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2. Restatement of Financial Statements (Tables)
9 Months Ended
Sep. 30, 2012
Restatement Of Financial Statements Tables  
Summary of Correction of Actuarial Finance Errors

 

 

Increase (decrease)   Summary of Correction of Actuarial Finance Errors – December 31, 2011 Balance Sheet Impacts(1)  
($ in millions)   Actuarial Finance  
   

Accounting

for UL Type

Products

   

Shadow

Accounting

   

Loss

Recognition

   

Traditional

Revenue

Recognition

   

Future

Cost of a

Settlement

    FIA    

Other

Actuarial

   

Total

Actuarial

Finance

Errors(2)

 
 
 
 
ASSETS:                                                
Available-for-sale debt securities, at fair value   $     $     $     $     $     $     $     $  
Available-for-sale equity securities, at fair value                                                
Limited partnerships and other investments                                                
Policy loans, at unpaid principal balances                                                
Derivative investments                                                
Fair value investments                                                
Total investments                                                
Cash and cash equivalents                                                
Accrued investment income                                                
Receivables                       16.6                   1.0       17.6  
Deferred policy acquisition costs     57.3       (11.0 )     (1.8 )     (0.7 )           (3.4 )     1.1       41.5  
Deferred income taxes, net                                                
Other assets                 (38.6 )                       4.8       (33.8 )
Discontinued operations assets                                                
Separate account assets                                                
Total assets   $ 57.3     $ (11.0 )   $ (40.4 )   $ 15.9     $     $ (3.4 )   $ 6.9     $ 25.3  
                                                                 
LIABILITIES:                                                                
Policy liabilities and accruals   $ 179.4     $ 9.2     $ 11.0     $ 12.1     $ 7.7     $     $ 21.3     $ 240.7  
Policyholder deposit funds                                   0.8       2.1       2.9  
Dividend obligations                       9.4                   (8.4 )     1.0  
Indebtedness                                                
Other liabilities                                         0.2       0.2  
Discontinued operations liabilities                                                
Separate account liabilities                                                
Total liabilities     179.4       9.2       11.0       21.5       7.7       0.8       15.2       244.8  
                                                                 
STOCKHOLDERS’ EQUITY:                                                                
Common stock                                                
Additional paid-in capital                                                
Accumulated other comprehensive loss           (14.2 )                                   (14.2 )
Accumulated deficit     (80.7 )           (1.2 )     (0.5 )     (3.8 )     (4.2 )     (24.5 )     (114.9 )
Treasury stock                                                
Noncontrolling interests                                                
Total stockholders’ equity –periods presented(3)     (80.7 )     (14.2 )     (1.2 )     (0.5 )     (3.8 )     (4.2 )     (24.5 )     (129.1 )
Total stockholders’ equity – cumulative impact(4)     (41.4 )     (6.0 )     (50.2 )     (5.1 )     (3.9 )           16.2       (90.4 )
Total stockholders’ equity –  impact     (122.1 )     (20.2 )     (51.4 )     (5.6 )     (7.7 )     (4.2 )     (8.3 )     (219.5 )
Total liabilities and stockholders’ equity   $ 57.3     $ (11.0 )   $ (40.4 )   $ 15.9     $     $ (3.4 )   $ 6.9     $ 25.3  

———————

(1)   All amounts are shown before income taxes, unless otherwise noted.
(2)   Amounts represent the total “Summary of Correction of Actuarial Finance Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

 

(3)   Amounts represent restatement changes made to the 2011 and 2010 periods as presented within the 2012 Report on Form 10-K as filed on April 1, 2014.
(4)   Amounts represent cumulative impact of restatement changes to periods prior to 2010.

 

Increase (decrease)   Summary of Correction of Actuarial Finance Errors – Three months ended September 30, 2011 Income Statement Impacts(1)  
($ in millions)   Actuarial Finance  
   

Accounting

for UL Type

Products

   

Shadow

Accounting

   

Loss

Recognition

   

Traditional

Revenue

Recognition

   

Future

Cost of a

Settlement

    FIA    

Other

Actuarial

   

Total

Actuarial

Finance

Errors(2)

 
 
 
 
REVENUES                                                
Premiums   $     $     $     $ (5.3 )   $     $     $ (0.2 )   $ (5.5 )
Fee income     (1.1 )                                         (1.1 )
Net investment income                                                
Net realized investment gains (losses):                                                                
  Total OTTI losses                                                
  Portion of OTTI losses recognized in OCI                                                
    Net OTTI losses recognized in earnings                                                
  Net realized investment gains (losses), excluding OTTI losses                                         (2.1 )     (2.1 )
Net realized investment gains (losses)                                         (2.1 )     (2.1 )
Gain on debt repurchase                                                
Total revenues     (1.1 )                 (5.3 )                 (2.3 )     (8.7 )
                                                                 
BENEFITS AND EXPENSES                                                                
Policy benefits, excluding policyholder dividends     19.7             0.8       (5.1 )           4.0       6.9       26.3  
Policyholder dividends                       (0.1 )                 (0.1 )     (0.2 )
Policy acquisition cost amortization     (15.2 )                             1.5       (0.8 )     (14.5 )
Interest expense on indebtedness                                                
Other operating expenses                                                
Total benefits and expenses     4.5             0.8       (5.2 )           5.5       6.0       11.6  
Income (loss) from continuing operations before income taxes     (5.6 )           (0.8 )     (0.1 )           (5.5 )     (8.3 )     (20.3 )
Income tax expense (benefit)                                                
Income (loss) from continuing operations     (5.6 )           (0.8 )     (0.1 )           (5.5 )     (8.3 )     (20.3 )
Noncontrolling interests                                                
Income (loss) from discontinued operations, net of income taxes                                                
Net income (loss) attributable to The Phoenix Companies, Inc.   $ (5.6 )   $     $ (0.8 )   $ (0.1 )   $     $ (5.5 )   $ (8.3 )   $ (20.3 )

———————

(1)   All amounts are shown before income taxes, unless otherwise noted.
(2)   Amounts represent the total “Summary of Correction of Actuarial Finance Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

 

(Continued from previous page)   Summary of Correction of Actuarial Finance Errors – Three months ended September 30, 2011 Income Statement Impacts(1)  
Increase (decrease)   Actuarial Finance  
($ in millions)  

Accounting

for UL Type

Products

   

Shadow

Accounting

   

Loss

Recognition

   

Traditional

Revenue

Recognition

   

Future

Cost of a

Settlement

    FIA    

Other

Actuarial

   

Total

Actuarial

Finance

Errors(2)

 
 
 
 
COMPREHENSIVE INCOME (LOSS):                                                
Net income (loss) attributable to The Phoenix Companies, Inc.   $ (5.6 )   $     $ (0.8 )   $ (0.1 )   $     $ (5.5 )   $ (8.3 )   $ (20.3 )
  Other comprehensive income (loss) before income taxes:                                                                
  Net unrealized investment gains before income taxes           (37.1 )                                   (37.1 )

  Non-credit portion of OTTI losses recognized in

    OCI before income taxes

                                               
  Net pension liability adjustment before income taxes                                                
  Net unrealized other gains (losses) before income taxes                                                
  Net unrealized derivative instruments gains (losses) before income taxes                                                
    Other comprehensive income (loss) before income taxes           (37.1 )                                   (37.1 )
  Less: Income tax expense (benefit) related to:                                                                
    Net unrealized investment gains (losses)                                                
    Non-credit portion of OTTI losses recognized in OCI                                                
    Net pension liability adjustment                                                
    Net unrealized other gains (losses)                                                
    Net unrealized derivative instruments gains (losses)                                                
      Total income tax expense (benefit)                                                
      Other comprehensive income (loss), net of income taxes           (37.1 )                                   (37.1 )
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.     (5.6 )     (37.1 )     (0.8 )     (0.1 )           (5.5 )     (8.3 )     (57.4 )
  Add: Comprehensive income attributable to noncontrolling interests                                                
Comprehensive income (loss)   $ (5.6 )   $ (37.1 )   $ (0.8 )   $ (0.1 )   $     $ (5.5 )   $ (8.3 )   $ (57.4 )

———————

(1)   All amounts are shown before income taxes, unless otherwise noted.
(2)   Amounts represent the total “Summary of Correction of Actuarial Finance Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

 

Increase (decrease)   Summary of Correction of Actuarial Finance Errors – Nine months ended September 30, 2011 Income Statement Impacts(1)  
($ in millions)   Actuarial Finance  
   

