Hawkins, Inc. Declares Semi-Annual Cash Dividend Of $0.44 Per Share

MINNEAPOLIS, Aug. 9, 2017 /PRNewswire/ -- The Board of Directors of Hawkins, Inc. (Nasdaq:  HWKN), at its meeting on August 9, 2017, declared a semi-annual cash dividend of $0.44 per share payable October 6, 2017, to shareholders of record at the close of business on September 22, 2017.  This is the 32nd consecutive year the Company has paid cash dividends since it first began paying out dividends in 1985.

Hawkins, Inc. distributes, blends and manufactures chemicals and other specialty ingredients for its customers in a wide variety of industries. Headquartered in Roseville, Minnesota, and with 41 facilities in 19 states, the Company creates value for its customers through superb customer service and support, quality products and personalized applications.

 

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SOURCE Hawkins, Inc.

OTC Markets Group Announces Second Quarter 2017 Financial Results

NEW YORK, Aug. 9, 2017 /PRNewswire/ --

Second Quarter 2017 Highlights:

  • Gross revenues of $13.8 million for the quarter versus $12.6 million for prior year quarter
  • Operating income of $4.8 million for the quarter up from $4.1 million for the prior year quarter
  • Operating profit margin of 37% for the quarter, versus 34% for the prior year quarter
  • Net income of $3.1 million for the quarter, up from $2.5 million for the prior year quarter
  • OTCQX and OTCQB Markets receive state Blue Sky recognition from four additional states, bringing the total to 25 that recognize OTCQX and 22 that recognize OTCQB
  • 12 Transfer Agents participating in the Transfer Agent Verified Shares Program, an initiative launched in October 2016 and designed to improve the timeliness and reliability of OTC company share information
  • On May 30, 2017 completed the acquisition of theOTC.today, an independent website that monitors and analyzes stock promotion campaigns
  • Announcing third quarter 2017 dividend of $0.14 per share
  • 14 graduates to a national securities exchange during the quarter

OTC Markets Group Inc. (OTCQX: OTCM), operator of the OTCQX® Best Market, the OTCQB® Venture Market and the Pink® Open Market for 10,000 U.S. and global securities, today announced its financial results for the second quarter 2017.

"A year after we announced that our OTCQX and OTCQB markets had received State Blue Sky recognition from five states, we have reached the half way point in achieving national State Blue Sky recognition with twenty-five states now formally recognizing our data-driven market standards," said R. Cromwell Coulson, President and Chief Executive Officer.  Mr. Coulson continued, "We continue to make public markets less painful with our focus on providing mission critical technology solutions that inform investors, make trading easier for broker dealers and deliver a more efficient market for public companies."

"The second quarter of 2017 saw 9% quarter over quarter revenue growth and a 300 basis point improvement in our operating profit margin.  This contributed to strong growth in our operating income, which was up 17% versus the prior year period and demonstrates the high level of operating leverage implicit in our subscription based business model.  We continue to focus on generating strong operating cashflows that create long term value for our shareholders.  In that context, we are pleased to announce our 35th consecutive quarterly dividend," said Bea Ordonez, Chief Financial Officer.

Second Quarter 2017 Compared to Second Quarter 2016



Quarter Ended June 30,





(in thousands, except shares and per share data)


2017


2016


% change


$ change

OTC Link ATS


$               2,497


$               2,658


(6%)


$           (161)

Market data licensing


5,522


5,237


5%


285

Corporate services


5,750


4,744


21%


1,006

Gross revenues


13,769


12,639


9%


1,130

Net revenues


13,143


12,055


9%


1,088

Operating expenses


8,319


7,936


5%


383

Income from operations


4,824


4,119


17%


705

Operating profit margin


37%


34%





Net income 


$               3,105


$               2,515


23%


$             590










Diluted earnings per share


$                 0.26


$                 0.21


24%



Adjusted diluted earnings per share


$                 0.48


$                 0.42


14%



Weighted-average shares outstanding, diluted


11,519,683


11,430,507


1%



Financial Highlights

  • Gross revenues increased $1.1 million, or 9%, to $13.8 million.
  • $1.0 million, or 21%, increase in Corporate Services revenues, largely driven by price increases related to our OTCQX market and DNS services and significant growth in new companies joining our premium markets.
  • Revenues from OTC Link® ATS declined $0.2 million, or 6%, to $2.5 million, reflecting the continued decline in the number of active market participants, decreases in the number of OTC Dealer® users at our remaining broker-dealer subscribers as well as reduced quote volumes.
  • Market Data Licensing revenues were up $0.3 million, or 5%, over the prior year quarter, primarily a result of significant growth in the number of non-professional users consuming our market data as well as the impact of price increases related to certain data license products and strong sales in relation to same.
  • Operating expenses increased $0.4 million, or 5%, to $8.3 million, primarily due to quarter over quarter increases in compensation costs and information technology costs.
  • Income from operations increased $0.7 million, or 17%, to $4.8 million.
  • Net income increased $0.6 million, or 23%, to $3.1 million, primarily due to the increase in operating income, as well as a decrease in the company's effective tax rate for the quarter from 39% to 36%, a result of the adoption of Accounting Standards Update No. 2016-09 related to Stock Compensation. Under the new guidance, excess tax benefits from share-based compensation are reflected in the Consolidated Statements of Income as a component of the provision for income taxes, whereas they were previously recognized under Additional paid-in capital.
  • Adjusted EBITDA, which excludes non-cash stock-based compensation expense, increased $0.7 million, or 15%, to $5.7 million, or $0.48 per adjusted diluted share.

Business Developments and News

  • Announced that Utah state regulations recognize the OTCQX market, and Indiana, Maine and West Virginia state securities regulators recognize the OTCQX and OTCQB markets as securities manuals for the purposes of each state's "Blue Sky Manual Exemption", bringing the total number of states to 25.
  • The Transfer Agent Verified Shares Program, launched in October 2016, provides investors with current and reliable share data on OTCQX, OTCQB and Pink securities. As of August 9, 2017, 12 transfer agents have joined the program, including Broadridge Financials Solutions Inc, providing timely data that improves the availability and accuracy of share information for companies on the OTCQX, OTCQB and Pink markets.
  • Announced that on May 30, 2017 we completed the acquisition of theOTC.today, an independent website that monitors and analyzes stock promotion campaigns, acquiring valuable historical data on and "know how" related to the tracking of stock promotion campaigns, data that will be used to further strengthen our internal issuer compliance processes and to enhance our compliance data product offerings.
  • Received award for "Most Innovative Market Data Project (vendor)" in the 2017 Inside Market Data/Inside Reference Data Awards. OTC Markets Group won in the category for its OTC Compliance Data Analytics Product.

Dividend Declaration – Quarterly Cash Dividend

OTC Markets Group announced today that its Board of Directors authorized a quarterly cash dividend of $0.14 on its Class A common stock.  The quarterly cash dividend is payable on September 21, 2017, to stockholders of record on September 7, 2017.  The ex-dividend date is September 5, 2017.

Non-GAAP Financial Measures

In addition to disclosing results prepared in accordance with GAAP, the Company also discloses certain non-GAAP results of operations, including adjusted EBITDA and adjusted diluted earnings per share that either exclude or include amounts that are described in the reconciliation table of GAAP to non-GAAP information provided at the end of this release.  Non-GAAP financial measures do not replace and are not superior to the presentation of GAAP financial results, but are provided to improve overall understanding of the Company's current financial performance.  Management believes that this non-GAAP information is useful to both management and investors regarding certain additional financial and business trends related to the operating results.  Management uses this non-GAAP information, along with GAAP information, in evaluating its historical operating performance.

Second Quarter 2017 Conference Call

The Company will host a conference call on Thursday, August 10, 2017, at 8:00 a.m. Eastern Time, during which management will discuss the financial results in further detail.  The conference call and replay of the conference call may be accessed as follows:

Dial-in numbers: 1-866-682-6100 (Domestic); 1-862-255-5401 (International);

Replay Dial-in Numbers (Available until August 24, 2017): 1-877-481-4010 (Domestic); 1-919-882-2331 (International); Replay Pin Number:  19391

The earnings release and transcript to the earnings call will also be available in the Investor Relations section of the corporate website at www.otcmarkets.com/investor-relations/overview.

OTC Markets Group's Quarterly Report for the period ended June 30, 2017 is available publicly at www.otcmarkets.com.

About OTC Markets Group Inc.

OTC Markets Group Inc. (OTCQX: OTCM) operates the OTCQX® Best Market, the OTCQB® Venture Market and the Pink® Open Market for 10,000 U.S. and global securities.  Through OTC Link® ATS, we connect a diverse network of broker-dealers that provide liquidity and execution services.  We enable investors to easily trade through the broker of their choice and empower companies to improve the quality of information available for investors.

To learn more about how we create better informed and more efficient markets, visit www.otcmarkets.com.

OTC Link ATS is operated by OTC Link LLC, member FINRA/SIPC and SEC regulated ATS.

Subscribe to the OTC Markets RSS Feed

Investor Contact:

Bea Ordonez
Chief Financial Officer
Phone: 212-220-2215
Email: ir@otcmarkets.com

 

OTC MARKETS GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 (in thousands, except share and per share information)

(Unaudited)



Three Months Ended June 30,


2017


2016

Gross revenues

$               13,769


$               12,639

Redistribution fees and rebates

(626)


(584)

  Net revenues

13,143


12,055

Operating expenses




Compensation and benefits

5,243


4,967

IT Infrastructure and information services

1,426


1,375

Professional and consulting fees

399


438

Marketing and advertising

227


184

Occupancy costs

451


367

Depreciation and amortization

399


410

General, administrative and other

174


195

  Total operating expenses

8,319


7,936

  Income from operations

4,824


4,119

Other (expense) income




Interest income

4


-

Other (expense) income

18


4

  Income before provision for income taxes

4,846


4,123

Provision for income taxes

1,741


1,608

  Net income 

$                 3,105


$                 2,515





Net income per share 




Basic

$                   0.27


$                   0.22

Diluted

$                   0.26


$                   0.21





Basic weighted average shares outstanding

11,134,758


11,099,650

Diluted weighted average shares outstanding

11,519,683


11,430,507





Non-GAAP Reconciliation





Three Months Ended June 30,


2017


2016

Net Income

$                 3,105


$                 2,515

Excluding:




Provision for income taxes

1,741


1,608

Depreciation and amortization

399


410

Stock-based compensation expense

456


420

Adjusted EBITDA

$                 5,701


$                 4,953





Adjusted diluted earnings per share 

$                   0.48


$                   0.42


Note: We use non-GAAP financial measures of operating performance. Non-GAAP measures do not replace and are not superior to the presentation of our GAAP financial results, but are provided to improve overall understanding of the Company's current financial performance.

