asset group may not be recoverable. Factors considered include,
but are not limited to, significant underperformance relative to historical or projected future operating results, significant
changes in the manner in which an asset is being used, an expectation that an asset will be disposed of significantly before the
end of its previously estimated useful life and significant negative industry or economic trends. Our Restaurant Group
companies annually review and compare the carrying value of intangible assets, including goodwill, to the fair value. For the
years ended December 31, 2020, 2019 and 2018, we recorded $7.8 million, $10.4 million and $26.7 million, respectively, of
impairment to goodwill in our Restaurant Group segment as a result of deteriorating operating results and cash flow resulting
from declining same store sales and increased costs. In addition, for the years ended December 31, 2020, 2019, and 2018, we
recorded $11.8 million, $17.1 million, and $5.8 million, respectively, of impairment expense related to other intangible assets
within our Restaurant Group.
We cannot accurately predict the amount and timing of any future recorded impairment to our Restaurant Group
companies' assets. Should the value of goodwill or other intangible or long-lived assets become further impaired, there could be
a material adverse effect on our financial condition and results of operations.
15
Increased commodity, energy and other costs could decrease our Restaurant Group companies' profit margins or cause the
Restaurant Group companies to limit or otherwise modify their menus, which could have a material adverse effect on our
business, financial condition and results of operations.
The cost, availability and quality of ingredients restaurant operations use to prepare their food is subject to a range of
factors, many of which are beyond their control. A significant component of our restaurant businesses' costs will be related to
food commodities, including beef, pork, chicken, seafood, poultry, dairy products, oils, produce, fruit, flour and other related
costs such as energy and transportation over which we may have little control, that can be subject to significant price
fluctuations due to seasonal shifts, climate conditions, industry demand, changes in international commodity markets and other
factors. If there is a substantial increase in prices for these commodities, our Restaurant Group companies' results of operations
may be negatively affected. In addition, the Restaurant Group companies' restaurants are dependent upon frequent deliveries of
perishable food products that meet certain specifications. Shortages or interruptions in the supply of perishable food products
caused by unanticipated demand, problems in production or distribution, disease or food-borne illnesses, inclement weather or
other conditions could adversely affect the availability, quality, and cost of ingredients, which would likely lower revenues,
damage the Restaurant Group companies' reputation or otherwise harm our business.
Negative customer experiences or negative publicity surrounding our Restaurant Group companies' restaurants or other
restaurants could adversely affect sales in one or more of our Restaurant Group companies' restaurants and make our
concepts less valuable, which could have a material adverse effect on our business, financial condition and results of
operations.
Because we believe our Restaurant Group companies' success depends significantly on their ability to provide exceptional
food quality, outstanding service and an excellent overall dining experience, adverse publicity, whether or not accurate, relating
to food quality, public health concerns, illness, safety, injury or government or industry findings concerning our Restaurant
Group companies' restaurants, restaurants operated by other food service providers or others across the food industry supply
chain could affect our Restaurant Group companies more than it would other restaurants that compete primarily on price or
other factors. If customers perceive or experience a reduction in the food quality, service or ambiance at our Restaurant Group
companies' restaurants or in any way believe our Restaurant Group companies' restaurants have failed to deliver a consistently
positive experience, the value and popularity of one or more of our Restaurant Group companies' concepts could suffer. Further,
because our restaurant businesses rely heavily on "word-of-mouth," as opposed to more conventional mediums of
advertisement, to establish concept recognition, our restaurant businesses may be more adversely affected by negative customer
experiences than other dining establishments, including those of our restaurant businesses' competitors.
Our restaurant businesses could suffer due to reduced demand for our restaurant businesses' brands or specific menu
offerings if our restaurant businesses are the subject of negative publicity or litigation regarding allegations of food-related
contaminations or illnesses, which could have a material adverse effect on our business, financial condition and results of
operations.
Food safety is a top priority, and our Restaurant Group companies dedicate substantial resources to ensuring that their
customers enjoy safe, quality food products. Food-related contaminations and illnesses may be caused by a variety of food-
borne pathogens, such as E. coli or salmonella, which are frequently carried on unwashed fruits and vegetables, from a variety
of illnesses transmitted by restaurant workers, such as hepatitis A, which may not be diagnosed prior to being infectious, and
from contamination of food by foreign substances. Contamination and food borne illness incidents could also be caused at the
point of source or by food suppliers and distributors. As a result, we cannot control all of the potential sources of contamination
or illness that can be contained in or transmitted from our Restaurant Group companies' food. Regardless of the source or cause,
any report of food-borne illnesses or other food safety issues including food tampering or contamination, at one of our
Restaurant Group companies' restaurants could adversely affect the reputation of our Restaurant Group companies' brands and
have a negative impact on their sales. Even instances of food-borne illness, food tampering or food contamination occurring
solely at restaurants of our Restaurant Group companies' competitors or at one of our Restaurant Group companies' suppliers
could result in negative publicity about the food service industry generally and adversely impact our Restaurant Group
companies' sales.
If any person becomes injured or ill, or alleges becoming injured or ill, as a result of eating our Restaurant Group
companies' food, our Restaurant Group companies may temporarily close some restaurants or their bakery facilities, which
would decrease their revenues, and our restaurant businesses may be liable for damages or be subject to governmental
regulatory action, either of which could have long-lasting, negative effects on our restaurant businesses' reputation, financial
condition and results of operations, regardless of whether the allegations are valid or whether our restaurant businesses are
found liable. The occurrence of food-borne illnesses or food safety issues could also adversely affect the price and availability
of affected ingredients, resulting in higher costs and lower margins.
Our Restaurant Group companies' failure to comply with government regulation, and the costs of compliance or non-
compliance, could have a material adverse effect on our business, financial condition and results of operations.
16
The Restaurant Group companies are subject to various federal, state and local laws and regulations affecting their
business. Each of their restaurants and their bakery division are subject to licensing and regulation by a number of federal, state
and local governmental authorities, which may include, among others, alcoholic beverage control, health and safety, nutritional
menu labeling, health care, environmental and fire agencies. Difficulty in obtaining or failure to obtain the required licenses,
including liquor or other licenses, permits or approval could delay or prevent the development of a new restaurant in a
particular area. Additionally, difficulties or inabilities to retain or renew licenses, or increased compliance costs due to changed
regulations, could adversely affect operations at existing restaurants.
There is also a potential for increased regulation of certain food establishments in the U.S., where compliance with Hazard
Analysis & Critical Control Points ("HACCP") management systems may now be required. HACCP refers to a management
system in which food safety is addressed through the analysis and control of potential hazards from raw material production,
procurement and handling, to manufacturing, distribution and consumption of the finished product. Many states have required
restaurants to develop and implement HACCP programs and the U.S. government continues to expand the sectors of the food
industry that must adopt and implement HACCP programs. For example, the Food Safety Modernization Act, signed into law
in January 2011, granted the FDA new authority regarding the safety of the entire food system, including through increased
inspections and mandatory food recalls. We anticipate that the new requirements may impact the restaurant industry.
Additionally, our Restaurant Group companies' suppliers may initiate or otherwise be subject to food recalls that may impact
the availability of certain products, result in adverse publicity or require the Restaurant Group companies' to take actions that
could be costly for them or otherwise harm their business.
The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional
requirements and the consequences of litigation relating to current or future laws and regulations, or an insufficient or
ineffective response to significant regulatory or public policy issues, could increase our Restaurant Group companies' cost
structure or lessen their operational efficiencies and talent availability, and therefore have a material adverse effect on our
financial condition and results of operations. Failure to comply with the laws and regulatory requirements of federal, state and
local authorities could result in, among other things, revocation of required licenses, administrative enforcement actions, fines
and civil and criminal liability. Compliance with these laws and regulations can be costly and can increase the Restaurant
Group companies' exposure to litigation or governmental investigations or proceedings.
Restaurant companies, including our restaurant companies, are the target of claims and lawsuits from time to time in the
ordinary course of business. Proceedings of this nature, if successful, could result in our payment of substantial costs and
damages, which could have a material adverse effect on our business, financial condition and results of operations.
Our Restaurant Group companies and other restaurant companies have been subject to claims and lawsuits alleging various
matters from time to time in the ordinary course of business, including those that follow. Claims and lawsuits may include class
action lawsuits, alleging violations of federal and state laws regarding workplace and employment matters, discrimination and
similar matters. A number of these lawsuits have resulted in the payment of substantial damages by the defendants. Similar
lawsuits have been instituted from time to time alleging violations of various federal and state wage and hour laws regarding,
among other things, employee meal deductions, the sharing of tips amongst certain employees, overtime eligibility of assistant
managers and failure to pay for all hours worked. Although our restaurant businesses will maintain what we believe to be
adequate levels of insurance, insurance may not be available at all or in sufficient amounts to cover any liabilities with respect
to these matters. Accordingly, if our restaurant businesses are required to pay substantial damages and expenses as a result of
these types or other lawsuits, such payments or expenses could have a material adverse effect on our business and results of
operations.
Occasionally, our Restaurant Group companies' customers may file complaints or lawsuits against the Restaurant Group
companies alleging that they are responsible for some illness or injury the customers suffered at or after a visit to one of the
Restaurant Group companies' restaurants, including actions seeking damages resulting from food-borne illness and relating to
notices with respect to chemicals contained in food products required under state law. Our Restaurant Group companies may
also be subject to a variety of other claims from third parties arising in the ordinary course of their business, including personal
injury claims, contract claims and claims alleging violations of federal and state laws. In addition, most of our Restaurant Group
companies' restaurants are subject to state "dram shop" or similar laws that generally allow a person to sue our restaurant
businesses if that person was injured by a legally intoxicated person who was wrongfully served alcoholic beverages at one of
our Restaurant Group companies' restaurants. The restaurant industry has also been subject to a growing number of claims that
the menus and actions of restaurant chains have led to the obesity of certain of their customers. In addition, the Restaurant
Group companies may also be subject to lawsuits from their employees or others alleging violations of federal and state laws
regarding workplace and employment matters, discrimination and similar matters. A number of these lawsuits in the restaurant
industry have resulted in the payment of substantial damages by the defendants.
Regardless of whether any claims against the Restaurant Group companies are valid or whether they are liable, claims may
be expensive to defend and may divert resources away from their operations. In addition, such claims may generate negative
publicity, which could reduce customer traffic and sales. Although our restaurant businesses will maintain what they believe to
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be adequate levels of insurance, insurance may not be available at all or in sufficient amounts to cover any liabilities with
respect to these or other matters. Defense costs, even for unfounded claims, or a judgment or other liability in excess of our
restaurant businesses' insurance coverage for any claims or any adverse publicity resulting from claims could have a material
adverse effect on our business, results of operations and financial condition.
The Restaurant Group companies rely heavily on information technology and any material failure, interruption, or security
breach in their systems could have a material adverse effect on our business, financial condition and results of operations.
The Restaurant Group companies rely heavily on information technology systems across their operations and corporate
functions, including for order and delivery from suppliers and distributors, point-of-sale processing in their restaurants,
management of their supply chains, payment of obligations, collection of cash, bakery production, data warehousing to support
analytics, finance or accounting systems, labor optimization tools, gift cards, online business and various other processes and
transactions, including the storage of employee and customer information. The Restaurant Group companies' ability to
effectively manage their business and coordinate the production, distribution and sale of their products will depend significantly
on the reliability and capacity of these systems. The failure of these systems to operate effectively, maintenance problems or
problems with transitioning to upgraded or replacement systems could cause delays in product sales and reduced efficiency of
our restaurant businesses' operations, and significant capital investments could be required to remediate the problem.
The regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent
imposition of new and constantly changing requirements. Compliance with these requirements may result in cost increases due
to necessary systems changes and the development of new administrative processes. In addition, customers and employees have
a high expectation that our restaurant businesses will adequately protect their personal information. The majority of our
restaurant businesses' restaurant sales are by credit or debit cards. We and other restaurants and retailers have experienced
security breaches in which credit and debit card information of their customers has been stolen.
In addition, any breach in customer payment information could result in investigations by the U.S. Secret Service
Electronic Crimes Task Force ("ECTF") and increased cost in our restaurant businesses' efforts to cooperate with the ECTF.
The Restaurant Group companies also maintain certain personal information regarding their employees. In addition to
government investigations, the Restaurant Group companies may in the future become subject to lawsuits or other proceedings
for purportedly fraudulent transactions arising out of the actual or alleged theft of their customers' credit or debit card
information or if customer or employee information is obtained by unauthorized persons or used inappropriately. If the
Restaurant Group companies fail to comply with these laws and regulations or experience a significant breach of customer,
employee or company data, their reputation could be damaged and they could experience lost sales, fines or lawsuits.
Additionally, if a person is able to circumvent the security measures intended to protect our Restaurant Group companies'
employee or customer private data, he or she could destroy or steal valuable information and disrupt our restaurant businesses'
operations. The Restaurant Group companies may also be required to incur additional costs to modify or enhance their systems
in order to prevent or remediate any such attacks.
The success of the Restaurant Group depends, in part, on its intellectual property, which we may be unable to protect.
We regard our Restaurant Group's service marks, including "O'Charley's", "Ninety Nine", "Village Inn", "Legendary
Baking", and "Bakers Square", and other service marks and trademarks as important factors in the marketing of our restaurants.
We have also obtained trademarks for several of our brand's menu items and for various advertising slogans. We are aware of
names and marks similar to our Restaurant Group's service marks and trademarks used by other persons in certain geographic
areas where we have restaurants. We believe such uses will not adversely affect us and our policy is to pursue registration of
our marks whenever possible and to oppose vigorously any infringement of our marks.
We license the use of our registered trademarks and service marks to franchisees and third parties through franchise
arrangements and licenses. The franchise and license arrangements restrict franchisees' and licensees' activities with respect to
the use of our trademarks and service marks, and impose quality control standards in connection with goods and services
offered in connection with the trademarks and service marks.
Risks Relating to the Company's Investment in Dun & Bradstreet
Our investment in D&B may expose us to certain risks, which could have a material adverse effect on our results of
operations or financial position.
D&B’s transformation strategy is based on several strategic initiatives and growth strategies. The achievement of its
strategic initiatives and growth strategies depends on a number of factors, including but not limited to its ability to maintain the
integrity of its brand and reputation, client demand for its solutions, the effect of macro-economic challenges on its clients and
vendors, its reliance on third parties to provide data and certain operational services and its ability to protect its information
technology. D&B may not be able to successfully implement its strategic initiatives in accordance with its expectations, or in
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the timeframe it desires, which may result in us not realizing our expected return on our investment in D&B, or result in a
negative return on investment.
We record our investment in D&B using the equity method of accounting, through which we record our proportionate
share of their net earnings or loss in our consolidated financial statements. Equity-method investments are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be
recoverable. If our equity-method investment is not recoverable, we may be required to record an impairment charge, which
could have a material adverse effect on our results of operations.
We share certain directors with D&B or its affiliated entities, which may lead to conflicting interests.
One of our directors, Bill Foley, and our CEO and director, Richard N. Massey, also serve on the board of directors of
D&B. From time to time, we may enter into transactions with D&B and/or its respective subsidiaries or other affiliates. There
can be no assurance that the terms of any such transactions will be as favorable to our company, D&B or any of our or its
respective subsidiaries or affiliates as would be the case where there is no overlapping director.
D&B's ability to implement and execute its strategic plans to transform the business may not be successful and, accordingly,
D&B may not be successful in achieving its goals to transform its business, which could have a material adverse effect on its
business, financial condition and results of operations.
D&B may not be successful in developing and implementing its strategic plans to transform its businesses, including
realigning management, simplifying and scaling technology, expanding and enhancing data and optimizing its client services. If
the development or implementation of D&B's plans are not successful, they may not produce the revenue, margins, earnings or
synergies that we expect, including offsetting the impact of adverse economic conditions that may exist currently or develop in
the future. D&B may also face delays or difficulties in implementing technological, organizational and operational
improvements, including its plans to leverage our data insights in new functional areas and utilize existing data architecture to
generate high contribution incremental revenue streams, which could adversely affect its ability to successfully compete. In
addition, the costs associated with implementing such plans may be more than anticipated and D&B may not have sufficient
financial resources to fund all of the desired or necessary investments required in connection with its plans. The existing and
future execution of D&B's strategic and operating plans to transform its business will, to some extent, also be dependent on
external factors that they cannot control. In addition, these strategic and operational plans need to be continually reassessed to
meet the challenges and needs of its business in order for D&B to remain competitive. The failure to implement and execute its
strategic and operating plans in a timely manner or at all, realize or maintain the cost savings or other benefits or improvements
associated with such plans, have financial resources to fund the costs associated with such plans or incur costs in excess of
anticipated amounts, or sufficiently assess and reassess these plans could have a material adverse effect on D&B's business,
financial condition and results of operations, and ultimately the value of our investment in D&B.
D&B's brand and reputation are key assets and a competitive advantage, and its business may be affected by how it is
perceived in the marketplace.
D&B's brand and reputation are key assets of its business and a competitive advantage. D&B's ability to attract and retain
clients is highly dependent upon the external perceptions of its level of data quality, effective provision of solutions, business
practices, including the actions of its employees, third-party providers, members of D&B's world-wide network of partners and
other brand licensees, some of which may not be consistent with its policies and standards. Negative perception or publicity
regarding these matters could damage D&B's reputation with clients and the public, which could make it difficult for it to
attract and maintain clients. Adverse developments with respect to its industry may also, by association, negatively impact its
reputation, or result in higher regulatory or legislative scrutiny. Negative perceptions or publicity could have a material adverse
effect on D&B's business, financial condition and results of operations, and ultimately the value of our investment in D&B.
Data security and integrity are critically important to D&B's business, and cybersecurity incidents, including cyberattacks,
breaches of security, unauthorized access to or disclosure of confidential information, business disruption, or the perception
that confidential information is not secure, could result in a material loss of business, regulatory enforcement, substantial
legal liability and/or significant harm to its reputation.
D&B collects, stores and transmits a large amount of confidential company information on over 420 million total
businesses as of December 31, 2020, including financial information and personal information. D&B operates in an
environment of significant risk of cybersecurity incidents resulting from unintentional events or deliberate attacks by third
parties or insiders, which may involve exploiting highly obscure security vulnerabilities or sophisticated attack methods. These
cyberattacks can take many forms, but they typically have one or more of the following objectives, among others: (1) obtain
unauthorized access to confidential information, (2) manipulate or destroy data or (3) disrupt, sabotage or degrade service on
D&B's systems.
D&B has experienced and expects to continue to experience numerous attempts to access its computer systems, software,
networks, data and other technology assets on a daily basis. The security and protection of its data is a top priority for D&B.
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D&B devotes significant resources to maintain and regularly upgrade the wide array of physical, technical and contractual
safeguards that it employs to provide security around the collection, storage, use, access and delivery of information D&B has
in its possession. Despite D&B's physical security, implementation of technical controls and contractual precautions to identify,
detect and prevent the unauthorized access to and alteration and disclosure of its data, D&B cannot be certain that third party
systems that have access to its systems will not be compromised or disrupted in the future, whether as a result of criminal
conduct or other advanced, employee error or malfeasance, or other disruptions during the process of upgrading or replacing
computer software or hardware, power outages, computer viruses, telecommunication or utility failures or natural disasters or
other catastrophic events. Due to the sensitive nature of the information D&B collects, stores and transmits, it is not unusual for
efforts to occur (coordinated or otherwise) by unauthorized persons to attempt to obtain access to its systems or data, or to
inhibit D&B's ability to deliver products or services to a consumer or a business customer.
D&B must continually monitor and develop its information technology networks and infrastructure to prevent, detect,
address and mitigate the risk of unauthorized access, misuse, computer viruses and other events that could have a security
impact. The preventive actions D&B takes to address cybersecurity risk, including protection of its systems and networks, may
be insufficient to repel or mitigate the effects of cyberattacks as it may not always be possible to anticipate, detect or recognize
threats to its systems, or to implement effective preventive measures against all cybersecurity risks. This is because, among
other things: (1) the techniques used in cyberattacks change frequently and may not be recognized until after the attacks have
succeeded; (2) cyberattacks can originate from a wide variety of sources, including sophisticated threat actors involved in
organized crime, sponsored by nation-states, or linked to terrorist or hacktivist organizations; and (3) third parties may seek to
gain access to D&B's systems either directly or using equipment or security passwords belonging to employees, clients, third-
party service providers or other users.
Although D&B has not incurred material losses or liabilities to date as a result of any breaches, unauthorized disclosure,
loss or corruption of its data or inability of its clients to access its systems, such events could disrupt D&B's operations, subject
it to substantial regulatory and legal proceedings and potential liability and fines, result in a material loss of business and/or
significantly harm its reputation.
D&B may not be able to immediately address the consequences of a cybersecurity incident because a successful breach of
its computer systems, software, networks or other technology assets could occur and persist for an extended period of time
before being detected due to, among other things: (1) the breadth and complexity of its operations and the high volume of
transactions that is processes; (2) the large number of clients, counterparties and third-party service providers with which D&B
does business with; (3) the proliferation and increasing sophistication of cyberattacks; and (4) the possibility that a third party,
after establishing a foothold on an internal network without being detected, might obtain access to other networks and systems.
The extent of a particular cybersecurity incident and the steps that D&B may need to take to investigate it may not be
immediately clear, and it may take a significant amount of time before such an investigation can be completed and full and
reliable information about the incident is known. While such an investigation is ongoing, D&B may not necessarily know the
extent of the harm or how best to remediate it, and certain errors or actions could be repeated or compounded before they are
discovered and remediated, any or all of which could further increase the costs and consequences of a cybersecurity incident.
Due to concerns about data security and integrity, a growing number of legislative and regulatory bodies have adopted
breach notification and other requirements in the event that information subject to such laws is accessed by unauthorized
persons and additional regulations regarding the use, access, accuracy and security of such data are possible. In the United
States, D&B is subject to laws that provide for at least 50 disparate notification regimes. Complying with such numerous and
complex regulations in the event of unauthorized access would be expensive and difficult, and failure to comply with these
regulations could subject D&B to regulatory scrutiny and additional liability.
If D&B is unable to protect its computer systems, software, networks, data and other technology assets it could have a
material adverse effect on its business, financial condition and results of operations, and ultimately the value of our investment
in D&B.
D&B's substantial indebtedness could have a material adverse effect on its financial condition and its ability to operate its
business or react to changes in the economy or its industry, prevent them from fulfilling its obligations and could divert its
cash flow from operations for debt payments.
D&B has a substantial amount of indebtedness, which requires significant interest and principal payments. As of December
31, 2020, D&B has $3,255.8 million in total long-term debt outstanding. In addition, subject to the limitations contained in the
credit agreements governing certain of D&B's credit facilities, D&B may be able to incur substantial additional debt from time
to time to finance working capital, capital expenditures, investments or acquisitions or for other purposes. If D&B does so, the
risks related to its high level of debt could increase. This substantial amount of indebtedness could have important
consequences to D&B, including the following: (1) it may be difficult for D&B to satisfy its obligations, including debt service
requirements under its outstanding indebtedness; (2) D&B's ability to obtain additional financing for working capital, capital
expenditures, debt service requirements, acquisitions or other general corporate purposes may be impaired; (3) requiring a
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substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on its indebtedness,
thereby reducing D&B's ability to use its cash flow to fund its operations, capital expenditures, future business opportunities
and other purposes; (4) D&B will be more vulnerable to economic downturns and adverse industry conditions and its flexibility
to plan for, or react to, changes in its business or industry will be more limited; (5) D&B's ability to capitalize on business
opportunities and to react to competitive pressures, as compared to its competitors, may be compromised due to its high level of
indebtedness and the restrictive covenants in its credit agreements and indentures; (6) D&B's ability to borrow additional funds
or to refinance indebtedness may be limited; and (7) it may cause potential or existing clients or vendors to not contract with
D&B due to concerns over its ability to meet its financial obligations.
An outbreak of disease, global or localized health pandemic or epidemic or a similar public health threat, or the fear of such
an event, could have a material adverse effect on Dun & Bradstreet's business, financial condition and results operations.
A significant outbreak of contagious diseases in the human population, such as COVID-19, could result in a widespread
health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic
downturn that could have an adverse effect on demand for Dun & Bradstreet's solutions and access to its data sources.
Disruptions in the financial markets could limit the ability or willingness of D&B's clients to extend credit to their customers or
cause its clients to constrain budgets, which could adversely impact demand for D&B's data and analytics solutions. The U.S.
and other governments abroad have implemented enhanced screening, broad shelter-in-place orders and social distancing
requirements, business closures, quarantine requirements and travel restrictions in connection with the COVID-19 global
pandemic. In addition to governmental measures, companies, including Dun & Bradstreet, are imposing, or may impose,
temporary precautionary measures intended to help minimize the risk of the virus to employees, customers and communities,
including requiring that employees work remotely and restricting non-essential travel. Additionally, many businesses
permanently reduced employee headcount and many others have permanently ceased operations as a result of the pandemic.
Given the breadth of Dun & Bradstreet's data, the large number of countries the data is sourced from and system requirements
necessary to process and analyze such data, many of D&B's employees and employees of its partners may be limited or unable
to effectively work remotely. Further, D&B's employees travel frequently to maintain relationships with and sell solutions to its
clients. Continued mandates that employees work remotely, prolonged travel restrictions or general economic uncertainty could
negatively impact D&B's suppliers’ ability to provide it with data and services, D&B's ability to deliver or market its solutions
and client demand for D&B's solutions. The extent of the impact of COVID-19 on D&B's operational and financial
performance will depend on future developments, including the duration and spread of the global pandemic, related travel
advisories, business closures and quarantine or social distancing restrictions, the speed of recovery once the pandemic subsides,
the impact of any resurgence of the pandemic once measures to slow the spread of the virus have been lifted and impacts to the
global markets, all of which are highly uncertain and cannot be predicted. Preventing the effects from and responding to this
market disruption or any other public health threat, related or otherwise, could further impact demand for D&B's solutions and
could have a material adverse effect on its business, financial condition and results of operations.
D&B has elected to take advantage of the ‘‘controlled company’’ exemption to the corporate governance rules for publicly
listed companies, which could make their common stock less attractive to some investors or otherwise harm their stock price.
Because D&B qualifies as a ‘‘controlled company’’ under the corporate governance rules for publicly listed companies,
D&B is not required to have a majority of its Board of Directors be independent under the applicable rules of the NYSE, nor is
it required to have a compensation committee or a corporate governance and nominating committee comprised entirely of
independent directors, and its audit committee is not required to be comprised entirely of independent directors for a period of
one year following its initial public offering. Accordingly, should the interests of the Investor Consortium differ from those of
other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are
subject to all of the corporate governance rules for publicly-listed companies. D&B's status as a controlled company could
make its common stock less attractive to some investors or otherwise harm its stock price and, thus, the value of our investment.
Risks Relating to the Company's Investment in Optimal Blue
If Optimal Blue is unable to protect its information systems against data corruption, cyber-based attacks or network security
breaches; are unable to provide adequate security in the electronic transmission of sensitive data; or are unable to prevent
system failures or service interruptions, it could have a material adverse effect on its business, financial condition and
results of operations and ultimately, our investment.
Optimal Blue is highly dependent on information technology networks and systems, including the Internet, to securely
process, transmit and store electronic information. Optimal Blue depends heavily upon its computer systems and cloud
computing and system interruptions or events beyond its control could interrupt or terminate the delivery of its solutions and
services to its clients and may interfere with its suppliers' ability to provide necessary data to it and its employees' ability to
perform their responsibilities.
Security breaches of Optimal Blue’s infrastructure, including physical or electronic break-ins, computer viruses, attacks by
hackers and similar breaches, and the evolving threat landscape can create system disruptions, shutdowns or unauthorized
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disclosure of confidential information, including non-public personal information, consumer data and proprietary business
information. Cyber-based attacks, including those to extort payment in return for the release of sensitive information, are
increasing. Unauthorized access, including through use of fraudulent schemes such as "phishing" schemes, could jeopardize the
security of information stored in Optimal Blue’s systems. In addition, malware or viruses could jeopardize the security of
information stored or used in a user's computer. If Optimal Blue is unable to prevent or detect such security or privacy breaches,
its operations could be disrupted, or it may suffer loss of reputation, financial loss, lawsuits and regulatory-imposed restrictions
and penalties because of lost or misappropriated information, including sensitive consumer data, which could have a material
adverse effect on its business, financial condition and results of operations and ultimately the value of our investment.
If Optimal Blue fails to adapt its solutions to technological changes or evolving industry standards and regulations, or if its
ongoing efforts to upgrade, modernize or innovate its technology are not successful, Optimal Blue may not be able to
achieve its growth strategies and could lose clients and have difficulty attracting new clients for its solutions.
The markets for Optimal Blue’s solutions are characterized by constant technological changes, frequent introductions of
new products and services and evolving industry standards and regulations. Optimal Blue’s growth strategies and future success
will be significantly affected by its ability to successfully enhance its current solutions, and to develop and introduce new
solutions and services that address the increasingly sophisticated needs of its clients and their customers. These initiatives carry
the risks associated with any new product or service development effort, including cost overruns, delays in delivery and
performance issues. There can be no assurance that Optimal Blue will be successful in developing, marketing and selling new
solutions and services that meet these changing demands, that it will not experience difficulties that could delay or prevent the
successful development, introduction and marketing of these solutions and services or that Optimal Blue’s new solutions and
services and their enhancements will adequately meet the demands of the marketplace and achieve market acceptance. If
Optimal Blue’s efforts are unsuccessful, it could have a material adverse effect on its business, financial condition and results of
operations and ultimately, the value of our investment.
Optimal Blue relies upon proprietary technology and information rights, and if it is unable to protect its rights, it could have
a material adverse effect on it and ultimately our investment value. Similarly, if Optimal Blue’s applications, solutions,
including those that contain "open source" software, or services are found to infringe the proprietary rights of others or fail
to comply with the terms of one or more of these open source licenses, Optimal Blue may be required to change its business
practices and may also become subject to significant costs and monetary penalties.
Optimal Blue’s success depends, in part, upon its intellectual property rights. Optimal Blue relies primarily on a
combination of patents, copyrights, trade secrets, trademark laws, nondisclosure and other contractual restrictions on copying,
distribution and creation of derivative products to protect its proprietary technology and information. This protection is limited,
and its intellectual property could be used by others without Optimal Blue’s consent. Any infringement, disclosure, loss,
invalidity of or failure to protect its intellectual property could have a material adverse effect on Optimal Blue’s business,
financial condition and results of operations and ultimately, the value of our investment. Moreover, litigation may be necessary
to enforce or protect its intellectual property rights, to protect its trade secrets or to determine the validity and scope of the
proprietary rights of others. Such litigation could be time-consuming, result in substantial costs and diversion of resources and
could have a material adverse effect on our business, financial condition and results of operations and ultimately, the value of
our investment.
As Optimal Blue’s information technology applications and services develop, it may become increasingly subject to
infringement claims. Any such claims, whether with or without merit, could be expensive and time-consuming to defend, cause
Optimal Blue to cease providing solutions that incorporate the challenged intellectual property, require Optimal blue to redesign
its solutions, if feasible, divert management's attention and resources; or require Optimal Blue to enter into royalty or licensing
agreements in order to obtain the right to use necessary technologies. Any one or more of the foregoing outcomes could have a
material adverse effect on Optimal Blue’s business, financial condition and results of operations and ultimately, the value of our
investment.
Optimal Blue’s reliance on third parties subjects it to risk and may disrupt or adversely affect its operations. In addition, it
may not realize the full benefit of its third-party arrangements, which may result in increased costs, or may adversely affect
the service levels Optimal Blue is able to provide its clients.
Optimal Blue relies upon third parties for various business process and technology-related products and services, including
cloud-based providers. Although Optimal Blue has contractual provisions with its providers that specify performance
requirements, Optimal Blue does not ultimately control their performance, which may make its operations vulnerable to third-
party performance failures. In addition, Optimal Blue’s failure to adequately monitor and regulate the performance of its third-
party vendors could subject it to additional risk. Reliance on third parties also makes Optimal blue vulnerable to changes in its
vendors' businesses, financial condition and other matters outside of Optimal Blue’s control, including their violations of laws
or regulations, which could increase Optimal Blue’s exposure to liability or otherwise increase the costs associated with the
operation of its business. If for any reason Optimal Blue’s relationship with any of these third parties, including cloud-based
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providers, were to end unexpectedly, it could require a significant amount of cost and time to transition to new third-party
service providers. The failure of Optimal Blue’s providers to perform as expected or as contractually required could result in
significant disruptions and costs to Optimal Blue’s operations and to the services it provides to its clients, or could result in loss
of revenues, which could have a material adverse effect on its business, financial condition and results of operations and
ultimately, the value of our investment.
Optimal Blue and its clients are subject to various governmental regulations, including regulations over the mortgage loan
industry or which address the mortgage loan market, and a failure to comply with governmental regulations or changes in
these regulations, including changes that may result from changes in the political landscape or the use of consumer data
and public records, could result in penalties, restrict or limit Optimal Blue or its clients' operations or make it more
burdensome to conduct such operations.
Many of Optimal Blue’s clients' and its businesses are subject to various federal, state, local and foreign laws and
regulations. Optimal Blue’s failure to comply with applicable laws and regulations could restrict its ability to provide certain
services or result in imposition of civil fines and criminal penalties, substantial regulatory and compliance costs, litigation
expense, adverse publicity and loss of revenues. As a provider of electronic data processing to financial institutions, such as
banks and credit unions, Optimal Blue is subject to regulatory oversight and examination by the Federal Financial Institutions
Examination Counsel.