Accounting

for UL Type

Products

   

Shadow

Accounting

   

Loss

Recognition

   

Traditional

Revenue

Recognition

   

Future

Cost of a

Settlement

    FIA    

Other

Actuarial

   

Total

Actuarial

Finance

Errors(2)

 
 
 
 
REVENUES                                                
Premiums   $     $     $     $ (14.6 )   $     $     $ 0.5     $ (14.1 )
Fee income     (0.7 )                                   0.6       (0.1 )
Net investment income                                                
Net realized investment gains (losses):                                                                
  Total OTTI losses                                                
  Portion of OTTI losses recognized in OCI                                                
    Net OTTI losses recognized in earnings                                                
  Net realized investment gains (losses), excluding OTTI losses                                         0.8       0.8  
Net realized investment gains (losses)                                         0.8       0.8  
Gain on debt repurchase                                                
Total revenues     (0.7 )                 (14.6 )                 1.9       (13.4 )
                                                                 
BENEFITS AND EXPENSES                                                                
Policy benefits, excluding policyholder dividends     41.5             2.3       (13.6 )           4.0       15.3       49.5  
Policyholder dividends                       (0.7 )                 (1.6 )     (2.3 )
Policy acquisition cost amortization     (12.6 )                             2.1       (4.7 )     (15.2 )
Interest expense on indebtedness                                                
Other operating expenses                             (0.1 )           6.8       6.7  
Total benefits and expenses     28.9             2.3       (14.3 )     (0.1 )     6.1       15.8       38.7  
Income (loss) from continuing operations before income taxes     (29.6 )           (2.3 )     (0.3 )     0.1       (6.1 )     (13.9 )     (52.1 )
Income tax expense (benefit)                                                
Income (loss) from continuing operations     (29.6 )           (2.3 )     (0.3 )     0.1       (6.1 )     (13.9 )     (52.1 )
Noncontrolling interests                                                
Income (loss) from discontinued operations, net of income taxes                                                
Net income (loss) attributable to The Phoenix Companies, Inc.   $ (29.6 )   $     $ (2.3 )   $ (0.3 )   $ 0.1     $ (6.1 )   $ (13.9 )   $ (52.1 )

———————

(1)   All amounts are shown before income taxes, unless otherwise noted.
(2)   Amounts represent the total “Summary of Correction of Actuarial Finance Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

 

(Continued from previous page)   Summary of Correction of Actuarial Finance Errors – Nine months ended September 30, 2011 Income Statement Impacts(1)  
Increase (decrease)   Actuarial Finance  
($ in millions)  

Accounting

for UL Type

Products

   

Shadow

Accounting

   

Loss

Recognition

   

Traditional

Revenue

Recognition

   

Future

Cost of a

Settlement

    FIA    

Other

Actuarial

   

Total

Actuarial

Finance

Errors(2)

 
 
 
 
COMPREHENSIVE INCOME (LOSS):                                                
Net income (loss) attributable to The Phoenix Companies, Inc.   $ (29.6 )   $     $ (2.3 )   $ (0.3 )   $ 0.1     $ (6.1 )   $ (13.9 )   $ (52.1 )
Other comprehensive income (loss) before income taxes:                                                                
Net unrealized investment gains before income taxes           (29.0 )                                   (29.0 )
Non-credit portion of OTTI losses recognized in OCI before income taxes                                                
Net pension liability adjustment before income taxes                                                
Net unrealized other gains (losses) before income taxes                                                
Net unrealized derivative instruments gains (losses) before income taxes                                                
Other comprehensive income (loss) before income taxes           (29.0 )                                   (29.0 )
Less: Income tax expense (benefit) related to:                                                                
Net unrealized investment gains (losses)                                                
Non-credit portion of OTTI losses recognized in OCI                                                
Net pension liability adjustment                                                
Net unrealized other gains (losses)                                                
Net unrealized derivative instruments gains (losses)                                                
Total income tax expense (benefit)                                                
Other comprehensive income (loss), net of income taxes           (29.0 )                                   (29.0 )
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.     (29.6 )     (29.0 )     (2.3 )     (0.3 )     0.1       (6.1 )     (13.9 )     (81.1 )
Add: Comprehensive income attributable to noncontrolling interests                                                
Comprehensive income (loss)   $ (29.6 )   $ (29.0 )   $ (2.3 )   $ (0.3 )   $ 0.1     $ (6.1 )   $ (13.9 )   $ (81.1 )

———————

(1)   All amounts are shown before income taxes, unless otherwise noted.
(2)   Amounts represent the total “Summary of Correction of Actuarial Finance Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.
Summary of Correction of Investments Errors
Increase (decrease)   Summary of Correction of Investments Errors – December 31, 2011 Balance Sheet Impacts(1)  
($ in millions)   Investments  
    OIA    

Available-for-Sale

Securities

   

Derivative

Valuation

   

Structured

Securities

   

Total

Investments

Errors(2)

 
 
    Valuation     Bond Call  
ASSETS:                                    
Available-for-sale debt securities, at fair value   $     $ (10.0 )   $ (25.3 )   $     $ (55.7 )   $ (91.0 )
Available-for-sale equity securities, at fair value                                    
Limited partnerships and other investments     (35.9 )                             (35.9 )
Policy loans, at unpaid principal balances                                    
Derivative investments                       (12.6 )           (12.6 )
Fair value investments     44.0       (2.2 )                 55.7       97.5  
Total investments     8.1       (12.2 )     (25.3 )     (12.6 )           (42.0 )
Cash and cash equivalents     2.0                               2.0  
Accrued investment income                                    
Receivables                                    
Deferred policy acquisition costs                       (13.1 )           (13.1 )
Deferred income taxes, net                                    
Other assets     (4.4 )           23.2       (6.7 )           12.1  
Discontinued operations assets                                    
Separate account assets                                    
Total assets   $ 5.7     $ (12.2 )   $ (2.1 )   $ (32.4 )   $     $ (41.0 )
                                                 
LIABILITIES:                                                
Policy liabilities and accruals   $     $     $     $     $     $  
Policyholder deposit funds                                    
Dividend obligations     4.1       (9.6 )     (2.1 )                 (7.6 )
Indebtedness                                    
Other liabilities     5.4       7.1                         12.5  
Discontinued operations liabilities                                    
Separate account liabilities                                    
Total liabilities     9.5       (2.5 )     (2.1 )                 4.9  
                                                 
STOCKHOLDERS’ EQUITY:                                                
Common stock                                    
Additional paid-in capital                                    
Accumulated other comprehensive loss     (15.7 )     24.3                   3.0       11.6  
Accumulated deficit     0.9       4.9             (16.6 )     (3.0 )     (13.8 )
Treasury stock                                    
Noncontrolling interests     (1.0 )                             (1.0 )
Total stockholders’ equity –periods presented(3)     (15.8 )     29.2             (16.6 )           (3.2 )
Total stockholders’ equity – cumulative impact(4)     12.0       (38.9 )           (15.8 )           (42.7 )
Total stockholders’ equity – impact     (3.8 )     (9.7 )           (32.4 )           (45.9 )
Total liabilities and stockholders’ equity   $ 5.7     $ (12.2 )   $ (2.1 )   $ (32.4 )   $     $ (41.0 )

———————

(1)   All amounts are shown before income taxes, unless otherwise noted.
(2)   Amounts represent the total “Summary of Correction of Investments Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

 

(3)   Amounts represent restatement changes made to the 2011 and 2010 periods as presented within the 2012 Report on Form 10-K which was filed April 1, 2014.
(4)   Amounts represent cumulative impact of restatement changes made to periods prior to 2010.