 

OTC MARKETS GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share information)

(Unaudited)



June 30,


December 31,


2017


2016

Assets




Current assets




Cash

$               22,595


$               25,034

Accounts receivable, net of allowance for doubtful accounts of $145 and $145

5,196


6,262

Prepaid expenses and other current assets

1,708


1,246

Prepaid income taxes

1,331


435

  Total current assets

30,830


32,977

Property and equipment, net 

1,876


2,279

Non-current deferred tax assets, net

1,103


886

Goodwill

251


251

Intangible assets, net

136


40

Security deposits

192


210

  Total Assets

$               34,388


$               36,643





Liabilities and stockholders' equity




Current liabilities




Accounts payable

$                    420


$                    508

Accrued expenses and other current liabilities

2,950


4,761

Income taxes payable

-


103

Deferred revenue

12,263


14,664

  Total current liabilities

15,633


20,036

Deferred rent

303


187

Income tax reserve

1,024


914

  Total Liabilities

16,960


21,137

Commitments and contingencies




Stockholders' equity




Common stock - par value $0.01 per share




  Class A - 14,000,000 authorized, 11,846,185 issued, 11,418,793 outstanding at




  June 30, 2017; 11,595,337 issued, 11,247,979 outstanding at December 31, 2016

118


116

  Class C - 0 shares authorized, issued and outstanding at June 30, 2017;




  130,838 shares authorized, issued and outstanding at December 31, 2016

-


1

Additional paid-in capital 

13,643


12,988

Retained earnings

9,343


6,385

Treasury stock - 427,392 shares at June 30, 2017 and 347,358 shares at December 31, 2016

(5,676)


(3,984)

  Total Stockholders' Equity

17,428


15,506

  Total Liabilities and Stockholders' Equity

$               34,388


$               36,643

 

 

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SOURCE OTC Markets Group Inc.

Nuvo Pharmaceuticals(TM) Announces 2017 Second Quarter Results

- Pennsaid® 2% U.S. prescriptions increased from Q1 -

- Cash and short-term investments increased to $20.0 million with no debt -

- Nuvo to Host Conference Call/Audio Webcast August 10 at 8:00 a.m. ET -

MISSISSAUGA, ON, Aug. 9, 2017 /PRNewswire/ - Nuvo Pharmaceuticals Inc. (Nuvo or the Company) (TSX:NRI), a commercial healthcare company with a portfolio of commercial products and pharmaceutical manufacturing capabilities, today announced its financial and operational results for the second quarter ended June 30, 2017.  For further details on the results, please refer to Nuvo's Management, Discussion and Analysis (MD&A) and Condensed Consolidated Interim Financial Statements which are available on the Company's website (www.nuvopharmaceuticals.com).

Second Quarter 2017 and Business Update

  • U.S. prescriptions of Pennsaid 2% increased to 111,000 in the second quarter of 2017 from 105,000 prescriptions in the first quarter of 2017 according to IMS Health.

  • In May 2017, the Company announced the United States District Court for the District of New Jersey had upheld the validity of one of the claims in Horizon's U.S. patent covering Pennsaid 2%. The Defendant, Actavis Laboratories UT, Inc. (Actavis) had admitted that its proposed generic version of Pennsaid 2% would infringe the patent and was attempting to challenge the patent's validity. The Court's judgment prevents Actavis from launching a generic version of Pennsaid 2% in the United States until at least October 17, 2027 – the expiration date of the patent.

  • In May 2017, the Company announced the results of a placebo-controlled, multi-centre Phase 3 trial (2016 Pennsaid 2% Trial) in Germany to study Pennsaid 2% for the treatment of acute ankle sprains. The 2016 Pennsaid 2% Trial was conducted to support regulatory applications for marketing approval of Pennsaid 2% in the E.U., Canada and Australia. The 2016 Pennsaid 2% Trial failed to meet its primary endpoint. The Company does not plan to conduct another clinical study of Pennsaid 2% for the treatment of acute ankle sprains. It is reviewing the possibility of using existing data that supported the U.S. Food and Drug Administration (FDA) approval of Pennsaid and Pennsaid 2% for the treatment of osteoarthritis (OA) to support applications for approval of Pennsaid or Pennsaid 2% for the treatment of OA in select E.U. territories, Canada and Australia.

Second Quarter Financial Summary(1) 

  • Total revenue for the three months ended June 30, 2017 was $3.1 million compared to $8.1 million for the three months ended June 30, 2016.

  • Adjusted EBITDA(2) decreased to $(0.1) million for the three months ended June 30, 2017 compared to $3.2 million for the three months ended June 30, 2016.

  • Net loss from continuing operations was $0.2 million for the three months ended June 30, 2017 or $(0.02) per share compared to net income from continuing operations of $2.5 million or $0.22 per share for the three months ended June 30, 2016.

  • Cash and short-term investments increased to $20.0 million as at June 30, 2017 compared to $17.6 million as at December 31, 2016.

(1)

The financial information presented herein reflects results from continuing operations with Nuvo's previously disclosed segment, Crescita, presented as a discontinued operation.

(2)

Adjusted EBITDA is a non- International Financial Reporting Standards (IFRS) financial measure defined by the Company below.

 

"The key development in the quarter was the enhancement of the long-term security of our main source of revenue as a result of Horizon's successful court defense of one of the Pennsaid 2% U.S. patents," said John London, Nuvo's CEO.  "As expected, our second quarter financial results were negatively impacted by our previously announced shut down of non-serialized commercial bottle production of Pennsaid 2% to facilitate compliance by Nuvo and Horizon with the U.S. Federal Drug Chain Security Act."

Growth Strategy

The Company's focus, in the short-term, is to continue to monetize Pennsaid 2% through out-licensing to commercial partners in international markets, while at the same time, identifying new opportunities to acquire additional, accretive, late or commercial-stage products or businesses to further diversify the Company's existing product portfolio and revenue streams, and to better utilize the Company's manufacturing facility in Varennes, Québec.

Licensing and Product Acquisitions
Nuvo is in active discussions relating to potential transactions to license or acquire additional, accretive commercial assets to further diversify the Company's product portfolio and maximize the Company's manufacturing capabilities at our FDA approved site in Varennes, Québec.  Nuvo will continue to actively seek appropriately priced bolt-on or transformative transactions that are strategically aligned with the Company's business plan and will deliver shareholder value. 

Pennsaid 2% Out-licensing
Despite the failure of the 2016 Pennsaid 2% Trial, Nuvo continues to be in active discussions with potential commercial licensees of Pennsaid 2% for various global territories.  Nuvo anticipates signing licensing agreements covering multiple countries throughout the second half of 2017 and 2018.  Nuvo projects that incremental revenue from licensing agreements signed in 2017 will commence in late 2018 or early 2019, subject to obtaining regulatory approvals for Pennsaid 2% in the related territories.

Pennsaid 2% U.S. Update

Court Decision Upholding Validity of a Pennsaid 2% Patent
In May, the United States District Court for the District of New Jersey upheld the validity of one of the claims in Horizon's U.S. patents covering Pennsaid 2%, which a generic company, Actavis Laboratories UT (Actavis) had challenged. The court decision prevents Actavis from launching a generic version of Pennsaid 2% in the United States until 2027 when that patent expires.  (There are other Horizon patents that cover Pennsaid 2% that expire as late as 2030 that were not the subject of this trial).   Actavis was the first company to file an application for approval of a generic version of Pennsaid 2% with the FDA.  This first filer status typically prevents other generic companies from entering the market until after the first filer has had the opportunity to sell its generic version for 180 days.  Actavis has appealed the trial decision and another similar court challenge filed by another generic pharmaceutical company, Lupin is pending; however, it is our view that the most likely result is that Pennsaid 2% will enjoy at least 10 more years of U.S. commercial sales without generic competition. 

Federal Drug Supply Chain Security Act Compliance
The Federal Drug Supply Chain Security Act (DSCSA) rules require all manufacturers of drug products sold in the U.S. to serialize each individual drug package to enhance drug traceability in the event of an adverse event and to prevent drug counterfeiting.  In order to be in compliance with the DSCSA, the Company has purchased new packaging equipment and technology systems in coordination with Horizon.  The Company commenced the process of installing and qualifying the new packaging equipment at its manufacturing plant in Varennes, Québec for commercial production; however, on June 30, after the Company had stopped commercial production of non-serialized commercial bottles for Horizon, the FDA announced that it was extending the date for serialization compliance by one year to November 27, 2018.  As a result of this change, Horizon has requested that the Company deliver some non-serialized commercial bottles before the qualification process is completed.  The Company expects to complete qualification and be fully compliant with the DSCSA before the end of this year.  As a result of these timing changes, the Company expects that some commercial production and revenue may shift to earlier in 2017 than was previously anticipated. 