A portion of Optimal Blue’s Compass Analytics, LLC ("Compass Analytics") business provides risk management, loan
sales (best execution) and general secondary marketing advisory and hedge execution services in concert with licensing
Compass Analytics’ mortgage loan valuation and risk management analytics to its clients. Through this business, Compass
Analytics may advise clients regarding their best practices, strategic relationships and workflow, but earns no commission or
compensation for any trade execution or volume and does not have custody of any client funds or securities. Compass Analytics
offers these advisory services to mortgage loan originators and servicers, including mortgage banks, community and
commercial banks, credit unions, mortgage loan insurers, government agencies, investors, Federal Home Loan Banks and real
estate investment trusts. As a result, Compass Analytics is registered with and regulated by the SEC as an investment adviser
under the Investment Advisers Act of 1940, as amended ("Investment Advisers Act"). The failure by Compass Analytics to
comply with applicable laws or regulations could result in fines, suspensions of individual employees or other sanctions, any of
which could have a negative impact on Compass Analytic’s business, financial condition and results of operations and
ultimately, the value of our investment. Even if an investigation or proceeding did not result in a fine or sanction or the fine or
sanction imposed against Compass Analytics or its employees by a regulator were small in monetary amount, the adverse
publicity relating to an investigation, proceeding or imposition of these fines or sanctions could harm Compass Analytic’s
reputation and cause it to lose existing clients.
In addition, Optimal Blue’s businesses are subject to an increased degree of compliance oversight by regulators and by its
clients. Specifically, the Consumer Financial Protection Bureau (the "CFPB") has authority to write rules affecting the business
of, supervise, conduct examinations of and enforce compliance with federal consumer financial laws and regulations with
respect to certain "non-depository covered persons" determined by the CFPB to be "larger participants" that offer consumer
financial products and services. The CFPB and the prudential financial institution regulators such as the OCC also have the
authority to examine Optimal Blue in its role as a service provider to large financial institutions. In addition, we believe some of
Optimal Blue’s largest bank clients' regulators are requiring the banks to exercise greater oversight and perform more rigorous
audits of their key service providers such as Optimal Blue.
Changes to laws and regulations and regulatory oversight of Optimal Blue and its clients, including those that may result
from changes in the political landscape, may cause Optimal Blue to increase its prices in certain situations or decrease its prices
in other situations, may restrict its ability to implement price increases or otherwise limit the manner in which Optimal Blue
conducts its business. Optimal Blue may also incur additional expense in keeping its software solutions services up to date as
laws and regulations change, and it may not be able to pass those additional costs on to its clients. In addition, in response to
increased regulatory oversight, participants in the mortgage lending industry may develop policies pursuant to which they limit
the extent to which they can rely on any one vendor or service provider. Conversely, in an environment with less stringent
regulatory oversight, prospective clients may choose to retain their in-house platforms, or current service providers, or seek
alternative service providers who provide services that are less compliance and quality oriented at a lower price point. If
Optimal Blue is unable to adapt its products and services to conform to increased or evolving laws and regulations, or if these
laws and regulations have a negative effect on its clients, Optimal Blue may experience client losses or increased operating
costs, which could have a material adverse effect on its business, financial condition and results of operations and ultimately,
the value of our investment.
Because Optimal Blue’s databases include certain public and non-public personal information concerning consumers, it is
subject to government regulation and potential adverse publicity concerning our use of consumer data. Optimal Blue acquires,
stores and uses many types of consumer data and related services that are subject to regulation under the Gramm-Leach-Bliley
Act and, to a lesser extent, various other federal, state and local laws and regulations. These laws and regulations are designed
23
to protect the privacy of consumers and to prevent security breaches, cyber-based attacks, other unauthorized access and misuse
of personal information in the marketplace. Optimal Blue’s failure to comply with these laws, or any future laws or regulations
of a similar nature, could result in substantial regulatory penalties, litigation expense or loss of revenues, which could have a
material adverse effect on its business, financial condition and results of operations and ultimately, the value of our investment.
The mortgage loan industry is heavily regulated and continues to be subject to review by governmental authorities.
Inquiries may include federal and state governmental review of all aspects of the mortgage lending business. Such efforts may
include actions to address the housing market and the economy in general and to maintain rigorous mortgage loan servicing
standards. Additional state and federal government actions directed at housing and the mortgage loan industry may occur and
could have a material adverse effect on Optimal Blue’s business, financial condition and results of operations and ultimately,
the value of our investment.
Because Optimal Blue’s revenues from clients in the mortgage lending industry are affected by the strength of the economy
and the housing market generally, including the volume of real estate transactions, a change in any of these conditions
could have a material adverse effect on it.
Optimal Blue’s revenues are primarily generated from software and hosting solutions and professional services it provides
to the mortgage loan industry and, as a result, a weak economy or housing market may have a material adverse effect on its
business, financial condition and results of operations and ultimately, the value of our investment. The volume of mortgage loan
origination and residential real estate transactions is highly variable and reductions in these transaction volumes could have a
direct effect on the revenues of Optimal Blue.
Risks Relating to the Split-Off
We may incur material costs as a result of our separation from FNF, which could have a material adverse effect on our
business, financial condition and results of operations.
As a result of our separation from FNF, we have incurred and will continue to incur costs and expenses not previously
incurred. These increased costs and expenses may arise from various factors, including financial reporting or costs associated
with complying with the federal securities laws (including compliance with the Sarbanes-Oxley Act of 2002, tax administration
and human resources related functions.) FNF provided many of these services for us at no-cost (other than reimbursement of
FNF's out-of-pocket costs and expenses) under the CSA until November 2020. In October 2020, we entered into an Extension
of Corporate Services Agreement (the “Extension”) with FNF. Pursuant to the Extension, the term of the CSA is extended for
two years until November 17, 2022 (the “Extended Term”). During the Extended Term, FNF will provide certain corporate
services to Cannae at FNF’s Standard Allocation (as defined in the CSA), plus 10%, and Cannae agrees to pay or reimburse
FNF for any fees, costs or other expenses paid by FNF to third parties in connection with the corporate services. The CSA will
automatically renew for successive one-year terms, unless the parties mutually agree to terminate the CSA at least 30 days prior
to the applicable termination date. No later than 30 days prior to such termination date, the parties shall negotiate mutually
agreeable arm’s length terms for each additional one-year term.
We cannot assure you that we will not incur third-party vendor costs or out-of-pocket expenses under the CSA that are
material to our business. Moreover, we will have to develop internal departments/functions to perform the services at the end of
the term of the CSA.
We share certain directors and officers with FNF, which may lead to conflicting interests.
One of our executive officers, Michael L. Gravelle, is also an executive officer of FNF and one of our directors, Bill Foley,
also serves on the boards of directors of FNF or its subsidiaries. Our executive officers and members of our board of directors
have fiduciary duties to our stockholders. Likewise, any such persons who serve in similar capacities at FNF or any other public
company have fiduciary duties to that company's stockholders. We also are party to a variety of related party agreements and
relationships with FNF and certain of FNF's subsidiaries and FNF and subsidiaries of FNF have an ownership interest in
Cannae Holdings. From time to time, we may enter into transactions with FNF and/or its respective subsidiaries or other
affiliates. There can be no assurance that the terms of any such transactions will be as favorable to our company, FNF or any of
our or its respective subsidiaries or affiliates as would be the case where there is no overlapping officer or director.
Our agreements with FNF were negotiated while we were a subsidiary of FNF.
We have a number of agreements with FNF covering matters such as tax sharing and our responsibility for certain
liabilities previously undertaken by FNF for certain of our businesses. In addition, we have entered into (i) the CSA, (ii) a
voting agreement with FNF, pursuant to which FNF agrees to appear or cause all shares of Cannae Holdings common stock that
FNF or its subsidiaries, as applicable, own after the Split-Off to be counted as present at any meeting of the stockholders of
Cannae Holdings, for the purpose of establishing a quorum, and agrees to vote all of such Cannae Holdings shares (or cause
them to be voted) in the same manner as, and in the same proportion to, all shares voted by holders of Cannae Holdings
common stock (other than FNF and its subsidiaries), (iii) a registration rights agreement, pursuant to which FNF or its
24
subsidiaries, as applicable, received registration rights with respect to the shares in Cannae held by FNF and (iv) a revolver note
with FNF, pursuant to which Cannae Holdings may borrow revolving loans, the proceeds of which may be used for investment
purposes and working capital needs, from FNF from time to time in an aggregate amount not to exceed $100.0 million. The
terms of all of these agreements were initially established while we were a wholly-owned subsidiary of FNF, and hence may
not be the result of arm's length negotiations.
We believe that the terms of these agreements are commercially reasonable and fair to all parties under the circumstances;
however, conflicts could arise in the interpretation or any extension or renegotiation of the foregoing agreements after the Split-
Off.
General Risk Factors
The outbreak of COVID-19 and resulting government response have negatively affected the global economy, the United
States economy and the global financial markets, and may disrupt our operations, which could have an adverse effect on
our Corporate and Other businesses, financial condition and results of operations.
The ongoing COVID-19 global and national health emergency has caused significant disruption in the international and
United States economies and financial markets. The spread of COVID-19 and resulting government imposed restrictions on
many activities has resulted in an overarching reduction in business activity and financial transactions, an increase in
unemployment, supply chain interruptions and overall economic and financial market instability. If such disruption persists for
an extended period of time, the businesses comprising our Corporate and Other segment and our ability to consummate new
investments could be adversely affected, which could result in an adverse effect on our financial condition and results of
operations.
Competition and technology may erode the Corporate and Other business franchises and result in lower earnings, which
could have a material adverse effect on our business, financial condition and results of operations.
Each of the Corporate and Other businesses face intense competitive pressures within markets in which they operate. While
we will manage our businesses with the objective of achieving long-term sustainable growth by developing and strengthening
competitive advantages, many factors, including market and technology changes, may erode or prevent the strengthening of
competitive advantages. Accordingly, future operating results will depend to some degree on whether our Corporate and Other
businesses are successful in protecting or enhancing their competitive advantages. If our Corporate and Other businesses are
unsuccessful in these efforts, our periodic operating results in the future may decline from current levels.
The Corporate and Other businesses, from time to time in the ordinary course of business, are involved in legal proceedings
and may experience unfavorable outcomes, which could have a material adverse effect on our business, financial condition
and results of operations.
The Corporate and Other businesses, from time to time in the ordinary course of business, are involved in pending and
threatened litigation matters, some of which include claims for punitive or exemplary damages. These companies are also
subject to compliance with extensive government laws and regulations related to employment practices and policies. The
Corporate and Other businesses may not be able to successfully resolve these types of conflicts to their satisfaction, and these
matters may involve claims for substantial amounts of money or for other relief that might necessitate changes to their business
or operations. The defense of these actions may be both time consuming and expensive and their outcomes cannot be predicted
with certainty. Determining reserves for pending litigation is a complex, fact-intensive process that requires significant legal
judgment. It is possible that unfavorable outcomes in one or more such proceedings could result in substantial payments that
could have a material adverse effect on the Corporate and Other businesses' cash flows in a particular period or on our business,
financial condition and results of operations.
Failure to comply with, or changes in, laws or regulations applicable to the Corporate and Other businesses could have a
material adverse effect on our business, financial condition and results of operations.
The Corporate and Other businesses will be subject to certain laws, such as certain environmental laws, takeover laws, anti-
bribery and anti-corruption laws, escheat or abandoned property laws, and antitrust laws, that may impose requirements on us
and them as an affiliated group. As a result, we could become jointly and severally liable for all or part of fines imposed on our
Corporate and Other businesses or be fined directly for violations committed by these businesses, and such fines imposed
directly on us could be greater than those imposed on such businesses. Compliance with these laws or contracts could also
require us to commit significant resources and capital towards information gathering and monitoring thereby increasing our
operating costs.
Similarly, the Corporate and Other businesses may be subject to contractual obligations that may impose obligations or
restrictions on their affiliates. The interpretation of such contractual provisions will depend on local laws. Given that we do not
control all of the Corporate and Other businesses and that they generally operate independently of each other, there is a risk that
we could contravene one or more of such laws, regulations and contractual arrangements due to limited access and
25
opportunities to monitor compliance. In addition, compliance with these laws or contracts could require us to commit
significant resources and capital towards information gathering and monitoring thereby increasing our operating costs.
We need qualified personnel to manage and operate our Corporate and Other businesses, and any inability to adequately
satisfy these needs could have a material adverse effect on our business, financial condition and results of operations.
In our decentralized business model, we need qualified and competent management to direct day-to-day business activities
of our Corporate and Other businesses. Our Corporate and Other businesses also need qualified and competent personnel in
executing their business plans and serving their customers, suppliers and other stakeholders. Changes in demographics, training
requirements and the unavailability of qualified personnel could negatively impact our Corporate and Other businesses' ability
to meet demands of customers to supply goods and services. Recruiting and retaining qualified personnel is important to all of
our Corporate and Other businesses' operations. Although our Corporate and Other businesses have adequate personnel for the
current business environment, unpredictable increases in demand for goods and services may exacerbate the risk of not having
sufficient numbers of trained personnel, which could have a negative impact on our operating results, financial condition and
liquidity.
Our management may seek growth through acquisitions in lines of business that will not necessarily be limited to our
current areas of focus or geographic areas. This expansion of our business subjects us to associated risks, such as the
diversion of management's attention and lack of experience in operating such businesses, which could have a material
adverse effect on our business, financial condition and results of operations.
We may make acquisitions in lines of business that are not directly tied to or synergistic with our current portfolio
companies. Accordingly, we may in the future acquire businesses in industries or geographic areas with which management is
less familiar than we are with our current businesses.
The acquisition and integration of any business we may acquire involves a number of risks and may result in unforeseen
operating difficulties and expenditures in assimilating or integrating the businesses, technologies, products, personnel or
operations of the acquired business. Furthermore, acquisitions may: (1) involve our entry into geographic or business markets in
which we have little or no prior experience; (2) involve difficulties in retaining the customers of the acquired business; (3)
involve difficulties and expense associated with regulatory requirements, competition controls or investigations; (4) result in a
delay or reduction of sales for both us and the business we acquire; and (5) disrupt our ongoing business, divert our resources
and require significant management attention that would otherwise be available for ongoing development of our current
business.
To complete future acquisitions, we may determine that it is necessary to use a substantial amount of our cash or engage in
equity or debt financing. If we raise additional funds through further issuances of equity or convertible debt securities, our
existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and
privileges senior to those of holders of our common stock. Any debt financing obtained by us in the future could involve
restrictive covenants relating to our capital-raising activities and other financial and operational matters that make it more
difficult for us to obtain additional capital in the future and to pursue other business opportunities, including potential
acquisitions. In addition, we may not be able to obtain additional financing on terms favorable to us, if at all, which could limit
our ability to engage in acquisitions. Moreover, we can make no assurances that the anticipated benefits of any acquisition, such
as operating improvements or anticipated cost savings, would be realized or that we would not be exposed to unexpected
liabilities in connection with any acquisition.
Further, an acquisition may negatively affect our operating results because it may require us to incur charges and
substantial debt or other liabilities, may cause adverse tax consequences, substantial depreciation and amortization of deferred
compensation charges, may require the amortization, write-down or impairment of amounts related to deferred compensation,
goodwill and other intangible assets, may include substantial contingent consideration payments or other compensation that
reduce our earnings during the quarter in which incurred, or may not generate sufficient financial return to offset acquisition
costs.
We may often pursue investment opportunities that involve business, regulatory, legal or other complexities, which could
have a material adverse effect on our business, financial condition and results of operations.
As an element of our investment strategy, we may pursue unusually complex investment opportunities. This could often
take the form of substantial business, regulatory or legal complexity. Our tolerance for complexity may present risks, as such
transactions can be more difficult, expensive and time-consuming to finance and execute; it may be more difficult to manage or
realize value from the assets acquired in such transactions; and such transactions may sometimes entail a higher level of
regulatory scrutiny or a greater risk of contingent liabilities. Any of these risks could harm our performance.
The lack of liquidity in our investments may adversely affect our business.
26
We invest, and will continue to invest, in companies whose securities are not publicly traded and whose securities will be
subject to legal and other restrictions on resale or will otherwise be less liquid than publicly traded securities. The illiquidity of
these investments may make it difficult for us to sell these investments when desired. In addition, if we are required or
otherwise choose to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which
we had previously recorded these investments. Our investments are often subject to contractual or legal restrictions on resale or
are otherwise illiquid because there is usually no established trading market for such investments. Because certain of our
investments are illiquid, we may be unable to dispose of them timely or we may be unable to do so at a favorable price, and, as
a result, we may suffer losses.
The loss of key personnel could impair our operating abilities and could have a material adverse effect on our business,
financial condition and results of operations.
Our success will substantially depend on our ability to attract and retain key members of our senior management team and
officers. If we lose one or more of these key employees, our operating results and in turn the value of our common stock could
be materially adversely affected. Although we will have employment agreements with many of our officers, there can be no
assurance that the entire term of the employment agreement will be served or that the employment agreement will be renewed
upon expiration.
The due diligence process that we undertake in connection with new acquisitions may not reveal all facts that may be
relevant in connection with an investment.
Before making acquisitions, we will conduct due diligence that we deem reasonable and appropriate based on the facts and
circumstances applicable to each investment. When conducting due diligence, we may be required to evaluate important and
complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisers, accountants
and investment banks may be involved in the due diligence process in varying degrees depending on the type of investment.
Nevertheless, when conducting due diligence and making an assessment regarding an acquisition, we will rely on the resources
available to us, including information provided by the target of the investment and, in some circumstances, third party
investigations. The due diligence investigation that we will carry out with respect to any opportunity may not reveal or highlight
all relevant facts (including fraud) that may be necessary or helpful in evaluating such opportunity. Moreover, such an
investigation will not necessarily result in the investment being successful.
Our commitments to invest in Paysafe/FTAC II, Alight/FTAC, and Trebia may expose us to certain risks, which could have
a material adverse effect on our results of operations or financial position.
As of the date of this Annual Report, we have an aggregate commitment of $975.0 million to purchase equity of Paysafe/
FTAC II; Alight/FTAC; and Trebia (collectively, such future investment commitments, the “SPAC Commitments”). See
discussion under the header Special Purpose Acquisition Companies in Item 1 of Part I of this Annual Report and under
Forward Purchases of Equity of Special Purpose Acquisition Companies in Item 7 of Part II of this Annual Report for further
information on each of our investment commitments.
The SPAC Commitments represent a significant portion of the Company’s available working capital and total assets as of
December 31, 2020. Our obligation to fund the SPAC Commitments could require the Company to forgo alternative investment
opportunities which may arise in the near term. Additionally, while the Company currently has sufficient cash and liquid
investments to fulfill our funding obligations, funding the SPAC Commitments could require the Company to raise additional
funds through equity financing, liquidating certain of our current investments or by drawing on our available corporate debt
facilities in the future. Despite our current financial position and capital resources, we cannot guarantee that the Company will
be able to fulfill our obligations to fund the SPAC Commitments.
Furthermore, we cannot guarantee the success of our ultimate investments in Paysafe, Alight or the ultimate target of
Trebia if our obligations to fund these entities pursuant to the SPAC Commitments are fulfilled. Neither our participation as
investors in the sponsors and in the common stock of FTAC, FTAC II and Trebia nor the historical performance of our or our
Manager’s other investments should be relied upon as an indication of the future performance or potential success of our
investments in Paysafe, Alight or the ultimate target of Trebia. We can make no assurances that our investments in these entities
upon consummation of their initial business combinations will be successful or that the value of the Company’s investments
will appreciate.
Through the Company’s initial investments in the sponsors of FTAC, FTAC II and Trebia, and our forward purchase
agreements with each, the Company will receive warrants representing the right to purchase common shares of each of Paysafe,
Alight and the ultimate target of Trebia at an exercise price of $11.50 per share upon consummation of their initial business
combinations. There is no guarantee that such warrants will ever be in the money prior to their expiration, and as such, the
warrants may expire worthless.
We expect to enter into similar forward purchase commitments with other SPACs in the near term. Accordingly, such
commitments once legally consummated would also be subject to the aformentioned risks.
27
Our charter, bylaws and provisions of Delaware law may discourage or prevent strategic transactions, including a takeover
of our company, even if such a transaction would be beneficial to our stockholders.
Provisions contained in our charter and bylaws and provisions of the Delaware General Corporate Law ("DGCL"), could
delay or prevent a third party from entering into a strategic transaction with us, as applicable, even if such a transaction would
benefit our stockholders. For example, our charter and bylaws: (1) authorize the issuance of "blank check" preferred stock that
could be issued by us upon approval of our board of directors to increase the number of outstanding shares of capital stock,
making a takeover more difficult and expensive; (2) provide that directors may be removed from office only for cause and that
any vacancy on our board of directors may only be filled by a majority of our directors then in office, which may make it
difficult for other stockholders to reconstitute our board of directors; (3) provide that special meetings of the stockholders may
be called only upon the request of a majority of our board of directors or by our executive chairman, chief executive officer or
president, as applicable; (4) require advance notice to be given by stockholders for any stockholder proposals or director
nominees; (5) provide that directors are elected by a plurality of the votes cast by stockholders, which results in each director
nominee elected by a plurality winning his or her seat upon receiving one "for" vote; and (6) provide that the board of directors
is divided into three classes, as nearly equal in number as possible, with one class being elected at each annual meeting of
stockholders, which could make it more difficult for a third party to acquire, or discourage a third party from seeking to acquire,
control of Cannae.
These restrictions and provisions could keep us from pursuing relationships with strategic partners and from raising
additional capital, which could impede our ability to expand our business and strengthen our competitive position. These
restrictions could also limit stockholder value by impeding a sale of our company.
Our business could be materially and adversely affected by the occurrence of a catastrophe, including natural or man-made
disasters.
Any catastrophic event, such as pandemic diseases, terrorist attacks, floods, severe storms or hurricanes or computer cyber-
terrorism, could have a material and adverse effect on our business in several respects: (1) the outbreak of a pandemic disease,
like the novel coronavirus COVID-19, could have a material adverse effect on our liquidity, financial condition and the
operating results of the Company and our underlying businesses due to its impact on the economy and financial markets; (2) the
occurrence of any pandemic disease, natural disaster, terrorist attack or any other catastrophic event that results in our
workforce being unable to be physically located at one of our facilities could result in lengthy interruptions in our corporate
operations; (3) the value of our investment portfolio may decrease if the securities in which we invest are negatively impacted
by climate change, pandemic diseases, severe weather conditions and other catastrophic events.
Item 1B.
Unresolved Staff Comments
None.
Item 2.
Properties
Our corporate headquarters are located in Las Vegas, Nevada in owned facilities.
Restaurant Group. The Restaurant Group's headquarters are located in Nashville, Tennessee with other office locations in
Woburn, Massachusetts. The majority of the restaurants are leased from third parties, and are located in 39 states throughout the
United States. Substantially all of our Restaurant Group's revenues are generated in those states.
Corporate and Other. The Golf & Real Estate segment of Cannae RE owns a 1,800 acre ranch-style luxury resort and
residential community in Bend/Powell Butte, Oregon and an 18-hole championship golf facility located in Rock Creek, Idaho.
Item 3.
Legal Proceedings
For a description of our legal proceedings see discussion under Legal and Regulatory Contingencies in Note M.
Commitments and Contingencies to our Consolidated Financial Statements included in Item 8 of Part II of this Annual Report,
which is incorporated by reference into this Part I, Item 3.
Item 4.
Mine Safety Disclosures
None.
28
PART II
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
The Company's common stock trades on The New York Stock Exchange under the trading symbol "CNNE".
Performance Graph
Set forth below is a graph comparing cumulative total shareholder return on our common stock against the cumulative total
return on the S&P 500 Index and against the cumulative total return of a peer group index consisting of certain companies
against which we compete for the period ending December 31, 2020. We updated our peer group for the period ending
December 31, 2020 from the group used for the period ending December 31, 2019 to include peers that better align with the
size and externally-managed operating structure of the Company. The peer group comparison has been weighted based on their
stock market capitalization. The graph assumes an initial investment of $100.00 on November 20, 2017, the date on which
shares of our common stock began trading.
Cannae Holdings, Inc....................................................................................................
S&P 500........................................................................................................................
Peer Group (1)...............................................................................................................
100.00
100.00
100.00
92.60
104.21
105.94
93.09
99.64
88.08
202.23
131.02
126.33
240.73
155.12
169.09
11/20/2017
12/31/2017
12/31/2018
12/31/2019
12/31/2020
Peer Group (2)...............................................................................................................
164.22
(1) Represents the peer group used for the year ending December 31, 2019 and consists of the following companies: Apollo Global Management, LLC,
Ares Capital Corporation, BlackRock, Inc., The Blackstone Group L.P., The Carlyle Group L.P., Compass Diversified Holdings, Jefferies Financial Group Inc.,
KKR & Co. Inc., and Qurate Retail Inc.
153.27
100.00
105.31
91.68
(2) Represents the peer group used for the year ending December 31, 2020 and consists of the following companies: Apollo Investment Corporation,
Compass Diversified Holdings, FS KKR Capital Corp. II, Golub Capital BDC, Inc., New Mountain Finance Corporation and Prospect Capital Corporation.
29
On January 29, 2021, the last reported sale price of our common stock on The New York Stock Exchange was $37.99 per
share. We had approximately 4,785 shareholders of record.
Information concerning securities authorized for issuance under our equity compensation plans will be included in Item 12
of Part III of this Annual Report.
Purchases of Equity Securities by the Issuer
On September 19, 2019, our Board of Directors approved a new three-year stock repurchase program effective September
19, 2019 (the "2019 Repurchase Program") under which we may purchase up to 5 million shares of our common stock through
September 30, 2022. We may make repurchases from time to time in the open market, in block purchases or in privately
negotiated transactions, depending on market conditions and other factors. We repurchased 510,109 shares of our common
stock during the year ended December 31, 2020 for approximately $14.4 million in the aggregate, or an average of $28.31 per
share. From the original commencement of the 2019 Repurchase Program through market close on December 31, 2020, we
repurchased a total of 688,416 common shares for approximately $19.3 million in the aggregate, or an average of $28.06 per
share.
The following table summarizes repurchases of equity securities by Cannae during the year ending December 31, 2020:
Period
3/1/2020 - 3/31/2020...................
4/1/2020 - 4/30/2020...................
Total
(1)
Total Number of
Shares Purchased
Average Price Paid
per Share
386,517 $
123,592 $
510,109
27.94
29.37
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs (1)
Maximum Number of
Shares that May Yet Be
Purchased Under the
Plans or Programs (2)
386,517
123,592
510,109
4,435,176
4,311,584
On September 19, 2019, our Board of Directors approved the 2019 Repurchase Program, under which we may
purchase up to 5 million shares of our common stock through September 30, 2022.
(2)
As of the last day of the applicable month.
30
Item 6. Selected Financial Data
The information set forth below should be read in conjunction with the Consolidated Financial Statements and related notes
and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this
Form 10-K. Certain reclassifications have been made to the prior year amounts to conform with the 2020 presentation.
On January 27, 2020, Blue Ribbon began the Blue Ribbon Reorganization and we deconsolidated Blue Ribbon. On
October 2, 2020, the Chapter 11 Plan became effective and Blue Ribbon emerged from bankruptcy as a set of reorganized
companies. Upon Blue Ribbon's emergence from bankruptcy, we acquired the assets and uncompromised liabilities of
Legendary Baking and VIBSQ in exchange for $15.5 million of the outstanding balance under the DIP Loan with Blue Ribbon.
Subsequent to Blue Ribbon's emergence from bankruptcy, we own 100% of the equity of VIBSQ and Legendary Baking. Our
consolidated results of operations for the year ended December 31, 2020 include the consolidated results of operations of Blue
Ribbon from January 1, 2020 through January 27, 2020 and of Legendary Baking and VIBSQ from October 2, 2020 through
December 31, 2020.
On December 31, 2019, we completed the contribution of T-System Holdings, Inc. ("T-System") to Corrohealth. As a
result, we reclassified the results of operations of T-System as discontinued operations for years ended December 31, 2019,
2018 and 2017 and for all quarterly periods within those years.
On June 6, 2017, we closed on the sale of Digital Insurance, Inc. ("OneDigital") for $560.0 million in an all-cash
transaction. The operations of One Digital are included in discontinued operations for the years ended December 31, 2017 and
2016. We recognized a pre-tax gain of $276.0 million on the sale and $126.3 million in income tax expense, which are included
in Net earnings from discontinued operations on the Consolidated Statement of Operations for the year ended December 31,
2017.
Summary Balance Sheet Data:
2020
2019
As of December 31,
2018
(in millions)
2017
2016
Balance Sheet Data:
Cash and cash equivalents............................................................................................... $ 724.7 $ 533.7 $ 315.7 $ 243.5 $ 141.7
1,473.3
Total assets......................................................................................................................
93.3
Notes payable, long term.................................................................................................
1,009.8
Equity..............................................................................................................................
1,487.2
12.7
1,153.1
1,459.5
42.2
1,199.7
4,613.4
52.2
3,785.2
2,092.2
120.1
1,529.8
31
Summary Statement of Operations Data:
2020
Year Ended December 31,
2017
2018
2019
(in millions, except per share amounts)
2016
Operating Data:
Operating revenue...................................................................................................... $ 585.7 $ 1,070.0 $ 1,147.5 $ 1,156.6 $ 1,178.4
Expenses:
Operating Expenses:
Cost of restaurant revenues...................................................................................
Personnel costs......................................................................................................
Depreciation and amortization..............................................................................
Other operating expenses, including asset impairments.......................................
Goodwill impairment............................................................................................
Total operating expenses
Operating loss
Total other income, net...............................................................................................
524.3
94.8
30.7
116.6
7.8
774.2
(188.5)
2,370.4
912.8
90.3
40.7
133.4
10.4
1,187.6
(117.6)
355.5
991.3
137.2
46.3
91.8
26.7
1,293.3
(145.8)
168.4
991.0
95.6
46.2
101.3
—
1,234.1
(77.5)
3.2
984.1
68.3
44.7
83.5
—
1,180.6
(2.2)
7.4
Earnings (loss) before income taxes, equity in (loss) earnings of unconsolidated
affiliates, and noncontrolling interest.........................................................................
2,181.9
Income tax expense (benefit).....................................................................................
481.2
Earnings (loss) before equity in earnings (loss) of unconsolidated affiliates............
1,700.7
237.9
24.2
213.7
22.6
15.0
7.6
Equity in earnings (loss) of unconsolidated affiliates................................................
59.1
(115.1)
(16.1)
Earnings (loss) from continuing operations, net of tax..............................................
1,759.8
(Loss) earnings from discontinued operations, net of tax..........................................
—
Net earnings (loss)......................................................................................................
1,759.8
98.6
(51.8)
46.8
Less: Net (loss) earnings attributable to noncontrolling interests..............................
(26.4)
(30.5)
(8.5)
(2.1)
(10.6)
(38.2)
(74.3)
(14.2)
(60.1)
3.4
(56.7)
149.2
92.5
(16.3)
5.2
(10.4)
15.6
(29.5)
(13.9)
2.0
(11.9)
0.5
Net earnings (loss) attributable to Cannae Holdings.................................................. $ 1,786.2 $
77.3 $
27.6 $ 108.8 $
(12.4)
Per Share Data:
Basic...........................................................................................................................
Net earnings (loss) from continuing operations attributable to Cannae Holdings
common shareholders (1)........................................................................................... $ 20.84 $
1.77 $
0.42 $
(0.57) $
(0.21)
Net (loss) earnings from discontinued operations attributable to Cannae Holdings
common shareholders (1)...........................................................................................
—
(0.70)
(0.03)
2.11
0.03
Net earnings (loss) per share attributable to Cannae Holdings common
shareholders (1).......................................................................................................... $ 20.84 $
1.07 $
0.39 $
1.54 $
(0.18)
Weighted average shares outstanding Cannae Holdings, basic basis (1)...................
85.7
72.2
71.2
70.6
70.6
Diluted........................................................................................................................
Net earnings (loss) from continuing operations attributable to Cannae Holdings
common shareholders (1)........................................................................................... $ 20.79 $
1.76 $
0.42 $
(0.57) $
(0.21)
Net (loss) earnings from discontinued operations attributable to Cannae Holdings
common shareholders (1)...........................................................................................
—
(0.69)
(0.03)
2.11
0.03
Net earnings (loss) per share attributable to Cannae Holdings common
shareholders (1).......................................................................................................... $ 20.79 $
1.07 $
0.39 $
1.54 $
(0.18)
Weighted average shares outstanding Cannae Holdings, diluted basis (1)................
85.9
72.4
71.3
70.6
70.6
Cash dividends paid per share Cannae Holdings common stock............................... $ — $ — $ — $ — $ —
Book value per share Cannae Holdings (1)(2)........................................................... $ 41.28 $ 19.24 $ 16.61 $ 16.33 $ 14.30
______________________________________
(1) On November 17, 2017, the date of the consummation of the Split-Off, 70.6 million shares of our common stock 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 year ended December 31, 2016 was calculated using the
number of shares distributed as if those shares were issued and outstanding beginning January 1, 2016.
(2) Book value per share is calculated as total equity at December 31 of each year presented divided by actual shares
outstanding at December 31 of each year presented.
32
Summary Quarterly Financial Data (Unaudited):
Quarter Ended
March 31,
June 30,
September 30, December 31,
(in millions, except per share amounts)
2020:
Operating revenue................................................................................ $
173.0 $
102.6 $
139.7 $
170.4
Earnings before income taxes, equity in earnings of unconsolidated
affiliates, and noncontrolling interest..................................................