 

Increase (decrease)   Summary of Correction of Investments Errors – Three months ended September 30, 2011 Income Statement Impacts(1)  
($ in millions)   Investments  
    OIA    

Available-for-Sale

Securities

   

Derivative

Valuation

   

Structured

Securities

   

Total

Investments

Errors(2)

 
 
    Valuation     Bond Call  
REVENUES                                    
Premiums   $     $     $     $     $     $  
Fee income                                                
Net investment income     6.2       0.1                   (1.1 )     5.2  
Net realized investment gains (losses):                                    
  Total OTTI losses                                    
  Portion of OTTI losses recognized in OCI                                    
    Net OTTI losses recognized in earnings                                    
  Net realized investment gains (losses), excluding OTTI losses     (2.1 )     (0.4 )           (10.7 )     (0.8 )     (14.0 )
Net realized investment gains (losses)     (2.1 )     (0.4 )           (10.7 )     (0.8 )     (14.0 )
Gain on debt repurchase                                    
Total revenues     4.1       (0.3 )           (10.7 )     (1.9 )     (8.8 )
                                     
BENEFITS AND EXPENSES                                    
Policy benefits, excluding policyholder dividends                                    
Policyholder dividends     2.1       0.2                   0.1       2.4  
Policy acquisition cost amortization                       (0.4 )           (0.4 )
Interest expense on indebtedness                                    
Other operating expenses     0.3                               0.3  
Total benefits and expenses     2.4       0.2             (0.4 )     0.1       2.3  
Income (loss) from continuing operations before income taxes     1.7       (0.5 )           (10.3 )     (2.0 )     (11.1 )
Income tax expense (benefit)                                                
Income (loss) from continuing operations     1.7       (0.5 )           (10.3 )     (2.0 )     (11.1 )
Noncontrolling interests     (0.3 )                             (0.3 )
Income (loss) from discontinued operations, net of income taxes                                    
Net income (loss) attributable to The Phoenix Companies, Inc.   $ 2.0     $ (0.5 )   $     $ (10.3 )   $ (2.0 )   $ (10.8 )

———————

(1)   All amounts are shown before income taxes, unless otherwise noted.
(2)   Amounts represent the total “Summary of Correction of Investments Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

 

(Continued from previous page)   Summary of Correction of Investments Errors – Three months ended September 30, 2011 Income Statement Impacts(1)  
Increase (decrease)   Investments  
($ in millions)   OIA    

Available-for-Sale

Securities

   

Derivative

Valuation

   

Structured

Securities

   

Total

Investments

Errors(2)

 
 
    Valuation     Bond Call  
COMPREHENSIVE INCOME (LOSS):                                    
Net income (loss) attributable to The Phoenix Companies, Inc.   $ 2.0     $ (0.5 )   $     $ (10.3 )   $ (2.0 )   $ (10.8 )
Other comprehensive income (loss) before income taxes:                                                
Net unrealized investment gains before income taxes     (4.8 )     (3.6 )                 1.9       (6.5 )
Non-credit portion of OTTI losses recognized in OCI before income taxes                                    
Net pension liability adjustment before income taxes                                    
Net unrealized other gains (losses) before income taxes                                    
Net unrealized derivative instruments gains (losses) before income taxes                                    
Other comprehensive income (loss) before income taxes     (4.8 )     (3.6 )                 1.9       (6.5 )
Less: Income tax expense (benefit) related to:                                                
Net unrealized investment gains (losses)                                    
Non-credit portion of OTTI losses recognized in OCI                                    
Net pension liability adjustment                                    
Net unrealized other gains (losses)                                    
Net unrealized derivative instruments gains (losses)                                    
Total income tax expense (benefit)                                    
Other comprehensive income (loss), net of income taxes     (4.8 )     (3.6 )                 1.9       (6.5 )
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.     (2.8 )     (4.1 )           (10.3 )     (0.1 )     (17.3 )
Add: Comprehensive income attributable to noncontrolling interests                                    
Comprehensive income (loss)   $ (2.8 )   $ (4.1 )   $     $ (10.3 )   $ (0.1 )   $ (17.3 )

———————

(1)   All amounts are shown before income taxes, unless otherwise noted.
(2)   Amounts represent the total “Summary of Correction of Investments Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

 

Increase (decrease)   Summary of Correction of Investments Errors – Nine months ended September 30, 2011 Income Statement Impacts(1)  
($ in millions)   Investments  
    OIA    

Available-for-Sale

Securities

   

Derivative

Valuation

   

Structured

Securities

   

Total

Investments

Errors(2)

 
 
    Valuation     Bond Call  
REVENUES                                    
Premiums   $     $     $     $     $     $  
Fee income                                                
Net investment income     16.4       1.8                   (1.4 )     16.8  
Net realized investment gains (losses):                                    
  Total OTTI losses                                    
  Portion of OTTI losses recognized in OCI                                    
    Net OTTI losses recognized in earnings                                    
  Net realized investment gains (losses), excluding OTTI losses           (0.1 )           (12.3 )     (1.3 )     (13.7 )
Net realized investment gains (losses)           (0.1 )           (12.3 )     (1.3 )     (13.7 )
Gain on debt repurchase                                    
Total revenues     16.4       1.7             (12.3 )     (2.7 )     3.1  
                                     
BENEFITS AND EXPENSES                                    
Policy benefits, excluding policyholder dividends                                    
Policyholder dividends     13.0       (1.1 )                 1.0       12.9  
Policy acquisition cost amortization                       (0.4 )           (0.4 )
Interest expense on indebtedness                                    
Other operating expenses     0.9                               0.9  
Total benefits and expenses     13.9       (1.1 )           (0.4 )     1.0       13.4  
Income (loss) from continuing operations before income taxes     2.5       2.8             (11.9 )     (3.7 )     (10.3 )
Income tax expense (benefit)                                                
Income (loss) from continuing operations     2.5       2.8             (11.9 )     (3.7 )     (10.3 )
Noncontrolling interests     (0.4 )                             (0.4 )
Income (loss) from discontinued operations, net of income taxes                                    
Net income (loss) attributable to                                                
The Phoenix Companies, Inc.   $ 2.9     $ 2.8     $     $ (11.9 )   $ (3.7 )   $ (9.9 )

———————

(1)   All amounts are shown before income taxes, unless otherwise noted.
(2)   Amounts represent the total “Summary of Correction of Investments Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.
Consolidated Summary of Correction of Errors

 

(Continued from previous page)   Summary of Correction of Errors – Nine months ended September 30, 2011 Income Statement Impacts(1)  
Increase (decrease)   Investments  
($ in millions)   OIA    

Available-for-Sale

Securities

   

Derivative

Valuation

   

Structured

Securities

   

Total

Investments

Errors(2)

 
 
    Valuation     Bond Call  
COMPREHENSIVE INCOME (LOSS):                                    
Net income (loss) attributable to The Phoenix Companies, Inc.   $ 2.9     $ 2.8     $     $ (11.9 )   $ (3.7 )   $ (9.9 )
Other comprehensive income (loss) before income taxes:                                                
Net unrealized investment gains before income taxes     (3.8 )     4.6                   3.6       4.4  
Non-credit portion of OTTI losses recognized in OCI before income taxes                                    
Net pension liability adjustment before income taxes                                    
Net unrealized other gains (losses) before income taxes                                    
Net unrealized derivative instruments gains (losses) before income taxes                                    
Other comprehensive income (loss) before income taxes     (3.8 )     4.6                   3.6       4.4  
Less: Income tax expense (benefit) related to:                                                
Net unrealized investment gains (losses)                                    
Non-credit portion of OTTI losses recognized in OCI                                    
Net pension liability adjustment                                    
Net unrealized other gains (losses)                                    
Net unrealized derivative instruments gains (losses)                                    
Total income tax expense (benefit)                                    
Other comprehensive income (loss), net of income taxes     (3.8 )     4.6                   3.6       4.4  
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.     (0.9 )     7.4             (11.9 )     (0.1 )     (5.5 )
Add: Comprehensive income attributable to noncontrolling interests                                    
Comprehensive income (loss)   $ (0.9 )   $ 7.4     $     $ (11.9 )   $ (0.1 )   $ (5.5 )

———————

(1)   All amounts are shown before income taxes, unless otherwise noted.
(2)   Amounts represent the total “Summary of Correction of Investments Errors” which are further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

Increase (decrease)   For the  
($ in millions)   period ended  
    Sept 30, 2011  
Consolidated Statement of Cash Flows      
Cash provided by (used for) operating activities   $ (227.1 )
Cash provided by (used for) investing activities     90.2  
Cash provided by (used for) financing activities     143.4  

 

 

Increase (decrease)   Consolidated Summary of Correction of Errors – December 31, 2011 Balance Sheet Impacts(1)  
($ in millions)  

Total

Actuarial

Finance(2)

   

Total

Investments(3)

   

Reinsurance

Accounting

    Pensions    

OIA

Taxable

Income

    Changes in Classification              
   

Cash and

Suspense

    Reinsurance    

Reclassify &

Separately

Present

   

Other

Restatement

Adjustments

   

Total

Correction

of Errors(4)

 
 