Horizon Adjustment of Sales and Marketing Resources
When Horizon released its Q1 results, it indicated that due to reimbursement pricing pressures, the profitability of its primary care group that sells Pennsaid 2% and other drug products had decreased.  As a result, Horizon indicated that it was reallocating resources to better align its costs and profits.  The reallocation included a reduction in the size of Horizon's primary care sales force that markets Pennsaid 2% to physicians.  Nuvo gets paid a fixed price per commercial bottle supplied to Horizon and is not directly impacted by any reduction in Horizon's profitability.  As prescription volumes increased in Q2 compared to Q1, the Company has not yet seen a negative impact from Horizon's sales force reduction that might impact Horizon's typical commercial bottle ordering patterns.  The Company expects Horizon's cost reallocation initiatives to also result in a decrease in the number of product samples Horizon distributes to physicians.  A reduction in sample product orders from Horizon will have a negative impact on the Company's future financial results. 

Second Quarter Financial Review

Table of Selected Financial Results
For further details on the results, please refer to Nuvo's Management, Discussion and Analysis (MD&A) and Condensed Consolidated Interim Financial Statements which are available on the Company's website (www.nuvopharmaceuticals.com).


Three months ended

Six months ended


June 30,

2017

June 30,

2016

 

Change

June 30,

2017

June 30,

2016


Change

(from continuing operations, Canadian dollars in
thousands, except gross margin)

$

$

$

$

$

$

Product Sales

2,786

7,317

(4,531)

9,439

14,642

(5,203)

Gross Margin % on Product Sales

48%

57%

(9%)

55%

57%

(2%)

Other Revenue

314

789

(475)

643

1,306

(663)

Total Operating Expenses

3,247

5,608

(2,361)

7,963

10,986

(3,023)

Net Income (Loss)

(203)

2,491

(2,694)

1,993

1,239

754

Adjusted EBITDA

(114)

3,176

(3,290)

2,184

6,165

(3,981)

 

Total revenue, consisting of product sales, royalties and contract and other revenue for the three months ended June 30, 2017 was $3.1 million compared to $8.1 million for the three months ended June 30, 2016.  The decrease in total revenue was primarily related to a decrease in product sales.  Total revenue for the six months ended June 30, 2017 was $10.1 million compared to $15.9 million for the comparative six-month period.

Total operating expenses for the three months ended June 30, 2017 decreased to $3.2 million compared to $5.6 million for the three months ended June 30, 2016.  The decrease in operating expenses was primarily attributable to a decrease in cost of goods sold (COGS) and general and administrative (G&A) expenses.  Total operating expenses for the six months ended June 30, 2017 decreased to $8.0 million from $11.0 million in the comparative six-month period.

COGS decreased to $1.5 million for the three months ended June 30, 2017 compared to $3.2 million for the three months ended June 30, 2016.  The decrease in COGS was attributable to a decrease in product sales.  The decrease in product sales during the current quarter reduced the gross margin on product sales to $1.3 million or 48% compared to $4.2 million or 57% in the comparative quarter.  For the six months ended June 30, 2017, COGS was $4.2 million compared to $6.3 million in the comparative six-month period.  Gross margin on product sales for the six months ended June 30, 2017 was $5.2 million or 55% compared to $8.3 million or 57% for the six months ended June 30, 2016. 

R&D expenses were consistent quarter-over-quarter at $0.2 million for the three months ended June 30, 2017 and 2016.  R&D expenses were $0.5 million for the six months ended June 30, 2017 compared to $0.4 million for the comparative six-month period.  The increase in spending in the current six-month period related to the 2016 Pennsaid 2% Trial for the treatment of acute ankle sprains. 

G&A expenses decreased to $1.6 million for the three months ended June 30, 2017 from $2.3 million for the three months ended June 30, 2016.  In the current quarter, the decrease of $0.7 million was primarily attributable to a decrease in stock-based compensation (SBC) expenses.  In the comparative three-month period, the Company recognized a $0.7 million SBC expense primarily related to the adjustment to market value for the outstanding share appreciation rights (SARs).  G&A expenses were $3.3 million for the six months ended June 30, 2017 compared to $4.4 million for the six months ended June 30, 2016. 

The Company earned net interest income of $34,000 for the three months ended June 30, 2017 compared to $22,000 for the three months ended June 30, 2016.  The increase in net interest income in the current quarter related to interest earned on the $5.0 million of short-term investments.  Net interest income was $72,000 for the six months ended June 30, 2017 compared to $78,000 for the comparative six-month period. 

For the three months ended June 30, 2017, the Company experienced a net foreign currency loss of $56,000 compared to a net foreign currency loss of $32,000 in the comparative quarter.  For the six months ended June 30, 2017, the Company experienced a net foreign currency loss of $0.1 million compared to a net foreign currency loss of $0.6 million in the comparative six-month period.

Net loss from continuing operations was $0.2 million for the three months ended June 30, 2017 compared to net income from continuing operations of $2.5 million for the three months ended June 30, 2016.  The decrease in the current quarter was attributable to a $2.8 million reduction in gross margin on product sales and a $0.5 million decrease in contract and other revenue, partially offset by a decrease in G&A expenses.  Net income from continuing operations was $2.0 million for the six months ended June 30, 2017 compared to $4.4 million for the six months ended June 30, 2016. 

Adjusted EBITDA decreased to $(0.1) million for the three months ended June 30, 2017 compared to $3.2 million for the three months ended June 30, 2016.  In the current quarter, a decrease in Adjusted EBITDA primarily related to a decrease in gross margin.  Adjusted EBITDA decreased to $2.2 million for the six months ended June 30, 2017 compared to $6.2 million for the comparative six-month period. 

Cash and short-term investments were $20.0 million as at June 30, 2017 compared to $17.6 million as at December 31, 2016.  The increase in cash and short-term investments was primarily attributable to an increase in cash provided by operations.

The number of common shares outstanding as at June 30, 2017 was 11,550,897.

Non-IFRS Financial Measures

Adjusted EBITDA
EBITDA is a non-IFRS financial measure.  The term EBITDA does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies.  The Company defines Adjusted EBITDA as net income from continuing operations before net interest income, plus income tax expense, depreciation, amortization and SBC.  Management believes Adjusted EBITDA is a useful supplemental measure from which to determine the Company's ability to generate cash available for working capital, capital expenditures and income taxes.

The following is a summary of how EBITDA and Adjusted EBITDA are calculated:


Three Months Ended
June 30

Six Months Ended
June 30


2017

2016

2017

2016

in thousands

$

$

$

$

Net income (loss) from continuing operations

(203)

2,491

1,993

4,419

Add back:






Net interest income                                           

(34)

(22)

(72)

(78)


Depreciation and amortization

58

55

112

113

EBITDA

(179)

2,524

2,033

4,454

Add back:






SBC

65

652

151

1,711

Adjusted EBITDA

(114)

3,176

2,184

6,165

 

Management to Host Conference Call/Webcast
Management will host a conference call to discuss the results tomorrow (Thursday, August 10, 2017) at 8:00 a.m. ET.  To participate in the conference call, please dial 1 (888) 231-8191 or (647) 427-7450, reference number 51804247.  Please call in 15 minutes prior to the call to secure a line.  You will be put on hold until the conference call begins.

A taped replay of the conference call will be available two hours after the live conference call and will be accessible until August 17, 2017 by calling 1 (855) 859-2056 or (416) 849-0833, reference number 51804247.

A live audio webcast of the conference call will be available through www.nuvopharmaceuticals.com.  Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to hear the webcast.

About Nuvo Pharmaceuticals Inc.
Nuvo (TSX:NRI) is a commercial healthcare company with a portfolio of commercial products and pharmaceutical manufacturing capabilities.  Nuvo has three commercial products that are available in a number of countries; Pennsaid 2%, Pennsaid and the heated lidocaine/tetracaine patch.  Pennsaid 2% is sold in the U.S. by Horizon Pharma plc (NASDAQ:HZNP) and is available for partnering in certain other territories around the world.  Nuvo manufactures Pennsaid for the global market and Pennsaid 2% for the U.S. market at its FDA, Health Canada and E.U. approved manufacturing facility in Varennes, Québec.  For additional information, please visit www.nuvopharmaceuticals.com.

Forward-Looking Statements
This Press Release contains "forward-looking statements" within the meaning of applicable securities laws. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on the Company's current beliefs, expectations and assumptions regarding the future of its business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company's control. Nuvo's actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, readers should not rely on any of these forward-looking statements. Important factors that could cause Nuvo's actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the risk factors included in Nuvo's most recent Annual Information Form dated March 1, 2017 under the heading "Risks Factors", and as described from time to time in the reports and disclosure documents filed by Nuvo with Canadian securities regulatory agencies and commissions. These and other factors should be considered carefully and readers should not place undue reliance on Nuvo's forward-looking statements. As a result of the foregoing and other factors, no assurance can be given as to any such future results, levels of activity or achievements and none of Nuvo or any other person assumes responsibility for the accuracy and completeness of these forward-looking statements.

Any forward-looking statement made by the Company in this Press Release is based only on information currently available to it and speaks only as of the date on which it is made. Except as required by applicable securities laws, Nuvo undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

SOURCE Nuvo Pharmaceuticals Inc.

Intec Pharma Reports Financial Results for the First Six Months of 2017

JERUSALEM, Aug. 9, 2017 /PRNewswire/ -- Intec Pharma Ltd. (Nasdaq: NTEC) (TASE: NTEC), a clinical-stage biopharmaceutical company focused on developing drugs based on its proprietary Accordion Pill™ (AP) platform technology, today reported financial results for the six months ended June 30, 2017.

Highlights of the first half of 2017 and recent weeks include:

  • Initiated and completed a Phase I clinical trial of AP-CBD/THC, the Company's AP platform with cannabidiol (CBD) and tetrahydrocannabinol (THC), the two primary cannabinoids contained in Cannabis sativa, which is being developed for various indications including low back neuropathic pain and fibromyalgia;
  • Reported topline data from the Phase I clinical trial of AP-CBD/THC, which showed that AP-CBD/THC had significant improvements in exposure of CBD (+290% - +330%) and THC (+25% - +50%) compared with Sativex®. The median time of peak concentration was two to three times longer than with Sativex and absorption was significantly higher. Importantly, the formation of THC metabolites were meaningfully reduced (>25%) and AP-CBD/THC was found to be safe and well tolerated with no serious adverse events reported;
  • Advanced enrollment in the ACCORDANCE study, Intec Pharma's Phase III clinical trial of AP Carbidopa/Levodopa (AP-CD/LD) for the treatment of symptoms in advanced Parkinson's disease, affirming the Company's expectation to complete enrollment during the fourth quarter of 2017 or the first quarter of 2018;
  • Expanded the Company intellectual property portfolio with the addition of U.S. and international patents that protect key elements of the AP technology platform and AP-CD/LD in significant markets; and
  • Strengthened the Company's balance sheet through a $10 million private placement in March 2017.