Net earnings.........................................................................................
Less: Net loss attributable to noncontrolling interests.........................
Net earnings attributable to Cannae Holdings..................................... $
Per Share Data:..................................................................................
Basic....................................................................................................
Basic earnings per share attributable to Cannae Holdings common
shareholders......................................................................................... $
Diluted.................................................................................................
Diluted earnings per share attributable to Cannae Holdings common
shareholders......................................................................................... $
Cash dividends paid per share Cannae Holdings common stock........ $
2019:
860.2
638.1
(9.6)
539.7
466.1
(9.2)
164.3
128.0
(3.9)
647.7 $
475.3 $
131.9 $
617.7
527.6
(3.7)
531.3
8.19 $
5.88 $
1.44 $
5.81
8.17 $
— $
5.87 $
— $
1.44 $
— $
5.80
—
Operating revenue................................................................................ $
262.3 $
272.2 $
257.0 $
278.5
(Loss) earnings before income taxes, equity in losses of
unconsolidated affiliates, and noncontrolling interest.........................
(Loss) earnings from continuing operations, net of tax.......................
Loss from discontinued operations, net of tax.....................................
Net (loss) earnings...............................................................................
Less: Net loss attributable to noncontrolling interests.........................
Net (loss) earnings attributable to Cannae Holdings........................... $
Per Share Data:..................................................................................
Net (loss) earnings from continuing operations attributable to
Cannae Holdings common shareholders............................................. $
Net loss from discontinued operations attributable to Cannae
Holdings common shareholders.......................................................... $
Basic (loss) earnings per share attributable to Cannae Holdings
common shareholders.......................................................................... $
Diluted.................................................................................................
Net (loss) earnings from continuing operations attributable to
Cannae Holdings common shareholders............................................. $
Net loss from discontinued operations attributable to Cannae
Holdings common shareholders.......................................................... $
Diluted (loss) earnings per share attributable to Cannae Holdings
common shareholders.......................................................................... $
Cash dividends paid per share Cannae Holdings common stock........ $
(2.2)
(17.6)
(2.3)
(19.9)
(3.1)
49.6
21.4
(2.5)
18.9
(4.5)
67.5
44.1
(2.5)
41.6
(4.6)
(16.8) $
23.4 $
46.2 $
123.0
50.7
(44.5)
6.2
(18.3)
24.5
(0.20) $
0.36 $
0.69 $
0.92
(0.04) $
(0.03) $
(0.04) $
(0.59)
(0.24) $
0.33 $
0.65 $
0.33
(0.20) $
0.36 $
0.69 $
0.91
(0.04) $
(0.03) $
(0.04) $
(0.58)
(0.24) $
— $
0.33 $
— $
0.65 $
— $
0.33
—
33
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the Consolidated Financial Statements and the Notes thereto
and Selected Financial Data included elsewhere in this Form 10-K.
Overview
For a description of our business, including descriptions of segments and recent business trends, see the discussion under
Business in Item 1 of Part I of this Annual Report, which is incorporated by reference into this Part II, Item 7 of this Annual
Report.
Recent Developments
Dun & Bradstreet
On July 6, 2020, Dun & Bradstreet closed its previously announced initial public offering of 90,047,612 shares of common
stock, which includes 11,745,340 shares of common stock issued pursuant to the exercise by the underwriters of their option to
purchase additional shares in full (the "D&B IPO"). The D&B IPO was priced at $22.00 per share, resulting in gross proceeds
to Dun & Bradstreet of $2.4 billion when combined with $400.0 million of aggregate proceeds from a concurrent private
placement offering (the "D&B Private Placement") and before deducting underwriting discounts and commissions and other
offering expenses payable by Dun & Bradstreet. Shares of Dun & Bradstreet common stock began trading on the New York
Stock Exchange ("NYSE") under the ticker symbol "DNB" on July 1, 2020. Dun & Bradstreet used a portion of the net
proceeds from the D&B IPO to redeem all of its outstanding Series A Preferred Stock and repay a portion of its 10.250% Senior
Unsecured Notes outstanding due 2027.
On July 6, 2020, we invested $200.0 million in the D&B Private Placement. Subsequent to the D&B IPO and the D&B
Private Placement, we own 76.6 million shares of Dun & Bradstreet, which represented approximately 18.1% of its outstanding
common stock as of December 31, 2020.
As a result of the D&B IPO, we recorded a net gain of $117.0 million (net of $2.3 million of before-tax losses reclassified
from other comprehensive earnings) which is included in Recognized gains and losses, net on the Consolidated Statement of
Operations for the year ended December 31, 2020.
Ceridian
During the year ended December 31, 2020, we completed the sale of an aggregate of 9.7 million shares of common stock
of Ceridian (the "Ceridian Share Sales") to brokers pursuant to Rule 144 promulgated under the Securities Act of 1933, as
amended. In connection with the Ceridian Share Sales, we received aggregate proceeds of $720.9 million. As of December 31,
2020, we owned approximately 9.5% of the outstanding common stock of Ceridian.
As of March 31, 2020 our voting agreement with Ceridian was terminated and, as a result, we are no longer able to exert
influence over the composition and quantity of Ceridian's board of directors. In combination with the reduction in our
ownership of Ceridian resulting from the sale of shares in February 2020, we no longer exercise significant influence over
Ceridian. As of March 31, 2020, we account for our investment in Ceridian at fair value pursuant to the investment in equity
security guidance of Accounting Standards Codification ("ASC") 321. The change resulted in the revaluation of our investment
in Ceridian to its fair value of $993.4 million as of March 31, 2020 and recording a non-cash gain on such revaluation of
$684.9 million (net of $47.1 million of before-tax losses reclassified from other comprehensive earnings), which is included in
Recognized gains and losses, net on the Consolidated Statement of Operations for the year ended December 31, 2020.
Restaurant Group
On January 27, 2020, Blue Ribbon and its wholly-owned subsidiaries, filed voluntary petitions for relief under Chapter 11
of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware in connection with the Blue
Ribbon Reorganization. The Blue Ribbon Reorganization does not involve or affect the operations of O’Charley’s or 99
Restaurants, which are not part of Blue Ribbon. As a result of the Blue Ribbon Reorganization, we deconsolidated Blue Ribbon
as of January 27, 2020 because the bankruptcy court and committee of creditors were deemed to have control of Blue Ribbon.
We recorded a non-cash gain of $26.5 million on January 27, 2020 as a result of the deconsolidation of Blue Ribbon, which
is included in Recognized gains and losses, net on the Consolidated Statement of Operations for the year ended December 31,
2020. The recorded gain was measured as the excess of the fair value of our retained equity investment in Blue Ribbon over our
book value of Blue Ribbon as of January 27, 2020.
During the Blue Ribbon Reorganization, we accounted for our retained equity interest in Blue Ribbon under the equity
method of accounting because (1) we continued to exert significant influence over Blue Ribbon through our majority equity
ownership and position as the single largest post-petition creditor of Blue Ribbon through the DIP Loan, (2) the Blue Ribbon
Reorganization was limited in scope and expected to be short in duration, and (3) we expected to retain a majority equity
interest upon completion of the Blue Ribbon Reorganization. We recorded an investment of $33.6 million as of January 27,
34
2020. The fair value of the investment was determined by performing a combination of discounted cash flow and market
approaches.
As a result of unprecedented social restrictions imposed by state and local government authorities related to the COVID-19
pandemic, our Restaurant Group brands experienced a significant reduction in guest counts beginning in the last two weeks of
March 2020. In response to the outbreak and these changing conditions, our Restaurant Group brands initially closed the dining
rooms in substantially all of our restaurants. Due to increased uncertainty in the operating environment for restaurants and a
significant reduction in forecasted cash flows for Blue Ribbon, we recorded an other-than-temporary impairment of our
investment of $18.6 million as of March 31, 2020.
On July 10, 2020, Blue Ribbon filed its Chapter 11 Plan with the Bankruptcy Court.
On October 2, 2020, the Chapter 11 Plan became effective and Blue Ribbon emerged from bankruptcy as a set of
reorganized companies. Upon Blue Ribbon's emergence from bankruptcy, we acquired the assets and uncompromised liabilities
of Legendary Baking and VIBSQ in exchange for $15.5 million of the outstanding balance under the DIP Loan with Blue
Ribbon. Subsequent to Blue Ribbon's emergence from bankruptcy, we own 100% of the equity of VIBSQ and Legendary
Baking. Refer to Note I to our Consolidated Financial Statements included in Item 8 of Part II of this Annual Report for further
discussion of our accounting for our acquisition of VIBSQ and Legendary Baking upon their emergence from bankruptcy.
AmeriLife
On March 18, 2020, we closed on the previously announced $125.0 million investment in a partnership (the “AmeriLife
Joint Venture”) that invested in the recapitalization of AmeriLife. Cannae and other investors provided an aggregate of
$617.0 million in equity financing to the AmeriLife Joint Venture to acquire AmeriLife. AmeriLife is a leader in marketing and
distributing life, health, and retirement solutions. We account for our investment in the AmeriLife Joint Venture under the
equity method of accounting and the investment is included in Investments in unconsolidated affiliates on our Condensed
Consolidated Balance Sheet as of December 31, 2020.
CoreLogic
On December 12, 2019, we entered into the Senator JV with affiliates of Senator designed to provide a mechanism to allow
us and Senator to jointly invest in CoreLogic. In December 2019, we initially contributed $90.9 million of cash in exchange for
a 49.0% in the Senator JV and a deposit on hand. Affiliates of Senator are the general partner and hold the balance of the
limited partnership interests of the Senator JV. In the year ended December 31, 2020, we invested an additional $201.2 million
in the Senator JV. We account for our investment in the Senator JV under the equity method of accounting and the investment
is included in Investments in unconsolidated affiliates on our Condensed Consolidated Balance Sheet as of December 31, 2020.
During the year ended December 31, 2020, we received from the Senator JV a distribution of 2.3 million shares of common
stock of CoreLogic and the Senator JV distributed $232.4 million of securities to other limited partners affiliated with Senator.
On June 26, 2020, Cannae and Senator submitted a jointly signed letter to CoreLogic’s board of directors pursuant to which
Cannae and Senator proposed to acquire CoreLogic for $65.00 per share in cash. On July 7, 2020, CoreLogic announced that its
board of directors unanimously rejected the proposal.
On July 29, 2020, Cannae and Senator sent an open letter to CoreLogic shareholders announcing that we initiated the
process to call a special meeting of CoreLogic's shareholders to elect nine independent directors to the CoreLogic board of
directors.
On September 14, 2020, Senator and Cannae informed the board of directors of CoreLogic of the decision by Senator and
Cannae to increase the proposed purchase price to $66.00 per share in cash. On September 15, 2020, the CoreLogic board of
directors delivered to Senator and Cannae a letter in which CoreLogic's board of directors rejected the revised offer and again
rejected Senator’s and Cannae’s request for access to targeted due diligence information regarding CoreLogic.
On October 30, 2020, we distributed the 2.3 million shares of CoreLogic previously held directly by us back to the Senator
JV.
In November 2020 and December 2020, we received an aggregate of $198.6 million of distributions from the Senator JV
resulting from the Senator JV's sales of CoreLogic shares.
Subsequent to December 31, 2020 through the date of this Annual Report, we have received distributions of $280.6 million
from the Senator JV, the Senator JV has exited our investment in CoreLogic completely and we have no further material
interest in the Senator JV.
Optimal Blue
On September 15, 2020, Black Knight closed on its acquisition of Optimal Blue, a leading provider of secondary market
solutions and actionable data services. Cannae, in connection with the closing of the acquisition by Black Knight, funded its
35
previously announced commitment to purchase 20% of the equity of Optimal Blue for $289.0 million. We account for our
investment in Optimal Blue under the equity method of accounting and the investment is included in Investments in
unconsolidated affiliates on our Condensed Consolidated Balance Sheet as of December 31, 2020.
Forward Purchases of Equity of Special Purpose Acquisition Companies
On May 8, 2020, we entered into the FTAC FPA with FTAC, a newly incorporated blank check company whose business
purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses or entities. FTAC is co-sponsored by entities affiliated with the chairman of our
Board of Directors, Bill Foley. Under the FTAC FPA, we will purchase an aggregate of 15,000,000 shares of FTAC’s Class A
common stock, plus an aggregate of 5,000,000 redeemable warrants to purchase one share of FTAC's Class A common stock at
$11.50 per share for an aggregate purchase price of $150.0 million in a private placement to occur concurrently with the closing
of the FTAC Alight Business Combination. The forward purchase is contingent upon the closing of the FTAC Alight Business
Combination.
On June 5, 2020, we entered into a forward purchase agreement (the "Trebia FPA") with Trebia Acquisition Corp.
(“Trebia”), a newly incorporated blank check company incorporated as a Cayman Islands exempted company for the purpose of
effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one
or more businesses or entities (the "Trebia Initial Business Combination"). Trebia is co-sponsored by entities affiliated with the
chairman and a member of our Board of Directors, Bill Foley and Frank R. Martire, respectively. Under the Trebia FPA, we
will purchase an aggregate of 7,500,000 Class A ordinary shares of Trebia, plus an aggregate of 2,500,000 redeemable warrants
to purchase one Class A ordinary share of Trebia at $11.50 per share for an aggregate purchase price of $75.0 million in a
private placement to occur concurrently with the closing of the Trebia Initial Business Combination. The forward purchase is
contingent upon the closing of the Trebia Initial Business Combination.
On July 31, 2020, we entered into the FTAC II FPA (together with the FTAC FPA and Trebia FPA, the "Forward Purchase
Agreements") with FTAC II, a newly incorporated blank check company whose business purpose is to effect a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses
or entities. FTAC II is sponsored by an entity affiliated with the chairman of our Board of Directors, Bill Foley. Under the
FTAC II FPA, we will purchase an aggregate of 15,000,000 shares of FTAC II’s Class A common stock, plus an aggregate of
5,000,000 redeemable warrants to purchase one share of FTAC II's Class A common stock at $11.50 per share for an aggregate
purchase price of $150.0 million in a private placement to occur concurrently with the closing of the FTAC II Paysafe Merger.
The forward purchase is contingent upon the closing of the FTAC II Paysafe Merger.
On December 7, 2020, FTAC II entered into a definitive agreement and plan of merger with Paysafe, a leading integrated
payments platform in connection with the contemplated FTAC II Paysafe Merger. Upon closing of the FTAC II Paysafe
Merger, the newly combined company will operate as Paysafe and plans to list on the New York Stock Exchange under the
symbol PSFE. The FTAC II Paysafe Merger reflects an implied pro-forma enterprise value for Paysafe of approximately
$9.0 billion. The FTAC II Paysafe Merger will be funded with the cash held in trust at FTAC II, forward purchase
commitments, PIPE commitments and equity of Paysafe. Completion of the FTAC II Paysafe Merger is subject to approval by
FTAC II stockholders, the effectiveness of a registration statement to be filed with the SEC in connection with the FTAC II
Paysafe Merger, and other customary closing conditions, including the receipt of certain regulatory approvals. The FTAC II
Paysafe Merger is expected to close in the first half of 2021.
In conjunction with the FTAC II Paysafe Merger, Cannae entered into the Paysafe Subscription Agreement to purchase
35,000,000 shares of Paysafe for $350.0 million as part of a subscription to the PIPE. Paysafe has agreed to pay us a placement
fee of $5.6 million as consideration for our subscription. Upon consummation of the FTAC II Paysafe Merger, our aggregate
investment in Paysafe is expected to be $504.7 million, inclusive of Cannae's investment commitments under the FTAC II FPA
and Paysafe Subscription Agreement and our prior $4.7 million investment in the sponsor of FTAC II, and we are expected to
receive 54,290,000 shares of common stock of Paysafe which represents approximately 7.5% of the pro forma outstanding
common equity of Paysafe and 8,134,067 warrants to purchase one share of Paysafe common stock at $11.50 per share.
On January 25, 2021, FTAC entered into a business combination agreement with Alight, a leading cloud-based provider of
integrated digital human capital and business solutions in connection with the contemplated FTAC Alight Business
Combination. Under the terms of the FTAC Alight Business Combination, FTAC will combine with Alight and Alight will
become a publicly traded entity under the name “Alight, Inc.” and symbol ALIT. The FTAC Alight Business Combination
reflects an implied pro-forma enterprise value for Alight of approximately $7.3 billion at closing. The FTAC Alight Business
Combination will be funded with the cash held in trust at FTAC, forward purchase commitments, PIPE commitments and
equity of Alight. Completion of the FTAC Alight Business Combination is subject to approval by FTAC stockholders, the
effectiveness of a registration statement to be filed with the SEC in connection with the FTAC Alight Business Combination,
and other customary closing conditions of SPAC business combinations, including the receipt of certain regulatory approvals.
36
In conjunction with the FTAC Alight Business Combination, Cannae entered into the Alight Subscription Agreement to
purchase 25,000,000 shares of Alight for $250.0 million as part of a subscription to the PIPE. Alight has agreed to pay us a
placement fee of $6.3 million as consideration for our subscription. Upon consummation of the FTAC Alight Business
Combination, our aggregate investment in Alight is expected to be $404.5 million, inclusive of Cannae's investment
commitments under the FTAC FPA and Alight Subscription Agreement and our previous $4.5 million investment in a sponsor
of FTAC, and we are expected to receive 44,639,500 shares of common stock of Alight which represents approximately 8.6%
of the pro forma outstanding common equity of Alight and 8,026,666 warrants to purchase one share of Alight common stock at
$11.50 per share.
Other Developments
In June 2020, we completed an underwritten public offering of an aggregate of 12,650,000 shares of our common stock,
including 1,650,000 shares of our common stock pursuant to the full exercise of the underwriter's overallotment option (the
"Offering"), pursuant to a prospectus supplement, dated June 10, 2020, and the base prospectus, dated November 27, 2019,
included in our registration statement on Form S-3 ASR (File No. 333-235303), which was initially filed with the Securities and
Exchange Commission on November 27, 2019. We received net proceeds from the Offering of approximately $455.0 million,
after deducting the underwriting discount and capitalized offering expenses payable by us. We intend to use the net proceeds of
the Offering to fund future acquisitions or investments, including potential investments in existing portfolio companies, and for
general corporate purposes.
Related Party Transactions
Our financial statements for all years presented reflect transactions with FNF and our Manager. See Note R to our
Consolidated Financial Statements included in Item 8 of Part II of this Annual Report for further discussion.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with U.S. GAAP. See Note A to our Consolidated
Financial Statements included in Item 8 of Part II of this Annual Report for discussion our significant accounting policies.
The accounting policies and estimates described below are those we consider critical in preparing our Consolidated
Financial Statements. Management is required to make estimates and assumptions that can affect the reported amounts of assets
and liabilities and disclosures with respect to contingent assets and liabilities at the date of the Consolidated Financial
Statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from
those estimates.
Investments in unconsolidated affiliates. Investments in unconsolidated affiliates are recorded using the equity method of
accounting. If an investor does not possess a controlling financial interest over an investee but has the ability to exercise
significant influence over the investee’s operating and financial policies, the investor must account for such an investment
under the equity method of accounting. For investments in common stock or in-substance common stock of an investee, which
an investor does not control, the general but rebuttable presumption exists that an ownership of greater than 20% of the
outstanding equity of an investee indicates the investor has significant influence. For investments in partnerships and similar
entities for which an investor does not control, equity method of accounting for the investment is generally required unless the
investor's interest is so minor that the investor has virtually no influence.
In the ordinary course of our business, we make investments in companies that provide us with varying degrees of control
and influence over the underlying investees through our level of ownership of the outstanding equity of the investee,
participation in management of the investee, participation on the board of directors of investees, and/or legal agreements with
other investors with control implications. As a result, our analysis of the appropriate accounting for our portfolio companies
often requires judgment regarding the level of control, significant influence or lack thereof the Company has over each investee.
If we are required to account at fair value for certain of our portfolio companies in which we have concluded the Company has
significant influence resulting in the application of the equity method of accounting, the impact of such change could
significantly impact the Company's Consolidated Financial Statements.
As of March 31, 2020 our voting agreement with Ceridian was terminated and, as a result, we are no longer able to exert
influence over the composition and quantity of Ceridian's board of directors. In combination with the reduction in our
ownership of Ceridian resulting from the sale of shares in February 2020, we no longer exercise significant influence over
Ceridian. As of March 31, 2020, we account for our investment in Ceridian at fair value pursuant to the investment in equity
security guidance of ASC 321. The change resulted in the revaluation of our investment in Ceridian to its fair value of
$993.4 million as of March 31, 2020 and recording a gain on such revaluation of $684.9 million (net of $47.1 million of before-
tax losses reclassified from other comprehensive earnings) which is included in Recognized gains and losses, net on the
Consolidated Statement of Operations for the year ended December 31, 2020.
As of December 31, 2020, we hold less than 20% of the outstanding common equity of Dun & Bradstreet but continue to
account for our investment under the equity method because we continue to exert significant influence through our 18.1%
37
ownership, because certain of our senior management and directors serve on Dun & Bradstreet's board of directors, and because
we are party to an agreement with other of its equity sponsors, which collectively own greater than 50% of the outstanding
voting equity of Dun & Bradstreet, pursuant to which we have agreed to collectively vote together on all matters related to the
election of directors to the Dun & Bradstreet board of directors for a period of three years.
As of December 31, 2020, the book value of our investment in D&B accounted for under the equity method of accounting
is $653.2 million. Based on quoted market prices, the aggregate fair market value of our ownership of Dun & Bradstreet
common stock was approximately $1.9 billion as of December 31, 2020.
Valuation of investments. The fair values of financial instruments presented in the Consolidated Financial Statements are
estimates of the fair values at a specific point in time using available market information and appropriate valuation
methodologies. Estimates that utilize unobservable inputs are subjective in nature and involve uncertainties and significant
judgment in the interpretation of current market data.
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 Consolidated 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 December 31, 2020 and 2019, respectively:
December 31, 2020
Level 1
Level 2
Level 3
Total
(In millions)
Fixed-maturity securities available for sale:
Corporate debt securities............................................................................... $
— $
— $
35.2 $
35.2
Equity securities:
Ceridian.........................................................................................................
1,491.8
Forward Purchase Agreements......................................................................
Paysafe Subscription Agreement...................................................................
Other..............................................................................................................
—
—
1.6
—
—
—
—
—
1,491.8
136.1
169.6
—
136.1
169.6
1.6
Total assets.................................................................................................... $ 1,493.4 $
— $ 340.9 $ 1,834.3
December 31, 2019
Level 1
Level 2
Level 3
Total
(In millions)
Fixed-maturity securities available for sale:
Corporate debt securities............................................................................... $
Total.............................................................................................................. $
— $
— $
— $
19.2 $
— $
19.2 $
19.2
19.2
The Forward Purchase Agreements and the Paysafe Subscription Agreement are accounted for at fair value pursuant to
ASC 321. We utilized a Monte Carlo Simulation in determining the fair value of these agreements, which is considered to be a
Level 3 fair value measurement. The Monte Carlo Simulation model simulates the current security price to a simulated date for
the consummation of the underlying initial business combination based on probabilities of consummation. The values of the
agreements are then calculated as the difference between the future simulated price and the fixed purchase prices for the
38
underlying securities to be purchased pursuant to the Forward Purchase Agreements and the Paysafe Subscription Agreement.
The primary unobservable input utilized in determining the fair value of the Forward Purchase Agreements and Paysafe
Subscription Agreement is the probability of consummation of the FTAC Initial Business Combination, Trebia Initial Business
Combination and FTAC II Initial Business Combination. The probabilities assigned to the consummation of each of the FTAC
Initial Business Combination and the Trebia Initial Business Combination was 90% and the probability assigned to the
consummation of the FTAC II Initial Business Combination was 95%. Determination of such probabilities is based on a hybrid
approach of both observed success rates of business combinations for special purpose acquisition companies and the sponsors
of FTAC, FTAC II and Trebia's track record for consummating similar transactions. The FTAC II Paysafe Merger was also
considered in our determination of the probability of the FTAC II Initial Business Combination.
Our Level 3 fair value measurement for our fixed maturity securities 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 fair value of our Level 3 fixed-maturity securities available for sale varies by security type and ranged
from 7.3% to 17.5% and had a weighted average of 12.1% as of December 31, 2020. Based on the total fair value of our Level
3 fixed-maturity securities available for sale as of December 31, 2020, 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.
Corporate debt Forward Purchase Paysafe Subscription
securities
Agreements
Agreement
Total
Fair value, December 31, 2018
Paid-in-kind dividends (1)
Impairment (2)
Net valuation gain included in other comprehensive
earnings (3)
Fair value, December 31, 2019
Paid-in-kind dividends (1)
Net valuation gain included in earnings (2)
Net valuation gain included in other comprehensive
earnings (3)
Fair value, December 31, 2020
$
$
$
17.8 $
0.2
(0.4)
1.6
19.2 $
1.3
—
14.7
35.2 $
— $
—
—
—
— $
—
— $
—
—
—
— $
—
136.1
169.6
—
136.1 $
—
169.6 $
17.8
0.2
(0.4)
1.6
19.2
1.3
305.7
14.7
340.9
______________________________________
(1) Included in Interest and investment income on the Consolidated Statements of Operations
(2) Included in Recognized gains and losses, net on the Consolidated Statements of Operations
(3) Included in Unrealized gain (loss) on investments and other financial instruments, net (excluding investments in
unconsolidated affiliates) on the Consolidated Statements of Comprehensive Earnings
Blue Ribbon Reorganization
During the Blue Ribbon Reorganization, we accounted for our retained equity interest in Blue Ribbon under the equity
method of accounting. In conjunction with our accounting for our investment in Blue Ribbon under the equity method of
accounting, we initially recorded our investment as of January 27, 2020 at fair value. Due to deteriorating operating results and
cash flows resulting from declining same store sales, increased costs, and the impact of COVID-19, we also performed
impairment tests quarterly by determining the fair value of our interest in Blue Ribbon during the Blue Ribbon Reorganization.
Upon emergence and our acquisition of Legendary Baking and VIBSQ out of bankruptcy, we again determined the fair value of
our interest in conjunction with our purchase accounting. Refer to Note I to our Consolidated Financial Statements included in
Item 8 of Part II of this Annual Report for discussion our purchase accounting for Legendary Baking and VIBSQ.
To determine the fair value of our interest in Blue Ribbon, Legendary Baking or VIBSQ, we used a combination of
discounted cash flow analyses and market approaches. Our discounted cash flow projections include assumptions for growth
rates for revenues, costs and earnings, which are based on various long-range financial and operational plans of each reporting
unit. Additionally, discount rates used in our analysis are based on weighted-average cost of capital, driven by comparable
public companies, the prevailing interest rates, credit ratings, financing abilities and opportunities of each reporting unit, among
other factors. Our market-based valuations utilize earnings multiples of comparable public companies, which are reflective of
39
the market in which each respective reporting unit operates, and recent comparable market transactions. Changes in these
significant management assumptions and estimates could have a significant impact on the determination of the fair values of
Blue Ribbon and the reorganized companies.
Valuation of Goodwill. Goodwill represents the excess of cost over fair value of identifiable net assets acquired and
assumed in a business combination. Goodwill and other intangible assets with indefinite useful lives are reviewed for
impairment annually or more frequently if circumstances indicate potential impairment, through a comparison of fair value to
the carrying amount. We have the option to first assess goodwill for impairment based on a review of qualitative factors to
determine if events and circumstances exist that will lead to a determination that the fair value of a reporting unit is greater than
its carrying amount, prior to performing a full fair-value assessment. If, after assessing the totality of events or circumstances,
we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then
performing the quantitative impairment test is unnecessary. However, if we conclude otherwise, then we are required to
perform the quantitative impairment test by calculating the fair value of the reporting unit and comparing the fair value with the
carrying amount of the reporting unit. Goodwill impairment, if any, is measured as the amount by which a reporting unit’s
carrying value exceeds its fair value.
We allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination. We
evaluate our reporting units on at least an annual basis and, if necessary, reassign goodwill using a relative fair value allocation
approach. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating
segment) annually in the fourth quarter (October 1) and between annual tests if an event occurs or circumstances change that
would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances
could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale
or disposition of a significant portion of a reporting unit.
We use a combination of discounted cash flow analyses and market approaches to determine the fair value of each of our
reporting units. Our discounted cash flow projections include assumptions for growth rates for revenues, costs and earnings,
which are based on various long-range financial and operational plans of each reporting unit. Additionally, discount rates used
in our goodwill analysis are based on weighted-average cost of capital, driven by comparable public companies, the prevailing
interest rates, credit ratings, financing abilities and opportunities of each reporting unit, among other factors. Our market-based
valuations utilize earnings multiples of comparable public companies, which are reflective of the market in which each
respective reporting unit operates, and recent comparable market transactions. Changes in the factors used in our fair value
estimates, including declines in industry or company-specific sales, margin erosion, discount rates used, and market multiples
could have a significant impact on the fair values of the reporting units.
For the year ended December 31, 2020, we recorded $7.8 million of impairment to goodwill in our Restaurant Group
segment. The impairment charge is a result of deteriorating operating results and cash flow resulting from declining same store
sales and increased costs at O'Charley's. The impairment recorded was calculated as the deficit between the carrying value of
our O'Charley's reporting unit of our Restaurant Group compared to the fair value of the reporting unit determined by
performing a combination of discounted cash flow and market approaches.
For the year ended December 31, 2019, we recorded $35.1 million of impairment to goodwill in our former T-System
segment and $10.4 million of impairment to goodwill in our Restaurant Group segment as a result of our annual goodwill
impairment testing. The impairment charge in our Restaurant Group is a result of deteriorating operating results and cash flow
resulting from declining same store sales and increased costs, primarily in our Village Inn and Bakers Square branded stores.
As a result of the goodwill impairment in the Restaurant Group, the fair value of this reporting unit approximates its carrying
value and relatively small decreases in future forecasts or changes in other assumptions could result in additional goodwill
impairment. The impairment in our former T-System segment is primarily a result of a decline in earnings multiples from
comparable public companies and lower forecasted cash flows for its reporting units. The impairments recorded were calculated
as the deficit between the carrying value of the reporting units of each segment compared to the fair value of the reporting unit
determined by performing a combination of discounted cash flow and market approaches.
Impairment to goodwill in our former T-System segment is included in Net loss from discontinued operations on the
Consolidated Statement of Operations for the year ended December 31, 2019. See Note N to our Consolidated Financial
Statements included in Item 8 of Part II of this Annual Report.
For the year ended December 31, 2018, we recorded $26.7 million of impairment to goodwill in our Restaurant Group
segment. The impairment charge was a result of deteriorating operating results and cash flow resulting from declining same
store sales and increased costs. The impairment recorded was calculated as the deficit between the carrying value of a reporting
unit of the Restaurant Group segment compared to the fair value of the reporting unit determined by performing a combination
of discounted cash flow and market approaches.
Valuation of Other Intangible Assets. We have other intangible assets, not including goodwill, which consist primarily of
customer relationships and contracts, trademarks and tradenames that are generally recorded in connection with acquisitions at
40
their fair value, franchise rights, the fair value of purchased software and capitalized software development costs. Intangible
assets with estimable lives are amortized over their respective estimated useful lives to their estimated residual values and
reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. In general, customer relationships are amortized over their estimated useful lives using an accelerated method,
which takes into consideration expected customer attrition rates. Contractual relationships are generally amortized over their
respective contractual lives. Useful lives of computer software range from 3 to 10 years. Capitalized software development
costs and purchased software are recorded at cost and amortized using the straight-line method over their estimated useful life.
Trademarks and tradenames were generally considered intangible assets with indefinite lives and reviewed for impairment
at least annually. In conjunction with our annual testing for impairment of tradenames during the fourth quarter of 2020 and in
light of the deteriorating operating environment for restaurants, we changed our estimate of the useful lives of our tradenames
for all of our restaurant brands from indefinite to 15 years. The impact of such change on the Company's consolidated income is
not considered material.
Tradenames are tested for impairment annually in the fourth quarter (October 1) and between annual tests if an event
occurs or circumstances change that would more likely than not reduce the fair value of a tradename below its carrying value.
We use a relief from royalty method to determine the fair value of our tradenames, which includes assumptions for growth rates
for revenues, tax rates, discount rates and royalty rates. Changes in the factors used in our fair value estimates, including
declines in industry or company-specific sales, discount rates used, and royalty rates could have a significant impact on the fair
values of our tradenames.
We recorded $11.8 million of impairment expense related to the O'Charley's tradename within our Restaurant Group in the
year ended December 31, 2020. We recorded $17.1 million of impairment expense related to the Village Inn and Bakers square
tradenames within our Restaurant Group in the year ended December 31, 2019. We recorded $5.8 million of impairment
expense related to a tradename and an abandoned software project in our Restaurant Group in the year ended December 31,
2018. The impairments are recorded within Other operating expenses on our Consolidated Statement of Operations for the years
then ended.
Accounting for Income Taxes. We recognize deferred tax assets and liabilities for temporary differences between the
financial reporting basis and the tax basis of our assets and liabilities and expected benefits of utilizing net operating loss and
credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The impact of changes in tax
rates and laws on deferred taxes, if any, is applied to the years during which temporary differences are expected to be settled
and reflected in the financial statements in the period enacted.
Refer to Note L to our Consolidated Financial Statements included in Item 8 of Part II of this Annual Report for further
discussion of our accounting for income taxes.