 
ASSETS:                                                            
Available-for-sale debt securities, at fair value   $     $ (91.0 )   $     $     $     $     $     $     $ (2.0 )   $ (93.0 )
Available-for-sale equity securities, at fair value                                                            
Limited partnerships and other investments           (35.9 )                                         (0.1 )     (36.0 )
Policy loans, at unpaid principal balances                                                            
Derivative investments           (12.6 )                                               (12.6 )
Fair value investments           97.5                                           (0.1 )     97.4  
Total investments           (42.0 )                                         (2.2 )     (44.2 )
Cash and cash equivalents           2.0                         (28.4 )                 0.3       (26.1 )
Accrued investment income                                                            
Receivables     17.6                               16.4       196.6             2.9       233.5  
Deferred policy acquisition costs     41.5       (13.1 )                                   (42.2 )     0.1       (13.7 )
Deferred income taxes, net                                                     2.4       2.4  
Other assets     (33.8 )     12.1       39.6                   8.8             42.2       (2.4 )     66.5  
Discontinued operations assets                                         14.1             2.0       16.1  
Separate account assets                       (0.7 )                                   (0.7 )
Total assets   $ 25.3     $ (41.0 )   $ 39.6     $ (0.7 )   $     $ (3.2 )   $ 210.7     $     $ 3.1     $ 233.8  

———————

(1)   All amounts are shown before income taxes, unless otherwise noted.
(2)   Represents “Summary of Correction of Actuarial Finance Errors” from the previous pages of this Note.

 

(3)   Represents “Summary of Correction of Investments Errors from the previous pages of this Note.
(4)   Amounts represent total correction of errors which is also presented in the “Consolidated Statement of Comprehensive Income” reflected in the tables on the following pages.

 

(Continued from previous page)   Consolidated Summary of Correction of Errors – December 31, 2011 Balance Sheet Impacts(1)  
Increase (decrease)  

Total

Actuarial

Finance(2)

   

Total

Investments(3)

   

Reinsurance

Accounting

    Pensions    

OIA

Taxable

Income

    Changes in Classification              
($ in millions)  

Cash and

Suspense

    Reinsurance    

Reclassify &

Separately

Present

   

Other

Restatement

Adjustments

   

Total

Correction

of Errors(4)

 
 
 
LIABILITIES:                                                            
Policy liabilities and accruals   $ 240.7     $     $     $     $     $     $ 196.6     $ (759.8 )   $ 5.3     $ (317.2 )
Policyholder deposit funds     2.9                                                 (0.1 )     2.8  
Dividend obligation     1.0       (7.6 )                                   759.8       (0.7 )     752.5  
Indebtedness                                                            
Other liabilities     0.2       12.5             22.9       6.9       (3.2 )                 5.0       44.3  
Discontinued operations liabilities                                         14.1             2.0       16.1  
Separate account liabilities                       (0.7 )                                   (0.7 )
Total liabilities     244.8       4.9             22.2       6.9       (3.2 )     210.7             11.5       497.8  
                                                                                 
                                                                                 
STOCKHOLDERS’ EQUITY:                                                                                
Common stock                                                            
Additional paid-in capital                                                            
Accumulated other comprehensive loss     (14.2 )     11.6             (13.4 )                             (49.7 )     (65.7 )
Accumulated deficit     (114.9 )     (13.8 )     3.0       5.3       (3.3 )                       11.1       (112.6 )
Treasury stock                                                            
Noncontrolling interests           (1.0 )                                               (1.0 )
Total stockholders’ equity –  periods presented(5)     (129.1 )     (3.2 )     3.0       (8.1 )     (3.3 )                       (38.6 )     (179.3 )
Total stockholders’ equity –  cumulative impact(6)     (90.4 )     (42.7 )     36.6       (14.8 )     (3.6 )                       30.2       (84.7 )
Total stockholders’ equity –impact     (219.5 )     (45.9 )     39.6       (22.9 )     (6.9 )                       (8.4 )     (264.0 )
Total liabilities and  stockholders’ equity   $ 25.3     $ (41.0 )   $ 39.6     $ (0.7 )   $     $ (3.2 )   $ 210.7     $     $ 3.1     $ 233.8  

———————

(1)   All amounts are shown before income taxes, unless otherwise noted.
(2)   Represents “Summary of Correction of Actuarial Finance Errors” from the previous pages of this Note.

 

(3)   Represents “Summary of Correction of Investments Errors from the previous pages of this Note.
(4)   Amounts represent total correction of errors which is also presented in the “Consolidated Statement of Comprehensive Income” reflected in the tables on the following pages.

 

(5)   Amounts represent restatement changes made to the 2011 and 2010 periods as presented within the 2012 Form 10-K.
(6)   Amounts represent cumulative impact of restatement changes made to periods prior to 2010.

 

Increase (decrease)   Summary of Correction of Errors – Three months ended September 30, 2011 Income Statement Impacts(1)  
($ in millions)   Consolidated  
   

Total

Actuarial

Finance(2)

   

Total

Investments(3)

   

Reinsurance

Accounting

    Pensions    

OIA

Taxable

Income

   

Other

Restatement

Adjustments

   

Total

Correction

of Errors(4)

 
REVENUES                                          
Premiums   $ (5.5 )   $     $     $     $     $     $ (5.5 )
Fee income     (1.1 )                                   (1.1 )
Net investment income           5.2                         (2.7 )     2.5  
Net realized investment gains (losses):                                                        
Total OTTI losses                                   0.1       0.1  
Portion of OTTI losses recognized in OCI                                   (1.4 )     (1.4 )
Net OTTI losses recognized in earnings                                   (1.3 )     (1.3 )
Net realized investment gains (losses), excluding OTTI losses     (2.1 )     (14.0 )                       1.2     (14.9 )
Net realized investment gains (losses)     (2.1 )     (14.0 )                       (0.1 )     (16.2 )
Gain on debt repurchase                                          
Total revenues     (8.7 )     (8.8 )                       (2.8 )     (20.3 )
                                                         
BENEFITS AND EXPENSES                                                        
Policy benefits, excluding policyholder dividends     26.3             (1.0 )                 (0.2 )     25.1  
Policyholder dividends     (0.2 )     2.4                         (0.2 )     2.0  
Policy acquisition cost amortization     (14.5 )     (0.4 )                             (14.9 )
Interest expense on indebtedness                                          
Other operating expenses           0.3             2.3             (2.8 )     (0.2 )
Total benefits and expenses     11.6       2.3       (1.0 )     2.3             (3.2 )     12.0  
Income (loss) from continuing operations before income taxes     (20.3 )     (11.1 )     1.0       (2.3 )           0.4       (32.3 )
Income tax expense (benefit)                                   (1.2 )     (1.2 )
Income (loss) from continuing operations     (20.3 )     (11.1 )     1.0       (2.3 )           1.6       (31.1 )
Noncontrolling interests           (0.3 )                             (0.3 )
Income (loss) from discontinued operations, net of income taxes                                   0.8       0.8  
Net income (loss) attributable to The Phoenix Companies, Inc.   $ (20.3 )   $ (10.8 )   $ 1.0     $ (2.3 )   $     $ 2.4     $ (30.0 )

———————

(1)   All amounts are shown before income taxes, unless otherwise noted.
(2)   Represents “Summary of Correction of Actuarial Finance Errors” from the previous pages of this Note.

 

(3)   Represents “Summary of Correction of Investments Errors from the previous pages of this Note.
(4)   Amounts represent total correction of errors which is also presented in the “Consolidated Statement of Comprehensive Income” reflected in the tables on the following pages.