Management Commentary

"Throughout the first half of 2017, Intec made substantial advances across the company, including key corporate, clinical and financial initiatives," stated Jeffrey A. Meckler, Chief Executive Officer of Intec Pharma. "We significantly advanced the ACCORDANCE study and are currently on target to complete enrollment by year end. In anticipation of completing this pivotal program, we are moving forward with a variety of pre-commercial activities including Key Opinion Leader engagement and manufacturing scale-up.

"We were delighted to report encouraging results from our Phase I study of AP-CBD/THC as the data show the AP platform is well suited to deliver these cannabinoids with significant improvements in exposure compared with Sativex. We are particularly pleased with the reduction in THC metabolite, which tells us that AP-CBD/THC avoids some of the hepatic first-pass metabolism of THC. These favorable data give us continued confidence in the potential for AP-CBD/THC as a therapy for pain management.

"We remain focused on our goals to bring the AP-CD/LD clinical development program to data readout, advance our pre-commercial initiatives, move forward with the development of AP-CBD/THC and execute a broad development program for the Accordion Pill technology. 

"It is an exciting time of growth and expansion for Intec as we look to achieve a number of key milestones throughout the balance of the year and beyond. We believe that the significant headway we are making positions us to advance our vision to become a leader in Parkinson's disease treatment and in oral drug delivery with our Accordion Pill platform to bring innovative new therapies to patients across various important indications, with significant unmet needs."

Financial Highlights for the Six Months Ended June 30, 2017

The Company's research and development expenses, net, for the six-month period ended June 30, 2017, amounted to approximately $9.5 million, an increase of $4.1 million, or approximately 76%, compared to approximately $5.4 million for the six-month period ended June 30, 2016. The increase was primarily due to increased activity in the Company's Phase III clinical trial for AP-CDLD, payroll and related expenses and a decrease in the Israeli National Authority for Technological Innovation's (NATI) participation in research and development expenses from $2.2 million in 2016 to $0 in 2017 as a result of a NATI grant condition requiring that AP-CDLD be manufactured in Israel, which the Company is currently evaluating. 

The Company's general and administrative expenses for the six-month period ended June 30, 2017 amounted to approximately $2.1 million, an increase of $0.6 million, or approximately 40%, compared to approximately $1.5 million for the six-month period ended June 30, 2016. The increase was primarily due to an increase in share-based compensation to employees and professional services. 

Financial income, net for the six-month period ended June 30, 2017, amounted to approximately $0.25 million, a decrease of $0.21 million, or approximately 46%, compared to approximately $0.46 million for the six-month period ended June 30, 2016. The decrease resulted primarily from less interest income due to lower cash and cash equivalents balances and the change in fair value of derivative financial instruments.

For the six-month period ended June 30, 2017, loss and comprehensive loss was approximately $11.2 million, an increase of $4.8 million, or approximately 75%, compared to loss and comprehensive loss for the six-month period ended June 30, 2016 of approximately $6.4 million. This increase primarily resulted from an increase in expenses related to the Phase III clinical trial for AP-CDLD, payroll and related expenses, share-based compensation to employees and professional services and a decrease in participation in research and development expenses from NATI. 

As of the six-month period ended June 30, 2017, the Company had cash and cash equivalents and financial assets at fair value through profit or loss of approximately $17.9 million.

About Intec Pharma Ltd.

Intec Pharma Ltd. is a clinical-stage biopharmaceutical company focused on developing drugs based on its proprietary Accordion Pill platform technology. The Company's Accordion Pill is an oral drug delivery system that is designed to improve the efficacy and safety of existing drugs and drugs in development by utilizing an efficient gastric retention and specific release mechanism. The Company's product pipeline includes two product candidates in clinical trial stages: Accordion Pill Carbidopa/Levodopa, or AP-CD/LD, which is being developed for the treatment of Parkinson's disease symptoms in advanced Parkinson's disease patients, and AP-CBD/THC, an Accordion Pill with the two primary cannabinoids contained in Cannabis sativa, cannabidiol (CBD) and tetrahydrocannabinol (THC), which is being developed for various indications including low back neuropathic pain and fibromyalgia.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements about the Company's expectations, beliefs and intentions. Forward-looking statements can be identified by the use of forward-looking words such as "believe", "expect", "intend", "plan", "may", "should", "could", "might", "seek", "target", "will", "project", "forecast", "continue" or "anticipate" or their negatives or variations of these words or other comparable words or by the fact that these statements do not relate strictly to historical matters. These forward-looking statements are based on assumptions and assessments made in light of management's experience and perception of historical trends, current conditions, expected future developments and other factors believed to be appropriate. Forward-looking statements in this press release are made as of the date of this press release, and the company undertakes no duty to update or revise any such statements, whether as a result of new information, future events or otherwise. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of the company's control. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are described in the sections titled "Risk Factors" in the company's filings with the Securities and Exchange Commission, and include the following: the company's ability to develop and commercialize its product candidates and obtain additional financing necessary therefor; the length, cost and uncertain results of the company's clinical trials; including uncertainty regarding the Company's ability to enroll the required number of patients therein; the potential of adverse side effects, other safety risks, or legal prohibitions on the use of certain products in certain jurisdictions that could preclude the approval of the company's drug candidates; the availability of reimbursement from government authorities and health insurance companies for the company's products; the impact of product liability lawsuits; and the influence of extensive and costly government regulation.

Tables to Follow

 

 

INTEC PHARMA LTD.

CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION



December 31,  
2016

June 30,    
2017


U.S. dollars in thousands




A s s e t s



CURRENT ASSETS:



Cash and cash equivalents

16,376

16,062

Financial assets at fair value through profit or loss

1,852

1,806

Restricted bank deposits

62

69

Other receivables

2,384

1,326


20,674

19,263

NON-CURRENT ASSETS -



Property and equipment

4,047

5,354

TOTAL ASSETS

24,721

24,617




Liabilities and equity



CURRENT LIABILITIES -



Accounts payable and accruals:



Trade

1,152

888

Other

768

2,128


1,920

3,016

NON-CURRENT LIABILITIES  -



Derivative financial instruments

97

17

COMMITMENTS AND CONTINGENT LIABILITIES



TOTAL LIABILITIES

2,017

3,033




EQUITY:



Ordinary shares

727

727

Share premium

84,980

94,505

Currency translation differences

(378)

(378)

Accumulated deficit

(62,625)

(73,270)

TOTAL EQUITY

22,704

21,584

TOTAL LIABILITIES AND EQUITY

24,721

24,617

 

 

INTEC PHARMA LTD.

CONDENSED INTERIM STATEMENT OF COMPREHENSIVE LOSS



Three months ended

June 30

Six months ended

June 30


2016

2017

2016

2017


U.S. dollars in thousands






RESEARCH AND DEVELOPMENT EXPENSES

(3,524)

(5,621)

(7,664)

(9,538)

LESS - PARTICIPATION IN RESEARCH AND DEVELOPMENT EXPENSES

2,241

-

2,241

-

RESEARCH AND DEVELOPMENT EXPENSES, net

(1,283)

(5,621)

(5,423)

(9,538)

GENERAL AND ADMINISTRATIVE EXPENSES

(756)

(1,075)

(1,515)

(2,086)

OTHER GAINS (LOSSES), net

(34)

75

30

171

OPERATING LOSS

(2,073)

(6,621)

(6,908)

(11,453)

FINANCIAL INCOME

97

104

473

258

FINANCIAL EXPENSES

(35)

(4)

(9)

(10)

FINANCIAL INCOME (EXPENSES), net

62

100

464

248

LOSS AND COMPREHENSIVE LOSS

(2,011)

(6,521)

(6,444)

(11,205)


$

BASIC AND DILUTED LOSS PER ORDINARY SHARE

(0.18)

(0.47)

(0.56)

(0.88)

 


 

INTEC PHARMA LTD.

CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY



Ordinary shares






Number of shares

Issued and

paid-up

share capital

Share premium

Currency translation differences

Accumulated deficit

Total



U.S. dollars in thousands








BALANCE AT JANUARY 1, 2016

11,448,191

727

84,980

(378)

(49,799)

35,530

CHANGES IN THE SIX MONTH PERIOD ENDED JUNE 30, 2016:







Share-based compensation





150

150

Comprehensive loss





(6,444)

(6,444)

BALANCE AT JUNE 30, 2016

11,448,191

727

84,980

(378)

(56,093)

29,236

BALANCE AT JANUARY 1, 2017

11,448,191

727

84,980

(378)

(62,625)

22,704

CHANGES IN THE SIX MONTH PERIOD ENDED JUNE 30, 2017:







Proceeds of issuance shares, net of issuance costs

2,289,638


9,525



9,525

Share-based compensation





560

560

Exercise of options by employees and service providers               

377


*



*

Comprehensive loss





(11,205)

(11,205)

BALANCE AT JUNE 30, 2017

13,738,206

727

94,505

(378)

(73,270)

21,584








* Represents an amount less than $ 1,000


 

 

 

INTEC PHARMA LTD.