Certain Factors Affecting Comparability
Year ended December 31, 2020. On January 27, 2020, Blue Ribbon began the Blue Ribbon Reorganization and we
deconsolidated Blue Ribbon. On October 2, 2020, the Chapter 11 Plan became effective and Blue Ribbon emerged from
bankruptcy as a set of reorganized companies. Upon Blue Ribbon's emergence from bankruptcy, we acquired the assets and
uncompromised liabilities of Legendary Baking and VIBSQ in exchange for $15.5 million of the outstanding balance under the
DIP Loan with Blue Ribbon. Subsequent to Blue Ribbon's emergence from bankruptcy, we own 100% of the equity of VIBSQ
and Legendary Baking. Our consolidated results of operations for the year ended December 31, 2020 include the consolidated
results of operations of Blue Ribbon from January 1, 2020 through January 27, 2020 and of Legendary Baking and VIBSQ
from October 2, 2020 through December 31, 2020.
Year ended December 31, 2019. On December 31, 2019, we completed the contribution of T-System to Corrohealth. As a
result of the contribution, we reclassified the results of operations of T-System to discontinued operations for the years ended
December 31, 2019 and 2018 in our Consolidated Statements of Operations.
41
Results of Operations
Consolidated Results of Operations
Net earnings. The following table presents certain financial data for the years indicated:
Revenues:
Restaurant revenue
Other operating revenue
Total operating revenues
Operating expenses:
Cost of restaurant revenue
Personnel costs
Depreciation and amortization
Other operating expenses, including asset impairments
Goodwill impairment
Total operating expenses
Operating loss
Other income (expense):
Interest, investment and other income
Interest expense
Recognized gains and losses, net
Total other income
Earnings from continuing operations before income taxes and equity in (losses) earnings of
unconsolidated affiliates
Income tax expense
Earnings from continuing operations before equity in (losses) earnings of unconsolidated affiliates
Equity in earnings (losses) of unconsolidated affiliates
Earnings (loss) from continuing operations
Net loss from discontinued operations, net of tax
Net earnings (loss)
Less: Net loss attributable to non-controlling interests
Net earnings attributable to Cannae Holdings, Inc. common shareholders
Revenues
Year ended December 31,
2020
2019
2018
(In millions)
$ 559.7 $ 1,043.3 $ 1,117.8
26.0
26.7
29.7
585.7
1,070.0
1,147.5
524.3
912.8
94.8
30.7
116.6
7.8
90.3
40.7
133.4
10.4
991.3
137.2
46.3
91.8
26.7
774.2
1,187.6
1,293.3
(188.5)
(117.6)
(145.8)
17.2
(9.0)
2,362.2
2,370.4
2,181.9
481.2
1,700.7
15.6
(17.8)
357.7
355.5
237.9
24.2
213.7
6.3
(4.7)
166.8
168.4
22.6
15.0
7.6
59.1
(115.1)
(16.1)
1,759.8
—
1,759.8
98.6
(51.8)
46.8
(26.4)
(30.5)
(8.5)
(2.1)
(10.6)
(38.2)
$ 1,786.2 $
77.3 $
27.6
Total revenue in 2020 decreased $484.3 million compared to 2019, primarily driven by a decline in revenue in the
Restaurant Group segment. Total revenue in 2019 decreased $77.5 million compared to 2018, primarily driven by a decline in
revenue in our Restaurant Group segment.
The change in revenues from our segments is discussed in further detail at the segment level below.
Expenses
Our operating expenses consist primarily of personnel costs, cost of restaurant revenue, other operating expenses, and
depreciation and amortization.
Personnel costs include base salaries, commissions, benefits, stock-based compensation and bonuses paid to employees,
and are one of our most significant operating expenses. Personnel costs that are directly attributable to the operations of the
Restaurant Group are included in Cost of restaurant revenue.
Cost of restaurant revenue includes cost of food and beverage, primarily the costs of beef, groceries, produce, seafood,
poultry and alcoholic and non-alcoholic beverages, net of vendor discounts and rebates, payroll and related costs and expenses
directly relating to restaurant level activities, and restaurant operating costs including occupancy and other operating expenses
at the restaurant level.
42
Other operating expenses include professional fees, advertising costs, travel expenses and impairments of operating assets.
Depreciation and amortization expense consists of our depreciation related to investments in property and equipment as
well as amortization of intangible assets.
The change in expenses from our segments is discussed in further detail at the segment level below.
Income tax expense on continuing operations was $481.2 million, $24.2 million, and $15.0 million for the years ended
December 31, 2020, 2019, and 2018, respectively. The effective tax rate for the years ended December 31, 2020, 2019, and
2018 was 22.1%, 10.2%, and 66.4%, respectively. The increase in the effective tax rate in 2020 from 2019 is primarily
attributable to the decreased impact of earnings from unconsolidated affiliates on pretax income. The increase in the effective
tax rate in 2019 from 2018 is primarily attributable to the decreased impact of non-deductible executive compensation on pretax
income. Additionally, the impact of the non-controlling interests, permanent items, and tax credits on pretax income was greater
in 2018 than the impact of those same items on pretax earnings and losses in 2019. The fluctuation in income tax benefit as a
percentage of earnings from continuing operations before income taxes is attributable to our estimate of ultimate income tax
liability and changes in the characteristics of net earnings year to year, such as the weighting of operating income versus
investment income.
For a detailed breakout of our effective tax rate and further discussion on changes in our taxes, see Note L to our
Consolidated Financial Statements included in Item 8 of Part II of this Annual Report.
Other
Recognized gains and losses, net totaled $2,362.2 million, $357.7 million, and $166.8 million for the years ended
December 31, 2020, 2019, and 2018, respectively. The net recognized gain for the year ended December 31, 2020 is primarily
attributable to gains on equity securities, a gain of $223.1 million on the sale of a portion of our investment in Ceridian in
February 2020 and a gain of $117.0 million recorded in conjunction with the D&B IPO. See Note D to our Consolidated
Financial Statements included in Item 8 of this Annual Report for further details on gains recognized on equity securities. The
$223.1 million gain on sale of Ceridian in February 2020 occurred prior to our change in accounting for our investment in
Ceridian as an equity security at fair value in March 2020. The net recognized gain for the year ended December 31, 2019 is
primarily attributable to $342.1 million of gains on sales of Ceridian shares and $3.9 million of gains on sales of property in the
Restaurant Group. The net recognized gain for the year ended December 31, 2018 is primarily attributable to a $92.6 million
gain on the sale of Ceridian shares in the fourth quarter of 2018, $63.2 million of recognized gains associated with Ceridian's
initial public offering and a gain of $24.0 million on the sale of LifeWorks, partially offset by impairment losses of $12.5
million recognized on fixed maturity securities in the 2018 period.
Equity in earnings (losses) of unconsolidated affiliates for the periods indicated consisted of the following (in millions):
Year Ended December 31,
2020
2019
2018
Dun & Bradstreet......................................................................... $
(46.8) $
(132.8) $
Ceridian (1)..................................................................................
Optimal Blue................................................................................
AmeriLife.....................................................................................
Other.............................................................................................
1.5
(9.4)
(4.0)
117.8
16.4
—
—
1.3
—
(20.5)
—
—
4.4
Total............................................................................................. $
59.1 $
(115.1) $
(16.1)
_____________________________________
(1) The amount for the year ended December 31, 2020 represents the Company's equity in earnings of Ceridian in the three
months ended March 31, 2020 prior to the change in accounting for the investment beginning March 31, 2020.
Net Earnings
Net earnings attributable to Cannae increased $1,708.9 million in the year ended December 31, 2020, compared to 2019.
Total net earnings attributable to Cannae increased $49.7 million in the year ended December 31, 2019, compared to 2018.
The change in net earnings is attributable to the factors discussed above and net earnings from the segments is discussed in
further detail at the segment level below.
43
Segment Results of Operations
Restaurant Group
The following table presents the results from operations of our Restaurant Group segment:
Revenues:
Restaurant revenue
Operating expenses:
Cost of restaurant revenue
Personnel costs
Depreciation and amortization
Other operating expenses, including asset impairments
Goodwill impairment
Total operating expenses
Operating loss
Other expense:
Interest expense
Recognized gains and losses, net
Total other expense
Year Ended December 31,
2020
2019
2018
(In millions)
$
559.7 $
1,043.3 $
1,117.8
524.3
31.2
27.7
53.1
7.8
644.1
(84.4)
(8.6)
7.5
(1.1)
912.8
52.1
38.5
108.9
10.4
991.3
47.3
44.9
86.3
26.7
1,122.7
1,196.5
(79.4)
(78.7)
(5.4)
3.9
(1.5)
(16.0)
(2.1)
(18.1)
Loss from continuing operations before income taxes and equity in losses of unconsolidated
affiliates
(85.5)
(80.9)
(96.8)
Total revenues for the Restaurant Group segment decreased $483.6 million, or 46.4%, in the year ended December 31,
2020 from 2019. The decrease was primarily driven by: (1) decreased revenue related to the Blue Ribbon Reorganization,
which resulted in the deconsolidation of Blue Ribbon for the period from January 27, 2020 through October 2, 2020, (2) the
closing or sale of company-owned restaurants primarily associated with our O'Charley's, Village Inn and Bakers Square
concepts subsequent to December 31, 2019 and (3) a decrease in comparable store sales driven by social restrictions imposed
by state and local governments in connection with COVID-19 in March 2020, which resulted in the closing of dining rooms for
substantially all of our restaurants from late March 2020 and into May 2020. The decrease was partially offset by an overall
increase in the average guest check in the year ended December 31, 2020 compared to 2019. Total revenues for the Restaurant
Group segment decreased $74.5 million, or 6.7%, in the year ended December 31, 2019 from 2018. The decrease was primarily
driven by decreased revenue related to the closing or sale of 48 company-owned restaurants primarily associated with our
O'Charley's, Village Inn and Bakers Square concepts in the year ended December 31, 2019 and to a lesser extent a decrease in
comparable store sales. The decrease was partially offset by increases in the average guest check.
Revenue of $183.4 million is recorded in the year ended December 31, 2019 associated with stores across all brands that
closed subsequent to December 31, 2019. Revenue associated with our Blue Ribbon brands was $312.5 million and $347.7
million, respectively, in the years ended December 31, 2019 and 2018. Revenue recorded for Blue Ribbon, Legendary Baking
and VIBSQ in the year ended December 31, 2020 was $53.1 million and represents Blue Ribbon's revenue for the period from
January 1, 2020 through January 27, 2020, the date of Blue Ribbon's filing for bankruptcy, and Legendary Baking and VIBSQ's
revenue for the period from October 2, 2020 through December 31, 2020.
Our Restaurant Group ended the years December 31, 2020 and 2019 with 34 and 130 Village Inn and Bakers Square
company-owned stores, respectively. The decrease primarily relates to stores closed in conjunction with the Blue Ribbon
Reorganization as well as 38 Village Inn stores which were converted from company-owned locations to franchises.
Comparable Store Sales. One method we use in evaluating the performance of our restaurants is to compare sales results
for restaurants period over period. A new restaurant is included in our comparable store sales figures starting in the first period
following the restaurant's first seventy-eight weeks of operations. Changes in comparable store sales reflect changes in sales for
the comparable store group of restaurants over a specified period of time. This measure highlights the performance of existing
restaurants, as the impact of new restaurant openings is excluded. Comparable store sales for our 99 Restaurants brand changed
(32.8)%, (0.4)% and 2.6% in the years ended December 31, 2020, 2019 and 2018, respectively, from the prior fiscal years. The
decrease in 2020 is primarily attributable to lower guest counts resulting from COVID-19. The decrease in 2019 is primarily
attributable to lower guest counts partially offset by an increase in the average guest check. Comparable store sales for our
44
O'Charley's brand decreased 22.5%, 2.5% and 2.9% in the years ended December 31, 2020, 2019 and 2018, respectively, from
the prior fiscal years. The decrease in 2020 is primarily attributable to lower guest counts resulting from COVID-19. The
decrease in 2019 and 2018 from the previous year is primarily attributable to decreased guest counts partially offset by an
increase in the average guest check.
Cost of restaurant revenue decreased $388.5 million, or 42.6%, in the year ended December 31, 2020 from 2019. Cost of
restaurant revenue decreased $78.5 million, or 7.9%, in the year ended December 31, 2019 from 2018. Cost of restaurant
revenue as a percentage of restaurant revenue was approximately 93.7%, 87.5%, and 88.7% in the years ended December 31,
2020, 2019 and 2018, respectively. The increase in cost of restaurant revenue as a percentage of restaurant revenue in 2020
compared to 2019 is primarily attributable to the impact of unavoidable costs on the substantial decrease in revenue discussed
above. The decrease in cost of restaurant revenue as a percentage of restaurant revenues in 2019 compared to 2018 was
primarily driven by the closure of underperforming stores with lower margins and higher operating expenses in 2019.
Personnel costs decreased by $20.9 million, or 40.1%, in the year ended December 31, 2020 from 2019. The decrease is
primarily attributable to the Blue Ribbon Reorganization.
Other operating expenses decreased by $55.8 million, or 51.2%, in the year ended December 31, 2020 from 2019. The
decrease is primarily attributable to the Blue Ribbon Reorganization. Other operating expenses increased by $22.6 million, or
26.2%, in the year ended December 31, 2019 from 2018. The increase is primarily attributable to impairments of other
intangible assets and lease assets.
See Note A to our Consolidated Financial Statements included in Item 8 of Part II of this Annual Report for further
discussion of goodwill impairments in our Restaurant Group.
Loss from continuing operations before income taxes decreased $4.6 million in the year ended December 31, 2020 from
2019. Loss from continuing operations before income taxes increased $15.9 million in the year ended December 31, 2019 from
2018. The change in losses is primarily attributable to the factors discussed above.
Dun & Bradstreet
We own an approximate 18.1% interest in Dun & Bradstreet and account for our investment in D&B under the equity
method of accounting; therefore, its results of operations do not consolidate into ours.
Summarized financial information for Dun & Bradstreet and Star Parent, L.P. ("Star Parent"), the former parent of D&B
through which the Company was invested prior to the D&B IPO, for the relevant dates and time periods included in
Investments in unconsolidated affiliates and Equity in earnings (losses) of unconsolidated affiliates in our Consolidated Balance
Sheets and Statements of Operations, respectively, is presented below.
We acquired our initial interest in Star Parent on February 8, 2019. The results of operations for the year ended December
31, 2019 presented below represent Star Parent's results of operations subsequent to our acquisition.
December 31,
2020
December 31,
2019
$
$
$
$
(In millions)
874.0 $
7,668.2
677.2
9,219.4 $
825.3 $
3,255.8
1,560.6
5,641.7
—
3,577.7
9,219.4 $
417.9
8,091.5
603.4
9,112.8
1,090.4
3,818.9
1,594.0
6,503.3
1,030.6
1,578.9
9,112.8
Total current assets
Goodwill and other intangible assets, net
Other noncurrent assets
Total assets
Current liabilities
Long-term debt
Other non-current liabilities
Total liabilities
Preferred equity
Total equity
Total liabilities and equity
45
Total revenues
Loss before income taxes
Net loss
Dividends attributable to preferred equity and noncontrolling interest expense
Net loss attributable to Dun & Bradstreet
Year ended
December 31, 2020
Year ended
December 31, 2019
$
(In millions)
1,738.1 $
(219.3)
(106.5)
(69.1)
(175.6)
1,413.9
(540.0)
(425.8)
(120.5)
(546.3)
The D&B IPO was completed on July 6, 2020. Details relating to the results of operations of Dun & Bradstreet (NYSE:
"DNB") can be found in its periodic reports filed with the SEC.
Optimal Blue
On September 15, 2020, we completed our investment in Optimal Blue. We account for our investment in Optimal Blue
under the equity method of accounting; therefore, its results of operations do not consolidate into ours.
Summarized financial information for Optimal Blue for the relevant dates and time periods included in Equity in
earnings (losses) of unconsolidated affiliates in our Consolidated Statements of Operations is presented below. Our net earnings
for the year ended December 31, 2020 include our equity in the Optimal Blue's losses for the period from September 15, 2020,
the date we made our investment in Optimal Blue, through December 31, 2020.
December 31,
2020
(In millions)
38.0
1,831.3
100.1
1,969.4
28.9
493.0
105.0
626.9
578.0
813.0
(48.5)
1,342.5
1,969.4
$
$
$
$
Year ended
December 31, 2020
(In millions)
$
45.4
(38.1)
(45.9)
Total current assets
Goodwill and other intangible assets, net
Other assets
Total assets
Current liabilities
Long-term debt
Other non-current liabilities
Total liabilities
Redeemable member's interest
Additional paid-in capital
Retained deficit
Total redeemable member's interest and equity
Total liabilities, redeemable member's interest and equity
Total revenues
Operating loss
Net loss
46
Corporate and Other
The Corporate and Other segment consists of our share in the operations of certain controlled portfolio companies and
other equity investments, activity of the corporate holding company and certain intercompany eliminations and taxes.
The following table presents the results from operations of our Corporate and Other segment:
Revenues:
Other operating revenue
Operating expenses:
Personnel costs
Depreciation and amortization
Other operating expenses
Total operating expenses
Operating loss
Other income (expense):
Interest, investment and other income
Interest (expense) income
Recognized gains and losses, net
Total other income
Year ended December 31,
2020
2019
2018
(In millions)
$
26.0 $
26.7 $
29.7
63.6
3.0
63.5
130.1
(104.1)
17.2
(0.4)
2,354.7
2,371.5
38.2
2.2
24.5
64.9
(38.2)
15.6
(12.4)
353.8
357.0
89.9
1.4
5.5
96.8
(67.1)
6.3
11.3
168.9
186.5
Earnings from continuing operations before income taxes and equity in losses of
unconsolidated affiliates
2,267.4
318.8
119.4
Personnel costs increased $25.4 million, or 66.5%, in the year ended December 31, 2020 compared to 2019, and decreased
$51.7 million, or 57.5%, in the year ended December 31, 2019 compared to 2018. The change in both periods is primarily
driven by a change in investment success bonuses paid related to investment monetization events.
Other operating expenses increased $39.0 million, or 159.2%, in the year ended December 31, 2020 compared to 2019 and
increased $19.0 million in the year ended December 31, 2019 compared to 2018. The increase in 2020 from 2019 is primarily
attributable to $20.8 million of management fee expenses and $11.3 million of carried interest on distributions from the Senator
JV and sales of other investments incurred with our Manager. The increase in 2019 from 2018 is primarily attributable to the
inclusion of a $14.8 million elimination of intercompany fees charged to the Restaurant Group in 2018.
Interest and investment income increased $9.3 million, or 147.6%, in the year ended December 31, 2019 compared to
2018. The increase was primarily attributable to $9.1 million of syndication fees earned in relation to our organization of
investors for the D&B Acquisition.
Interest expense decreased $12.0 million in the year ended December 31, 2020 from 2019. The decrease was attributable to
the decrease in corporate debt. Interest expense in the year ended December 31, 2019 consists primarily of interest on our
corporate debt instruments. See Note K to our Consolidated Financial Statements included in Item 8 of Part II of this Annual
Report for further discussion of our outstanding debt. Interest expense in the year ended December 31, 2018 consists primarily
of eliminations of previously outstanding intercompany debt with our Restaurant Group and T-System.
The net recognized gain for the year ended December 31, 2020 is primarily attributable to gains on equity securities, a gain
of $223.1 million on the sale of a portion of our investment in Ceridian in February 2020 and a gain of $117.0 million recorded
in conjunction with the D&B IPO. See Note D to our Consolidated Financial Statements included in Item 8 of this Annual
Report for further details on gains recognized on equity securities. The $223.1 million gain on sale of Ceridian in February
2020 occurred prior to our change in accounting for our investment in Ceridian as an equity security at fair value in March
2020. Net recognized gains for the year ended December 31, 2019 is primarily attributable to $342.1 million of gains on sales
of Ceridian shares. Net recognized gain for the year ended December 31, 2018 is primarily attributable to a $92.6 million gain
on the sale of Ceridian shares in the fourth quarter of 2018, $63.2 million of recognized gains associated with Ceridian's initial
public offering and the gain of $24.0 million on the sale of LifeWorks, partially offset by impairment losses of $12.5 million
recognized on fixed maturity securities in 2018.
47
Discontinued Operations
As a result of the T-System Contribution, the financial results of T-System have been reclassified to discontinued
operations. See Note N to our Consolidated Financial Statements included in Item 8 of Part II of this Annual Report for further
details on amounts included in discontinued operations for the periods ended December 31, 2019 and 2018.
Liquidity and Capital Resources
Cash Requirements. Our current cash requirements include the SPAC Commitments, personnel costs, operating expenses,
taxes, payments of interest and principal on our debt, capital expenditures, and business acquisitions. There are no restrictions
on our retained earnings regarding our ability to pay dividends to stockholders, although there are limits on the ability of certain
subsidiaries to pay dividends to us, as a result of provisions in certain debt agreements. The declaration of any future dividends
is at the discretion of our Board of Directors. Additional uses of cash flow are expected to include stock repurchases,
acquisitions, and debt repayments.
As of December 31, 2020, we had cash and cash equivalents of $724.7 million, of which $666.0 million was cash held by
the corporate holding company, and $200.0 million of available borrowing capacity under our existing holding company credit
facilities with the ability to add an additional $400.0 million of borrowing capacity by amending our 2020 Margin Facility.
Subsequent to December 31, 2020 through the date of this Annual Report, we have received distributions of $280.6 million
from the Senator JV. As of February 24, 2020, our corporate holding company had cash of $951.3 million.
We continually assess our capital allocation strategy, including decisions relating to reducing debt, repurchasing our stock,
and/or conserving cash. We believe that all anticipated cash requirements for current operations will be met from internally
generated funds, cash dividends from subsidiaries, cash generated by investment securities, potential sales of non-strategic
assets, and borrowings on existing credit facilities. Our short-term and long-term liquidity requirements are monitored regularly
to ensure that we can meet our cash requirements. We forecast the needs of all of our subsidiaries and periodically review their
short-term and long-term projected sources and uses of funds, as well as the asset, liability, investment and cash flow
assumptions underlying such forecasts.
We are focused on evaluating our assets and investments as potential vehicles for creating liquidity. Our intent is to use that
liquidity for general corporate purposes, including, funding future investments, other strategic initiatives and/or conserving
cash.
Operating Cash Flows. Our cash flows used in operations for the years ended December 31, 2020, 2019, and 2018 were
$113.9 million, $84.2 million and $22.9 million, respectively. The increase in cash used in operations of $29.7 million from
2020 to 2019 is primarily attributable to increased payments for income taxes of $59.0 million and increased losses in our
Restaurant Group, excluding non-cash impairments, partially offset by a decrease in operating lease payments of $21.3 million.
The remainder of the variance is attributable to the timing of payment and receipt of accounts payable and receivable. The
decrease in cash provided by operations of $61.3 million from 2019 to 2018 is primarily attributable to the cash outflow related
to amounts previously on deposit with the Senator JV. The remainder of the variance is attributable to the timing of payment
and receipt of accounts payable and receivable.
Investing Cash Flows. Our cash flows (used in) provided by investing activities for the years ended December 31, 2020,
2019, and 2018 were $(74.2) million, $(24.2) million and $186.7 million, respectively. The decrease in cash provided by
investing activities of $50.0 million from 2020 to 2019 is primarily attributable to an increase in investments in unconsolidated
investments, including our investments in AmeriLife, Optimal Blue and the D&B Private Placement, and funding of the DIP
Loan, partially offset by an increase in proceeds from sales of Ceridian stock in 2020 compared to 2019. The decrease in cash
provided by (increase in cash used in) investing activities of $210.9 million from 2019 to 2018 is primarily attributable to our
initial investment in D&B, partially offset by proceeds from sales of Ceridian shares and net sales of short term investments.
Capital Expenditures. Total capital expenditures for property and equipment and other intangible assets were $22.3 million,
$28.3 million and $15.9 million for the years ended December 31, 2020, 2019, and 2018, respectively. Capital expenditures in
2020 and 2019 primarily consisted of purchases of property and equipment in our Restaurant Group segment and property
improvements at our real estate operations. Expenditures in 2020 also includes the Company's purchase of our corporate
headquarters for $9.3 million. The increase in expenditures in 2019 compared to 2018 is reflective of an increase in
expenditures in our real estate operations, capital expenditures for new stores and maintenance at 99 Restaurants and store
maintenance expenditures at O'Charley's, partially offset by a decrease in capital expenditures at Blue Ribbon.
Financing Cash Flows. Our cash flows provided by (used in) financing activities for the years ended December 31, 2020,
2019, and 2018 were $379.1 million, $319.1 million and $(86.4) million, respectively. The increase in cash provided by
financing activities of $60.0 million from 2020 compared to 2019 is primarily attributable to $455.0 million of net proceeds
from the Offering compared to $236.0 million from our 2019 equity offering, partially offset by a net decrease in debt proceeds
net of service payments of $140.1 million in 2020 compared to 2019, and a $9.5 million increase in cash paid for purchases of
48
Treasury stock in 2020 compared to 2019. The increase in cash provided by (decrease in cash used in) financing activities of
$405.5 million from 2019 compared to 2018 is primarily attributable to proceeds from our registered offering of shares of our
common stock in December 2019 and an increase in net borrowings (net of repayments) in 2019.
Financing Arrangements. In our Restaurant Group, financing arrangements are used both as part of its companies' overall
capitalization structure as well as to fund purchases of seasonal inventory in advance of sales. For a description of our historical
financing arrangements see Note K to our Consolidated Financial Statements included in Item 8 of Part II of this Annual
Report.
Contractual Obligations. Our long term contractual obligations generally include our credit agreements and other debt
facilities, lease payments on certain of our premises and equipment and purchase obligations of the Restaurant Group.
See Note B to our Consolidated Financial Statements included in Item 8 of Part II of this Annual Report for further
discussion of our leasing arrangements.
Pursuant to the terms of the Management Services Agreement between Cannae LLC and our Manager, Cannae LLC is
obligated to pay our Manager a quarterly management fee equal to 0.375% (1.5% annualized) of the Company’s cost of
invested capital (as defined in the Management Services Agreement) as of the last day of each fiscal quarter, payable in arrears
in cash, as may be adjusted pursuant to the terms of the Management Services Agreement. Management fees payable to our
Manager are included for the initial 5-year term of the Management Services Agreement that began in September 2019 and are
based on our cost of invested capital of $1,613.5 million as of December 31, 2020.
Purchase obligations include agreements to purchase goods or services that are enforceable, are legally binding and specify
all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and
the approximate timing of the transaction. The Restaurant Group has unconditional purchase obligations with various vendors,
primarily related to 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. Future purchase obligations are estimated by assuming
historical purchase activity over the remaining, non-cancellable terms of the various agreements. For agreements with minimum
purchase obligations, at least the minimum amounts we are legally required to purchase are included. These agreements do not
include fixed delivery terms. We used both historical and projected volume and pricing as of December 31, 2020 to determine
the amount of the obligations.
Restaurant Group financing obligations include its agreements to lease its corporate office and certain O'Charley's
restaurant locations that are accounted for as failed sale and leaseback transactions.
As of December 31, 2020, our required annual payments relating to these contractual obligations were as follows:
2021
2022
2023
2024
2025
Thereafter
Total
Unconditional purchase obligations.............. $ 99.2 $ 13.3 $
7.8 $
7.1 $
5.9 $
6.8 $ 140.1
Operating lease payments.............................
Notes payable................................................
Management fees payable to Manager..........
40.7
12.5
23.7
39.2
6.9
23.7
35.4
33.3
23.7
26.5
0.8
23.7
23.0
0.8
19.8
151.0
315.8
11.0
65.3
—
114.6
41.2
Restaurant Group financing obligations.......
Total.............................................................. $ 179.4 $ 86.5 $ 103.6 $ 61.5 $ 53.0 $ 193.0 $ 677.0
24.2
3.3
3.5
3.4
3.4
3.4
Capital Stock Transactions. For information on our 2019 Repurchase Program, see discussion under the header Purchases
of Equity Securities by the Issuer included in Item 5 of Part II of this Annual Report.
Off-Balance Sheet Arrangements. We do not engage in off-balance sheet activities.
Recent Accounting Pronouncements
For a description of recent accounting pronouncements, see Note S to our Consolidated Financial Statements included in
Item 8 of Part II of this Annual Report.
Item 7A.
Quantitative and Qualitative Disclosure about Market Risk
Equity Price Risk
We are exposed to market price fluctuations associated with the Company's equity securities holdings. Equity price risk is
the risk that we will incur economic losses due to adverse changes in equity prices. At December 31, 2020, we held $1,799.1
million in equity securities which are recorded at fair value. The carrying values of investments subject to equity price risks are
directly derived from, or valued in part using, quoted market prices. See Note C to our Consolidated Financial Statements for
further discussion of our fair value measurements for equity securities. Market prices are subject to fluctuation and,
49
consequently, the amount realized in the subsequent sale of an investment may significantly differ from the reported market
value. Fluctuation in the market price of a security may result from perceived changes in the underlying economic
characteristics of the investee, the relative price of alternative investments and general market conditions. Furthermore, amounts
realized in the sale of a particular security may be affected by the relative quantity of the security being sold.
For purposes of this Annual Report, we perform a sensitivity analysis to determine the effects that market risk exposures
may have on the fair values of our equity securities. At December 31, 2020, a 20% increase (decrease) in market prices, with all
other variables held constant, would result in an increase (decrease) in the fair value of our equity securities portfolio of $359.8
million.
Commodity Price Risk
In our Restaurant Group segment, we are exposed to market price fluctuations in beef, seafood, produce and other food
product prices. Given the historical volatility of beef, seafood, produce and other food product prices, these fluctuations can
materially impact the food and beverage costs incurred in our Restaurant Group segment. While our Restaurant Group
companies have taken steps to qualify multiple suppliers who meet our standards as suppliers for our restaurants and have
entered into agreements with suppliers for some of the commodities used in our restaurant operations, there can be no assurance
that future supplies and costs for such commodities will not fluctuate due to weather and other market conditions outside of our
control. Consequently, such commodities can be subject to unforeseen supply and cost fluctuations. Dairy costs can also
fluctuate due to government regulation. Because we typically set our menu prices in advance of our food product prices, our
menu prices cannot immediately take into account changing costs of food items. To the extent that we are unable to pass the
increased costs on to our guests through price increases, our results of operations would be adversely affected. We do not use
financial instruments to hedge our risk to market price fluctuations in beef, seafood, produce and other food product prices at
this time.
50
Item 8. Financial Statements and Supplementary Data
CANNAE HOLDINGS, INC.
INDEX TO FINANCIAL INFORMATION
Report of Independent Registered Public Accounting Firm on Effectiveness of Internal Control over Financial
Reporting.....................................................................................................................................................................
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements..........................
Consolidated Balance Sheets as of December 31, 2020 and 2019..............................................................................
Consolidated Statements of Operations for the years ended December 31, 2020, 2019, and 2018............................
Consolidated Statements of Comprehensive Earnings for the years ended December 31, 2020, 2019, and 2018.....
Consolidated Statements of Equity for the years ended December 31, 2020, 2019, and 2018...................................
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019, and 2018...........................
Notes to Consolidated Financial Statements...............................................................................................................
Page
Number
52
53
55
56
57
58
59
60
51
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Cannae Holdings, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Cannae Holdings, Inc. and subsidiaries (the “Company”) as of
December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal
Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our
report dated February 25, 2021, expressed an unqualified opinion on those financial statements and included an explanatory
paragraph related to a change in accounting principle for leases due to the adoption of FASB ASC 842, Leases, on January 1,
2019.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Las Vegas, Nevada
February 25, 2021
52
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Cannae Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Cannae Holdings, Inc. and subsidiaries (the "Company") as
of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive earnings, equity, and cash
flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the
"financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of
the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of
America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated February 25, 2021, expressed an unqualified opinion on the Company's internal control over
financial reporting.
Change in Accounting Principle
As discussed in Notes B and S to the financial statements, the Company has changed its method of accounting for leases due to
the adoption of FASB ASC 842, Leases, on January 1, 2019.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due
to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Acquisitions — Refer to Note I to the financial statements
Critical Audit Matter Description
On January 27, 2020, American Blue Ribbon Holdings, LLC ("Blue Ribbon") and its wholly-owned subsidiaries, which own
the Village Inn, Bakers Square, and Legendary Baking concepts, filed for Chapter 11 bankruptcy (the "Blue Ribbon
Reorganization"). As a result of the Blue Ribbon Reorganization, the Company deconsolidated Blue Ribbon as of January 27,
2020, which resulted in a deconsolidation gain of $26.5 million.
During the Blue Ribbon Reorganization, the Company accounted for their equity interest in Blue Ribbon under the equity
method of accounting and as a result of the unprecedented social restrictions imposed by state and local governments related to
the novel coronavirus (“COVID-19") pandemic the Company recorded an other-than-temporary impairment of $18.6 million as
of March 31, 2020.
53
On July 10, 2020, Blue Ribbon filed its Chapter 11 plan with the U.S. Bankruptcy Court which became effective on October 2,
2020. Subsequent to Blue Ribbon’s emergence from bankruptcy, the Company received 100% of the equity of the reorganized
companies, VIBSQ Holdco, LLC and Legendary Baking I, LLC, in exchange for consideration transferred of $49.2 million that
included the fair value of the Company’s equity method investment in Blue Ribbon and the notes receivable from Blue Ribbon
of $15.2 million and $34.0 million, respectively. The consideration transferred was allocated to the net assets acquired of $52.1
million, and the Company recorded a bargain purchase gain of $2.9 million.