 

(Continued from previous page)   Summary of Correction of Errors – Three months ended September 30, 2011 Income Statement Impacts(1)  
Increase (decrease)   Consolidated  
($ in millions)  

Total

Actuarial

Finance(2)

   

Total

Investments(3)

   

Reinsurance

Accounting

    Pensions    

OIA

Taxable

Income

   

Other

Restatement

Adjustments

   

Total

Correction

of Errors(4)

 
 
 
COMPREHENSIVE INCOME (LOSS):                                          
Net income (loss) attributable to The Phoenix Companies, Inc.   $ (20.3 )   $ (10.8 )   $ 1.0     $ (2.3 )   $     $ 2.4     $ (30.0 )
Other comprehensive income (loss) before income taxes:                                          
Net unrealized investment gains before income taxes(5)     (37.1 )     (6.5 )                       61.3       17.7  
Non-credit portion of OTTI losses recognized in OCI before income taxes(5)                                             (43.6 )     (43.6 )
Net pension liability adjustment before income taxes                       7.2             (16.4 )     (9.2 )
Net unrealized other gains (losses) before income taxes                                          
Net unrealized derivative instruments gains (losses) before income taxes(5)                                   (1.1 )     (1.1 )
Other comprehensive income (loss) before income taxes     (37.1 )     (6.5 )           7.2             0.2       (36.2 )
Less: Income tax expense (benefit) related to:                                          
Net unrealized investment gains (losses)(5)                                   20.8       20.8  
Non-credit portion of OTTI losses recognized in OCI(5)                                   (15.3 )     (15.3 )
Net pension liability adjustment                                          
Net unrealized other gains (losses)                                          
Net unrealized derivative instruments gains (losses)                                          
Total income tax expense (benefit)                                   5.5       5.5  
Other comprehensive income (loss), net of income taxes     (37.1 )     (6.5 )           7.2             (5.3 )     (41.7 )
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.     (57.4 )     (17.3 )     1.0       4.9             (2.9 )     (71.7 )
Add: Comprehensive income attributable to noncontrolling interests                                   (0.3 )     (0.3 )
Comprehensive income (loss)   $ (57.4 )   $ (17.3 )   $ 1.0     $ 4.9     $     $ (3.2 )   $ (72.0 )

———————

(1)   All amounts are shown before income taxes, unless otherwise noted.
(2)   Represents “Summary of Correction of Actuarial Finance Errors” from the previous pages of this Note.

 

(3)   Represents “Summary of Correction of Investments Errors from the previous pages of this Note.
(4)   Amounts represent total correction of errors which is also presented in the “Consolidated Statement of Comprehensive Income” reflected in the tables on the following pages.

 

(5)   In addition to adjustments described within this footnote the correction of errors column contains reclassifications related to changes in presentation of components of other comprehensive income.

 

Increase (decrease)   Summary of Correction of Errors – Nine months ended September 30, 2011 Income Statement Impacts(1)  
($ in millions)   Consolidated  
   

Total

Actuarial

Finance(2)

   

Total

Investments(3)

   

Reinsurance

Accounting

    Pensions    

OIA

Taxable

Income

   

Other

Restatement

Adjustments

   

Total

Correction

of Errors(4)

 
REVENUES                                          
Premiums   $ (14.1 )   $     $     $     $     $     $ (14.1 )
Fee income     (0.1 )                             (0.1 )     (0.2 )
Net investment income           16.8                         (1.3 )     15.5  
Net realized investment gains (losses):                                                        
  Total OTTI losses                                   0.4       0.4  
  Portion of OTTI losses recognized in OCI                                   (1.8 )     (1.8 )
    Net OTTI losses recognized in earnings                                   (1.4 )     (1.4 )
  Net realized investment gains (losses), excluding OTTI losses     0.8       (13.7 )                       3.3       (9.6 )
Net realized investment gains (losses)     0.8       (13.7 )                       1.9       (11.0 )
Gain on debt repurchase                                          
Total revenues     (13.4 )     3.1                         0.5       (9.8 )
                                                         
BENEFITS AND EXPENSES                                                        
Policy benefits, excluding policyholder dividends     49.5             (4.2 )                 0.1       45.4  
Policyholder dividends     (2.3 )     12.9                         (0.4 )     10.2  
Policy acquisition cost amortization     (15.2 )     (0.4 )                             (15.6 )
Interest expense on indebtedness                                          
Other operating expenses     6.7       0.9             3.9             (0.9 )     10.6  
Total benefits and expenses     38.7       13.4       (4.2 )     3.9             (1.2 )     50.6  
Income (loss) from continuing operations before income taxes     (52.1 )     (10.3 )     4.2       (3.9 )           1.7       (60.4 )
Income tax expense (benefit)                                   (0.3 )     (0.3 )
Income (loss) from continuing operations     (52.1 )     (10.3 )     4.2       (3.9 )           2.0       (60.1 )
Noncontrolling interests           (0.4 )                             (0.4 )
Income (loss) from discontinued operations, net of income taxes                                   0.8       0.8  
Net income (loss) attributable to The Phoenix Companies, Inc.   $ (52.1 )   $ (9.9 )   $ 4.2     $ (3.9 )   $     $ 2.8     $ (58.9 )

———————

(1)   All amounts are shown before income taxes, unless otherwise noted.
(2)   Represents “Summary of Correction of Actuarial Finance Errors” from the previous pages of this Note.

 

(3)   Represents “Summary of Correction of Investments Errors from the previous pages of this Note.
(4)   Amounts represent total correction of errors which is also presented in the “Consolidated Statement of Comprehensive Income” reflected in the tables on the following pages.

 

(Continued from previous page)   Summary of Correction of Errors – Nine months ended September 30, 2011 Income Statement Impacts(1)  
Increase (decrease)   Consolidated  
($ in millions)  

Total

Actuarial

Finance(2)

   

Total

Investments(3)

   

Reinsurance

Accounting

    Pensions    

OIA

Taxable

Income

   

Other

Restatement

Adjustments

   

Total

Correction

of Errors(4)

 
 
 
COMPREHENSIVE INCOME (LOSS):                                          
Net income (loss) attributable to The Phoenix Companies, Inc.   $ (52.1 )   $ (9.9 )   $ 4.2     $ (3.9 )   $     $ 2.8     $ (58.9 )
Other comprehensive income (loss) before income taxes:                                          
Net unrealized investment gains before income taxes(5)     (29.0 )     4.4                         60.6       36.0  
Non-credit portion of OTTI losses recognized in OCI before income taxes(5)                                             (44.9 )     (44.9 )
Net pension liability adjustment before income taxes                       8.9             (16.3 )     (7.4 )
Net unrealized other gains (losses) before income taxes                                          
Net unrealized derivative instruments gains (losses) before income taxes(5)                                   0.1       0.1  
Other comprehensive income (loss) before income taxes     (29.0 )     4.4             8.9             (0.5 )     (16.2 )
Less: Income tax expense (benefit) related to:                                          
Net unrealized investment gains (losses)(5)                                   29.6       29.6  
Non-credit portion of OTTI losses recognized in OCI(5)                                   (15.8 )     (15.8 )
Net pension liability adjustment                                          
Net unrealized other gains (losses)                                          
Net unrealized derivative instruments gains (losses)                                          
Total income tax expense (benefit)                                   13.8       13.8  
Other comprehensive income (loss), net of income taxes     (29.0 )     4.4             8.9             (14.3 )     (30.0 )
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.     (81.1 )     (5.5 )     4.2       5.0             (11.5 )     (88.9 )
Add: Comprehensive income attributable to noncontrolling interests                                   (0.4 )     (0.4 )
Comprehensive income (loss)     (81.1 )   $ (5.5 )   $ 4.2     $ 5.0     $     $ (11.9 )   $ (89.3 )

———————

(1)   All amounts are shown before income taxes, unless otherwise noted.
(2)   Represents “Summary of Correction of Actuarial Finance Errors” from the previous pages of this Note.

 

(3)   Represents “Summary of Correction of Investments Errors from the previous pages of this Note.
(4)   Amounts represent total correction of errors which is also presented in the “Consolidated Statement of Comprehensive Income” reflected in the tables on the following pages.

 

(5)   In addition to adjustments described within this footnote the correction of errors column contains reclassifications related to changes in presentation of components of other comprehensive income.
Restatement of Consolidated Financial Statements

 

    Consolidated Balance Sheet  
($ in millions, except share data)   As of and for the year ended December 31, 2011  
   

As previously

reported

   

Correction

of errors(1)

   

Adjusted

prior to the

retrospective

adoption

   

Retrospective

Adoption(2)

   

As restated

and amended

 
ASSETS:                              
Available-for-sale debt securities, at fair value   $ 11,890.0     $ (93.0 )   $ 11,797.0     $     $ 11,797.0  
Available-for-sale equity securities, at fair value     35.7             35.7             35.7  
Limited partnerships and other investments     601.3       (36.0 )     565.3             565.3  
Policy loans, at unpaid principal balances     2,379.3             2,379.3             2,379.3  
Derivative investments     174.8       (12.6 )     162.2             162.2  
Fair value investments     86.6       97.4       184.0             184.0  
Total investments     15,167.7       (44.2 )     15,123.5             15,123.5  
Cash and cash equivalents     194.3       (26.1 )     168.2             168.2  
Accrued investment income     175.6             175.6             175.6  
Receivables     415.1       233.5       648.6             648.6  
Deferred policy acquisition costs     1,317.6       (13.7 )     1,303.9       (184.7 )     1,119.2  
Deferred income taxes, net     118.2       2.4       120.6             120.6  
Other assets     164.6       66.5       231.1       (1.0 )     230.1  
Discontinued operations assets     69.2       16.1       85.3             85.3  
Separate account assets     3,817.6       (0.7 )     3,816.9             3,816.9  
Total assets   $ 21,439.9     $ 233.8     $ 21,673.7     $ (185.7 )   $ 21,488.0  
                                         