CONDENSED INTERIM STATEMENTS OF CASH FLOWS



Six months ended

June 30



2016

2017



U.S. dollars
 in thousands






CASH FLOWS FROM OPERATING ACTIVITIES:



Comprehensive loss

(6,444)

(11,205)

Adjustments to reconcile loss and comprehensive loss to net cash used in operating activities (see appendix A)

(2,918)

2,677

Net cash used in operating activities

(9,362)

(8,528)

CASH FLOWS FROM INVESTING ACTIVITIES:



Purchase of property and equipment

(55)

(1,636)

Proceeds from disposal of financial assets at fair value through profit or loss, net

129

219

Proceeds from sale of property and equipment

-

7

Net cash provided by (used in) investing activities

74

(1,410)

CASH FLOWS FROM FINANCING ACTIVITIES:



Issuance of shares, net of issuance costs

-

9,525

Exercise of options by employees and service providers

-

Net cash provided by financing activities

-

9,525

DECREASE IN CASH AND CASH EQUIVALENTS

(9,288)

(413)

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD

23,649

16,376

EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS

93

99

CASH AND CASH EQUIVALENTS - END OF PERIOD

14,454

16,062

* Represents an amount less than $ 1,000

 

 

INTEC PHARMA LTD.

CONDENSED INTERIM STATEMENTS OF CASH FLOWS



Six months ended

June 30



2016

2017



U.S. dollars
 in thousands


APPENDIX A:







Adjustments to reconcile loss and comprehensive loss to
  net cash used in operating activities:






Income and expenses not involving cash flows:



Depreciation

356

400

Changes in the fair value of derivative financial instruments  

(217)

(80)

Exchange differences on cash and cash equivalents

(93)

(99)

Exchange differences on restricted deposits

-

(7)

Gains on financial assets at fair value through profit or loss

(30)

(173)

Loss on sale of property and equipment

-

2

Share-based compensation to employees and service providers

150

560


166

603

Changes in operating asset and liability items:



Decrease (increase) in other  receivables

(3,118)

1,058

Increase in accounts payable and accruals

34

1,016


(3,084)

2,074


(2,918)

2,677

APPENDIX B:






      Information regarding investment and financing activities not   
     
  involving cash flows:



Liability with respect to property purchase


80

Supplementary information to the statement of cash



flows -

Interest received

109

73

 

 

Contacts:

Jeffrey A. Meckler
Chief Executive Officer
Intec Pharma
646-374-8050
jeffrey@intecpharma.com

Anne Marie Fields
Senior Vice President
LHA Investor Relations
212-838-3777
afields@lhai.com

 

View original content:http://www.prnewswire.com/news-releases/intec-pharma-reports-financial-results-for-the-first-six-months-of-2017-300502300.html

SOURCE Intec Pharma Ltd.

New Research Report On Global Wireless Smart Lighting Control System Market Analysis and Forecasts Year 2017 To 2022

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Apria Resolves MassHealth Investigation

LAKE FOREST, Calif.–(BUSINESS WIRE)–Apria Healthcare LLC, a wholly owned subsidiary of Apria Healthcare Group Inc., announced today that it has settled a matter with the Massachusetts Attorney General concerning issues relating to billings for services provided to MassHealth beneficiaries.

“We are pleased to have resolved this matter with the Massachusetts Attorney General,” said Apria’s Executive Vice President and General Counsel, Raoul Smyth. “Although, as set forth in the Assurance of Discontinuance filed in connection with the settlement between the parties, Apria denies that it has violated any Massachusetts laws, this resolution reflects Apria’s desire to put this matter behind it so that it can continue to focus on the needs of patients. As noted in the press release issued by the office of the Attorney General regarding this matter, the investigation covered the period from December 2011 through April 2017, but Apria in fact addressed the processes that were the focus of the Attorney General early during the pendency of the investigation and long before this settlement was reached. Also, even though we have reduced our Medicaid business in many other states, we have not done so in Massachusetts. The unique circumstances presented in this matter have not changed Apria’s commitment to providing high quality service to MassHealth beneficiaries.”

Any inquiries concerning this matter should be addressed to Mr. Smyth in Apria’s Legal Department.

Apria Resolves MassHealth Investigation

LAKE FOREST, Calif.–(BUSINESS WIRE)–Apria Healthcare LLC, a wholly owned subsidiary of Apria Healthcare Group Inc., announced today that it has settled a matter with the Massachusetts Attorney General concerning issues relating to billings for services provided to MassHealth beneficiaries.

“We are pleased to have resolved this matter with the Massachusetts Attorney General,” said Apria’s Executive Vice President and General Counsel, Raoul Smyth. “Although, as set forth in the Assurance of Discontinuance filed in connection with the settlement between the parties, Apria denies that it has violated any Massachusetts laws, this resolution reflects Apria’s desire to put this matter behind it so that it can continue to focus on the needs of patients. As noted in the press release issued by the office of the Attorney General regarding this matter, the investigation covered the period from December 2011 through April 2017, but Apria in fact addressed the processes that were the focus of the Attorney General early during the pendency of the investigation and long before this settlement was reached. Also, even though we have reduced our Medicaid business in many other states, we have not done so in Massachusetts. The unique circumstances presented in this matter have not changed Apria’s commitment to providing high quality service to MassHealth beneficiaries.”

Any inquiries concerning this matter should be addressed to Mr. Smyth in Apria’s Legal Department.

Athene Holding Ltd. Reports Second Quarter 2017 Results

PEMBROKE, Bermuda–(BUSINESS WIRE)–Athene Holding Ltd. („Athene”) (NYSE: ATH), a leading provider of retirement savings products, today announced financial results for the second quarter 2017.

Net income for the second quarter 2017 was $326 million, or $1.65 per diluted Class A share („diluted share”), compared to net income in the second quarter 2016 of $193 million, or $1.04 per diluted share.

Operating income, net of tax for the second quarter 2017 was $280 million, or $1.43 per operating diluted Class A share („operating diluted share”), compared to operating income, net of tax for the second quarter 2016 of $179 million, or $0.96 per operating diluted share.

“We have delivered another quarter of strong financial performance resulting in further strengthening of our balance sheet and capital position,” said Jim Belardi, CEO of Athene.

“Our differentiated, multi-channel distribution platform generated record deposits of $3.2 billion resulting from growth in both our retail and institutional channels. I am pleased to announce that we successfully entered the pension risk transfer (PRT) market in the second quarter, securing our first deal in which we assumed approximately $320 million in pension liabilities. Further demonstrating the diversity and flexibility of our model, we issued $1.1 billion of funding agreements during the quarter, a market in which we continue to gain significant traction,” Mr. Belardi noted.

“We have had a great first half of the year, executing our strategic plan and delivering increases in operating income, net income and shareholders’ equity. We are a strong, growing and disciplined financial services company and are well positioned to capitalize on future opportunities that will continue to generate significant shareholder value.”

Other Highlights1

  • Subsequent to quarter-end, Athene executed a new flow reinsurance treaty with Lincoln Financial Group (NYSE: LNC) to reinsure traditional fixed and fixed indexed annuities, effective August 1, 2017
  • Total investments, including related parties, increased 14% year-over-year to $78.7 billion; total invested assets increased 9% year-over-year to $76.3 billion
  • Athene shareholders’ equity increased 29% year-over-year to $8.3 billion and Athene shareholders’ equity ex. AOCI increased 23% year-over-year to $7.2 billion, as of June 30, 2017
  • Estimated Q2 U.S. RBC of 458%, as of June 30, 2017
  • Estimated Q2 ALRe RBC of 539%2 as of June 30, 2017; BSCR of 228%3 as of December 31, 2016
  • In June, priced a secondary offering of 18,630,000 of Class A common shares; Athene did not receive any proceeds from the sale

1 This news release references certain Non-GAAP measures. See Non-GAAP Measures for additional discussion.
2 ALRe RBC ratio, which is used in evaluating our capital position and the amount of capital needed to support our segment, is calculated by applying the NAIC RBC factors to the Statutory Financial Statements of ALRe.
3 Effective January 1, 2016, in connection with the implementation of its broader regulatory regime, the BMA integrated the EBS framework into the determination of BSCR. The European Commission has granted the BMA’s regulatory regime for reinsurance, group solvency calculation and group supervision full equivalence to Solvency II. Under the EBS framework, ALRe’s assets are recorded at market value and its insurance reserves are determined by reference to nine prescribed scenarios, with the scenario resulting in the highest reserve balance required to be selected. This ratio is not comparable to prior year end BSCR ratios given the change in the solvency regime; however, consistent with the previous regime the minimum required capital ratio to be considered solvent by the BMA is 100%.

Second Quarter Results

Net income for the second quarter increased by $133 million, or 69%, over the prior year to $326 million. The increase was driven by a $101 million increase in operating income, net of tax, and a $33 million favorable change in FIA derivatives primarily driven by strong equity market performance.

Operating income, net of tax for the second quarter increased by $101 million, or 56%, over the prior year to $280 million. The increase was driven by higher investment income due to invested asset growth, higher short-term interest rates resulting in increased floating rate investment income and strength in our alternatives portfolio. The increase in investment income was partially offset by higher liability costs due to higher rider reserve changes and DAC amortization attributed to growth in the block of business and higher gross profits, partially offset by approximately $25 million of favorable impacts related to improved equity market performance and out of period actuarial adjustments compared to the prior period.

Deposit Highlights

In the second quarter of 2017, we generated record deposits of $3.2 billion, an increase of 31% compared to the prior year.

Retail Sales: For the second quarter, we generated new deposits of $1.6 billion, an increase of 43% over the prior year, making us one of the largest and fastest growing writers of fixed indexed annuities. During the quarter, we expanded our distribution with the addition of new partners, in both the bank and broker-dealer channels, as we continue to build a strong reputation for competitive products and high quality service.

Flow Reinsurance: Flow reinsurance deposits were $214 million in the second quarter, down from the prior year. Subsequent to quarter-end we entered into a new flow reinsurance partnership with Lincoln Financial to reinsure traditional fixed and fixed indexed annuities, effective August 1, 2017. We continue to pursue new reinsurance partners and develop new products to diversify our portfolio.

Institutional: For the second quarter, we generated $1.4 billion of new deposits within our institutional channel, mainly comprised of $1.1 billion of funding agreements. In the third quarter to date, we have issued $700 million of funding agreements, and we expect demand will continue for this product.