The deconsolidation and the related evaluation of the loss of control and the application of the equity method of accounting for
the Company’s equity interest in Blue Ribbon required significant accounting judgments. Additionally, the Company
determined the fair value of Blue Ribbon in connection with the deconsolidation and the other-than-temporary impairment and
the fair value of the reorganized companies and the related consideration transferred at emergence using a combination of
discounted cash flow analyses and market approaches. The determination of the fair value of Blue Ribbon and the reorganized
companies involved significant management assumptions and estimates related to forecasts of future growth rates for revenues,
costs, and earnings (collectively the “forecasts”) and the selection of discount rates and earnings multiples due to deteriorating
operating results and cash flows resulting from declining same store sales, increased costs, and the impact of COVID-19.
Changes in these significant management assumptions and estimates could have a significant impact on the determination of the
fair values of Blue Ribbon and the reorganized companies.
Therefore, auditing management’s deconsolidation accounting judgments as well as the forecasts and the selection of discount
rates and earnings multiples used to determine the fair value of Blue Ribbon and the reorganized companies, involved a higher
degree of auditor judgment and subjectivity as well as an increased level of audit effort, including the involvement of
specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the Company’s accounting judgments related to the deconsolidation of Blue Ribbon and the
forecasts, discount rates, and earnings multiples used to determine the fair value of Blue Ribbon and the reorganized companies,
included the following:
• We tested the effectiveness of the Company’s internal controls over management’s accounting judgments and the
forecasts, discount rates, and earnings multiples for determining the fair value of Blue Ribbon and the reorganized
companies.
• With the assistance of specialists in our firm having expertise in deconsolidation accounting, we evaluated
management’s accounting judgments related to the deconsolidation of Blue Ribbon under accounting principles
generally accepted in the United States of America.
• We evaluated the reasonableness of management’s forecasts by: (1) evaluating management’s ability to accurately
forecast by comparing the forecasts to historical results; (2) evaluating evidence for assumptions and estimates related
to management’s planned operational initiatives, the effects of the Blue Ribbon Reorganization, and the impact of
COVID-19 that were incorporated into the forecasts; (3) corroborating assumptions and estimates with management’s
communications to the Board of Directors; and (4) comparing forecast assumptions and estimates with information
included in Company press releases, analyst reports of the Company and companies in its peer group, and restaurant
industry reports.
• With the assistance of our valuation specialists, we evaluated the discount rates and earnings multiples selected by
management including assessing the impact of the uncertainty in management’s forecast due to deteriorating operating
results and cash flows on these valuation assumptions, testing the underlying market-based source information and the
mathematical accuracy of the valuation assumptions, and developing a range of independent valuation assumptions
and comparing those to the discount rates and earnings multiples valuation assumptions and estimates selected by
management.
/s/ Deloitte & Touche LLP
Las Vegas, Nevada
February 25, 2021
We have served as the Company’s auditor since 2017.
54
CANNAE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
2020
December 31,
2019
(in millions)
Current assets:
ASSETS
Cash and cash equivalents.................................................................................................................................. $
724.7 $
533.7
Fixed maturity securities available for sale, at fair value...................................................................................
Other current assets............................................................................................................................................
Total current assets........................................................................................................................................
Equity securities, at fair value...............................................................................................................................
Investments in unconsolidated affiliates...............................................................................................................
Lease assets...........................................................................................................................................................
Property and equipment, net..................................................................................................................................
Other intangible assets, net....................................................................................................................................
Goodwill................................................................................................................................................................
Fixed maturity securities available for sale, at fair value......................................................................................
Deferred tax assets................................................................................................................................................
Other long term investments and noncurrent assets..............................................................................................
35.2
84.3
844.2
1,799.1
1,453.0
202.3
145.8
51.8
53.4
—
—
63.8
—
97.2
630.9
—
836.5
192.9
162.6
63.1
66.1
19.2
54.5
66.4
Total assets............................................................................................................................................... $
4,613.4 $
2,092.2
Current liabilities:
LIABILITIES AND EQUITY
Accounts payable and other accrued liabilities, current..................................................................................... $
Lease liabilities, current.....................................................................................................................................
Income taxes payable.........................................................................................................................................
Deferred revenue................................................................................................................................................
Notes payable, current........................................................................................................................................
Total current liabilities..................................................................................................................................
Deferred tax liabilities...........................................................................................................................................
Lease liabilities, long-term....................................................................................................................................
Notes payable, long-term......................................................................................................................................
Accounts payable and other accrued liabilities, long-term...................................................................................
Total liabilities...............................................................................................................................................
93.2 $
26.2
47.4
23.9
11.3
202.0
325.3
195.6
52.2
53.1
828.2
86.4
41.5
37.4
26.4
7.0
198.7
—
199.7
120.1
43.9
562.4
Commitments and contingencies - see Note M
Equity:
Cannae common stock, $0.0001 par value; authorized 115,000,000 shares as of December 31, 2020 and
December 31, 2019; issued of 92,391,965 and 79,727,972 shares as of December 31, 2020 and
December 31, 2019, respectively; and outstanding of 91,651,257 and 79,516,833 shares as of
December 31, 2020 and December 31, 2019, respectively................................................................................
Preferred stock, $0.0001 par value; authorized 10,000,000 shares; issued and outstanding, none as of
December 31, 2020 and December 31, 2019.....................................................................................................
Retained earnings...............................................................................................................................................
Additional paid-in capital...................................................................................................................................
Less: Treasury stock, 740,708 and 211,139 shares as of December 31, 2020 and December 31, 2019,
respectively, at cost............................................................................................................................................
Accumulated other comprehensive loss.............................................................................................................
Total Cannae shareholders' equity................................................................................................................
Noncontrolling interests.....................................................................................................................................
Total equity...................................................................................................................................................
Total liabilities and equity........................................................................................................................ $
—
—
—
1,929.8
1,875.8
(21.1)
(4.9)
3,779.6
5.6
3,785.2
4,613.4 $
—
143.6
1,396.7
(5.9)
(45.9)
1,488.5
41.3
1,529.8
2,092.2
See Notes to Consolidated Financial Statements
55
CANNAE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31,
2020
2019
2018
(in millions)
Revenues:
Restaurant revenue
Other operating revenue
Total operating revenues
Operating expenses:
Cost of restaurant revenue
Personnel costs
Depreciation and amortization
Other operating expenses, including asset impairments
Goodwill impairment
Total operating expenses
Operating loss
Other income (expense):
Interest, investment and other income
Interest expense
Recognized gains and losses, net
Total other income
Earnings from continuing operations before income taxes and equity in earnings (losses) of
unconsolidated affiliates
Income tax expense
Earnings from continuing operations before equity in earnings (losses) of unconsolidated affiliates
Equity in earnings (losses) of unconsolidated affiliates
Earnings (loss) from continuing operations
Net loss from discontinued operations, net of tax - see Note N
Net earnings (loss)
Less: Net loss attributable to non-controlling interests
Net earnings attributable to Cannae Holdings, Inc. common shareholders
Amounts attributable to Cannae Holdings, Inc. common shareholders
$ 559.7 $ 1,043.3 $ 1,117.8
29.7
1,147.5
26.7
1,070.0
26.0
585.7
524.3
94.8
30.7
116.6
7.8
774.2
(188.5)
912.8
90.3
40.7
133.4
10.4
1,187.6
(117.6)
991.3
137.2
46.3
91.8
26.7
1,293.3
(145.8)
17.2
(9.0)
2,362.2
2,370.4
2,181.9
481.2
15.6
(17.8)
357.7
355.5
237.9
24.2
1,700.7
59.1
1,759.8
—
1,759.8
(26.4)
$ 1,786.2 $
213.7
(115.1)
98.6
(51.8)
46.8
(30.5)
77.3 $
6.3
(4.7)
166.8
168.4
22.6
15.0
7.6
(16.1)
(8.5)
(2.1)
(10.6)
(38.2)
27.6
Net earnings from continuing operations attributable to Cannae Holdings, Inc. common shareholders
$ 1,786.2 $ 127.6 $
29.5
Net loss from discontinued operations attributable to Cannae Holdings, Inc. common shareholders
Net earnings attributable to Cannae Holdings, Inc. common shareholders
Earnings per share
Basic
Net earnings per share from continuing operations
Net loss per share from discontinued operations
Net earnings per share
Diluted
Net earnings per share from continuing operations
Net loss per share from discontinued operations
Net earnings per share
—
$ 1,786.2 $
(50.3)
77.3 $
(1.9)
27.6
$ 20.84 $
—
$ 20.84 $
1.77 $
(0.70)
1.07 $
0.42
(0.03)
0.39
$ 20.79 $
—
$ 20.79 $
1.76 $
(0.69)
1.07 $
0.42
(0.03)
0.39
Weighted average shares outstanding Cannae Holdings common stock, basic basis
Weighted average shares outstanding Cannae Holdings common stock, diluted basis
85.7
85.9
72.2
72.4
71.2
71.3
See Notes to Consolidated Financial Statements
56
CANNAE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
Year Ended December 31,
2020
2019
2018
(in millions)
Net earnings (loss)........................................................................................................................... $
1,759.8 $
46.8 $
(10.6)
Other comprehensive earnings (loss), net of tax:
Unrealized gain on investments and other financial instruments, net (excluding investments
in unconsolidated affiliates) (1)..................................................................................................
Unrealized (loss) gain relating to investments in unconsolidated affiliates (2)..........................
Reclassification of unrealized losses on investments in unconsolidated affiliates, net of tax,
included in net earnings (3).........................................................................................................
Reclassification of unrealized losses on investments and other financial instruments, net of
tax, included in net earnings (4)..................................................................................................
Other comprehensive earnings.........................................................................................................
Comprehensive earnings
10.7
(15.9)
46.2
—
41.0
1,800.8
0.1
7.1
19.1
—
26.3
73.1
Less: Comprehensive loss attributable to noncontrolling interests..................................................
(26.4)
(30.5)
Comprehensive earnings attributable to Cannae
$
1,827.2 $
103.6 $
0.9
(12.0)
24.0
7.0
19.9
9.3
(38.2)
47.5
(1)
(2)
(3)
(4)
Net of income tax expense of $2.9 million, less than $0.1 million and $0.3 million for the years ended
December 31, 2020, 2019 and 2018, respectively.
Net of income tax (benefit) expense of $(4.2) million, $1.9 million and $(3.2) million for the years ended
December 31, 2020, 2019 and 2018, respectively.
Net of income tax expense of $12.3 million, $5.1 million and $6.4 million for the years ended December 31,
2020, 2019 and 2018, respectively.
Net of income tax benefit of $1.9 million for the year ended December 31, 2018.
See Notes to Consolidated Financial Statements
57
CANNAE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
Common Stock
Shares
$
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other Comp
(Loss)
Earnings
(in millions)
Treasury Stock
Shares
$
Non-
controlling
Interests
Total
Equity
Balance, December 31, 2017.................................................................................
Adjustment for cumulative effect of adoption of ASC Topic 606....................
Adjustment for adoption of ASU 2018-02........................................................
70.9 $ — $ 1,130.2 $
—
—
—
—
—
—
0.2 $
1.9
16.1
(71.0)
—
(16.1)
— $ — $
—
—
—
—
93.7 $ 1,153.1
1.9
—
—
—
Reclassification of unrealized losses on investments in unconsolidated
affiliates, net of tax, included in net earnings....................................................
Reclassification of unrealized losses on investments and other financial
instruments, net of tax, included in net earnings...............................................
Other comprehensive earnings — unrealized gain on investments and other
financial instruments, net of tax.........................................................................
Other comprehensive earnings — unrealized losses of investments in
unconsolidated affiliates, net of tax...................................................................
Stock-based compensation.................................................................................
Issuance of restricted stock................................................................................
Shares withheld for taxes and in treasury..........................................................
Shares issued for investment success bonuses, net of issuance costs................
Contribution of CSA services from FNF...........................................................
Ceridian stock-based compensation...................................................................
Restaurant Group Restructuring........................................................................
Subsidiary dividends paid to noncontrolling interests.......................................
Sale of noncontrolling interest in consolidated subsidiary................................
Net earnings (loss).............................................................................................
—
—
—
—
—
—
—
—
0.3
—
1.0
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2.0
—
—
19.8
1.3
6.5
(13.6)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
27.6
24.0
—
—
7.0
—
—
0.9
—
—
(12.0)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(0.2)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
15.6
(0.1)
4.1
(38.2)
24.0
7.0
0.9
(12.0)
2.0
—
(0.2)
19.8
1.3
6.5
2.0
(0.1)
4.1
(10.6)
Balance, December 31, 2018.................................................................................
Adjustment for cumulative effect of adoption of accounting standards by
unconsolidated affiliates, net of tax...................................................................
Other comprehensive earnings — unrealized gain on investments and other
financial instruments, net of tax.........................................................................
Other comprehensive earnings — unrealized earnings of investments in
unconsolidated affiliates, net of tax...................................................................
Reclassification of unrealized losses on investments in unconsolidated
affiliates, net of tax, included in net earnings....................................................
Proceeds from equity offering, net of offering costs.........................................
Dun & Bradstreet equity issuance costs............................................................
Treasury stock repurchases................................................................................
Shares withheld for taxes and in treasury..........................................................
Stock-based compensation, consolidated subsidiaries.......................................
Contribution of CSA services from FNF...........................................................
Stock-based compensation, unconsolidated affiliates.......................................
Deconsolidation of T-System............................................................................
Subsidiary dividends paid to noncontrolling interests.......................................
Net earnings (loss).............................................................................................
Balance, December 31, 2019.................................................................................
Equity offering, net of offering costs.................................................................
Restaurant Group Reorganization......................................................................
Other comprehensive earnings — unrealized gain on investments and other
financial instruments, net of tax.........................................................................
Other comprehensive earnings — unrealized losses of investments in
unconsolidated affiliates, net of tax...................................................................
Reclassification adjustments for unrealized gains and losses on
unconsolidated affiliates, net of tax, included in net earnings...........................
Sale of noncontrolling interest in consolidated subsidiary................................
Treasury stock repurchases................................................................................
Stock-based compensation, consolidated subsidiaries.......................................
Contribution of CSA services from FNF...........................................................
Stock-based compensation, unconsolidated affiliates.......................................
Subsidiary dividends paid to noncontrolling interests.......................................
Shares withheld for taxes and in treasury..........................................................
Net earnings (loss).............................................................................................
72.2 $ — $ 1,146.2 $
45.8 $
(67.2)
— $ (0.2) $
75.1 $ 1,199.7
—
—
—
—
—
—
—
7.5
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
236.0
(1.4)
—
—
4.0
1.3
10.6
—
—
—
20.5
(5.0)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
77.3
0.1
—
—
7.1
—
—
19.1
—
—
—
—
—
—
—
—
—
—
—
—
—
0.2
—
—
—
—
—
—
—
—
—
—
(4.9)
(0.8)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
0.6
—
—
(2.9)
(1.0)
(30.5)
15.5
0.1
7.1
19.1
236.0
(1.4)
(4.9)
(0.8)
4.6
1.3
10.6
(2.9)
(1.0)
46.8
79.7 $ — $ 1,396.7 $ 143.6 $
12.7
—
—
—
455.0
6.8
—
—
(45.9)
—
—
0.2 $ (5.9) $
—
—
—
—
41.3 $ 1,529.8
455.0
(5.5)
—
(12.3)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
4.2
1.2
11.9
—
—
—
—
—
—
—
—
—
—
—
—
—
1,786.2
10.7
—
—
(15.9)
—
—
46.2
—
—
—
—
—
0.5
(14.4)
—
—
—
—
—
—
—
—
—
(0.8)
—
—
—
—
—
—
—
—
—
—
3.7
—
—
—
—
(0.7)
—
10.7
(15.9)
46.2
3.7
(14.4)
4.2
1.2
11.9
(0.7)
(0.8)
—
—
(26.4)
1,759.8
Balance, December, 2020......................................................................................
92.4 $ — $ 1,875.8 $ 1,929.8 $
(4.9)
0.7 $ (21.1) $
5.6 $ 3,785.2
See Notes to Consolidated Financial Statements.
58
CANNAE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Net earnings (loss)
Adjustments to reconcile net earnings (loss) to net cash used in operating activities:
Depreciation and amortization
Equity in (earnings) losses of unconsolidated affiliates
Distributions from investments in unconsolidated affiliates
Recognized gains and losses, net
Loss on sale of consolidated subsidiaries
Impairments of assets
Lease asset amortization
Stock-based compensation cost
Changes in assets and liabilities, net of effects from acquisitions:
Net (increase) decrease in trade receivables
Net (increase) decrease in other assets
Net increase in accounts payable, accrued liabilities, deferred revenue and other
Net decrease in lease liabilities
Net change in income taxes
Net cash used in operating activities
Cash flows from investing activities:
Proceeds from sales of equity securities
Proceeds from sale of Ceridian shares
Proceeds from sale of LifeWorks
Additions to property and equipment and other intangible assets
Additions to notes receivable
Collections of notes receivable
Purchases of investment securities
Other investments in unconsolidated affiliates
Investments in Dun & Bradstreet, net of capitalized syndication fees
Investment in Optimal Blue
Proceeds from the sale of other investments
Proceeds from the sale of property and equipment
Purchases of other long-term investments
Distributions from investments in unconsolidated affiliates
Net proceeds from (purchases of) short term investments
Net other investing activities
Cash deconsolidated at the inception of the Blue Ribbon Reorganization
Cash acquired upon acquisition of Legendary Baking and VIBSQ - see Note I
Cash proceeds from the contribution of T-System to CorroHealth, net of cash transferred
Holdback proceeds received from sale of OneDigital
Other acquisitions/disposals of businesses, net of cash acquired/disposed
Net cash (used in) provided by investing activities
Cash flows from financing activities:
Borrowings, net of debt issuance costs
Debt service payments
Equity offering proceeds, net of capitalized costs
Sale of noncontrolling interest in consolidated subsidiary
Subsidiary distributions paid to noncontrolling interest shareholders
Proceeds from Restaurant Group sale and leaseback of corporate office, net of issuance costs
Payment for shares withheld for taxes and in treasury
Purchases of treasury stock
Net cash provided by (used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period, including cash of discontinued operations
Cash and cash equivalents at end of period, including cash of discontinued operations
See Notes to Consolidated Financial Statements
59
2020
Year ended December 31,
2019
(in millions)
2018
$
1,759.8 $
46.8
$
(10.6)
30.7
(59.1)
128.4
(2,367.9)
—
24.4
25.1
4.2
(1.6)
(29.8)
26.0
(28.3)
374.2
(113.9)
—
721.0
—
(22.3)
(37.3)
7.2
(0.7)
(323.8)
(200.0)
(289.0)
9.9
4.4
—
48.3
0.5
0.1
(1.1)
8.6
—
—
—
(74.2)
45.2
(108.8)
455.0
3.7
(0.8)
—
(0.8)
(14.4)
379.1
191.0
533.7
724.7 $
$
54.5
115.1
2.0
(354.1)
6.4
90.8
38.8
4.6
18.2
(36.2)
8.4
(46.9)
(32.6)
(84.2)
—
477.9
—
(28.3)
—
—
—
(45.7)
(526.1)
—
4.8
21.4
(30.0)
1.0
30.9
3.0
—
—
66.9
—
—
(24.2)
367.3
(290.8)
236.0
—
(0.9)
13.2
(0.8)
(4.9)
319.1
210.7
323.0
533.7
$
61.3
16.1
1.4
(182.7)
—
55.2
—
21.8
(7.3)
9.5
0.9
—
11.5
(22.9)
17.7
152.5
56.2
(15.9)
—
—
(3.5)
—
—
—
7.8
4.9
(7.4)
0.4
(31.4)
0.1
—
—
—
4.6
0.7
186.7
33.9
(124.1)
—
4.1
(0.1)
—
(0.2)
—
(86.4)
77.4
245.6
323.0
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A.
Business and Summary of Significant Accounting Policies
The following describes the significant accounting policies of Cannae Holdings, Inc. and its subsidiaries (collectively,
“we,” “us,” “our,” "Cannae," or the "Company”), which have been followed in preparing the accompanying Consolidated
Financial Statements.
Description of Business
We are engaged in actively managing and operating a group of companies and investments, 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. Our primary investments as of December 31, 2020 include our minority ownership interests
in Dun & Bradstreet Holdings, Inc. ("Dun & Bradstreet" or "D&B"), Ceridian HCM Holding, Inc. ("Ceridian"), Optimal Blue
Holdco, LLC ("Optimal Blue") and AmeriLife Group, LLC ("AmeriLife"); majority equity ownership stakes in O'Charley's
Holdings, LLC ("O'Charley's") and 99 Restaurants Holdings, LLC ("99 Restaurants"); and various other controlled portfolio
companies and minority equity and debt investments.
See Note Q Segment Information for further discussion of the businesses comprising our reportable segments.
Split-off of Cannae from FNF
On November 17, 2017, Fidelity National Financial, Inc. (“FNF”) redeemed each outstanding share of its FNF Ventures
("FNFV") Group common stock, par value $0.0001, for one share of common stock, par value $0.0001, of a newly formed
entity, Cannae (the "Split-Off"). In conjunction with the Split-Off, FNF contributed to us its portfolio of investments unrelated
to its primary insurance and real estate operations, which included majority and minority equity investment stakes in a number
of entities and certain fixed income investments. On November 20, 2017, Cannae common stock began “regular-way” trading
on The New York Stock Exchange under the “CNNE” stock symbol.
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 and registration rights agreements 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 will provide Cannae with certain "back office" services including legal, tax, accounting, treasury and investor
relations support. Cannae will reimburse FNF for direct, out-of-pocket expenses incurred by FNF in providing these services.
On October 7, 2020, the Company entered into an Extension of Corporate Services Agreement (the “Extension”) with
FNF. Pursuant to the Extension, the term of the CSA is extended for two years until November 17, 2022 (the “Extended
Term”). During the Extended Term, FNF will provide certain corporate services to Cannae at FNF’s Standard Allocation (as
defined in the CSA), plus 10%, and Cannae agrees to pay or reimburse FNF for any fees, costs or other expenses paid by FNF
to third parties in connection with the corporate services. The CSA will automatically renew for successive one-year terms,
unless the parties mutually agree to terminate the CSA at least 30 days prior to the applicable termination date. No later than 30
days prior to such termination date, the parties shall negotiate mutually agreeable arm’s length terms for each additional one
year term.
Principles of Consolidation and Basis of Presentation
The accompanying Consolidated Financial Statements are prepared in accordance with generally accepted accounting
principles in the United States ("GAAP") and include the historical accounts as well as wholly-owned and majority-owned
subsidiaries of the Company. 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
60
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
independent, publicly traded company for the periods presented or the amounts that will be incurred by the Company in the
future.
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. Earnings attributable to noncontrolling interests are
recorded on the Consolidated 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 Consolidated
Balance Sheets in each period.
Management Estimates
The preparation of these Consolidated 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 Consolidated Financial Statements and the reported amounts of revenues and expenses during the
reporting period. Significant estimates made by management include the carrying amount and depreciation of property and
equipment (Note E), the valuation of acquired intangible assets (Note H and Note I), fair value measurements (Note C), and
accounting for income taxes (Note L). Actual results could differ from estimates.
Recent Developments
Dun & Bradstreet
On July 6, 2020, Dun & Bradstreet closed its previously announced initial public offering of 90,047,612 shares of common
stock, which includes 11,745,340 shares of common stock issued pursuant to the exercise by the underwriters of their option to
purchase additional shares in full (the "D&B IPO"). The D&B IPO was priced at $22.00 per share, resulting in gross proceeds
to Dun & Bradstreet of $2.4 billion when combined with $400.0 million of aggregate proceeds from a concurrent private
placement offering (the "D&B Private Placement") and before deducting underwriting discounts and commissions and other
offering expenses payable by Dun & Bradstreet. Shares of Dun & Bradstreet common stock began trading on the New York
Stock Exchange ("NYSE") under the ticker symbol "DNB" on July 1, 2020. Dun & Bradstreet used a portion of the net
proceeds from the D&B IPO to redeem all of its outstanding Series A Preferred Stock and repay a portion of its 10.250% Senior
Unsecured Notes outstanding due 2027.
On July 6, 2020, we invested $200.0 million in the D&B Private Placement. Subsequent to the D&B IPO and the D&B
Private Placement, we own 76.6 million shares of Dun & Bradstreet, which represented approximately 18.1% of its outstanding
common stock as of December 31, 2020.
As a result of the D&B IPO, we recorded a net gain of $117.0 million (net of $2.3 million of before-tax losses reclassified
from other comprehensive earnings).
See Note D for further discussion of our accounting for our investment in D&B.
On January 8, 2021, D&B completed its acquisition of Bisnode Business Information Group AB (the "Bisnode
acquisition"). In connection with the Bisnode acquisition, an additional 6.2 million shares were issued by D&B, which resulted
in a decrease in our ownership interest in D&B to approximately 15.6%.
Ceridian
During the year ended December 31, 2020, we completed the sale of an aggregate of 9.7 million shares of common stock
of Ceridian to brokers pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended (the "Ceridian Share
Sales"). In connection with the Ceridian Share Sales, we received aggregate proceeds of $720.9 million. As of December 31,
2020, we owned 9.5% of the outstanding common stock of Ceridian.
As of March 31, 2020 our voting agreement with Ceridian was terminated and, as a result, we are no longer able to exert
influence over the composition and quantity of Ceridian's board of directors. In combination with the reduction in our
ownership of Ceridian resulting from the sale of shares in February 2020, we no longer exercise significant influence over
Ceridian. As of March 31, 2020, we account for our investment in Ceridian at fair value pursuant to the investment in equity
security guidance of Accounting Standards Codification ("ASC") 321. The change resulted in the revaluation of our investment
in Ceridian to its fair value of $993.4 million as of March 31, 2020 and recording a gain on such revaluation of $684.9 million
(net of $47.1 million of before-tax losses reclassified from other comprehensive earnings), which is included in Recognized
gains and losses, net on the Consolidated Statement of Operations for the year ended December 31, 2020.
See Notes C and D for further discussion of our accounting for our investment in Ceridian and other equity securities.
Restaurant Group
61
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
On January 27, 2020, American Blue Ribbon Holdings, LLC ("Blue Ribbon") and its wholly-owned subsidiaries, filed
voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the
District of Delaware (the "Blue Ribbon Reorganization"). The Blue Ribbon Reorganization does not involve or affect the
operations of O’Charley’s or 99 Restaurants, which are not part of Blue Ribbon. As a result of the Blue Ribbon Reorganization,
we deconsolidated Blue Ribbon as of January 27, 2020 because the bankruptcy court and committee of creditors were deemed
to have control of Blue Ribbon.
We recorded a gain of $26.5 million on January 27, 2020 as a result of the deconsolidation of Blue Ribbon, which is
included in Recognized gains and losses, net on the Condensed Consolidated Statement of Operations. The recorded gain was
measured as the excess of the fair value of our retained equity investment in Blue Ribbon over our book value of Blue Ribbon
as of January 27, 2020. In conjunction with the Blue Ribbon Reorganization, we provided debtor-in-possession financing (the
"DIP Loan") of $27.5 million to Blue Ribbon and its subsidiaries.
During the Blue Ribbon Reorganization, we accounted for our retained equity interest in Blue Ribbon under the equity
method of accounting because (1) we continued to exert significant influence over Blue Ribbon through our majority equity
ownership and position as the single largest post-petition creditor of Blue Ribbon through the DIP Loan, (2) the Blue Ribbon
Reorganization was limited in scope and expected to be short in duration, and (3) we expected to retain a majority equity
interest upon completion of the Blue Ribbon Reorganization. We recorded an investment of $33.6 million as of January 27,
2020. The fair value of the investment was determined by performing a combination of discounted cash flow and market
approaches.
As a result of unprecedented social restrictions imposed by state and local government authorities related to the novel
coronavirus ("COVID-19") pandemic, our Restaurant Group brands experienced a significant reduction in guest counts
beginning in the last two weeks of March 2020. In response to the outbreak and these changing conditions, our Restaurant
Group brands initially closed the dining rooms in substantially all of our restaurants. Due to increased uncertainty in the
operating environment for restaurants and a significant reduction in forecasted cash flows for Blue Ribbon, we recorded an
other-than-temporary impairment of our investment of $18.6 million as of March 31, 2020.
On July 10, 2020, Blue Ribbon filed its Debtor's Chapter 11 Plan (the "Chapter 11 Plan") with the U.S. Bankruptcy Court
of Delaware (the "Bankruptcy Court").
On October 2, 2020, the Chapter 11 Plan became effective and Blue Ribbon emerged from bankruptcy as a set of
reorganized companies (the "Blue Ribbon Emergence"). Subsequent to Blue Ribbon's emergence from bankruptcy we own
100% of Legendary Baking Holdings I, LLC ("Legendary Baking") and VIBSQ Holdco, LLC ("VIBSQ"), which were formerly
part of Blue Ribbon.
See Note I for further discussion of our accounting for our acquisition of Legendary Baking and VIBSQ.
AmeriLife
On March 18, 2020, we closed on the previously announced $125.0 million investment in a partnership (the “AmeriLife
Joint Venture”) that invested in the recapitalization of AmeriLife. Cannae and other investors provided an aggregate of
$617.0 million in equity financing to the AmeriLife Joint Venture to acquire AmeriLife. AmeriLife is a leader in marketing and
distributing life, health, and retirement solutions. We account for our investment in the AmeriLife Joint Venture under the
equity method of accounting and the investment is included in Investments in unconsolidated affiliates on our Consolidated
Balance Sheet as of December 31, 2020.
Refer to Note D for further discussion of our investments in unconsolidated affiliates.
CoreLogic
On December 12, 2019, we entered into a joint venture (the "Senator JV") with affiliates of Senator Investment Group, LP
("Senator") designed to provide a mechanism to allow us and Senator to jointly invest in CoreLogic, Inc. ("CoreLogic"). In
December 2019, we initially contributed $90.9 million of cash in exchange for a 49.0% in the Senator JV and a deposit on hand
with Senator JV. Affiliates of Senator are the general partner of the Senator JV and hold the balance of the limited partnership
interests of the Senator JV. In the year ended December 31, 2020, we invested an additional $201.2 million in the Senator JV.
We account for our investment in the Senator JV under the equity method of accounting and the investment is included in
Investments in unconsolidated affiliates on our Consolidated Balance Sheet as of December 31, 2020.
During the year ended December 31, 2020, we received from the Senator JV a distribution of 2.3 million shares of common
stock of CoreLogic and the Senator JV distributed $232.4 million of securities to other limited partners affiliated with Senator.
62
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
On June 26, 2020, Cannae and Senator submitted a jointly signed letter to CoreLogic’s board of directors pursuant to which
Cannae and Senator proposed to acquire CoreLogic for $65.00 per share in cash. On July 7, 2020, CoreLogic announced that its
board of directors unanimously rejected the proposal.
On July 29, 2020, Cannae and Senator sent an open letter to CoreLogic shareholders announcing that we initiated the
process to call a special meeting of CoreLogic's shareholders to elect nine independent directors to the CoreLogic board of
directors.
On September 14, 2020, Senator and Cannae informed the board of directors of CoreLogic of the decision by Senator and
Cannae to increase the proposed purchase price to $66.00 per share in cash. On September 15, 2020, the CoreLogic board of
directors delivered to Senator and Cannae a letter in which CoreLogic's board of directors rejected the revised offer and again
rejected Senator’s and Cannae’s request for access to targeted due diligence information regarding CoreLogic.
On October 30, 2020, we distributed the 2.3 million shares of CoreLogic previously held directly by us back to the Senator
JV.
In November 2020 and December 2020, we received an aggregate of $198.6 million of distributions from the Senator JV
resulting from the Senator JV's sales of CoreLogic Shares.
Subsequent to December 31, 2020 through the date of this Annual Report, we have received distributions of $280.6 million
from the Senator JV, the Senator JV has exited our investment in CoreLogic completely and we have no further material
interest in the Senator JV.
Refer to Notes C and D for further discussion of our accounting for our investment in the Senator JV.
Optimal Blue
On September 15, 2020, Black Knight, Inc. (“Black Knight”) closed on its acquisition of Optimal Blue, a leading provider
of secondary market solutions and actionable data services. Cannae, in connection with the closing of the acquisition by Black
Knight, funded its previously announced commitment to purchase 20% of the equity of Optimal Blue for $289.0 million. We
account for our investment in Optimal Blue under the equity method of accounting and the investment is included in
Investments in unconsolidated affiliates on our Consolidated Balance Sheet as of December 31, 2020.
Refer to Note D for further discussion of our investments in unconsolidated affiliates.
Forward Purchases of Equity of Special Purpose Acquisition Companies
On May 8, 2020, we entered into a forward purchase agreement (the "FTAC FPA") with Foley Trasimene Acquisition
Corp. (“FTAC”), a newly incorporated blank check company whose business purpose is to effect a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or
entities (the "FTAC Initial Business Combination"). FTAC is co-sponsored by entities affiliated with the chairman of our Board
of Directors ("Board"), William P. Foley II. Under the FTAC FPA, we will purchase an aggregate of 15,000,000 shares of
FTAC’s Class A common stock, plus an aggregate of 5,000,000 redeemable warrants to purchase one share of FTAC's Class A
common stock at $11.50 per share for an aggregate purchase price of $150.0 million in a private placement to occur
concurrently with the closing of the FTAC Initial Business Combination. The forward purchase is contingent upon the closing
of the FTAC Initial Business Combination.
On June 5, 2020, we entered into a forward purchase agreement (the "Trebia FPA") with Trebia Acquisition Corp.