LIABILITIES:                                        
Policy liabilities and accruals(3)   $ 12,967.8     $ (317.2 )   $ 12,650.6     $ (19.2 )   $ 12,631.4  
Policyholder deposit funds     2,429.4       2.8       2,432.2             2,432.2  
Dividend obligations(4)           752.5       752.5             752.5  
Indebtedness     426.9             426.9             426.9  
Other liabilities     613.7       44.3       658.0             658.0  
Discontinued operations liabilities     58.3       16.1       74.4             74.4  
Separate account liabilities     3,817.6       (0.7 )     3,816.9             3,816.9  
Total liabilities     20,313.7       497.8       20,811.5       (19.2 )     20,792.3  
                                         
COMMITMENTS AND CONTINGENT                                        
LIABILITIES (Notes 21 & 22)                                        
                                         
STOCKHOLDERS’ EQUITY:                                        
Common stock, $.01 par value: 5.8 million shares outstanding(5)     1.3             1.3             1.3  
Additional paid-in capital     2,630.5             2,630.5             2,630.5  
Accumulated other comprehensive income (loss)     (170.7 )     (103.5 )     (274.2 )     43.5       (230.7 )
Accumulated deficit     (1,155.4 )     (163.3 )     (1,318.7 )     (210.0 )     (1,528.7 )
Treasury stock, at cost: 0.6 million shares(5)     (179.5 )           (179.5 )           (179.5 )
Total The Phoenix Companies, Inc. stockholders’ equity     1,126.2       (266.8 )     859.4       (166.5 )     692.9  
Noncontrolling interests           2.8       2.8             2.8  
Total stockholders’ equity     1,126.2       (264.0 )     862.2       (166.5 )     695.7  
Total liabilities and stockholders’ equity   $ 21,439.9     $ 233.8     $ 21,673.7     $ (185.7 )   $ 21,488.0  

———————

(1)   Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26). See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2)   Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26), have been updated from those originally disclosed in the First Quarter 2012 Quarterly Report on Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

(3)   Included within policyholder liabilities and accruals is the post-ASU gross profits followed by losses reserve of $211.8 million. The corresponding net post-ASU amount of $200.5 million reported within the consolidated financial statements includes $(11.2) million of shadow profits followed by losses, both of which are discussed further within the “Actuarial Finance” section of this Note.
(4)   Dividend obligations were previously included in policy liabilities and accruals.

 

(5)   All share amounts for all periods reflect the 1-for-20 reverse stock split, which was effective August 10, 2012.

 

    Consolidated Statement of Comprehensive Income  
($ in millions, except share data)   Three months ended September 30, 2011  
   

As previously

reported

   

Correction

of errors(1)

   

Adjusted

prior to the

retrospective

adoption

   

Retrospective

Adoption(2)

   

As restated

and amended

 
REVENUES:                              
Premiums   $ 117.4     $ (5.5 )   $ 111.9     $     $ 111.9  
Fee income     147.6       (1.1 )     146.5             146.5  
Net investment income     201.0       2.5       203.5             203.5  
Net realized investment gains (losses):                                        
  Total OTTI losses     (31.0 )     0.1       (30.9 )           (30.9 )
  Portion of OTTI losses recognized in OCI     22.6       (1.4 )     21.2             21.2  
    Net OTTI losses recognized in earnings     (8.4 )     (1.3 )     (9.7 )           (9.7 )
  Net realized investment gains (losses), excluding OTTI losses     14.5       (14.9 )     (0.4 )           (0.4 )
Net realized investment losses     6.1       (16.2 )     (10.1 )           (10.1 )
Gain on debt repurchase                              
Total revenues     472.1       (20.3 )     451.8             451.8  
                                         
BENEFITS AND EXPENSES:                                        
Policy benefits, excluding policyholder dividends     268.2       25.1       293.3       (0.2 )     293.1  
Policyholder dividends     51.5       2.0       53.5             53.5  
Policy acquisition cost amortization     57.5       (14.9 )     42.6       (7.5 )     35.1  
Interest expense on indebtedness     7.9             7.9             7.9  
Other operating expenses     57.2       (0.2 )     57.0       0.4       57.4  
Total benefits and expenses     442.3       12.0       454.3       (7.3 )     447.0  
Income (loss) from continuing operations before income taxes     29.8       (32.3 )     (2.5 )     7.3       4.8  
Income tax benefit     (6.7 )     (1.2 )     (7.9 )     1.1       (6.8 )
Income (loss) from continuing operations     36.5       (31.1 )     5.4       6.2       11.6  
Income (loss) from discontinued operations, net of income taxes     (4.7 )     0.8       (3.9 )           (3.9 )
Net income (loss)     31.8       (30.3 )     1.5       6.2       7.7  
Less: Net income (loss) attributable to noncontrolling interests           (0.3 )     (0.3 )           (0.3 )
Net income (loss) attributable to The Phoenix Companies, Inc.   $ 31.8     $ (30.0 )   $ 1.8     $ 6.2     $ 8.0  

 

(Continued from previous page)   Consolidated Statement of Comprehensive Income  
($ in millions, except share data)   Three months September 30, 2011  
   

As previously

reported

   

Correction

of errors(1)

   

Adjusted

prior to the

retrospective

adoption

   

Retrospective

Adoption(2)

   

As restated

and amended

 
COMPREHENSIVE INCOME (LOSS):                              
Net income (loss) attributable to The Phoenix Companies, Inc.   $ 31.8     $ (30.0 )   $ 1.8     $ 6.2     $ 8.0  
Less: Net income (loss) attributable to noncontrolling interests           (0.3 )     (0.3 )           (0.3 )
Net income (loss)     31.8       (30.3 )     1.5       6.2       7.7  
  Other comprehensive income (loss) before income taxes:                                        
  Net unrealized investment gains before income taxes(5)     (13.3 )     17.7       4.4       1.6       6.0  
  Non-credit portion of OTTI losses recognized in OCI before income taxes(5)     22.4       (43.6 )     (21.2 )           (21.2 )
  Net pension liability adjustment before income taxes     1.1       (9.2 )     (8.1 )           (8.1 )
  Net unrealized other gains (losses) before income taxes                              
  Net unrealized derivative instruments gains (losses) before income taxes(5)     1.1       (1.1 )                  
    Other comprehensive income (loss) before income taxes     11.3       (36.2 )     (24.9 )     1.6       (23.3 )
  Less: Income tax expense (benefit) related to:                                        
    Net unrealized investment gains (losses)     (42.2 )     20.8       (21.4 )     (1.2 )     (22.6 )
    Non-credit portion of OTTI losses recognized in OCI(5)     7.8       (15.3 )     (7.5 )           (7.5 )
    Net pension liability adjustment(5)                              
    Net unrealized other gains (losses)                              
    Net unrealized derivative instruments gains (losses)                              
      Total income tax benefit     (34.4 )     5.5       (28.9 )     (1.2 )     (30.1 )
      Other comprehensive income (loss), net of income taxes     45.7       (41.7 )     4.0       2.8       6.8  
Comprehensive income (loss)     77.5       (72.0 )     5.5       9.0       14.5  
  Less: Comprehensive income (loss) attributable to noncontrolling interests, net of income taxes           (0.3 )     (0.3 )           (0.3 )
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.   $ 77.5     $ (71.7 )   $ 5.8     $ 9.0     $ 14.8  

 

 

(Continued from previous page)   Consolidated Statement of Comprehensive Income  
($ in millions, except share data)   Three months ended September 30, 2011  
   

As previously

reported

   

Correction

of errors (1)

   

Adjusted

prior to the

retrospective

adoption

   

Retrospective

Adoption(2)

   

As restated

and amended

 
EARNINGS (LOSS) PER SHARE: (3)                                
Earnings (loss) from continuing operations – basic   $ 6.25     $ (5.35 )           $ 1.07     $ 1.99  
Earnings (loss) from continuing operations – diluted   $ 6.23     $ (5.28 )           $ 1.05     $ 1.97  
Earnings (loss) from discontinued operations – basic   $ (0.80 )   $ 0.14             $     $ (0.67 )
Earnings (loss) from discontinued operations – diluted   $ (0.80 )   $ 0.14             $     $ (0.66 )
Net earnings (loss) attributable to The Phoenix Companies, Inc. – basic   $ 5.44     $ (5.16 )           $ 1.07     $ 1.38  
Net earnings (loss) attributable to The Phoenix Companies, Inc. – diluted   $ 5.43     $ (5.09 )           $ 1.05     $ 1.36  
Basic weighted-average common shares outstanding (in thousands)     5,844       5,816 (4)             5,816       5,816  
Diluted weighted-average common shares outstanding (in thousands)     5,856       5,890 (4)             5,890       5,890  

———————

(1)   Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26). See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2)   Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26).