In addition, Athene entered into its first pension buyout agreement during the second quarter 2017. The transaction is structured as a buyout arrangement in which Athene’s Iowa life insurance subsidiary agrees to provide annuity benefits to more than 10,000 retirees, representing pension obligations of approximately $320 million. Athene will issue a group annuity to the organization and individual annuity certificates to applicable retirees and will have direct payment responsibility for all liabilities covered in this transaction.

Selected Results

 
 

As of and for the three months

ended June 30,

(In millions, except percentages and share data) 2017   2016
Deposits $ 3,226 $ 2,461
Investments, including related parties 78,699 68,860
Invested assets 76,279 69,859
Debt to equity % %
Book value per share $ 42.20 $ 34.57
Book value per share, ex. AOCI1 $ 36.72 $ 31.40
Common shares outstanding2 196.3 185.9
Operating diluted Class A common shares outstanding3 196.7 186.5
Total AHL shareholders’ equity $ 8,284 $ 6,426
Total AHL shareholders’ equity excluding AOCI 7,224 5,857
 
ROE 16.4 % 12.8 %
ROE ex. AOCI 18.4 % 13.4 %
Operating ROE ex. AOCI 15.9 % 12.4 %
 
Retirement Services
Operating income, net of tax $ 267 $ 196
Operating ROE ex. AOCI 21.4 % 18.8 %
Investment margin on deferred annuities 2.96 % 2.59 %
 

1Book value per share, ex AOCI is calculated as the ending AHL shareholders’ equity excluding AOCI divided by the operating diluted Class A common shares outstanding.
2Represents common shares outstanding for all classes eligible to participate in dividends for each period presented. Utilized for the book value per share calculation.
3Operating diluted Class A common shares outstanding assumes conversion or settlement of all outstanding items that are able to be converted to or settled in Class A common shares, including the impacts of Class B common shares outstanding on a one-for-one basis, the impacts of all Class M common shares outstanding net of the conversion price and any other stock-based awards outstanding, but excluding any awards for which the exercise or conversion price exceeds the market value of Class A common shares on the applicable measurement date. Our Class B common shares are economically equivalent to Class A common shares and can be converted to Class A common shares on a 1-for-1 basis at any time. Our Class M common shares are in the legal form of shares but economically function as options as they are convertible into Class A shares after vesting and settlement of the conversion price. We believe this non-GAAP measure is an appropriate economic representation of our share counts for use in an economic view of book value metrics.

  Three months ended June 30,
(In millions, except share data) 2017   2016
Operating income, net of tax by segment
Retirement Services $ 267 $ 196
Corporate and Other 13   (17 )
Operating income, net of tax 280   179  
 
Investment gains (losses), net of offsets 58 61
Change in fair values of derivatives and embedded derivatives – FIAs, net of offsets 15 (18 )
Integration, restructuring and other non-operating expenses (11 ) (5 )
Stock compensation expense (13 ) (28 )
Income tax (expense) benefit – non-operating (3 ) 4  
Total non-operating adjustments 46   14  
Net income available to AHL shareholders $ 326   $ 193  
 
Earnings per share – basic1 $ 1.66 $ 1.04
Earnings per share – diluted Class A2 $ 1.65 $ 1.04
Operating earnings per share – operating diluted Class A3 $ 1.43 $ 0.96
Weighted average shares outstanding – basic1 195.7 186.0
Weighted average shares outstanding – diluted Class A2 109.0 50.1
Weighted average shares outstanding – operating diluted Class A3 195.9 186.1
 

Basic earnings per share, including basic weighted average shares outstanding includes all classes eligible to participate in dividends for each period presented.
2 Diluted earnings per share on a GAAP basis for Class A common shares, including diluted Class A weighted average shares outstanding, includes the dilutive impacts, if any, of Class B common shares, Class M common shares and any other stock-based awards. Such dilutive securities totaled 2.7 million weighted average shares in the quarter. Diluted earnings per share on a GAAP basis for Class A common shares are based on allocated net income of $181 million (55% of net income) and $52 million (27% of net income) for the three months ended June 30, 2017 and 2016, respectively. The increase in shares is mainly driven by Class B shares converting to Class A shares through the various offerings in 2016 and 2017.
3 Weighted average shares outstanding – operating diluted Class A assumes conversion or settlement of all outstanding items that are able to be converted to or settled in Class A common shares, including the impacts of Class B common shares on a one-for-one basis, the impacts of all Class M common shares net of the conversion price and any other stock-based awards but excluding any awards for which the exercise or conversion price exceeds the market value of Class A common shares on the applicable measurement date. Our Class B common shares are economically equivalent to Class A common shares and can be converted to Class A common shares on a 1-for-1 basis at any time. Our Class M common shares are in the legal form of shares but economically function as options as they are convertible into Class A shares after vesting and settlement of the conversion price. In calculating Class A diluted earnings per share on a GAAP basis, we are required to apply sequencing rules to determine the dilutive impacts, if any, of our Class B common shares, Class M common shares and any other stock-based awards. To the extent our Class B common shares, Class M common shares and/or any other stock-based awards are not dilutive they are excluded. We believe this non-GAAP measure is an appropriate economic representation of our share counts for use in an economic view of diluted operating earnings per share.

Segment Results

Retirement Services
Q2 Results

In the second quarter, our Retirement Services segment generated an operating ROE excluding AOCI of 21.4% and operating income, net of tax of $267 million, an increase of $71 million over the prior year. The increase was driven by higher fixed, other and alternative investment income.

Investment income increased due to invested asset growth, higher short-term interest rates increasing floating rate investment income and strength in our alternatives portfolio. In 2016, fixed income and other investment income benefited from $15 million of bond call income from a large redemption. The increase in investment income was partially offset by higher liability costs due to higher rider reserve changes and DAC amortization attributed to growth in the block of business and higher gross profits, partially offset by approximately $25 million of favorable impacts related to improved equity market performance and out of period actuarial adjustments compared to the prior period.

Investment margin on deferred annuities was 2.96%, an increase of 37 basis points over the prior year. The net investment earned rate was 4.85%, an increase of 27 basis points over the prior year. Cost of crediting was 1.89%, a decrease of 10 basis points compared to the prior year, as a result of recent rate actions and lower option costs.

Corporate Segment

Q2 Results

In the second quarter, Corporate and Other operating income, net of tax was $13 million, as compared to a loss of $17 million in the prior year. Operating income in the quarter was partially driven by higher alternative investment income due to higher credit fund income resulting from favorable economics as well as an increase in the market value of public equity positions in one of our funds. Additionally, in the prior year alternative investment income was lower due to a decline in the market value of public equity positions in one of our funds. Partially offsetting the increase in the second quarter 2017 was lower Germany operating income as compared to prior year.

Conference Call Information

This press release and the second quarter 2017 financial supplement will be posted to the Company’s website at ir.athene.com.

Athene will conduct a conference call on Thursday, August 10, 2017 at 9:00 a.m. ET to discuss second quarter 2017 results. Additionally, the company will post an earnings presentation deck on the ir.athene.com website prior to market open on August 10, 2017.

  • Live conference call: Toll-free at 1-888-317-6003 (domestic) or 1-412-317-6061 (international)
  • Participant entry number: 6776192
  • Replay available through August 24, 2017 at 1-877-344-7529 (domestic) or 1-412-317-0088 (international)
  • Replay access code: 10110252
  • Live and archived webcast available at ir.athene.com

About Athene Holding Ltd.

Athene, through its subsidiaries, is a leading retirement services company that issues, reinsures and acquires retirement savings products designed for the increasing number of individuals and institutions seeking to fund retirement needs. The products offered by Athene include:

  • Retail fixed and fixed indexed annuity products;
  • Reinsurance arrangements with third-party annuity providers; and
  • Institutional products, such as funding agreements and group annuity contracts related to pension risk transfers.

Athene’s principal subsidiaries include Athene Annuity & Life Assurance Company, a Delaware-domiciled insurance company, Athene Annuity and Life Company, an Iowa-domiciled insurance company, Athene Annuity & Life Assurance Company of New York, a New York-domiciled insurance company, Athene Life Re Ltd., a Bermuda-domiciled reinsurer and Athene Lebensversicherung AG, a German-based life insurance company.

Further information about our companies can be found at www.athene.com.

Non-GAAP Measures

In addition to our results presented in accordance with GAAP, our results of operations include certain non-GAAP measures commonly used in our industry. Management believes the use of these non-GAAP measures, together with the relevant GAAP measures, provides information that may enhance an investor’s understanding of our results of operations and the underlying profitability drivers of our business. The majority of these non-GAAP measures are intended to remove from the results of operations the impact of market volatility (other than with respect to alternative investments) as well as integration, restructuring and certain other expenses which are not part of our underlying profitability drivers or likely to re-occur in the foreseeable future, as such items fluctuate from period-to-period in a manner inconsistent with these drivers. These measures should be considered supplementary to our results in accordance with GAAP and should not be viewed as a substitute for the GAAP measures. See Non-GAAP Measure Reconciliations for the appropriate reconciliations to the GAAP measures.

Operating income, net of tax, a commonly used operating measure in the life insurance industry, is a non-GAAP measure used to evaluate our financial performance excluding market volatility and expenses related to integration, restructuring, stock compensation, and certain other expenses. Our operating income, net of tax, equals net income available to AHL’s shareholders adjusted to eliminate the impact of the following (collectively, the “non-operating adjustments”):

  • Investment Gains (Losses), Net of Offsets
  • Change in Fair Values of Derivatives and Embedded Derivatives – FIAs, Net of Offsets
  • Integration, Restructuring, and Other Non-operating Expenses
  • Stock Compensation Expense
  • Bargain Purchase Gain
  • Income Tax (Expense) Benefit – Non-operating

We consider these non-operating adjustments to be meaningful adjustments to net income available to AHL’s shareholders and we believe using a measure which excludes the impact of these items is effective in analyzing the trends in our results of operations. Together with net income available to AHL’s shareholders, we believe operating income, net of tax, provides a meaningful financial metric that helps investors understand our underlying results and profitability. Operating income, net of tax, should not be used as a substitute for net income available to AHL’s shareholders.