(“Trebia”), a newly incorporated blank check company incorporated as a Cayman Islands exempted company for the purpose of
effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one
or more businesses or entities (the "Trebia Initial Business Combination"). Trebia is co-sponsored by entities affiliated with the
chairman and a member of our Board, William P. Foley II and Frank R. Martire, respectively. Under the Trebia FPA, we will
purchase an aggregate of 7,500,000 Class A ordinary shares of Trebia, plus an aggregate of 2,500,000 redeemable warrants to
purchase one Class A ordinary share of Trebia at $11.50 per share for an aggregate purchase price of $75.0 million in a private
placement to occur concurrently with the closing of the Trebia Initial Business Combination. The forward purchase is
contingent upon the closing of the Trebia Initial Business Combination.
On July 31, 2020, we entered into a forward purchase agreement (the "FTAC II FPA" and together with the FTAC FPA
and Trebia FPA, the "Forward Purchase Agreements") with Foley Trasimene Acquisition Corp. II (“FTAC II”), a newly
incorporated blank check company whose business purpose is to effect a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination with one or more businesses or entities (the "FTAC II Initial
Business Combination"). FTAC II is sponsored by an entity affiliated with the chairman of our Board, William P. Foley II.
Under the FTAC II FPA, we will purchase an aggregate of 15,000,000 shares of FTAC II’s Class A common stock, plus an
aggregate of 5,000,000 redeemable warrants to purchase one share of FTAC II's Class A common stock at $11.50 per share for
63
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
an aggregate purchase price of $150.0 million in a private placement to occur concurrently with the closing of the FTAC II
Initial Business Combination. The forward purchase is contingent upon the closing of the FTAC II Initial Business
Combination.
On December 7, 2020, FTAC II entered into a definitive agreement and plan of merger with Paysafe Limited (“Paysafe”), a
leading integrated payments platform (the "FTAC II Paysafe Merger"). Upon closing of the FTAC II Paysafe Merger, the newly
combined company will operate as Paysafe and plans to list on the New York Stock Exchange under the symbol PSFE. The
FTAC II Paysafe Merger reflects an implied pro-forma enterprise value for Paysafe of approximately $9.0 billion. The FTAC II
Paysafe Merger will be funded with the cash held in trust at FTAC II, forward purchase commitments, private investment in
public equity ("PIPE") commitments and equity of Paysafe. Completion of the FTAC II Paysafe Merger is subject to approval
by FTAC II stockholders, the effectiveness of a registration statement to be filed with the SEC in connection with the
transaction, and other customary closing conditions, including the receipt of certain regulatory approvals. The FTAC II Paysafe
Merger is expected to close in the first half of 2021.
In conjunction with the FTAC II Paysafe Merger, Cannae entered into an agreement to purchase 35,000,000 shares of
Paysafe for $350.0 million as part of a subscription to the PIPE (the "Paysafe Subscription Agreement"). Paysafe has agreed to
pay us a placement fee of $5.6 million as consideration for our subscription. Upon consummation of the FTAC II Paysafe
Merger, our aggregate investment in Paysafe is expected to be $504.7 million, inclusive of Cannae's investment commitments
under the FTAC II FPA and Paysafe Subscription Agreement and our prior $4.7 million investment in the sponsor of FTAC II,
and we are expected to receive 54,290,000 shares of common stock of Paysafe which represents approximately 7.5% of the pro
forma outstanding common equity of Paysafe and 8,134,067 warrants to purchase one share of Paysafe common stock at $11.50
per share.
Refer to Note C and G for further discussion of our accounting for the Forward Purchase Agreements and Paysafe
Subscription Agreement.
On January 25, 2021, FTAC entered into a business combination agreement with Alight Solutions ("Alight"), a leading
cloud-based provider of integrated digital human capital and business solutions (the "FTAC Alight Business Combination").
Under the terms of the FTAC Alight Business Combination, FTAC will combine with Alight and Alight will become a publicly
traded entity under the name “Alight, Inc.” and symbol ALIT. The FTAC Alight Business Combination reflects an implied pro-
forma enterprise value for Alight of approximately $7.3 billion at closing. The FTAC Alight Business Combination will be
funded with the cash held in trust at FTAC, forward purchase commitments, PIPE commitments and equity of Alight.
Completion of the FTAC Alight Business Combination is subject to approval by FTAC stockholders, the effectiveness of a
registration statement to be filed with the SEC in connection with the transaction, and other customary closing conditions of
SPAC business combinations, including the receipt of certain regulatory approvals.
On January 25, 2021, Cannae entered into an agreement to purchase 25,000,000 shares of Alight for $250.0 million as part
of a subscription to the PIPE (the "Alight Subscription Agreement"). Alight has agreed to pay us a placement fee of
$6.3 million as consideration for our subscription. Upon consummation of the FTAC Alight Business Combination, our
aggregate investment in Alight is expected to be $404.5 million, inclusive of Cannae's investment commitments under the
FTAC FPA and Alight Subscription Agreement and our previous $4.5 million investment in a sponsor of FTAC, and we are
expected to receive 44,639,500 shares of common stock of Alight which represents approximately 8.6% of the pro forma
outstanding common equity of Alight and 8,026,666 warrants to purchase one share of Alight common stock at $11.50 per
share.
Other Developments
In June 2020, we completed an underwritten public offering of an aggregate of 12,650,000 shares of our common stock,
including 1,650,000 shares of our common stock pursuant to the full exercise of the underwriter's overallotment option (the
"Offering"), pursuant to a prospectus supplement, dated June 10, 2020, and the base prospectus, dated November 27, 2019,
included in our registration statement on Form S-3 ASR (File No. 333-235303), which was initially filed with the Securities and
Exchange Commission on November 27, 2019. We received net proceeds from the Offering of approximately $455.0 million,
after deducting the underwriting discount and capitalized offering expenses payable by the Company. We intend to use the net
proceeds of the Offering to fund future acquisitions or investments, including potential investments in existing portfolio
companies, and for general corporate purposes.
Cash and Cash Equivalents
Highly liquid instruments, including money market instruments, purchased as part of cash management with original
maturities of three months or less, and certain amounts in transit from credit and debit card processors, are considered cash
equivalents. The carrying amounts reported in the Consolidated Balance Sheets for these instruments approximate their fair
value.
64
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Restricted Cash
The Restaurant Group is required to hold cash collateralizing its outstanding letters of credit. Included in Cash and cash
equivalents on our Consolidated Balance Sheets as of December 31, 2020 and 2019 is $12.5 million and $11.4 million,
respectively, of such restricted cash.
Investments
Equity securities primarily include our investments in Ceridian, the Forward Purchase Agreements and the Paysafe
Subscription Agreement and are carried at fair value.
Investments in unconsolidated affiliates are recorded using the equity method of accounting.
Fixed maturity securities, which may be sold prior to maturity, are carried at fair value and are classified as available for
sale as of the balance sheet dates. Fair values for fixed maturity securities are principally a function of current market conditions
and are valued based on quoted prices in markets that are not active or model inputs that are unobservable. See Note C.
Discount or premium is recorded for the difference between the purchase price and the principal amount. The discount or
premium is amortized or accrued using the interest method and is recorded as an adjustment to interest, investment and other
income. The interest method results in the recognition of a constant rate of return on the investment equal to the prevailing rate
at the time of purchase or at the time of subsequent adjustments of book value.
Recognized gains and losses on the sale of investments are determined on the basis of the cost of the specific investments
sold and are credited or charged to income on a trade date basis. Unrealized gains or losses on fixed maturity securities, which
are classified as available for sale, net of applicable deferred income tax expenses (benefits), are excluded from earnings and
credited or charged directly to a separate component of equity. If any unrealized losses on available for sale fixed maturity
securities are determined to be other-than-temporary, such unrealized losses are recognized as realized losses. Unrealized losses
are considered other-than-temporary if factors exist that cause us to believe that the value will not increase to a level sufficient
to recover our cost basis. Some factors considered in evaluating whether or not a decline in fair value is other-than-temporary
include (i) our need and intent to sell the investment prior to a period of time sufficient to allow for a recovery in value; (ii) the
duration and extent to which the fair value has been less than cost; and (iii) the financial condition and prospects of the issuer.
Such reviews are inherently uncertain and the value of the investment may not fully recover or may decline in future periods
resulting in a realized loss.
See Notes C and D for further discussion of our accounting for equity securities and investments in unconsolidated
affiliates.
Fair Value of Financial Instruments
The fair values of financial instruments presented in the Consolidated Financial Statements are estimates of the fair values
at a specific point in time using available market information and appropriate valuation methodologies. Estimates that use
unobservable inputs are subjective in nature and involve uncertainties and significant judgment in the interpretation of current
market data. We do not necessarily intend to dispose of or liquidate such instruments prior to maturity. See Note C for further
details.
Other Current Assets
Prepaid expenses and other current assets consist of trade receivables, inventory, prepaid operating expenses, the current
portion of notes receivable, deposits and other miscellaneous current assets. As of December 31, 2019, Prepaid expenses and
other current assets also includes cash on depost with the Senator JV.
Trade receivables are primarily for the Restaurant Group and consist primarily of billings to third-party customers of
Legendary Baking, business to business gift card sales, insurance-related reimbursement, rebates, tenant improvement
allowances, and billings to franchisees for royalties, initial and renewal fees, equipment sales and rent. Trade receivables are
recorded net of an allowance for doubtful accounts, which is our best estimate of the amount of probable credit losses related to
existing receivables. The carrying values reported in the Consolidated Balance Sheets for trade receivables approximate their
fair value.
Inventory primarily consists of raw materials, finished pies, food, beverages packaging and supplies in our Restaurant
Group segment and is stated at the lower of cost or net realizable value. Cost is determined using the first in, first out method
for restaurant inventory and standard cost that approximates actual cost on a first in, first out basis for the bakery operations.
65
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Other Long Term Investments and Non-Current Assets
Other long-term investments consist of land held for investment purposes and investments in equity securities without a
readily determinable fair value. Land is carried at historical cost. See Note D for further discussion of our accounting for equity
securities without a readily determinable fair value.
Other non-current assets include notes receivable from third-parties and other miscellaneous non-current assets.
Leases
Refer to Note B.
Goodwill
Goodwill represents the excess of cost over fair value of identifiable net assets acquired and assumed in business
combinations. Goodwill and other intangible assets with indefinite useful lives are reviewed for impairment annually or more
frequently if circumstances indicate potential impairment, through a comparison of fair value to the carrying amount. We have
the option to first assess goodwill for impairment based on a review of qualitative factors to determine if events and
circumstances exist that will lead to a determination that the fair value of a reporting unit is greater than its carrying amount,
prior to performing a full fair-value assessment. If, after assessing the totality of events or circumstances, the Company
determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing
the quantitative impairment test is unnecessary. However, if the Company concludes otherwise, then it is required to perform
the quantitative impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying
amount of the reporting unit. Goodwill impairment, if any, is measured as the amount by which a reporting unit’s carrying
value exceeds its fair value.
For the year ended December 31, 2020, we recorded $7.8 million of impairment to goodwill in our Restaurant Group
segment. The impairment charge is a result of deteriorating operating results and cash flow resulting from declining same store
sales and increased costs at O'Charley's. The impairment recorded was calculated as the deficit between the carrying value of
our O'Charley's reporting unit of our Restaurant Group compared to the fair value of the reporting unit determined by
performing a combination of discounted cash flow and market approaches.
For the year ended December 31, 2019 we recorded $35.1 million of impairment to goodwill in our former T-System
segment and $10.4 million of impairment to goodwill in our Restaurant Group segment. The impairment in our former T-
System segment is primarily a result of a decline in earnings multiples from comparable public companies and lower forecasted
cash flows for its reporting units. The impairment charge in our Restaurant Group is a result of deteriorating operating results
and cash flow resulting from declining same store sales and increased costs, primarily in our Village Inn and Bakers Square
branded stores. The impairments recorded were calculated as the deficit between the carrying value of the reporting units of
each segment compared to the fair value of the reporting unit determined by performing a combination of discounted cash flow
and market approaches.
Impairment to goodwill in our former T-System segment is included in Net loss from discontinued operations on the
Consolidated Statement of Operations for the year ended December 31, 2019. See Note N.
For the year ended December 31, 2018, we recorded $26.7 million of impairment to goodwill in our Restaurant Group
segment. The impairment charge was a result of deteriorating operating results and cash flow resulting from declining same
store sales and increased costs. The impairment recorded was calculated as the deficit between the carrying value of a reporting
unit of the Restaurant Group segment compared to the fair value of the reporting unit determined by performing a combination
of discounted cash flow and market approaches.
Other Intangible Assets
We have other intangible assets, not including goodwill, which consist primarily of customer relationships and contracts,
trademarks and tradenames that are generally recorded in connection with acquisitions at their fair value, franchise rights, the
fair value of purchased software and capitalized software development costs. Intangible assets with estimable lives are
amortized over their respective estimated useful lives to their estimated residual values and reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable. In general, customer relationships
are amortized over their estimated useful lives using an accelerated method, which takes into consideration expected customer
attrition rates. Contractual relationships are generally amortized over their respective contractual lives. Useful lives of computer
software range from three to ten years. Capitalized software development costs and purchased software are recorded at cost and
amortized using the straight-line method over their estimated useful life.
66
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Trademarks and tradenames were generally considered intangible assets with indefinite lives and reviewed for impairment
at least annually. In conjunction with our annual testing for impairment of tradenames during the fourth quarter of 2020 and in
light of the deteriorating operating environment for restaurants, we changed our estimate of the useful lives of our tradenames
for all of our restaurant brands from indefinite to 15 years. The impact of such change on the Company's consolidated income is
not considered material.
We recorded $11.8 million of impairment expense related to the O'Charley's tradename within our Restaurant Group in the
year ended December 31, 2020. We recorded $17.1 million of impairment expense related to the Village Inn and Bakers Square
tradenames within our Restaurant Group in the year ended December 31, 2019. We recorded $5.8 million of impairment
expense related to a tradename and an abandoned software project in our Restaurant Group in the year ended December 31,
2018. The impairments are recorded within Other operating expenses, including asset impairments, on our Consolidated
Statement of Operations for the years then ended.
Property and Equipment, net
Property and equipment, net are recorded at cost, less accumulated depreciation. Depreciation is computed primarily using
the straight-line method based on the estimated useful lives of the related assets: thirty to forty years for buildings and three to
twenty-five years for furniture, fixtures and equipment. Leasehold improvements are amortized on a straight-line basis over the
lesser of the term of the applicable lease or the estimated useful lives of such assets.
In our Restaurant Group, all direct external costs associated with obtaining the land, building and equipment for each new
restaurant, as well as construction period interest, are capitalized. Direct external costs associated with obtaining the dining
room and kitchen equipment, signage and other assets and equipment are also capitalized. In addition, for each new restaurant
and re-branded restaurant, a portion of the internal direct costs of its real estate and construction department are also capitalized.
Property and equipment are reviewed for impairment when events or circumstances indicate that the carrying amounts may
not be recoverable. We recorded $3.5 million, $6.6 million, and $8.1 million of impairment expense related to Property and
equipment in our Restaurant Group segment in the years ended December 31, 2020, 2019 and 2018, respectively, which is
recorded within Other operating expenses, including asset impairments, on our Consolidated Statements of Operations for the
years then ended.
Insurance Reserves
Our Restaurant Group companies are currently self-insured for a portion of its workers' compensation, general liability, and
liquor liability losses (collectively, casualty losses) as well as certain other insurable risks. To mitigate the cost of the
Restaurant Group's exposures for certain property and casualty losses, we make annual decisions to either retain the risks of loss
up to a certain maximum per occurrence, aggregate loss limits negotiated with its insurance carriers, or fully insure those risks.
Our Restaurant Group companies are also self-insured for healthcare claims for eligible participating employees subject to
certain deductibles and limitations. We have accounted for such retained liabilities for casualty losses and healthcare claims,
including reported and incurred but not reported claims, based on information provided by third-party actuaries. As of
December 31, 2020, our Restaurant Group companies were committed under letters of credit totaling $14.7 million issued
primarily in connection with casualty insurance programs.
Income Taxes
We recognize deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax
basis of our assets and liabilities and expected benefits of utilizing net operating loss and credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The impact of changes in tax rates and laws on deferred taxes, if
any, is applied to the years during which temporary differences are expected to be settled and reflected in the financial
statements in the period enacted.
We recognize the benefits of uncertain tax positions in the financial statements only after determining a more likely than
not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and
circumstances change, we reassess these probabilities and record any changes in the financial statements as appropriate.
Uncertain tax positions are accounted for by determining the minimum recognition threshold that a tax position is required to
meet before being recognized in the financial statements. This determination requires the use of judgment in assessing the
timing and amounts of deductible and taxable items. Tax positions that meet the more likely than not recognition threshold are
recognized and measured as the largest amount of tax benefit that is more than 50% likely to be realized upon settlement with a
taxing authority that has full knowledge of all relevant information. The Company recognizes interest and penalties accrued
related to unrecognized tax benefits as components of income tax expense.
67
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Revenue Recognition
Refer to Note U.
Advertising Costs
The Company expenses advertising and marketing costs as incurred, except for certain advertising production costs that are
initially capitalized and subsequently expensed the first time the advertising takes place. During the years ended December 31,
2020, 2019, and 2018, the Company incurred $15.7 million, $30.0 million, and $34.7 million of advertising and marketing
costs, respectively, related to advertising in our Restaurant Group and in our real estate operations. These costs are included in
Other operating expenses on the Consolidated Statements of Operations.
Comprehensive Earnings
We report comprehensive earnings in accordance with GAAP on the Consolidated Statements of Comprehensive Earnings.
Total comprehensive earnings are defined as all changes in shareholders' equity during a period, other than those resulting from
investments by and distributions to shareholders. While total comprehensive earnings is the activity in a period and is largely
driven by net earnings in that period, accumulated other comprehensive earnings or loss represents the cumulative balance of
other comprehensive earnings, net of tax, as of the balance sheet date. Amounts reclassified to net earnings relate to realized
losses and are included in Recognized gains and losses, net on the Consolidated Statements of Operations. 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).
Changes in the balance of other comprehensive earnings by component are as follows:
Unrealized gain (loss) on
investments and other
financial instruments, net
(excluding investments in
unconsolidated affiliates)
Unrealized (loss) gain
relating to investments in
unconsolidated affiliates
Total Accumulated Other
Comprehensive (Loss)
Earnings
(In millions)
Balance December 31, 2018............................................ $
(0.6) $
(66.6) $
Other comprehensive earnings...................................
Cumulative effect of adoption of accounting
standards by unconsolidated affiliates........................
Reclassification adjustments......................................
Balance December 31, 2019............................................ $
Other comprehensive earnings................................... $
Reclassification adjustments......................................
Balance December 31, 2020............................................ $
Stock-Based Compensation Plans
0.1
—
—
(0.5) $
10.7 $
—
10.2 $
7.1
(5.0)
19.1
(45.4) $
(15.9) $
46.2
(15.1) $
(67.2)
7.2
(5.0)
19.1
(45.9)
(5.2)
46.2
(4.9)
Stock-based compensation expense includes restricted stock awards granted in Cannae common stock to certain members
of management. We account for stock-based compensation plans using the fair value method. Under the fair value method of
accounting, compensation cost is measured based on the fair value of the award at the grant date, using quoted market prices of
the underlying stock, and recognized over the service period. See Note O.
Earnings Per Share
Basic earnings per share, as presented on the Consolidated 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.
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 that 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 year ended December 31, 2020, 2019 and 2018, no antidilutive shares were
68
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
outstanding.
Note B.
Leases
We adopted Topic 842 on January 1, 2019 using a modified retrospective approach. Prior years continue to be reported
under Accounting Standards Codification ("ASC") Topic 840. See Note S for further discussion of the effects of adoption of
Topic 842 in the year ended December 31, 2019.
We are party to operating lease arrangements primarily for leased real estate for restaurants and office space. Right-of-use
assets and lease liabilities related to operating leases under ASC 842 are recorded at commencement when we are party to a
contract that conveys the right for the Company to control an asset for a specified period of time. We are not a party to any
material contracts considered finance leases. Right-of-use assets and lease liabilities related to operating leases are recorded as
Lease assets and Lease liabilities, respectively, on the Consolidated Balance Sheets as of December 31, 2020 and 2019.
Our material operating leases range in term from one year to nineteen years. As of December 31, 2020 and 2019, the
weighted-average remaining lease term of our operating leases was approximately ten years. Leases with an initial term of
twelve months or less are not recorded on the balance sheet and we recognize lease expense for these leases on a straight-line
basis over the lease term.
Our operating lease agreements do not contain any material buyout options, residual value guarantees or restrictive
covenants.
Most of our leases include one or more options to renew, with renewal terms that can extend the lease term by varying
amounts. The exercise of lease renewal options is at our sole discretion. We include options to renew, not to exceed a total lease
term of twenty years, in our measurement of right-of-use assets and lease liabilities when they are considered reasonably certain
of exercise. We consider a lease probable for renewal when the duration of the lease extensions are in the foreseeable future and
related to assets for which continued use is reasonably assured.
Excluding certain immaterial classes of leases in our Restaurant Group, we do not separate lease components from non-
lease components for any of our right of use assets.
Our operating lease liabilities are determined by discounting future lease payments using a discount rate that represents our
best estimate of the incremental borrowing rate our subsidiaries would have to pay to borrow money to finance the asset over
the underlying lease term and for an amount equal to the lease payments. Our discount rate is based on interest rates associated
with comparable public company secured debt for companies similar to our operating subsidiaries and of similar duration to the
underlying lease. As of December 31, 2020 and 2019, the weighted-average discount rate used to determine our operating lease
liabilities was 7.08% and 7.67%, respectively.
Our lease costs are directly attributable to restaurant operations, primarily for real estate and to a lesser extent certain
restaurant equipment. $43.2 million and $58.5 million of operating lease costs are included in Cost of restaurant revenue on the
Consolidated Statement of Operations for the years ended December 31, 2020 and 2019, respectively.
During the years ended December 31, 2020 and 2019, we recorded impairment expense of $1.5 million and $21.1 million,
respectively, related to lease assets in our Restaurant Group, which is recorded within Other operating expenses on our
Consolidated Statement of Operations.
We do not have any material short term lease costs, variable lease costs, or sublease income.
69
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Future payments under operating lease arrangements accounted for under ASC Topic 842 as of December 31, 2020 are as
follows (in millions):
2021
2022
2023
2024
2025
Thereafter
Total lease payments, undiscounted
Less: discount
Total operating lease liability as of December 31, 2020, at present value
Less: operating lease liability as of December 31, 2020, current
Operating lease liability as of December 31, 2020, long term
$
$
$
$
40.7
39.2
35.4
26.5
23.0
151.0
315.8
94.0
221.8
26.2
195.6
Rent expense incurred under operating leases during the year ended December 31, 2018 recorded pursuant to ASC Topic
840 was $60.8 million. No abandoned lease charges were recorded in the year ended December 31, 2018.
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 Consolidated 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.
70
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
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 December 31, 2020 and 2019, respectively:
December 31, 2020
Level 1
Level 2
Level 3
Total
(In millions)
Fixed-maturity securities available for sale:
Corporate debt securities............................................................................... $
— $
— $
35.2 $
35.2
Equity securities:
Ceridian.........................................................................................................
1,491.8
Forward Purchase Agreements......................................................................
Paysafe Subscription Agreement...................................................................
Other..............................................................................................................
—
—
1.6
—
—
—
—
—
1,491.8
136.1
169.6
—
136.1
169.6
1.6
Total assets.................................................................................................... $ 1,493.4 $
— $ 340.9 $ 1,834.3
December 31, 2019
Level 1
Level 2
Level 3
Total
(In millions)
Fixed-maturity securities available for sale:
Corporate debt securities............................................................................... $
Total.............................................................................................................. $
— $
— $
— $
19.2 $
— $
19.2 $
19.2
19.2
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 fair value of our Level 3 fixed-maturity securities available for sale varies by security type and ranged
from 7.3% to 17.5% and had a weighted average of 12.1% as of December 31, 2020. Based on the total fair value of our Level
3 fixed-maturity securities available for sale as of December 31, 2020, changes in the discount rate utilized will not result in a
fair value significantly different than the amount recorded.
The Forward Purchase Agreements and the Paysafe Subscription Agreement are accounted for at fair value pursuant to
ASC Topic 321. We utilized a Monte Carlo Simulation in determining the fair value of these agreements, which is considered
to be a Level 3 fair value measurement. The Monte Carlo Simulation model simulates the current security price to a simulated
date for the consummation of the underlying initial business combination based on probabilities of consummation. The values
of the agreements are then calculated as the difference between the future simulated price and the fixed purchase prices for the
underlying securities to be purchased pursuant to the Forward Purchase Agreements and the Paysafe Subscription Agreement.
The primary unobservable input utilized in determining the fair value of the Forward Purchase Agreements and Paysafe
Subscription Agreement is the probability of consummation of the FTAC Initial Business Combination, Trebia Initial Business
Combination and FTAC II Initial Business Combination. The probabilities assigned to the consummation of each of the FTAC
Initial Business Combination and the Trebia Initial Business Combination was 90% and the probability assigned to the
consummation of the FTAC II Initial Business Combination was 95%. Determination of such probabilities is based on a hybrid
approach of both observed success rates of business combinations for special purpose acquisition companies and the sponsors
of FTAC, FTAC II and Trebia's track record for consummating similar transactions. The FTAC II Paysafe Merger was also
considered in our determination of the probability of the FTAC II Initial Business Combination.
71
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
The following table presents a summary of the changes in the fair values of Level 3 assets, measured on a recurring basis.
Corporate debt Forward Purchase Paysafe Subscription
securities
Agreements
Agreement
Total
Fair value, December 31, 2018
Paid-in-kind dividends (1)
Impairment (2)
Net valuation gain included in other comprehensive
earnings (3)
Fair value, December 31, 2019
Paid-in-kind dividends (1)
Net valuation gain included in earnings (2)
Net valuation gain included in other comprehensive
earnings (3)
Fair value, December 31, 2020
$
$
$
17.8 $
0.2
(0.4)
1.6
19.2 $
1.3
—
14.7
35.2 $
— $
—
—
—
— $
—
— $
—
—
—
— $
—
136.1
169.6
—
136.1 $
—
169.6 $
17.8
0.2
(0.4)
1.6
19.2
1.3
305.7
14.7
340.9
_____________________________________
(1) Included in Interest, investment and other income on the Consolidated Statements of Operations
(2) Included in Recognized gains and losses, net on the Consolidated Statements of Operations
(3) Included in Unrealized gain (loss) on investments and other financial instruments, net (excluding investments in
unconsolidated affiliates) on the Consolidated Statements of Comprehensive Earnings
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. The Company’s policy is to recognize transfers between
levels in the fair value hierarchy at the end of the reporting period in which they occur.
All of the unrealized gain on investments and other financial instruments, net (excluding investments in unconsolidated
affiliates) on our Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018
relate to fixed maturity securities considered Level 3 fair value measures.
Additional information regarding the fair value of our investment portfolio is included in Note D.
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 K.
72
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Note D.
Investments
Equity Securities
Gains on equity securities included in Recognized gains and losses, net on the Consolidated Statements of Operations
consisted of the following for the year ended December 31, 2020 (in millions):
Net gains recognized during the period on equity securities........................................................................................ $ 1,991.0
Less: net gains recognized during the period on equity securities sold or transferred during the period....................
(410.2)
Unrealized gains recognized during the reporting period on equity securities still held at December 31, 2020......... $ 1,580.8
We recorded no gains or losses on equity securities for the years ended December 31, 2019 or 2018.
Investments in Unconsolidated Affiliates
Investments in unconsolidated affiliates recorded using the equity method of accounting as of December 31, 2020 and 2019
consisted of the following (in millions):
Ownership at
December 31, 2020
2020
2019
Dun & Bradstreet..........................................................................................................
Ceridian (1)...................................................................................................................
Optimal Blue.................................................................................................................
AmeriLife......................................................................................................................
Other..............................................................................................................................
18.1 % $ 653.2 $ 385.9
9.5 %
20.0 %
20.0 %
various
—
309.5
279.8
121.1
398.9
—
—
141.1
Total..............................................................................................................................
$ 1,453.0 $ 836.5
_____________________________________
(1) The investment in Ceridian was no longer accounted for under the equity method of accounting beginning March 31, 2020.
Equity in earnings (losses) of unconsolidated affiliates for the periods indicated consisted of the following (in millions):
Dun & Bradstreet......................................................................... $
(46.8) $
(132.8) $
Year Ended December 31,
2020
2019
2018
Ceridian (1)..................................................................................
Optimal Blue................................................................................
AmeriLife.....................................................................................
Other.............................................................................................
Total............................................................................................. $
_____________________________________
1.5
(9.4)
(4.0)
117.8
59.1 $
16.4
—
—
1.3
—
(20.5)
—
—
4.4
(115.1) $
(16.1)
(1) The amount for the year ended December 31, 2020 represents the Company's equity in earnings of Ceridian in the three
months ended March 31, 2020 prior to the change in accounting for the investment beginning March 31, 2020. See Note A.
Dun & Bradstreet
Based on quoted market prices, the aggregate fair market value of our ownership of Dun & Bradstreet common stock was
approximately $1.9 billion as of December 31, 2020.
As of December 31, 2020, we hold less than 20% of the outstanding common equity of Dun & Bradstreet but continue to
account for our investment under the equity method because we continue to exert significant influence through our 18.1%
ownership, because certain of our senior management and directors serve on Dun & Bradstreet's board of directors, and because
we are party to an agreement with other of its equity sponsors, which collectively own greater than 50% of the outstanding
voting equity of Dun & Bradstreet, pursuant to which we have agreed to collectively vote together on all matters related to the
election of directors to the Dun & Bradstreet board of directors for a period of three years.
Summarized financial information for Dun & Bradstreet and Star Parent, L.P. ("Star Parent"), the former parent of D&B
through which the Company was invested prior to the D&B IPO, for the relevant dates and time periods included in
73
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Investments in unconsolidated affiliates and Equity in earnings (losses) of unconsolidated affiliates in our Consolidated Balance
Sheets and Statements of Operations, respectively, is presented below.
We acquired our initial interest in Star Parent on February 8, 2019. The results of operations for the year ended December
31, 2019 presented below represent Star Parent's results of operations subsequent to our acquisition.
Total current assets
Goodwill and other intangible assets, net
Other noncurrent assets
Total assets
Current liabilities
Long-term debt
Other non-current liabilities
Total liabilities
Preferred equity
Total equity
Total liabilities and equity
Total revenues
Loss before income taxes
Net loss
Dividends attributable to preferred equity and noncontrolling interest expense
Net loss attributable to Dun & Bradstreet and Star Parent
December 31,
2020
December 31,
2019
$
$
$
$
(In millions)
874.0 $
7,668.2
677.2
9,219.4 $
825.3 $
3,255.8
1,560.6
5,641.7
—
3,577.7
9,219.4 $
417.9
8,091.5
603.4
9,112.8
1,090.4
3,818.9
1,594.0
6,503.3
1,030.6
1,578.9
9,112.8
Year ended
December 31, 2020
Year ended
December 31, 2019
$
(In millions)
1,738.1 $
(219.3)
(106.5)
(69.1)
(175.6)
1,413.9
(540.0)
(425.8)
(120.5)
(546.3)
74
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Optimal Blue
On September 15, 2020, we closed on our $289.0 million investment in Optimal Blue. Summarized financial information
for Optimal Blue for the relevant dates and time periods included in Investments in unconsolidated affiliates and Equity in
earnings (losses) of unconsolidated affiliates in our Consolidated Balance Sheets and Statements of Operations, respectively, is
presented below. The results of operations for the year ended December 31, 2020 presented below represent Optimal Blue's
results of operations for the period from September 15, 2020 through December 31, 2020.
Total current assets
Goodwill and other intangible assets, net
Other assets
Total assets
Current liabilities
Long-term debt
Other non-current liabilities
Total liabilities
Redeemable member's interest
Additional paid-in capital
Retained deficit
Total redeemable member's interest and equity
Total liabilities, redeemable member's interest and equity
Total revenues
Operating loss
Net loss
December 31,
2020
(In millions)
38.0
1,831.3
100.1
1,969.4
28.9
493.0
105.0
626.9
578.0
813.0
(48.5)
1,342.5
1,969.4
$
$
$
$
Year ended
December 31, 2020
(In millions)
$
45.4
(38.1)
(45.9)
75
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
AmeriLife
On March 18, 2020, we closed on our $125.0 million investment in the AmeriLife Joint Venture. Summarized financial
information for the AmeriLife Joint Venture for the relevant dates and time periods included in Investments in unconsolidated
affiliates and Equity in earnings (losses) of unconsolidated affiliates in our Consolidated Balance Sheets and Statements of
Operations, respectively, is presented below. We account for our investment in AmeriLife as an equity method investment and
report our equity in earnings or loss of the AmeriLife Joint Venture on a three-month lag. Accordingly, our net earnings for the
year ended December 31, 2020 includes our equity in AmeriLife’s losses for the period from March 18, 2020 through
September 30, 2020.