 

(3)   All share amounts for all periods reflect the 1-for-20 reverse stock split, which was effective August 10, 2012.
(4)   Weighted-average common shares outstanding have been updated to reflect the impact of an error which had no material impact to EPS information, basic or diluted, for any period presented.

 

(5)   In addition to adjustments described within this footnote the correction of errors column contains reclassifications related to changes in presentation of components of other comprehensive income.

 

    Consolidated Statement of Comprehensive Income  
($ in millions, except share data)   Nine months ended September 30, 2011  
   

As previously

reported

   

Correction

of errors(1)

   

Adjusted

prior to the

retrospective

adoption

   

Retrospective

Adoption(2)

   

As restated

and amended

 
REVENUES:                              
Premiums   $ 337.7     $ (14.1 )   $ 323.6     $     $ 323.6  
Fee income     456.0       (0.2 )     455.8             455.8  
Net investment income     612.6       15.5       628.1             628.1  
Net realized investment gains (losses):                                        
  Total OTTI losses     (45.0 )     0.4       (44.6 )           (44.6 )
  Portion of OTTI losses recognized in OCI     27.9       (1.8 )     26.1             26.1  
    Net OTTI losses recognized in earnings     (17.1 )     (1.4 )     (18.5 )           (18.5 )
  Net realized investment gains (losses), excluding OTTI losses     10.1       (9.6 )     0.5             0.5  
Net realized investment losses     (7.0 )     (11.0 )     (18.0 )           (18.0 )
Gain on debt repurchase                              
Total revenues     1,399.3       (9.8 )     1,389.5             1,389.5  
                                         
BENEFITS AND EXPENSES:                                        
Policy benefits, excluding policyholder dividends     800.0       45.4       845.4       3.2       848.6  
Policyholder dividends     188.8       10.2       199.0             199.0  
Policy acquisition cost amortization     172.0       (15.6 )     156.4       (29.4 )     127.0  
Interest expense on indebtedness     23.7             23.7             23.7  
Other operating expenses     175.4       10.6       186.0       1.1       187.1  
Total benefits and expenses     1,359.9       50.6       1,410.5       (25.1 )     1,385.4  
Income (loss) from continuing operations before income taxes     39.4       (60.4 )     (21.0 )     25.1       4.1  
Income tax expense (benefit)     2.4       (0.3 )     2.1       7.4       9.5  
Income (loss) from continuing operations     37.0       (60.1 )     (23.1 )     17.7       (5.4 )
Income (loss) from discontinued operations, net of income taxes     (6.9 )     0.8       (6.1 )           (6.1 )
Net income (loss)     30.1       (59.3 )     (29.2 )     17.7       (11.5 )
Less: Net income (loss) attributable to noncontrolling interests           (0.4 )     (0.4 )           (0.4 )
Net income (loss) attributable to The Phoenix Companies, Inc.   $ 30.1     $ (58.9 )   $ (28.8 )   $ 17.7     $ (11.1 )

 

(Continued from previous page)   Consolidated Statement of Comprehensive Income  
($ in millions, except share data)   Nine months ended September 30, 2011  
   

As previously

reported

   

Correction

of errors(1)

   

Adjusted

prior to the

retrospective

adoption

   

Retrospective

Adoption(2)

   

As restated

and amended

 
COMPREHENSIVE INCOME (LOSS):                              
Net income (loss) attributable to The Phoenix Companies, Inc.   $ 30.1     $ (58.9 )   $ (28.8 )   $ 17.7     $ (11.1 )
Net income (loss) attributable to noncontrolling interests           (0.4 )     (0.4 )           (0.4 )
Net income (loss)     30.1     $ (59.3 )   $ (29.2 )   $ 17.7     $ (11.5 )
  Other comprehensive income (loss) before income taxes:                                        
  Net unrealized investment gains before income taxes(5)     19.9       36.0       55.9       4.4       60.3  
  Non-credit portion of OTTI losses recognized in OCI before income taxes(5)     23.4       (44.9 )     (21.5 )           (21.5 )
  Net pension liability adjustment before income taxes     5.2       (7.4 )     (2.2 )           (2.2 )
  Net unrealized other gains (losses) before income taxes                              
  Net unrealized derivative instruments gains (losses) before income taxes(5)     (0.1 )     0.1                    
    Other comprehensive income (loss) before income taxes     48.4       (16.2 )     32.2       4.4       36.6  
  Less: Income tax expense (benefit) related to:                                        
  Net unrealized investment gains (losses)(5)     (13.4 )     29.6       16.2       (7.5 )     8.7  
  Non-credit portion of OTTI losses recognized in OCI(5)     8.2       (15.8 )     (7.6 )           (7.6 )
    Net pension liability adjustment                              
  Net unrealized other gains (losses)                              
  Net unrealized derivative instruments gains (losses)                              
    Total income tax expense (benefit)     (5.2 )     13.8       8.6       (7.5 )     1.1  
    Other comprehensive income net of income taxes     53.6       (30.0 )     23.6       11.9       35.5  
Comprehensive income (loss)     83.7     $ (89.3 )   $ (5.6 )   $ 29.6     $ 24.0  
  Less: Comprehensive income attributable to noncontrolling interests, net of income taxes           (0.4 )     (0.4 )           (0.4 )
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.   $ 83.7     $ (88.9 )   $ (5.2 )   $ 29.6     $ 24.4  

 

(Continued from previous page)   Consolidated Statement of Comprehensive Income  
($ in millions, except share data)   Nine months ended September 30, 2011  
   

As previously

reported

   

Correction

of errors(1)

   

Adjusted

prior to the

retrospective

adoption

   

Retrospective

Adoption(2)

   

As restated

and amended

 
EARNINGS (LOSS) PER SHARE: (3)                              
Earnings (loss) from continuing operations – basic   $ 6.34     $ (10.34 )           $ 3.04     $ (0.93 )
Earnings (loss) from continuing operations – diluted   $ 6.33     $ (10.34 )           $ 3.04     $ (0.93 )
Earnings (loss) from discontinued operations – basic   $ (1.18 )   $ 0.14             $     $ (1.05 )
Earnings (loss) from discontinued operations –  diluted   $ (1.18 )   $ 0.14             $     $ (1.05 )
Net earnings (loss) attributable to The Phoenix Companies, Inc. – basic   $ 5.15     $ (10.13 )           $ 3.04     $ (1.91 )
Net earnings (loss) attributable to The Phoenix Companies, Inc. – diluted   $ 5.15     $ (10.13 )           $ 3.04     $ (1.91 )
Basic weighted-average common shares outstanding (in thousands)     5,840       5,814 (4)              5,814       5,814  
Diluted weighted-average common shares outstanding (in thousands)     5,849       5,814 (4)              5,814       5,814  

———————

(1)   Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26). See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2)   Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26).

 

(3)   All share amounts for all periods reflect the 1-for-20 reverse stock split, which was effective August 10, 2012.
(4)   Weighted-average common shares outstanding have been updated to reflect the impact of an error which had no material impact to EPS information, basic or diluted, for any period presented.

 

(5)   In addition to adjustments described within this footnote the correction of errors column contains reclassifications related to changes in presentation of components of other comprehensive income.