ROE excluding AOCI and operating ROE excluding AOCI are non-GAAP measures used to evaluate our financial performance excluding the impacts of AOCI. AOCI fluctuates period-to-period in a manner inconsistent with our underlying profitability drivers as the majority of such fluctuation is related to the market volatility of the unrealized gains and losses associated with our AFS securities. Once we have reinvested acquired blocks of businesses, we typically buy and hold AFS investments to maturity throughout the duration of market fluctuations. Therefore, the period-over-period impacts in unrealized gains and losses are not necessarily indicative of current operating fundamentals or future performance. Accordingly, we believe using measures which exclude AOCI is useful in analyzing the trends of our operations. To enhance the ability to analyze these measures across periods, interim periods are annualized. ROE excluding AOCI and operating ROE excluding AOCI should not be used as a substitute for ROE. However, we believe the adjustments to equity are significant to gaining an understanding of our overall results of operations.

Operating earnings per share – operating diluted Class A, weighted average shares outstanding – operating diluted Class A common shares and book value per share excluding AOCI are non-GAAP measures used to evaluate our financial performance and financial condition. The non-GAAP measures adjust the number of shares included in the corresponding GAAP measures to reflect the conversion or settlement of all shares and other stock-based awards outstanding. We believe using these measures represent an economic view of our share counts and provide a simplified and consistent view of our outstanding shares. Operating earnings per share – operating diluted Class A is calculated as the operating income, net of tax over the weighted average shares outstanding – operating diluted Class A common shares. Book value per share excluding AOCI is calculated as the ending AHL shareholders’ equity excluding AOCI divided by the operating diluted Class A common shares outstanding. Our Class B common shares are economically equivalent to Class A common shares and can be converted to Class A common shares on a one-for-one basis at any time. Our Class M common shares are in the legal form of shares but economically function as options as they are convertible into Class A shares after vesting and settlement of the conversion price. In calculating Class A diluted earnings per share on a GAAP basis, we are required to apply sequencing rules to determine the dilutive impacts, if any, of our Class B common shares, Class M common shares and any other stock-based awards. To the extent our Class B common shares, Class M common shares and/or any other stock-based awards are not dilutive they are excluded. Weighted average shares outstanding – operating diluted Class A common shares and operating diluted Class A common shares outstanding assume conversion or settlement of all outstanding items that are able to be converted to or settled in Class A common shares, including the impacts of Class B common shares on a one-for-one basis, the impacts of all Class M common shares net of the conversion price and any other stock-based awards, but excluding any awards for which the exercise or conversion price exceeds the market value of our Class A common shares on the applicable measurement date. For certain historical periods, Class M shares were not included due to issuance restrictions which were contingent upon our IPO. Operating earnings per share – operating diluted Class A, weighted average shares outstanding – operating diluted Class A common shares and book value per share excluding AOCI should not be used as a substitute for basic earnings per share – Class A common shares, basic weighted average shares outstanding – Class A or book value per share. However, we believe the adjustments to the shares and equity are significant to gaining an understanding of our overall results of operations and financial condition.

Investment margin is a key measurement of the financial health of our Retirement Services core deferred annuities. Investment margin on our deferred annuities is generated from the excess of our net investment earned rate over the cost of crediting to our policyholders. Net investment earned rate is a key measure of investment returns and cost of crediting is a key measure of the policyholder benefits on our deferred annuities. Net investment earned rate, cost of crediting and investment margin on deferred annuities are non-GAAP measures we use to evaluate the profitability of our core deferred annuities business. We believe measures like net investment earned rate, cost of crediting and investment margin on deferred annuities are effective in analyzing the trends of our core business operations, profitability and pricing discipline. While we believe net investment earned rate, cost of crediting and investment margin on deferred annuities are meaningful financial metrics and enhance our understanding of the underlying profitability drivers of our business, they should not be used as a substitute for net investment income and interest sensitive contract benefits presented under GAAP.

  • Net investment earned rate is a non-GAAP measure we use to evaluate the performance of our invested assets that does not correspond to GAAP net investment income. Net investment earned rate is computed as the income from our invested assets divided by the average invested assets for the relevant period. To enhance the ability to analyze these measures across periods, interim periods are annualized. The adjustments to arrive at our net investment earned rate add alternative investment gains and losses, gains and losses related to trading securities for CLOs, net VIE impacts (revenues, expenses and noncontrolling interest) and the change in reinsurance embedded derivatives. We include the income and assets supporting our assumed reinsurance by evaluating the underlying investments of the funds withheld at interest receivables and we include the net investment income from those underlying investments which does not correspond to the GAAP presentation of reinsurance embedded derivatives. We exclude the income and assets supporting business that we have exited through ceded reinsurance including funds withheld agreements. We believe the adjustments for reinsurance provide a net investment earned rate on the assets for which we have economic exposure.
  • Cost of crediting is the interest credited to the policyholders on our fixed strategies as well as the option costs on the index annuity strategies. With respect to FIAs, the cost of providing index credits includes the expenses incurred to fund the annual index credits, and where applicable, minimum guaranteed interest credited. The interest credited on fixed strategies and option costs on index annuity strategies are divided by the average account value of our deferred annuities. Under GAAP, deposits and withdrawals for fixed indexed and fixed rate annuities are reported as deposit liabilities (or policyholder funds). Our average account values are averaged over the number of quarters in the relevant period to obtain our cost of crediting for such period. To enhance the ability to analyze these measures across periods, interim periods are annualized.

In managing our business we analyze invested assets, which do not correspond to total investments, including investments in related parties, as disclosed in our consolidated financial statements and notes thereto. Invested assets represent the investments that directly back our policyholder liabilities as well as surplus assets. Invested assets is used in the computation of net investment earned rate, which allows us to analyze the profitability of our investment portfolio. Invested assets includes (a) total investments on the consolidated balance sheets with AFS securities at cost or amortized cost, excluding derivatives, (b) cash and cash equivalents and restricted cash, (c) investments in related parties, (d) accrued investment income, (e) the consolidated VIE assets, liabilities and noncontrolling interest, (f) net investment payables and receivables and (g) policy loans ceded (which offset the direct policy loans in total investments). Invested assets also excludes assets associated with funds withheld liabilities related to business exited through reinsurance agreements and derivative collateral (offsetting the related cash positions). We include the underlying investments supporting our assumed funds withheld and modco agreements in our invested assets calculation in order to match the assets with the income received. We believe the adjustments for reinsurance provide a view of the assets for which we have economic exposure. Our invested assets are averaged over the number of quarters in the relevant period to compute our net investment earned rate for such period.

Sales statistics do not correspond to revenues under GAAP, but are used as relevant measures of understanding our business performance. Our sales statistics include fixed rate annuities and FIAs and align with the LIMRA definition of all money paid into an individual annuity, including money paid into new contracts with initial purchase occurring in the specified period and existing contracts with initial purchase occurring prior to the specified period (excluding internal transfers).

Safe Harbor for Forward Looking Statements

This press release contains, and certain oral statements made by our representatives from time to time may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results, events and developments to differ materially from those set forth in, or implied by, such statements. These statements are based on the beliefs and assumptions of AHL’s management and the management of AHL’s subsidiaries. Generally, forward-looking statements include actions, events, results, strategies and expectations and are often identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans,” “seeks,” “estimates,” “projects,” “may,” “will,” “could,” “might,” or “continues” or similar expressions. Factors that could cause actual results, events and developments to differ include, without limitation: the accuracy of our assumptions and estimates; our ability to maintain or improve financial strength ratings; our ability to manage our business in a highly regulated industry; regulatory changes or actions; the impact of our reinsurers failing to meet their assumed obligations; the impact of interest rate fluctuations; changes in the federal income tax laws and regulations; litigation (including class action litigation), enforcement investigations or regulatory scrutiny; the performance of third parties; the loss of key personnel; telecommunication, information technology and other operational systems failures; the continued availability of capital; new accounting rules or changes to existing accounting rules; general economic conditions; our ability to protect our intellectual property; the ability to maintain or obtain approval of the Delaware Department of Insurance, the Iowa Insurance Division and other regulatory authorities as required for our operations; and other factors discussed from time to time in AHL’s filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2016, which can be found at the SEC’s website www.sec.gov.

All forward-looking statements described herein are qualified by these cautionary statements and there can be no assurance that the actual results, events or developments referenced herein will occur or be realized. We do not undertake any obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operation results.

Athene Holding Ltd.

   

Condensed Consolidated Balance Sheets (unaudited)

 
June 30, December 31,
(In millions) 2017 2016
Assets
Investments
Available-for-sale securities, at fair value
Fixed maturity securities $ 56,813 $ 52,033
Equity securities 429 353
Trading securities, at fair value 2,692 2,581
Mortgage loans, net of allowances 6,024 5,470
Investment funds 697 689
Policy loans 579 602
Funds withheld at interest 6,834 6,538
Derivative assets 1,808 1,370
Real estate 597 542
Short-term investments, at fair value 106 189
Other investments 91   81
Total investments 76,670 70,448
Cash and cash equivalents 3,478 2,445
Restricted cash 105 57
Investments in related parties
Available-for-sale securities, at fair value
Fixed maturity securities 337 335
Equity securities 20
Trading securities, at fair value 166 195
Investment funds 1,260 1,198
Short-term investments 28
Other investments 238 237
Accrued investment income 566 554
Reinsurance recoverable 5,958 6,001
Deferred acquisition costs, deferred sales inducements, and value of business acquired 2,886 2,940
Current income tax recoverable 29 107
Deferred tax assets 55 372
Other assets 824 869
Assets of consolidated variable interest entities:
Investments
Available-for-sale securities, at fair value
Equity securities – related party 206 161
Trading securities, at fair value – related party 185 167
Investment funds 595 573
Cash and cash equivalents 2 14
Other assets 6   6
Total assets $ 93,594   $ 86,699
 
 
June 30, December 31,
(In millions) 2017 2016
Liabilities and Equity
Liabilities
Interest sensitive contract liabilities $ 64,911 $ 61,532
Future policy benefits 15,481 14,592
Other policy claims and benefits 205 217
Dividends payable to policyholders 980 974
Derivative liabilities 63 40
Payables for collateral on derivatives 1,860 1,383
Funds withheld liability 391 380
Other liabilities 1,374 688
Liabilities of consolidated variable interest entities 45   34
Total liabilities 85,310   79,840
Equity
Common stock
Additional paid-in capital 3,452 3,421
Retained earnings 3,772 3,070
Accumulated other comprehensive income 1,060   367
Total Athene Holding Ltd. shareholders’ equity 8,284 6,858
Noncontrolling interest   1
Total equity 8,284   6,859
Total liabilities and equity $ 93,594   $ 86,699
 

Athene Holding Ltd.