Total current assets
Goodwill and other intangible assets, net
Other assets
Total assets
Current liabilities
Long-term debt
Other non-current liabilities
Total liabilities
Member's equity
Noncontrolling interest - nonredeemable
Total member's equity
Total liabilities and member's equity
Total revenues
Operating income
Net loss
Income attributable to noncontrolling interests
Net loss attributable to AmeriLife
$
$
$
$
$
December 31,
2020
(In millions)
108.5
1,370.4
16.4
1,495.3
53.1
645.2
14.7
713.0
607.4
174.9
782.3
1,495.3
December 31,
2020
(In millions)
171.3
9.5
(10.1)
14.3
(24.4)
76
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Fixed Maturity Securities
The carrying amounts and fair values of our fixed maturity securities at December 31, 2020 and 2019 are as follows:
December 31, 2020
Carrying
Value
Cost
Basis
Unrealized
Gains
Unrealized
Losses
Fair
Value
(In millions)
Fixed maturity securities available for sale:
Corporate debt securities........................................................ $
35.2 $
22.0 $
13.2 $
Total................................................................................. $
35.2 $
22.0 $
13.2 $
— $
— $
35.2
35.2
December 31, 2019
Carrying
Value
Cost
Basis
Unrealized
Gains
Unrealized
Losses
Fair
Value
(In millions)
Fixed maturity securities available for sale:
Corporate debt securities........................................................ $
19.2 $
19.6 $
Total................................................................................. $
19.2 $
19.6 $
0.7 $
0.7 $
(1.1) $
(1.1) $
19.2
19.2
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 December 31, 2020, $34.7 million of our fixed maturity securities are corporate debt securities with a maturity of less
than one year, and $0.5 million are corporate debt securities with 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, 2019
were as follows (in millions):
December 31, 2019
Corporate debt securities
Total temporarily impaired securities
Less than 12 Months
Fair
Value
Unrealized
Losses
$
$
10.8 $
10.8 $
(1.1)
(1.1)
During the year ended December 31, 2020, we recorded no other-than-temporary impairment charges relating to corporate
debt securities. During the years ended December 31, 2019 and 2018, we incurred $0.4 million and $12.5 million,
respectively, of other-than-temporary impairment charges relating to corporate debt securities, which is included in Recognized
gains and losses, net on the Consolidated Statements of Operations. The impairments recorded relate to a corporate debt holding
that has experienced a prolonged period of declining earnings and that were uncertain of our ability to recover our initial
investment. The entire loss represents credit loss recognized in earnings and no portion of the loss was included in other
comprehensive earnings.
As of December 31, 2020, we held $16.4 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.
Equity Security Investments Without Readily Determinable Fair Values
We account for our investment in preferred equity of QOMPLX, Inc. ("QOMPLX"), an intelligent decision and analytics
platform used by businesses for modeling and planning, at cost less impairment, if any, plus or minus changes resulting from
observable price changes in orderly market transactions. As of December 31, 2020 and 2019, we have $30.0 million and
$22.5 million, respectively, recorded for our investment in QOMPLX, which is included in Other long term investments and
77
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
noncurrent assets on our Consolidated Balance Sheets. We have not recorded any upward or downward adjustments to our
investment in QOMPLX.
Note E.
Property and Equipment
Property and equipment consists of the following:
December 31,
2020
2019
(In millions)
Furniture, fixtures and equipment ........................................................................................................ $
118.3 $
Leasehold improvements......................................................................................................................
129.6
Land......................................................................................................................................................
Buildings...............................................................................................................................................
Other.....................................................................................................................................................
36.7
40.9
5.1
166.0
158.9
40.6
28.9
6.1
.............................................................................................................................................................
330.6
400.5
Accumulated depreciation and amortization........................................................................................
(184.8)
(237.9)
$
145.8 $
162.6
Depreciation expense on property and equipment was $26.7 million, $35.8 million, and $38.0 million for the years ended
December 31, 2020, 2019, and 2018, respectively.
Note F.
Goodwill
Goodwill consists of the following:
Restaurant
Group
Corporate
and Other
Total
(in millions)
Balance, December 31, 2018........................................................................................ $
76.5 $
— $
76.5
Impairment...................................................................................................................
(10.4)
—
(10.4)
Balance, December 31, 2019........................................................................................ $
66.1 $
— $
66.1
Impairment...................................................................................................................
Deconsolidation of Blue Ribbon..................................................................................
(7.8)
(4.9)
—
—
(7.8)
(4.9)
Balance, December 31, 2020........................................................................................ $
53.4 $
— $
53.4
Note G.
Variable Interest Entities
The Company, in the normal course of business, engages in certain activities that involve variable interest entities ("VIEs"),
which are legal entities in which a group equity investors individually lack any of the characteristics of a controlling interest.
The primary beneficiary of a VIE is generally the enterprise that has both the power to direct the activities most significant to
the economic performance of the VIE and the obligation to absorb losses or receive benefits that could potentially be significant
to the VIE. The Company evaluates its interest in certain entities to determine if these entities meet the definition of a VIE and
whether the Company is the primary beneficiary and should consolidate the entity based on the variable interests it held both at
inception and when there is a change in circumstances that requires a reconsideration. If the Company is determined to be the
primary beneficiary of a VIE, it must account for the VIE as a consolidated subsidiary. If the Company is determined not to be
the primary beneficiary of a VIE but holds a variable interest in the entity, such variable interests are accounted for under
accounting standards as deemed appropriate. As of and for the years ended December 31, 2020, 2019 and 2018, we are not the
primary beneficiary of any VIEs.
78
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Unconsolidated VIEs
The table below summarizes select information related to variable interests held by the Company as of December 31, 2020
and 2019, of which we are not the primary beneficiary:
2020
2019
Total Assets
Maximum
Exposure
Total Assets
Maximum
Exposure
(in millions)
Investments in unconsolidated affiliates...............................................
Forward Purchase Agreements and Paysafe Subscription Agreement.
299.7
305.7
299.7
305.7
440.2
—
440.2
—
Investments in Unconsolidated Affiliates
We hold variable interests in certain unconsolidated affiliates, which are primarily comprised of our investments in the
Senator JV; the sponsors of FTAC, Trebia, and FTAC II; and funds that hold minority ownership interests primarily in
healthcare-related entities. We do not have the power to direct the activities that most significantly impact the economic
performance of these unconsolidated affiliates; therefore, we are not the primary beneficiary.
As of December 31, 2019, total assets in the table above includes the Company's equity method investment in Star Parent.
Upon consummation of the D&B IPO on July 6, 2020, our investment in Dun & Bradstreet changed from an investment in a
limited partnership to an investment in the common stock of a corporation. The limited partners of Star Parent did not have the
ability to unilaterally remove the general partner and as a result, our investment in Star Parent was considered a VIE. As a result
of the change in form of our investment from a limited partnership to a corporation, Dun & Bradstreet is no longer considered a
VIE subsequent to the D&B IPO.
The principal risk to which these investments and funds are exposed is the credit risk of the underlying investees. We do
not provide any implicit or explicit liquidity guarantees or principal value guarantees to these VIEs. The assets are included in
Investments in unconsolidated affiliates on the Consolidated Balance Sheets and accounted for under the equity method of
accounting.
See Note D for further discussion of our accounting for investments in unconsolidated affiliates.
Forward Purchase Agreements and Paysafe Subscription Agreement
In addition to the Forward Purchase Agreements and Paysafe Subscription Agreement, the Company made investments in
the sponsors of FTAC, Trebia and FTAC II, which are considered VIEs for which we are not the primary beneficiary and are
included in Investments in unconsolidated affiliates. The assets represented by the Forward Purchase Agreements and Paysafe
Subscription Agreement are accounted for as investments in equity securities pursuant to ASC 321 and are included in Equity
securities on the Consolidated Balance Sheet as of December 31, 2020. See Notes C and D for further information on our
accounting for equity securities.
Note H.
Other Intangible Assets
Other intangible assets consist of the following:
December 31,
2020
2019
(In millions)
Trademarks and tradenames..................................................................................................... $
37.8 $
Software....................................................................................................................................
Franchise rights.........................................................................................................................
Customer relationships and contracts.......................................................................................
Accumulated amortization........................................................................................................
13.5
9.3
5.2
65.8
(14.0)
$
51.8 $
53.9
17.1
7.2
5.2
83.4
(20.3)
63.1
Amortization expense for amortizable intangible assets was $4.0 million, $4.9 million, and $8.3 million for the years ended
December 31, 2020, 2019 and 2018, respectively. Estimated amortization expense for the next five years for assets owned at
December 31, 2020, is $5.3 million in 2021, $5.0 million in 2022, $4.1 million in 2023, $3.7 million in 2024 and $3.7 million in
2025.
79
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Note I.
Acquisitions
On October 2, 2020, the Chapter 11 Plan became effective and Blue Ribbon emerged from bankruptcy as a set of
reorganized companies. We exchanged $15.5 million of the outstanding balance under the DIP Loan prior to October 2, 2020
for 100% of the assets and uncompromised liabilities of Legendary Baking and VIBSQ. The acquisition was accounted for as a
business combination pursuant to ASC Topic 805.
The consideration transferred was determined as follows (in millions):
Notes receivable from Blue Ribbon............................................................................................................................
$
Fair value of investment in Blue Ribbon immediately prior to Blue Ribbon Emergence..........................................
Total consideration transferred...................................................................................................................................
$
34.0
15.2
49.2
All notes receivable by the Company from Blue Ribbon prior to the Blue Ribbon Emergence of $34.0 million, inclusive of
the $15.5 million exchanged for the assets and uncompromised liabilities of Legendary Baking and VIBSQ, $12.0 million of
the remaining balance outstanding under the DIP Loan and converted to an intercompany term loan with us, and $6.5 million
provided to Blue Ribbon as exit financing and included in the closing term loan with us upon the Blue Ribbon Emergence, is
part of the consideration transferred because subsequent to our acquisition of Legendary Baking and VIBSQ upon the Blue
Ribbon Emergence the remaining balance outstanding eliminates in consolidation.
Our interest in Blue Ribbon during the Blue Ribbon Reorganization was accounted for as an equity method investment. In
conjunction with our acquisition of Legendary Baking and VIBSQ out of bankruptcy, we revalued our interest in Blue Ribbon
to fair value, which resulted in a gain of $9.5 million and is included in Recognized gains and losses, net on the Consolidated
Statement of Operations for the year ended December 31, 2020. The fair value was determined by performing a combination of
discounted cash flow and market approaches.
The assets acquired and liabilities assumed have been recorded based on our best estimates of their fair values as of the
acquisition date. The fair value of assets acquired and liabilities assumed represents a preliminary allocation as our evaluation
of facts and circumstances available is ongoing as of December 31, 2020.
The following table summarizes the preliminary fair value amounts recognized for the assets acquired and liabilities
assumed as of the acquisition date (dollars in millions):
Cash
Other current assets
Property and equipment
Lease assets
Other intangible assets
Other noncurrent assets
Total assets acquired
Current liabilities
Lease liabilities
Other noncurrent liabilities
Total liabilities assumed
Net assets acquired
Fair Value
8.6
24.9
23.2
14.7
22.5
2.6
96.5
27.6
14.5
2.3
44.4
52.1
$
$
$
$
$
We recorded a bargain purchase gain of $2.9 million on our acquisition of Legendary Baking and VIBSQ, which is
included in Recognized gains and losses, net on the Consolidated Statement of Operations for the year ended December 31,
2020. The gain is calculated as the difference between the consideration transferred and the net assets acquired. The transaction
resulted in a gain because the fair value of the net assets acquired and liabilities assumed exceeded value of notes receivable
from Blue Ribbon outstanding and the fair value of our equity investment in Blue Ribbon prior to the Blue Ribbon Emergence.
80
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
The gross carrying value and weighted average estimated useful lives of Property and equipment and Other intangible
assets acquired consist of the following (dollars in millions):
Property and equipment
Other intangible assets:
Tradenames
Franchise agreements
Customer relationships
Software
Total Other intangible assets
Weighted Average
Estimated Useful Life
(in years)
12
15
10
4
5
Gross Carrying
Value
$
$
$
23.2
8.0
7.7
6.4
0.4
22.5
Revenue and net losses of $36.6 million and $4.0 million, respectively, which represents the combined revenue and loss for
Legendary Baking and VIBSQ subsequent to our acquisition on October 2, 2020, are included in our Consolidated Statement of
Operations for the year ended December 31, 2020.
Note J.
Accounts Payable and Other Accrued Liabilities
Accounts payable and other accrued liabilities, current consist of the following:
Accrued payroll and employee benefits.......................................................................................... $
Trade accounts payable...................................................................................................................
Accrued casualty self insurance expenses......................................................................................
Tax liabilities, excluding income taxes payable.............................................................................
Other accrued liabilities..................................................................................................................
$
Accounts payable and other accrued liabilities, long term consist of the following:
Restaurant Group financing obligations......................................................................................... $
Other accrued liabilities..................................................................................................................
$
December 31,
2020
2019
(In millions)
21.5 $
25.7
11.5
9.9
24.6
93.2 $
25.3
19.6
13.3
11.9
16.3
86.4
December 31,
2020
2019
(In millions)
29.4 $
23.7
53.1 $
27.5
16.4
43.9
81
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Note K.
Notes Payable
Notes payable consists of the following:
December 31,
2020
2019
(In millions)
99 Term Loan....................................................................................................................................
99 Revolver........................................................................................................................................
2020 Margin Facility.........................................................................................................................
2018 Margin Facility.........................................................................................................................
FNF Revolver....................................................................................................................................
Brasada Interstate Loans....................................................................................................................
Other..................................................................................................................................................
$
16.8 $
5.0
—
—
—
13.1
28.6
30.9
3.0
—
75.0
—
13.4
4.8
Notes payable, total...........................................................................................................................
$
63.5 $
127.1
Less: Notes payable, current..............................................................................................................
11.3
7.0
Notes payable, long term...................................................................................................................
$
52.2 $
120.1
At December 31, 2020, the carrying value of our outstanding notes payable approximated fair value. The respective
carrying values of the loans under the 99 Restaurants Credit Facility and the B Note, Development Loan and Line of Credit
Loan pursuant to the Interstate Credit Agreement, each as defined below, approximate fair value as they are variable rate
instruments with monthly reset periods that reflect current market rates. The revolving credit facilities are considered Level 2
financial liabilities. The fixed-rate A Note, as defined below, pursuant to the Interstate Credit Agreement approximates fair
value as of December 31, 2020.
2020 Margin Facility
On November 30, 2020, Cannae Funding C, LLC (“Borrower 1”), an indirect wholly-owned special purpose subsidiary of
the “Company, and Cannae Funding D, LLC (“Borrower 2” and, together with Borrower 1, the “Borrowers”), an indirect
wholly-owned special purpose subsidiary of the Company, entered into a Margin Loan Agreement (the “2020 Margin Facility”)
with the lenders from time to time party thereto and Royal Bank of Canada. The Company concurrently entered into a Guaranty
(the “Guaranty Agreement”) for the benefit of each of the lenders to the 2020 Margin Facility pro rata to their loan
commitments, pursuant to which the Company absolutely, unconditionally and irrevocably guaranteed all of the Borrowers’
obligations under the 2020 Margin Facility for a period of up to one year after the later of (i) the conditions precedent to the
obligations of the lenders under the Loan Agreement being met (the date when such conditions have been met, the “Closing
Date”) or (ii) as relevant, additional collateral or additional loan commitments being provided. Under the 2020 Margin Facility,
the Borrowers may initially borrow up to $100.0 million in revolving loans and, subject to certain terms and conditions, may
enter into an amendment to the 2020 Margin Facility to borrow up to $500.0 million in revolving loans (including the initial
revolving loans) from the same initial lender and/or additional lenders on substantially identical terms and conditions as the
initial revolving loans. The 2020 Margin Facility matures on the 36-month anniversary of the Closing Date. All outstanding
amounts under the 2020 Margin Facility bear interest quarterly at a rate per annum equal to a three-month LIBOR rate plus an
applicable margin. Interest will be payable in kind unless the Borrowers elect to pay interest in cash or a cumulative cap is
exceeded. The Borrowers’ obligations under the 2020 Margin Facility will be secured by a first priority lien on (i) 6,000,000
shares of common stock, par value $0.01 per share (the “Ceridian Common Stock”), of Ceridian, which the Company
contributed to Borrower 1, and (ii) 19,000,000 shares of common stock, par value $0.0001 per share (the “DNB Common
Stock”), of D&B, which the Company contributed to Borrower 2. The Borrowers may also, at their discretion, post up to an
additional 4,000,000 shares of Ceridian Common Stock and/or 11,000,000 shares of DNB Common Stock as collateral for the
revolving loans from time to time after the Closing Date, subject to certain notice, guaranty, average daily trading volume and
other requirements. The 2020 Margin Facility requires the Borrowers to maintain a certain loan-to-value ratio (based on the
value of Ceridian Common Stock and DNB Common Stock). In the event the Borrowers fail to maintain such loan-to-value
ratio, the Borrowers must post additional cash collateral under the Loan Agreement and/or elect to repay a portion of the
revolving loans thereunder, or sell the Ceridian Common Stock and/or DNB Common Stock and use the proceeds from such
sale to prepay a portion of the revolving loans thereunder.
As of December 31, 2020, there was $100.0 million of capacity under the 2020 Margin Facility with an option to increase
the capacity to $500.0 million upon amendment.
82
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
99 Restaurants Credit Facility
On December 21, 2018, 99 Restaurants LLC, a direct, wholly-owned subsidiary of 99 Restaurants entered into a credit
agreement (the "99 Restaurants Credit Facility"), as amended from time to time, with Fifth Third Bank and other lenders
thereto. The 99 Restaurants Credit Facility provides for (i) a maximum revolving loan of $15.0 million (the “99 Revolver”)
with a maturity date of December 21, 2023; (ii) a maximum term loan of $37.0 million (the "99 Term Loan") with monthly
installment repayments through November 30, 2023 and a maturity date of December 21, 2023 for the outstanding unpaid
principal balance; and (iii) a maximum Development Line of Credit loan (the “DLOC Loan”) of up to $10.0 million. Interest on
the 99 Credit Facility is based on, at our option, an applicable margin of (x) two and one half percent (2.50%) per annum with
respect to Base Rate Loans, as provided therein, and (y) three and one half percent (3.50%) per annum with respect to LIBOR
Loans, as provided therein. The 99 Restaurants Credit Facility also allows for 99 Restaurants LLC to request up to $5.0
million of letters of credit commitments and $2.5 million in swingline debt from Fifth Third Bank as the administrative agent.
The obligations of the 99 Restaurants LLC under the 99 Restaurants Credit Facility are guaranteed by 99 Restaurants. The 99
Restaurants Credit Facility is subject to affirmative, negative and financial covenants customary for financings of this type,
including, among other things, limits on the Borrower’s creation of liens, sales of assets, incurrence of indebtedness, restricted
payments and transactions with affiliates. The 99 Restaurants Credit Facility includes customary events of default for facilities
of this type (with customary grace periods, as applicable). The 99 Restaurants Credit Facility provides that, upon the occurrence
of an event of default, Fifth Third Bank, as administrative agent, may (i) declare the principal of, and any and all accrued and
unpaid interest and all other amounts owed in respect of, the loans immediately due and payable, (ii) terminate loan
commitments and (iii) exercise all other rights and remedies available to Fifth Third Bank or the lenders under the loan
documents. On December 1, 2020, 99 Restaurants LLC entered into a waiver, consent and amendment to the 99 Restaurants
Credit Facility pursuant to which a payment was made, and the borrowing capacity under the 99 Revolver was permanently
reduced by, $7.5 million, the borrowing capacity under the 99 Revolver will be reduced by another $2.0 million in 2021, the
applicable margin was increased by 1.00% with respect to both Base Rate Loans and LIBOR Loans, the lender's commitment to
provide the DLOC Loan was terminated, and certain of the financial covenants were added or waived until the second quarter
of 2021, among other changes.
As of December 31, 2020, interest on the 99 Term Loan and 99 Revolver is payable monthly at a rate of 4.75% and 6.75%,
respectively, and there is $0.5 million of available borrowing capacity under the 99 Revolver.
2018 Margin Facility
On November 7, 2018, Cannae Funding, LLC, a wholly-owned special purpose subsidiary of the Company, entered into a
Margin Loan Agreement (the "Original Loan Agreement"), and certain other related agreements, with Credit Suisse AG (in
such capacity, "Administrative Agent") and other lenders thereto. On December 18, 2019, Cannae Funding, LLC entered into
an Amended and Restated Margin Loan Agreement (the “Amended Loan Agreement”) with the lenders thereto, the
Administrative Agent, and others that amended the Original Loan Agreement. Pursuant to the Amended Loan Agreement, we
may borrow up to $300.0 million (the "2018 Margin Facility") in term loans at an interest rate of the three-month LIBOR plus
an applicable margin. As of December 31, 2019, $75.0 million was outstanding under the 2018 Margin Facility, which
accrued interest at a rate of 4.7%. On February 18, 2020, we repaid the remaining $75.0 million outstanding under the Margin
Facility and terminated the Amended Loan Agreement. Accordingly, we have no borrowing capacity and all of the Company's
holdings of Ceridian common stock have been released from the first priority lien under the 2018 Margin Facility.
Brasada Interstate Loans
On January 29, 2016, FNF NV Brasada, LLC, an Oregon limited liability company and majority-owned subsidiary of
Cannae ("NV Brasada"), entered into a credit agreement with an aggregate borrowing capacity of $17.0 million (the "Interstate
Credit Agreement") originally with Bank of the Cascades, as lender. The Interstate Credit Agreement provides for a $12.5
million acquisition loan (the "Acquisition Loan"). On June 13, 2018, the Interstate Credit Agreement was modified to add an
additional line of credit of $3.6 million the ("C Note") and to assign the loan from the Bank of the Cascades to First Interstate
Bank. Pursuant to the Acquisition Loan, NV Brasada executed a $6.25 million "A Note", which accrues interest at a rate of
4.51% per annum and matures on the tenth anniversary of the issuance thereof, and a $6.25 million "B Note", which accrues
interest at the rate of LIBOR plus 225 basis points, adjusted monthly, and matures on the tenth anniversary of the issuance
thereof. NV Brasada makes equal monthly payments of principal and interest under the Acquisition Loan. The Interstate Loans
are secured by certain single-family residential lots that can be sold for construction, owned by NV Brasada, and certain other
operating assets owned by NV Brasada. The Company does not provide any guaranty or stock pledge under the Interstate Credit
Agreement.
As of December 31, 2020, the B Note and Line of Credit Loan incurred interest at 2.40% and the C Note had $2.1 million
outstanding and incurred interest at 2.40%.
83
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FNF Revolver
On November 17, 2017, FNF issued to Cannae a revolver note in aggregate principal amount of up to $100.0 million (the
"FNF Revolver"). Pursuant to the FNF Revolver, FNF may make one or more loans to us in increments of $1.0 million, with up
to $100.0 million outstanding at any time. The FNF Revolver accrues interest at LIBOR plus 450 basis points and matures on
the five-year anniversary of the date of the FNF Revolver. The maturity date is automatically extended for additional five-year
terms unless notice of non-renewal is otherwise provided by either FNF or Cannae, in their sole discretion. On February 7,
2019, we drew the $100.0 million available and used the proceeds to fund, in part, our initial investment in Dun & Bradstreet.
On June 12, 2019 we repaid to FNF the $100.0 million outstanding under the FNF Revolver. On July 5, 2019, we again drew
the $100.0 million available and used the proceeds for general corporate purposes. On September 11, 2019, we again repaid to
FNF the $100.0 million outstanding amount under the FNF Revolver. As of December 31, 2020, there was no outstanding
balance and $100.0 million of available borrowing capacity under the FNF Revolver.
Gross principal maturities of notes payable at December 31, 2020 are as follows (in millions):
2021............................................................................................................................................................................... $
2022...............................................................................................................................................................................
2023...............................................................................................................................................................................
2024...............................................................................................................................................................................
2025...............................................................................................................................................................................
Thereafter......................................................................................................................................................................
$
12.5
6.9
33.3
0.8
0.8
11.0
65.3
Note L.
Income Taxes
Income tax expense (benefit) on continuing operations consists of the following:
Current................................................................................................................................. $
116.1 $
64.7 $
27.3
Deferred...............................................................................................................................
365.1
(40.5)
(12.3)
$
481.2 $
24.2 $
15.0
Year Ended December 31,
2020
2019
(In millions)
2018
84
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
A reconciliation of the federal statutory rate to our effective tax rate is as follows:
Year Ended December 31,
2020
2019
2018
Federal statutory rate...........................................................................................................
21.0 %
21.0 %
21.0 %
State income taxes, net of federal benefit............................................................................
Tax credits............................................................................................................................
Valuation allowance............................................................................................................
Non-deductible expenses and other, net..............................................................................
Non-deductible executive compensation ............................................................................
Dividends received deduction..............................................................................................
Noncontrolling interests.......................................................................................................
Basis difference in investments...........................................................................................
Tax Reform..........................................................................................................................
Other....................................................................................................................................
Effective tax rate excluding equity investments...............................................................
(0.1)
(0.1)
0.1
—
0.5
—
0.3
—
—
(0.2)
21.5 %
Equity investments...............................................................................................................
0.6
Effective tax rate...............................................................................................................
22.1 %
(0.2)
(2.6)
0.5
0.1
1.8
—
2.6
(2.8)
—
(1.0)
19.4 %
(9.2)
10.2 %
3.6
(22.7)
—
0.2
67.5
(34.0)
35.5
—
0.4
3.8
75.3 %
(8.9)
66.4 %
The Company’s effective tax rate at December 31, 2020, 2019, and 2018 is 22.1%, 10.2% and 66.4%, respectively. The
increase in the effective tax rate from 2020 to 2019 is primarily attributable to the decreased impact of earnings from
unconsolidated affiliates on pretax income. The decrease in the effective tax rate from 2019 to 2018 primarily relates to the
decreased impact of non-deductible executive compensation on pretax income. Additionally, the impact of the non-controlling
interests, permanent items, and tax credits on pretax income was greater in 2018 than the impact of those same items on pretax
earnings and losses in 2019.
The significant components of deferred tax assets and liabilities at December 31, 2020 and 2019 consist of the following:
December 31,
2020
2019
(In millions)
Deferred tax assets:
Partnerships.............................................................................................................................................. $
— $
54.1
Net operating loss carryforwards..............................................................................................................
Other.........................................................................................................................................................
Total gross deferred tax asset...............................................................................................................
4.1
1.4
5.5
Less: valuation allowance....................................................................................................................
Total deferred tax asset........................................................................................................................ $
(3.3)
2.2 $
Deferred tax liabilities:
Partnerships.............................................................................................................................................. $
(327.5) $
Total deferred tax liability.................................................................................................................... $
(327.5) $
1.1
0.4
55.6
(1.1)
54.5
—
—
Net deferred tax (liability) asset........................................................................................................... $
(325.3) $
54.5
The Company's net deferred tax (liability) asset was $(325.3) million and $54.5 million at December 31, 2020, and 2019,
respectively. The Company’s deferred taxes are primarily reflected as the book to tax difference in the Company's investment in
Cannae LLC. The Company, through its direct and indirect interests, holds a 100% ownership percentage of Cannae LLC.
The increase in our net deferred tax liability (decrease in deferred tax asset) as of December 31, 2020 from 2019 is
primarily related to the recognized book gains on the change in fair value of the Company's investment in Ceridian, the Forward
Purchase Agreements and the Paysafe Subscription Agreement.
The Company’s gross state NOL carryforwards were $68.5 million and $19.7 million at December 31, 2020 and 2019,
respectively. The NOLs expire in various tax years through 2041.
85
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
ASC 740 requires that companies assess whether a valuation allowance should be established against their deferred tax
assets based on the consideration of all of the available evidence using a “more likely than not” standard. A valuation
allowance is established for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some
portion or all of the deferred tax assets may not be realized. Management evaluated the Company’s deferred tax assets for
recoverability using a consistent approach that considers the relative impact of negative and positive evidence, in particular, the
Company’s historical profitability and any projections of future taxable income or potential future tax planning strategies. As of
December 31, 2020 and 2019, the Company recorded a valuation allowance of $3.3 million and $1.1 million, respectively,
related to state NOLs, as it is more likely than not that the tax benefit of certain state NOLs will not be realized before the
NOLs expire.
Unrecognized tax benefits are recorded for differences between tax positions the Company takes, or expects to take, on its
income tax return compared to the benefit recognized for financial statement purposes. The Company does not have any
unrecognized tax benefits as of December 31, 2020, 2019 or 2018.
The Company's federal and state income tax returns for the tax years ended December 31, 2020, 2019, 2018 and 2017
remain subject to examination.
Note M.
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, if any, 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 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 that represents
our best estimate is recorded. As of December 31, 2020 and 2019, our accrual for settlements of legal proceedings was not
considered material. 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 in the event of an unfavorable outcome, 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.
On September 23, 2020, a stockholder derivative lawsuit styled Oklahoma Firefighters Pension & Retirement System,
derivatively on behalf of Cannae Holdings, Inc. v. William P. Foley, II, et al., was filed in the Court of Chancery of the State of
Delaware against the Company, certain Board members and officers of the Company, and the Manager, alleging breach of
fiduciary duties relating to the Company’s Management Services Agreement. The plaintiff further alleges the Board breached
their fiduciary duties by approving bonuses in connection with the initial public offering of Ceridian and the approval of an
Investment Success Incentive Plan in August 2018. Along with the Complaint, the plaintiff filed a motion for partial summary
judgment as to the count seeking to void the Management Services Agreement. On January 27, 2021, the Company entered into
an amendment to the Management Services Agreement and plaintiff withdrew its motion for partial summary judgment as
moot. On February 1, 2020, the court ordered the plantiff's summary judgment motion withdrawn and dismissed the related
count of the plantiff's complaint. On February 18, 2021, our Board formed a Special Litigation Committee (the "SLC")
consisting of two of the Board’s Directors, and has authorized the SLC, among other things, to investigate and evaluate the
86
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
claims and allegations asserted in the lawsuit. The Board has also given the SLC the sole authority and power to consider and
determine whether or not prosecution of the claims asserted in the lawsuit is in the best interest of the Company and its
shareholders, and what action the Company should take with respect to the lawsuit. The defendants will contest the remaining
claims in the action vigorously.
Blue Ribbon Reorganization
On September 16, 2020, the Bankruptcy Court entered its order in the Blue Ribbon Reorganization confirming the Chapter
11 Plan. Blue Ribbon, which owned the Village Inn, Bakers Square, and Legendary Baking concepts, had initiated its voluntary
Chapter 11 bankruptcy case before the Bankruptcy Court on January 27, 2020. The Blue Ribbon Reorganization did not involve
or affect the operations of O’Charley’s or 99 Restaurants, which are not part of Blue Ribbon.
On October 2, 2020, the Chapter 11 Plan became effective and Blue Ribbon emerged from bankruptcy as a set of
reorganized companies. Pursuant to the Chapter 11 Plan, we received 100% of the equity in the reorganized companies in
exchange for the satisfaction of a portion equal to $15.5 million of the DIP Loan. In addition, as approved under the Chapter 11
Plan and in connection with Blue Ribbon’s emergence from bankruptcy, we provided the reorganized companies with an exit
facility that, among other things, converted the balance of the DIP Loan to a term loan and made available to the reorganized
companies an additional term loan in the amount of $6.5 million and two revolving lines of credit in the amount of $5.0 million
and $2.5 million, respectively. Subsequent to October 2, 2020, all such loans between the reorganized companies and the
Company eliminate upon accounting consolidation.
Unconditional Purchase Obligations
We have certain unconditional purchase obligations, primarily in our Restaurant Group segment. These purchase
obligations are with various vendors and primarily related to 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 December 31, 2020 to determine the amount of the obligations. Purchase
obligations as of December 31, 2020 are as follows (in millions):
2021............................................................................................................................................................................ $
2022............................................................................................................................................................................
2023............................................................................................................................................................................
2024............................................................................................................................................................................
2025............................................................................................................................................................................
Thereafter...................................................................................................................................................................
99.2
13.3
7.8
7.1
5.9
6.8
Total purchase commitments...................................................................................................................................... $
140.1
Note N.
T-System
Discontinued Operations
On December 31, 2019, we completed the contribution of T-System to CorroHealth. As a result of such contribution, the
results of operations of T-System have been reclassified to discontinued operations in our Consolidated Statements of
Operations for the years ended December 31, 2019 and 2018. We retained a 22.7% equity interest in CorroHealth, the company
to which we contributed our equity in T-System. We recognized a pre-tax loss of $6.4 million on the sale and $1.4 million in
income tax benefit which are included in Net loss from discontinued operations on the Consolidated Statement of Operations
for the year ended December 31, 2019.
87
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
A reconciliation of the operations of T-System included in the Consolidated Statement of Operations is shown below:
Year Ended December 31,
2019
2018
(in millions)
Revenues:
Other operating revenue
Total operating revenues
Operating expenses:
Personnel costs
Depreciation and amortization
Other operating expenses
Goodwill impairment
Total operating expenses
Operating loss
Other expense:
Recognized loss
Total other expense
Loss before income taxes
Income tax benefit
Net loss from discontinued operations
Cash flow from discontinued operations data:
Net cash provided by operations
Net cash used in investing activities
Note O.
Employee Benefit Plans
Omnibus Plan
$
50.4 $
50.4
33.1
13.7
19.1
35.1
101.0
(50.6)
(6.9)
(6.9)
(57.5)
(5.7)
(51.8) $
57.9
57.9
33.1
15.0
13.8
—
61.9
(4.0)
—
—
(4.0)
(1.9)
(2.1)
$
$
$
2.7 $
(0.5) $
5.2
(0.1)
In 2017, we established the 2017 Omnibus Incentive Plan (the “Omnibus Plan”) authorizing the issuance of up to 3.9
million shares of common stock, subject to the terms of the Omnibus Plan. The 2017 Omnibus Plan provides for the grant of
stock options, stock appreciation rights, restricted stock, restricted stock units and performance shares, performance units, other
cash and stock-based awards and dividend equivalents. As of December 31, 2020, there were 149,628 shares of Cannae
restricted stock outstanding (the "CNNE Awards") under the Omnibus Plan. Awards granted are approved by the Compensation
Committee of the Board of Directors of the Company.