 

    Consolidated Statement of Cash Flows  
($ in millions)   For the period ended September 30, 2011  
   

As previously

Reported(1)

   

Correction

of errors(2)

   

Adjusted

prior to the

retrospective

adoption

   

Retrospective

Adoption(3)

   

As restated

and amended

 
 
 
 
OPERATING ACTIVITIES:                              
Net income (loss)   $ 30.1     $ (58.9 )   $ (28.8 )   $ 17.7     $ (11.1 )
Net realized investment gains     7.0       11.0       18.0             18.0  
Gain on debt repurchase                              
Policy acquisition costs deferred     (104.3 )     38.6       (65.7 )     1.1       (64.6 )
Amortization of deferred policy acquisition costs     172.0       (15.6 )     156.4       (29.4 )     127.0  
Amortization and depreciation     9.1             9.1             9.1  
Interest credited           89.4       89.4             89.4  
Equity in earnings of limited partnerships and other investments           (48.2 )     (48.2 )           (48.2 )
Change in:                                        
  Accrued investment income     (66.9 )     (42.9 )     (109.8 )           (109.8 )
  Deferred income taxes     1.3       (11.4 )     (10.1 )     7.4       (2.7 )
  Receivables     (7.6 )     18.2       10.6             10.6  
  Policy liabilities and accruals     (175.9 )     (190.8 )     (366.7 )     3.2       (363.5 )
  Dividend obligations           16.2       16.2             16.2  
Impact of operating activities of consolidated investment entities, net           (2.7 )     (2.7 )           (2.7 )
Other operating activities, net     (10.4 )     (23.8 )     (34.2 )           (34.2 )
Cash from (for) continuing operations     (145.6 )     (220.9 )     (366.5 )           (366.5 )
Discontinued operations, net     6.2       (6.2 )                  
Cash used for operating activities     (139.4 )     (227.1 )     (366.5 )           (366.5 )
                                         
INVESTING ACTIVITIES:                                        
Purchases of:                                        
  Available-for-sale debt securities     (5,017.7 )     2,763.8       (2,253.9 )           (2,253.9 )
  Available-for-sale equity securities           (5.7 )     (5.7 )           (5.7 )
  Derivative instruments           (32.9 )     (32.9 )           (32.9 )
  Fair value investments           (35.0 )     (35.0 )           (35.0 )
  Other investments           (1.1 )     (1.1 )           (1.1 )
Sales, repayments and maturities of:                                        
  Available-for-sale debt securities     4,540.3       (2,778.1 )     1,762.2             1,762.2  
  Available-for-sale equity securities           1.9       1.9             1.9  
  Derivative instruments           61.4       61.4             61.4  
  Fair value investments           10.9       10.9             10.9  
  Other investments           22.0       22.0             22.0  
Contributions to limited partnerships and limited liability corporations           (67.1 )     (67.1 )           (67.1 )
Distributions from limited partnerships and limited liability corporations           78.7       78.7             78.7  
Policy loans, net     34.1       67.7       101.8             101.8  
Impact of investing activities of consolidated investment entities, net                              
Other investing activities, net           (4.6 )     (4.6 )           (4.6 )
Premises and equipment additions     (3.4 )     3.4                    
Discontinued operations, net     (4.9 )     4.9                    
Cash provided by (used for) investing activities     (451.6 )     90.2       (361.4 )           (361.4 )

 

($ in millions)

  For the period ended September 30, 2011  
   

As previously

reported

   

Correction

of errors(2)

   

Adjusted

prior to the

retrospective

adoption

   

Retrospective

Adoption(3)

   

As restated

and amended

 
 
 
 
FINANCING ACTIVITIES:                              
Policyholder deposit fund deposits     1,068.6       267.7       1,336.3             1,336.3  
Policyholder deposit fund withdrawals     (450.7 )     (469.7 )     (920.4 )           (920.4 )
Net transfers to/from separate accounts           344.1       344.1             344.1  
Impact of financing activities of consolidated investment entities, net           1.3       1.3             1.3  
Cash provided by financing activities     617.9       143.4       761.3             761.3  
Change in cash and cash equivalents     26.9       6.5       33.4             33.4  
Change in cash included in discontinued operations assets           1.2       1.2             1.2  
Cash and cash equivalents, beginning of period     121.9       (28.2 )     93.7             93.7  
Cash and cash equivalents, end of period   $ 148.8     $ (20.5 )   $ 128.3     $     $ 128.3  
                                         
Supplemental Disclosure of Cash Flow Information                                        
Income taxes paid   $ (6.2 )   $     $ (6.2 )   $     $ (6.2 )
Interest expense on indebtedness paid   $ (23.0 )   $ 2.6     $ (20.4 )   $     $ (20.4 )
                                         
Non-Cash Transactions During the Year                                        
Investment exchanges   $     $ 54.5     $ 54.5     $     $ 54.5  

———————

(1)   Operating activities of the consolidated statement of cash flows for the period ended September 30, 2011 was previously reported using the direct method. Reported numbers herein reflect adjustment to indirect method currently presented.
(2)   Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26). See footnote 3 for additional information regarding these amounts and the retrospective adoption.

 

(3)   Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26).

 

    Consolidated Statement of Changes in Stockholders’ Equity  
($ in millions, except share data)   For the period ended September 30, 2011  
   

As previously

reported

   

Correction

of errors(1)

   

Adjusted

prior to the

retrospective

adoption

   

Retrospective

Adoption(2)

   

As restated

and amended

 
 
 
 
COMMON STOCK:(3)                              
  Balance, beginning of period   $ 1.3     $     $ 1.3     $     $ 1.3  
    Adjustment for reverse stock split                              
  Balance, end of period   $ 1.3     $     $ 1.3     $     $ 1.3  
                                         
ADDITIONAL PAID-IN CAPITAL:                                        
  Balance, beginning of period   $ 2,631.0     $     $ 2,631.0     $     $ 2,631.0  
    Issuance of shares and compensation expense on stock compensation awards     1.8             1.8             1.8  
    Adjustment for reverse stock split                              
  Balance, end of period   $ 2,632.8     $     $ 2,632.8     $     $ 2,632.8  
                                         
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):                                        
  Balance, beginning of period   $ (133.8 )   $ (50.7 )   $ (184.5 )   $ 28.3     $ (156.2 )
    Adjustment for initial application of accounting changes                              
    Other comprehensive income (loss)     53.6       (30.0 )     23.6       11.9       35.5  
  Balance, end of period   $ (80.2 )   $ (80.7 )   $ (160.9 )   $ 40.2     $ (120.7 )
                                         
ACCUMULATED DEFICIT:                                        
  Balance, beginning of period   $ (1,163.5 )   $ (102.1 )   $ (1,265.6 )   $ (232.4 )   $ (1,498.0 )
    Adjustment for initial application of accounting changes                              
    Net income (loss)     30.1       (58.9 )     (28.8 )     17.7       (11.1 )
  Balance, end of period   $ (1,133.4 )   $ (161.0 )   $ (1,294.4 )   $ (214.7 )   $ (1,509.1 )
                                         
TREASURY STOCK, AT COST: (3)                                        
  Balance, beginning of period   $ (179.5 )   $     $ (179.5 )   $     $ (179.5 )
    Change in treasury stock                              
  Balance, end of period   $ (179.5 )   $     $ (179.5 )   $     $ (179.5 )
                                         
TOTAL STOCKHOLDERS’ EQUITY ATTRIBUTABLE TO THE PHOENIX COMPANIES, INC.:                                        
  Balance, beginning of period   $ 1,155.5     $ (152.8 )   $ 1,002.7     $ (204.1 )   $ 798.6  
    Adjustment for initial application of accounting changes                              
Change in stockholders’ equity attributable to                                        
    The Phoenix Companies, Inc.     85.5       (88.9 )     (3.4 )     29.6       26.2  
  Stockholders’ equity, end of period   $ 1,241.0     $ (241.7 )   $ 999.3     $ (174.5 )   $ 824.8  
                                         
NONCONTROLLING INTERESTS:                                        
  Balance, beginning of period   $     $ 1.8     $ 1.8           $ 1.8  
    Change in noncontrolling interests           0.8       0.8             0.8  
  Balance, end of period   $     $ 2.6     $ 2.6     $     $ 2.6  
                                         
TOTAL STOCKHOLDERS’ EQUITY:                                        
  Balance, beginning of period   $ 1,155.5     $ (151.0 )   $ 1,004.5     $ (204.1 )   $ 800.4  
    Adjustment for initial application of accounting changes                              
    Change in stockholders’ equity     85.5       (88.1 )     (2.6 )     29.6       27.0  
  Stockholders’ equity, end of period   $ 1,241.0     $ (239.1 )   $ 1,001.9     $ (174.5 )   $ 827.4  

———————

(1)   Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26). See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2)   Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26).

 

(3)   Reflects the 1-for-20 reverse stock split, which was effective August 10, 2012.