   

Condensed Consolidated Statement of Income (unaudited)

 
Three months ended June 30, Six months ended June 30,
(In millions) 2017   2016 2017   2016
Revenue
Premiums $ 379 $ 60 $ 431 $ 120
Product charges 85 69 166 135
Net investment income 821 700 1,607 1,394
Investment related gains (losses) 460 227 1,142 143
OTTI investment losses:
OTTI losses (12 ) (2 ) (12 ) (24 )
OTTI losses (gains) recognized in OCI 1   (9 )   3  
Net OTTI losses (11 ) (11 ) (12 ) (21 )
Other revenues 8 9 16 17
Revenues of consolidated variable interest entities:
Net investment income 10 22 20 33
Investment related gains (losses) 11   (31 ) 12   (54 )
Total revenues 1,763   1,045   3,382   1,767  
Benefits and Expenses
Interest sensitive contract benefits 553 335 1,245 590
Amortization of DSI 11 2 29 6
Future policy and other policy benefits 578 258 792 482
Amortization of DAC and VOBA 67 61 171 90
Dividends to policyholders 49 13 81 30
Policy and other operating expenses 168 163 321 267
Operating expenses of consolidated variable interest entities   5     9  
Total benefits and expenses 1,426   837   2,639   1,474  
Income before income taxes 337 208 743 293
Income tax expense 11   15   33   15  
Net income 326 193 710 278
Less: Net income attributable to noncontrolling interests        
Net income available to AHL shareholders $ 326   $ 193   $ 710   $ 278  
 

Non-GAAP Measure Reconciliations

   
 

The reconciliation of operating earnings per operating dilutive Class A common share to basic earnings per Class A common shares is as follows:

 
Three months ended June 30, Six months ended June 30,
2017   2016 2017   2016
Operating income, net of tax – per operating dilutive Class A common share $ 1.43   $ 0.96   $ 2.79   $ 1.78  
Investment gains (losses), net of offsets 0.29 0.33 0.59 0.22
Change in fair values of derivatives and embedded derivatives – FIAs, net of offsets 0.08 (0.10 ) 0.56 (0.47 )
Integration, restructuring and other non-operating expenses (0.06 ) (0.02 ) (0.10 ) (0.03 )
Stock compensation expense (0.07 ) (0.16 ) (0.12 ) (0.07 )
Income tax (expense) benefit – non-operating   (0.02 )   0.03     (0.09 )   0.07  
Total non-operating adjustments   0.22     0.08     0.84     (0.28 )
Effect of items convertible to or settled in Class A common shares   0.01         0.03      
Basic earnings per share – Class A common shares $ 1.66   $ 1.04   $ 3.66   $ 1.50  
 

The reconciliation of basic weighted average Class A shares to weighted average operating diluted Class A shares is as follows:

 
Three months ended June 30, Six months ended June 30,
(In millions) 2017 2016 2017 2016
Basic weighted average shares outstanding – Class A 106.3 50.0 92.4 50.0
Conversion of Class B shares to Class A shares 82.9 136.0 96.7 136.0
Conversion of Class M shares to Class A shares 6.2 6.2
Effect of other stock compensation plans   0.5     0.1     0.5     0.1  
Weighted average shares outstanding – operating diluted Class A common shares   195.9     186.1     195.8     186.1  
 

The reconciliation of AHL shareholders’ equity to AHL shareholders’ equity excluding AOCI included in ROE excluding AOCI, operating income ROE excluding AOCI and book value per share excluding AOCI is as follows:

 
June 30,
(In millions) 2017 2016
Total AHL shareholders’ equity $ 8,284 $ 6,426
Less: AOCI   1,060     569  
Total AHL shareholders’ equity excluding AOCI $ 7,224   $ 5,857  
 
Retirement Services $ 5,165 $ 4,232
Corporate and Other   2,059     1,625  
Total AHL shareholders’ equity excluding AOCI $ 7,224   $ 5,857  
 

The reconciliation of basic Class A shares outstanding to operating diluted Class A outstanding shares is as follows:

 
June 30,
(In millions) 2017 2016
Class A common shares outstanding 119.3 50.2
Conversion of Class B shares to Class A shares 70.1 136.0
Conversion of Class M shares to Class A shares 6.4
Effect of other stock compensation plans   0.9     0.3  
Operating diluted Class A common shares outstanding   196.7     186.5  
 

The reconciliation of book value per share to book value per share, excluding AOCI is as follows:

 
June 30,
2017 2016
Book value per share $ 42.20 $ 34.57
AOCI (5.40 ) (3.07 )
Effect of items convertible to or settled in Class A common shares   (0.08 )   (0.10 )
Book value per share, excluding AOCI $ 36.72   $ 31.40  
 

The reconciliation of net investment income to net investment earnings and earned rate is as follows:

   
Three months ended June 30, Six months ended June 30,
2017   2016 2017   2016
(In millions) Dollar   Rate Dollar   Rate Dollar   Rate Dollar   Rate
GAAP net investment income $ 821   4.38 % $ 700   4.06 % $ 1,607   4.35 % $ 1,394   4.08 %
Reinsurance embedded derivative impacts 52 0.28 % 53 0.31 % 97 0.26 % 89 0.26 %
Net VIE earnings 21 0.11 % (14 ) (0.08 )% 32 0.09 % (30 ) (0.09 )%
Alternative income gain (loss) 6 0.03 % % (7 ) (0.02 )% (32 ) (0.09 )%
Other (15 ) (0.08 )% (15 ) (0.09 )% (30 ) (0.08 )% (15 ) (0.04 )%
Total adjustments to arrive at net investment earnings/earned rate 64   0.34 % 24   0.14 % 92   0.25 % 12   0.04 %
Total net investment earnings/earned rate $ 885   4.72 % $ 724   4.20 % $ 1,699   4.60 % $ 1,406   4.12 %
 
Retirement Services $ 821 4.85 % $ 708 4.58 % $ 1,601 4.80 % $ 1,401 4.58 %
Corporate and Other 64   3.53 % 16   0.93 % 98   2.71 % 5   0.16 %
Total net investment earnings/earned rate $ 885   4.72 % $ 724   4.20 % $ 1,699   4.60 % $ 1,406   4.12 %
 
Retirement Services average invested assets $ 67,577 $ 61,804 $ 66,635 $ 61,168
Corporate and Other average invested assets 7,345   7,177   7,258   7,139  
Average invested assets $ 74,922   $ 68,981   $ 73,893   $ 68,307  
 

The reconciliation of interest sensitive contract benefits to Retirement Services’ cost of crediting on deferred annuities, and the respective rates, is as follows:

 
Three months ended June 30, Six months ended June 30,
2017 2016 2017 2016
(In millions) Dollar Rate Dollar Rate Dollar Rate Dollar Rate
GAAP interest sensitive contract benefits $ 553   3.95 % $ 335   2.64 % $ 1,245   4.48 % $ 590   2.34 %
Interest credited other than deferred annuities (42 ) (0.30 )% (27 ) (0.21 )% (68 ) (0.24 )% (57 ) (0.23 )%
FIA option costs 149 1.07 % 139 1.08 % 294 1.05 % 275 1.10 %
Product charges (strategy fees) (17 ) (0.12 )% (13 ) (0.10 )% (34 ) (0.12 )% (24 ) (0.10 )%
Reinsurance embedded derivative impacts 9 0.06 % 7 0.06 % 18 0.06 % 13 0.05 %
Change in fair values of embedded derivatives – FIAs (399 ) (2.85 )% (206 ) (1.62 )% (933 ) (3.35 )% (343 ) (1.37 )%
Negative VOBA amortization 10 0.07 % 15 0.12 % 22 0.08 % 24 0.10 %
Unit linked change in reserve 1 0.01 % 4 0.03 % (17 ) (0.06 )% 19 0.08 %
Other changes in interest sensitive contract liabilities   % (1 ) (0.01 )%   % (1 ) %
Total adjustments to arrive at cost of crediting on deferred annuities (289 ) (2.06 )% (82 ) (0.65 )% (718 ) (2.58 )% (94 ) (0.37 )%
Retirement Services cost of crediting on deferred annuities $ 264   1.89 % $ 253   1.99 % $ 527   1.90 % $ 496   1.97 %
 
Average account value on deferred annuities $ 56,001 $ 50,817 $ 55,627 $ 50,297
 

The reconciliation of total investments, including related parties, to invested assets is as follows:

 
June 30,
(In millions) 2017   2016
Total investments, including related parties $ 78,699   $ 68,860  
Derivative assets (1,808 ) (961 )
Cash and cash equivalents (including restricted cash) 3,583 3,385
Accrued income 566 507
Derivative collateral (1,860 ) (743 )
Reinsurance funds withheld and modified coinsurance (444 ) (275 )
VIE assets, liabilities and noncontrolling interest 949 1,024
AFS unrealized (gain) loss (2,335 ) (1,593 )
Ceded policy loans (332 ) (345 )
Net investment receivables (payables) (739 )  
Total adjustments to arrive at invested assets (2,420 ) 999  
Total invested assets $ 76,279   $ 69,859