Restricted stock transactions under the Omnibus Plan in 2020, 2019 and 2018 are as follows:
Weighted
Average
Grant Date
Fair Value
Shares
Balance, December 31, 2017...............................................................................................................
287,059 $
Granted...........................................................................................................................................
384,281
Vested.............................................................................................................................................
(95,685)
Balance, December 31, 2018...............................................................................................................
575,655 $
Granted...........................................................................................................................................
18,642
Vested.............................................................................................................................................
(223,777)
Balance, December 31, 2019...............................................................................................................
370,520 $
Granted...........................................................................................................................................
13,993
Vested.............................................................................................................................................
(234,885)
Balance, December 31, 2020...............................................................................................................
149,628 $
18.45
17.98
18.45
18.13
34.45
18.18
18.93
40.53
18.60
21.46
88
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Compensation cost relating to share-based payments is recognized in the Consolidated Statements of Operations based on
the grant-date fair value of each award. Using the fair value method of accounting, compensation cost is measured based on the
fair value of the award at the grant date and recognized over the service period of 3 years. Fair value of restricted stock awards
and units is based on the grant date value of the underlying stock derived from quoted market prices. Net earnings attributable
to Cannae reflects stock-based compensation expense for the CNNE Awards of $4.2 million, $4.1 million and $2.0 million for
the years ended December 31, 2020, 2019 and 2018, respectively, which are included in personnel costs on the Consolidated
Statements of Operations. The total fair value of restricted stock awards granted in the years ended December 31, 2020, 2019
and 2018 was $0.6 million, $0.6 million and $6.9 million, respectively.
On May 16, 2018, we issued 991,906 shares of our common stock (unrestricted) under the Omnibus Plan for the stock
portion of bonuses paid in conjunction with Ceridian's initial public offering.
Note P.
Concentration of Risk
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents.
We place cash equivalents with high credit quality financial institutions and, by policy, limit the amount of credit exposure
with any one financial institution.
Our Restaurant Group companies obtain a majority of their restaurant food products and supplies from four distributors.
Although we believe alternative vendors could be found in a timely manner, any disruption of these services could potentially
have an adverse impact on operating results.
Note Q.
Segment Information
As discussed in Notes A and D, as of March 31, 2020, we no longer account for our investment in Ceridian under the
equity method of accounting for equity investments. As a result of our reduction in influence over Ceridian and change in our
accounting for our investment, we no longer consider Ceridian a reportable segment.
On September 15, 2020, we completed our investment in Optimal Blue. Optimal Blue exceeds certain of the quantitative
thresholds prescribed by ASC 280 Segment Reporting and our chief operating decision maker reviews the financial results of
Optimal Blue for purposes of assessing performance and allocating resources. Accordingly, we consider Optimal Blue a
reportable segment and have included the results of operation of Optimal Blue subsequent to the date of our investment in
Optimal Blue in the tables below. See below for further discussion of Optimal Blue and our accounting for our related
investment.
As of and for the year ended December 31, 2020:
Restaurant
Group
Dun &
Bradstreet
Optimal
Blue
Corporate
and Other
(in millions)
Dun &
Bradstreet &
Optimal Blue
Elimination
Total
Restaurant revenues................................................................................................. $ 559.7 $
— $
— $
— $
— $ 559.7
Other revenues.........................................................................................................
—
1,738.1
Revenues from external customers..........................................................................
559.7
1,738.1
45.4
45.4
26.0
26.0
(1,783.5)
(1,783.5)
26.0
585.7
Interest and investment income, including recognized gains and losses, net..........
7.5
0.8
—
2,371.9
(0.8)
2,379.4
Total revenues and other income.............................................................................
567.2
1,738.9
45.4
2,397.9
(1,784.3)
2,965.1
Depreciation and amortization.................................................................................
Interest expense........................................................................................................
27.7
(8.6)
536.9
(271.1)
39.3
(9.3)
3.0
(0.4)
(576.2)
280.4
30.7
(9.0)
(Loss) earnings from continuing operations, before income taxes and equity in
earnings (loss) of unconsolidated affiliates..............................................................
Income tax (benefit) expense...................................................................................
(Loss) earnings from continuing operations, before equity in earnings (loss) of
unconsolidated affiliates..........................................................................................
(85.5)
(1.0)
(219.3)
(110.5)
(47.4)
2,267.4
266.7
2,181.9
(1.5)
482.2
112.0
481.2
(84.5)
(108.8)
(45.9)
1,785.2
154.7
1,700.7
Equity in (losses) earnings of unconsolidated affiliates...........................................
(9.2)
2.3
—
124.5
(58.5)
59.1
(Loss) earnings from continuing operations............................................................ $
(93.7) $ (106.5) $
(45.9) $ 1,909.7 $
96.2 $ 1,759.8
Assets....................................................................................................................... $ 520.9 $ 9,219.4 $ 1,969.4 $ 4,092.5 $ (11,188.8) $ 4,613.4
Goodwill...................................................................................................................
53.4
2,856.2
1,236.8
—
(4,093.0)
53.4
89
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
As of and for the year ended December 31, 2019:
Restaurant
Group
Dun &
Bradstreet
Corporate
and Other
Dun &
Bradstreet
Elimination
Total
(in millions)
Restaurant revenues........................................................................................................................ $ 1,043.3 $ — $ — $
— $ 1,043.3
Other revenues................................................................................................................................
—
1,413.9
26.7
(1,413.9)
26.7
Revenues from external customers.................................................................................................
1,043.3
1,413.9
26.7
(1,413.9)
1,070.0
Interest and investment (loss) income, including recognized gains and losses, net.......................
3.9
2.4
369.4
(2.4)
373.3
Total revenues and other income....................................................................................................
1,047.2
1,416.3
396.1
(1,416.3)
1,443.3
Depreciation and amortization........................................................................................................
38.5
482.4
2.2
Interest expense...............................................................................................................................
(5.4)
(303.5)
(12.4)
(Loss) earnings from continuing operations, before income taxes and equity in earnings (loss)
of unconsolidated affiliates.............................................................................................................
(80.9)
(540.0)
Income tax expense (benefit)..........................................................................................................
0.3
(110.0)
318.8
23.9
(482.4)
303.5
540.0
110.0
40.7
(17.8)
237.9
24.2
(Loss) earnings from continuing operations, before equity in earnings of unconsolidated
affiliates...........................................................................................................................................
(81.2)
(430.0)
294.9
430.0
213.7
Equity in earnings of unconsolidated affiliates...............................................................................
—
4.2
1.3
(120.6)
(115.1)
(Loss) earnings from continuing operations................................................................................... $
(81.2) $ (425.8) $ 296.2 $
309.4 $
98.6
Assets.............................................................................................................................................. $
572.8 $ 9,112.8 $ 1,519.4 $ (9,112.8) $ 2,092.2
Goodwill.........................................................................................................................................
66.1
2,840.1
—
(2,840.1)
66.1
As of and for the year ended December 31, 2018:
Restaurant
Group
Corporate
and Other
Total
(in millions)
Restaurant revenues.............................................................................................................................................. $
1,117.8 $
— $
1,117.8
Other revenues......................................................................................................................................................
—
Revenues from external customers.......................................................................................................................
1,117.8
Interest and investment (loss) income, including recognized gains and losses, net.............................................
(2.1)
Total revenues and other income..........................................................................................................................
1,115.7
Depreciation and amortization..............................................................................................................................
Interest expense....................................................................................................................................................
(Loss) earnings from continuing operations, before income taxes and equity in losses of unconsolidated
affiliates................................................................................................................................................................
Income tax expense..............................................................................................................................................
(Loss) earnings from continuing operations, before equity in losses of unconsolidated affiliates.......................
Equity in earnings (losses) of unconsolidated affiliates.......................................................................................
44.9
(16.0)
(96.8)
0.6
(97.4)
0.1
29.7
29.7
175.2
204.9
1.4
11.3
119.4
14.4
105.0
(16.2)
(Loss) earnings from continuing operations......................................................................................................... $
(97.3) $
88.8 $
29.7
1,147.5
173.1
1,320.6
46.3
(4.7)
22.6
15.0
7.6
(16.1)
(8.5)
Assets.................................................................................................................................................................... $
432.3 $
1,027.2 $
1,459.5
Goodwill...............................................................................................................................................................
76.5
—
76.5
The activities in our segments include the following:
•
•
Restaurant Group. This segment consists of the operations of O'Charley's, 99 Restaurants, Legendary Baking, and
VIBSQ in which we have 65.4%, 88.5%, 100% and 100% ownership interests, respectively. O'Charley's, 99
Restaurants, Legendary Baking, VIBSQ and their affiliates are the owners and operators of the O'Charley's restaurant
concept, Ninety Nine Restaurants restaurant concept, Legendary Baking bakery and the Village Inn and Bakers Square
restaurant concepts.
Dun & Bradstreet. This segment consists of our approximate 18.1% ownership interest in Dun & Bradstreet. Dun &
Bradstreet is a leading global provider of business decisioning data and analytics. Its mission is to deliver a global
network of trust, enabling clients to transform uncertainty into confidence, risk into opportunity and potential into
prosperity. Clients embed D&B's trusted, end-to-end solutions into their daily workflows to enhance salesforce
productivity, gain visibility into key markets, inform commercial credit decisions and confirm that suppliers are
financially viable and compliant with laws and regulations. Dun & Bradstreet's solutions support its clients’ mission
critical business operations by providing proprietary and curated data and analytics to help drive informed decisions
and improved outcomes. Dun & Bradstreet's global commercial database as of December 31, 2020 contained more
90
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
than 420 million business records. Our chief operating decision maker reviews the full financial results of Dun &
Bradstreet for purposes of assessing performance and allocating resources. Thus, we consider Dun & Bradstreet a
reportable segment and have included the full results of Dun & Bradstreet subsequent to our initial investment in the
tables above. We account for Dun & Bradstreet using the equity method of accounting, and therefore its results do not
consolidate into ours. Accordingly, we have presented the elimination of Dun & Bradstreet's results in the Dun &
Bradstreet and Optimal Blue Elimination section of the segment presentation above. Our net earnings for the year
ended December 31, 2019, includes our equity in Star Parent’s losses for the period from February 8, 2019, the date
we made our initial investment in Star Parent, to December 31, 2019. See Note D for further discussion of our
investment in Dun & Bradstreet and related accounting.
Optimal Blue. This segment consists of our 20.0% ownership interest in Optimal Blue. Optimal Blue is a leading
provider of secondary market solutions and actionable data services. They operate a software-as-a-service,
subscription-based mortgage marketplace that supports a network of originators and investors in the residential
mortgage market. The marketplace provides a broad set of critical functions utilized by banks, credit unions and
mortgage brokerage companies throughout the mortgage processing life cycle. Optimal Blue exceeds certain of the
quantitative thresholds prescribed by ASC 280 Segment Reporting and our chief operating decision maker reviews the
financial results of Optimal Blue for purposes of assessing performance and allocating resources. Thus, we consider
Optimal Blue a reportable segment and have included the results of operations of Optimal Blue in the tables above. We
account for Optimal Blue using the equity method of accounting, and therefore its results do not consolidate into ours.
Accordingly, we have presented the elimination of Optimal Blue's results in the Dun & Bradstreet and Optimal Blue
Elimination section of the segment presentation above. Our net earnings for the year ended December 31, 2020,
includes our equity in Optimal Blue’s losses for the period from September 15, 2020, the date we made our initial
investment in Optimal Blue, to December 31, 2020. See Note D for further discussion of our investment in Optimal
Blue and related accounting.
Corporate and Other. This aggregation of nonreportable segments consists of our share in the operations of certain
controlled portfolio companies and other equity investments, activity of the corporate holding company and certain
intercompany eliminations and taxes. Total assets for this segment as of December 31, 2018 also include the assets of
T-System. See Note N Discontinued Operations for further details.
•
•
Note R.
Related Party Transactions
FNF
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. Total operating expenses allocated from FNF to us was $1.3 million in each of the years ended December 31,
2020, 2019 and 2018.
On January 17, 2020, we completed the purchase of our corporate office headquarters in Las Vegas, Nevada from an
affiliate of FNF for $9.3 million.
Trasimene
During the year ended December 31, 2020 we incurred $20.8 million of management fee expenses payable to our Manager,
incurred $11.3 million of carried interest expense related to sales and distributions of Company investments, and earned
$9.1 million of income related to transaction fees earned by the Manager and allocable to us pursuant to the Management
Services Agreement. Such management fees and carried interest expense are recorded in Other operating expenses and
transaction fee income is recorded in Interest, investment and other income on our Consolidated Statement of Operations for the
year ended December 31, 2020.
Special Purpose Acquisition Company Investments and Commitments
See Note A for discussion of Cannae's investments, and commitments to invest in, FTAC, FTAC II and Trebia, which are
sponsored by certain of our directors and affiliates of our Manager.
91
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Note S.
Recent Accounting Pronouncements
In February 2016, the FASB issued Accounting Standards Update ("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. In July 2018, the FASB issued ASU
2018-11 Leases (Topic 842): Targeted Improvements that allows entities the option to adopt this standard by recording a
cumulative-effect adjustment to opening equity, if necessary, and only include required disclosures for prior periods.
We adopted Topic 842 on January 1, 2019 using a modified retrospective approach prescribed by ASU 2018-11 and
recorded an operating lease right-of-use asset (Lease assets) of $246.0 million and an operating lease liability for future
discounted lease payment obligations (Lease liabilities) of $279.4 million at the date of adoption. The other material impacts of
the adoption of Topic 842 also resulted in a decrease of $9.1 million and $42.3 million to our Other intangible assets, net and
Accounts payable and accrued liabilities, respectively. We elected to apply the following package of practical expedients on a
consistent basis permitting entities not to reassess: (i) whether any expired or existing contracts are or contain a lease; (ii) lease
classification for any expired or existing leases and (iii) whether initial direct costs for any expired or existing leases qualify for
capitalization under the amended guidance.
See Note B for further discussion of our leasing arrangements and related accounting.
In December 2019, the FASB issued Accounting Standards Update ("ASU") 2019-12 Income Taxes - Simplifying the
Accounting for Income Taxes (Topic 740), which simplifies various aspects of the income tax accounting guidance and will be
applied using different approaches depending on what the specific amendment relates to and, for public entities, are effective
for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted.
We have completed our evaluation of the impact of this guidance on our Consolidated Financial Statements and related
disclosures upon adoption and determined that, based on currently prevailing tax laws and rates, the adoption of this ASU is not
expected to have a material impact on our Consolidated Financial Statements and related disclosures. Adoption of this ASU
could result in a material change to our accounting for taxes in future interim periods if a change in tax laws or rates occurs in a
future interim period as this ASU now requires accounting for such changes to occur in the period in which changes to tax laws
or rates are enacted. We did not early adopt this standard.
92
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Note T.
Supplementary Cash Flow Information
The following supplemental cash flow information is provided with respect to interest and tax payments, as well as certain
non-cash investing and financing activities.
Year Ended December 31,
2020
2019
2018
(In millions)
Cash paid during the year:
Interest.................................................................................................................................... $
5.5 $
15.6 $
Income taxes..........................................................................................................................
Operating leases.....................................................................................................................
107.6
41.3
48.6
62.6
Non-cash investing and financing activities:
Acquisition of Ceridian HCM common shares through non-cash private placement
investment - see Note A......................................................................................................... $ — $ — $
Non-cash distribution of LifeWorks from Ceridian...............................................................
Investment in CorroHealth received as partial consideration for T-System..........................
Non-cash distribution of CoreLogic stock from Senator JV.................................................
Non-cash contribution of CoreLogic stock to Senator JV.....................................................
Lease assets recognized in exchange for lease liabilities.......................................................
Assets acquired in non-cash acquisition of Legendary Baking and VIBSQ..........................
Liabilities assumed in non-cash acquisition of Legendary Baking and VIBSQ....................
Financing obligations assumed by O'Charley's in exchange for property.............................
Property obtained by O'Charley's in exchange for stores......................................................
—
—
112.5
176.3
65.0
96.5
44.4
—
—
—
60.2
—
—
8.5
—
—
14.6
10.5
3.3
0.2
—
(33.4)
32.5
—
—
—
—
—
—
—
—
Note U.
Revenue Recognition
On January 1, 2018, we adopted ASC Topic 606 by applying the modified retrospective method. Results for reporting
periods beginning after January 1, 2018 are presented under ASC 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. Differences
between our historical revenue recognition and revenue that would have been recorded had we retrospectively restated prior
periods to conform with ASC Topic 606 are not considered material. We recorded a cumulative effect adjustment to opening
equity as of January 1, 2018 of $1.9 million as a result of adoption of ASC Topic 606.
93
CANNAE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Disaggregation of Revenue
Our revenue consists of the following:
Restaurant revenue:
Revenue Stream
Segment
Year ended December 31,
2020
2019
2018
Total Revenue
(in millions)
Restaurant sales.......................................................................
Restaurant Group
$
534.1 $
958.4 $
1,023.0
Bakery sales.............................................................................
Restaurant Group
Franchise and other.................................................................
Restaurant Group
Total restaurant revenue........................................................
Other operating revenue:
Real estate and resort...............................................................
Corporate and other
Other........................................................................................
Corporate and other
Total other operating revenue...............................................
Total operating revenue......................................................
23.4
2.2
559.7
24.7
1.3
26.0
585.7
78.9
6.0
88.8
6.0
1,043.3
1,117.8
25.9
0.8
26.7
23.2
6.5
29.7
1,070.0
1,147.5
Restaurant revenue consists of restaurant sales, bakery operations, and, to a lesser extent, franchise revenue and other
revenue. Restaurant sales include food and beverage sales and gift card breakage, are net of applicable state and local sales
taxes and discounts, and are recognized at a point in time as services are performed and goods are provided.
Revenue from bakery operations is recognized at a point in time in the period during which the products are shipped and
control transfers to the customer.
Franchise revenue and other revenue consist of development fees and royalties on sales by franchised units. Initial
franchise fees are recognized as income upon commencement of the franchise operation and completion of all material services
and conditions by the Company. Royalties are calculated as a percentage of the franchisee sales and recognized in the period in
which the sales are generated. Revenue resulting from the sale of gift cards is recognized in the period in which the gift card is
redeemed and is recorded as deferred revenue until recognized.
Other operating revenue consists of income generated by our resort operations, which includes sales of real estate, lodging
rentals, food and beverage sales, and other income from various resort services offered. Revenue is recognized upon closing of
the sale of real estate or once goods and services have been provided and billed to the customer.
Contract Balances
The following table provides information about receivables and deferred revenue:
December 31,
December 31,
2020
2019
Trade receivables, net............................................................................................................. $
Deferred revenue (contract liabilities)....................................................................................
Trade receivables, net are included in Other current assets on our Consolidated Balance Sheets.
(In millions)
17.6 $
23.9
16.0
26.4
Deferred revenue is recorded primarily for restaurant gift card sales. The unrecognized portion of such revenue is recorded
as Deferred revenue in the Consolidated Balance Sheets. Revenue of $17.5 million was recognized in the year ended
December 31, 2020 and was included in Deferred revenue at the beginning of the period.
There was no impairment related to contract balances.
94
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the year covered by this Annual Report, we carried out an evaluation, under the supervision and with the
participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of
our disclosure controls and procedures as such term is defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act. Based
on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and
procedures are effective to ensure that information required to be disclosed by the Company in the reports that we file or submit
under the Exchange Act is: (a) recorded, processed, summarized and reported, within the time periods specified in the SEC’s
rules and forms; and (b) accumulated and communicated to management, including our principal executive and principal
financial officers, as appropriate to allow timely decisions regarding required disclosure.
Management's Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term
is defined in Exchange Act Rule 13a-15(f) or 15d-15(f). Because of its inherent limitations, internal control over financial
reporting may not prevent or detect all misstatements. Under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our
internal control over financial reporting using the criteria set forth under the framework in Internal Control-Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our
evaluation under this framework, our management concluded that our internal control over financial reporting was effective as
of December 31, 2020.
The effectiveness of our internal control over financial reporting as of December 31, 2020 has been audited by Deloitte &
Touche LLP, an independent registered public accounting firm, as stated in their report, which is included herein.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31,
2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B.
Other Information
None.
95
Items 10-14.
PART III
Within 120 days after the close of our fiscal year, we intend to file with the SEC the matters required by these items.
96
Item 15.
Exhibits, Financial Statement Schedules and Reports on Form 8-K
PART IV
(a) (1) Financial Statements. The following is a list of the Consolidated Financial Statements of Cannae Holdings, Inc. and
its subsidiaries included in Item 8 of Part II:
Report of Independent Registered Public Accounting Firm on Effectiveness of Internal Control over Financial
Reporting.....................................................................................................................................................................
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements..........................
Consolidated Balance Sheets as of December 31, 2020 and 2019..............................................................................
Consolidated Statements of Operations for the years ended December 31, 2020, 2019, and 2018............................
Consolidated Statements of Comprehensive Earnings for the years ended December 31, 2020, 2019, and 2018.....
Consolidated Statements of Equity for the years ended December 31, 2020, 2019, and 2018...................................
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019, and 2018...........................
Notes to Consolidated Financial Statements...............................................................................................................
52
53
55
56
57
58
59
60
All other schedules are omitted because they are not applicable or not required, or because the required information is
included in the Consolidated Financial Statements or notes thereto.
97
(a) (2) The following exhibits are incorporated by reference or are set forth on pages to this Form 10-K:
Exhibit
Number
Description
2.1
3.1
3.2
4.1
4.2
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
Reorganization Agreement, dated as of November 17, 2017, between Cannae Holdings, Inc. and Fidelity National
Financial, Inc. (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed November 20, 2017)
Restated Certificate of Incorporation of Cannae Holdings, Inc. (filed as Exhibit 3.1 to the Company’s Current
Report on Form 8-K, filed November 20, 2017)
Restated Bylaws of Cannae Holdings, Inc. (filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K,
filed November 20, 2017)
Specimen Certificate for shares of Common Stock (incorporated by reference to Exhibit 4.1 to Amendment No. 2
to the Company's Registration Statement on Form S-1 on Form S-4 (File No. 333-217-886), filed July 24, 2017)
Description of Common Stock (filed as Exhibit 4.2 to the Company’s Annual Report on Form 10-K for the year
ended December 31, 2019, filed March 2, 2020)
Revolver Note, dated as of November 17, 2017, by and between Cannae Holdings, Inc. and Fidelity National
Financial, Inc. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed November 20, 2017)
Tax Matters Agreement, dated as of November 17, 2017, by and between Cannae Holdings, Inc. and Fidelity
National Financial, Inc. (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed November 20,
2017)
Corporate Services Agreement, dated as of November 17, 2017, by and between Cannae Holdings, Inc. and
Fidelity National Financial, Inc. (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed
November 20, 2017)
Voting Agreement, dated as of November 17, 2017, by and between Cannae Holdings, Inc. and Fidelity National
Financial, Inc. (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed November 20, 2017)
Registration Rights Agreement, dated as of November 17, 2017, by and between Cannae Holdings, Inc. and
Chicago Title Insurance Company. (filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed
November 20, 2017)
Registration Rights Agreement, dated as of November 17, 2017, by and between Cannae Holdings, Inc. and
Fidelity National Title Insurance Company (filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K,
filed November 20, 2017)
Registration Rights Agreement, dated as of November 17, 2017, by and between Cannae Holdings, Inc. and
Commonwealth Land Title Insurance Company (filed as Exhibit 10.7 to the Company’s Current Report on Form
8-K, filed November 20, 2017)
Master Assignment and Assumption, dated as of March 13, 2018, by and between Cannae Holdings, LLC as the
assignee, Wells Fargo Bank, N.A. as assignor, and other assignors party thereto (incorporated by reference to
Exhibit 10.9 to the Company's Annual Report on Form 10-K for the year ended December 31, 2017, filed March
26, 2018)
Agency Succession Agreement, dated as of March 13, 2018, by and between Cannae Holdings, LLC and Wells
Fargo Bank, N.A. (incorporated by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K for
the year ended December 31, 2017, filed March 26, 2018).
10.10
10.11
Form of Notice of Restricted Stock Grant and Restricted Stock Award Agreement under Cannae Holdings, Inc.
2017 Omnibus Incentive Plan (time-based vesting) for November 2017 Awards (incorporated by reference to
Exhibit 10.11 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed
March 26, 2018). (1)
Form of Notice of Restricted Stock Grant and Restricted Stock Award Agreement under Cannae Holdings, Inc.
2017 Omnibus Incentive Plan (time-based vesting) for November 2018 Awards (incorporated by reference to
Exhibit 10.16 to the Company Annual Report on Form 10-K for the year ended December 31, 2018, filed March
14, 2019) (1)
10.12 Management Services Agreement, dated as of August 27, 2019, with effect September 1, 2019, by and among the
Cannae Holdings, Inc., Cannae Holdings, LLC and Trasimene Capital Management, LLC (incorporated by
reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed August 27, 2019)
10.13
Amended and Restated Operating Agreement of Cannae Holdings, LLC, dated August 27, 2019, with effect
September 1, 2019 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K,
filed August 27, 2019)
98
Exhibit
Number
10.14
Description
Second Amended and Restated Limited Liability Company Agreement of Optimal Blue Holdco, LLC, dated
September 15, 2020, by and among Optimal Blue Holdco, LLC, THL Optimal Blue Blocker Corp., Black Knight
Technologies, LLC, Cannae Holdings, LLC and the other Persons who may from time to time become parties
thereto in accordance with the terms therein
10.15 Margin Loan Agreement, dated as of November 30, 2020, among Cannae Funding C, LLC, as Borrower 1,
Cannae Funding D, LLC, as Borrower 2, the lenders from time to time party thereto and Royal Bank of Canada,
as administrative agent and calculation Margin Loan Agreement, dated as of November 30, 2020, among Cannae
Funding C, LLC, as Borrower 1, Cannae Funding D, LLC, as Borrower 2, the lenders from time to time party
thereto and Royal Bank of Canada, as administrative agent and calculation agent (incorporated by reference to
Exhibit 10.1 to the Company's Current Report on Form 8-K, filed December 2, 2020).
10.16
Guaranty, dated as of November 30, 2020, of Cannae Holdings, Inc. (incorporated by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K, filed December 2, 2020).
10.17
10.18
10.19
10.20
10.21
10.22
10.23
Extension of Corporate Services Agreement, dated October 1, 2020 (executed October 7, 2020), by and between
Fidelity National Financial, Inc., and Cannae Holdings, Inc. (incorporated by reference to the Company Quarterly
Report on Form 10-Q for the period ended September 30, 2020, filed November 9, 2020).
Subscription Agreement, dated as of December 7, 2020, by and among Foley Trasimene Acquisition Corp. II,
Paysafe Limited and Cannae Holdings, LLC (incorporated by reference to Exhibit 10.1 to the Company's Current
Report on Form 8-K, filed December 7, 2020).
Amended and Restated Sponsor Agreement, dated as of December 7, 2020, by and among Foley Trasimene
Acquisition Corp. II, Trasimene Capital FT, LP II, Cannae Holdings, Inc., Cannae Holdings, LLC, and the
Insiders (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, filed
December 7, 2020).
Extension of Corporate Services Agreement, dated October 1, 2020 (executed October 7, 2020), by and between
Fidelity National Financial, Inc., and Cannae Holdings, Inc. (incorporated by reference to Exhibit 10.3 to the
Company's Quarterly Report on Form 10-Q for the period ended September 30, 2020, filed November 9, 2020).
Subscription Agreement, dated as of January 25, 2021, by and among Foley Trasimene Acquisition Corp.,
Acrobat Holdings, Inc. and Cannae Holdings, LLC (incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K, filed January 26, 2021).
Amended and Restated Sponsor Agreement, dated as of January 25, 2021 (incorporated by reference to Exhibit
10.2 to the Company's Current Report on Form 8-K, filed January 26, 2021).
First Amendment to Management Services Agreement, dated as of January 27, 2021, by and among Cannae
Holdings, Inc., Cannae Holdings, LLC and Trasimene Capital Management, LLC (incorporated by reference to
Exhibit 10.1 to the Company's Current Report on Form 8-K, filed January 29, 2021.)
99
Exhibit
Number
21.1
23.1
23.2
23.3
23.4
31.1
31.2
32.1
32.2
99.1
99.2
List of Subsidiaries
Consent of Deloitte & Touche LLP.
Description
Consent of KPMG LLP with respect to report related to Dun & Bradstreet Holdings, Inc. and The Dun &
Bradstreet Corporation
Consent of PricewaterhouseCoopers LLP with respect to reports related to The Dun & Bradstreet Corporation
Consent of KPMG LLP with respect to report related to Star Parent, L.P.
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification by Chief Executive Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, 18 U.S.C. Section 1350
Certification by Chief Financial Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, 18 U.S.C. Section 1350.
Audited Financial Statements of Dun & Bradstreet Holdings, Inc.
Audited Financial Statements of Star Parent, L.P. for the Period from February 8, 2019 to December 31, 2019
(incorporated by reference to Exhibit 99.2 to the Company's Annual Report on Form 10-K, filed March 25, 2020)
101.INS Inline XBRL Instance Document (2)
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
104
Cover Page Interactive Data File formatted Inline XBRL and contained in Exhibit 101.
(1) A management or compensatory plan or arrangement required to be filed as an exhibit to this report pursuant to Item 15(b)
of Form 10-K
(2) The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline
XBRL document.
Item 16.
Form 10-K Summary
None.
100
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Cannae Holdings, Inc.
By:
/s/ David W. Ducommun
David W. Ducommun
President
Date: February 25, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
/s/ David W. Ducommun
David W. Ducommun
/s/ Bryan D. Coy
Bryan D. Coy
/s/ William P. Foley, II
William P. Foley, II
/s/ Hugh R. Harris
Hugh R. Harris
/s/ C. Malcolm Holland
C. Malcolm Holland
/s/ Mark D. Linehan
Mark D. Linehan
/s/ Frank R. Martire
Frank R. Martire
/s/ Richard N. Massey
Richard N. Massey
/s/ Erika Meinhardt
Erika Meinhardt
/s/ James B. Stallings, Jr.
James B. Stallings, Jr.
/s/ Frank P. Willey
Frank P. Willey
Title
President
(Principal Executive Officer)
Date
February 25, 2021
Executive Vice President and Chief Financial Officer
February 25, 2021
(Principal Financial and Accounting Officer)
Director and Chairman of the Board
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
Director
Director
Director
Director
Director
Director
Director
Director
101
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Corporate
Information
MANAGEMENT TEAM
William P. Foley, II
Chairman
Richard N. Massey
Chief Executive Officer
David W. Ducommun
President
Bryan D. Coy
Chief Financial Officer
Michael L. Gravelle
EVP, General Counsel & Corporate Secretary
Ryan R. Caswell
SVP, Corporate Finance
Brett A. Correia
Chief Accounting Officer
COMMON SHARE LISTING
Our common stock is listed on the New York Stock
Exchange under the symbol CNNE.
INDEPENDENT AUDITORS
Deloitte & Touche LLP
3883 Howard Hughes Parkway, Suite 400
Las Vegas, NV 89169
ANNUAL MEETING INFORMATION
The annual meeting of shareholders will be
held on Wednesday, June 23, 2021, at 10:00 AM
(Pacific Daylight Time) in a virtual meeting format.
Shareholders who plan to attend our virtual annual
meeting should check the Investors' page of our
website at cannaeholdings.com the week of the
meeting for details on how to participate.
BOARD OF DIRECTORS
William P. Foley, II
Chairman
Cannae Holdings, Inc.
Managing Member
Trasimene Capital Management, LLC
David Aung, CFA
Investment Officer
City of San Jose, California
Hugh R. Harris
Retired Chief Executive Officer
Lender Processing Services, Inc.
C. Malcolm Holland
Chairman & Chief Executive Officer
Veritex Holdings, Inc.
Mark D. Linehan
President & Chief Executive Officer
Wynmark Company
Frank R. Martire
Executive Chairman
NCR Corporation
Richard N. Massey
Chief Executive Officer
Cannae Holdings, Inc.
Senior Managing Director
Trasimene Capital Management, LLC
Erika Meinhardt
Executive Vice President
Fidelity National Financial, Inc.
Barry B. Moullet
Supply Chain Consultant
Board Member
CiCi’s Pizza
James B. Stallings, Jr.
Managing Partner
PS27 Ventures, LLC
Frank P. Willey
Partner
Hennelly & Grossfeld LLP
TRANSFER AGENT
Continental Stock Transfer & Trust
1 State Street, 30th Floor
New York, NY 10004
(212) 509-4000
PUBLICATIONS
The Company’s Annual Report on Form 10-K and
quarterly reports on Form 10-Q are available on the
Investor Relations section of the Company’s website
at cannaeholdings.com.
A Notice of Annual Meeting of Shareholders and
Proxy Statement are furnished to shareholders in
advance of the Annual Meeting.
INVESTOR RELATIONS
Solebury Trout
Jamie Lillis, jlillis@soleburytrout.com
Shannon Devine, sdevine@soleburytrout.com
Cannae Holdings, Inc.
1701 Village Center Circle
Las Vegas, NV 89134
(702) 323-7330
cannaeholdings.com
1701 Village Center Circle, Las Vegas, NV 89134
(833) 856-8534 Toll Free
(702) 323-7330 Direct
info@cannaeholdings.com
cannaeholdings.com