First Quarter Fiscal 2016 Consolidated Highlights:
| | • | HRG recorded total revenues of $1.2 billion for the Fiscal 2016 Quarter, an increase of $84.4 million, or 7.4%, as compared to the first quarter of fiscal 2015 (the "Fiscal 2015 Quarter"), as higher Consumer Products revenues, driven primarily by growth from acquisitions and organic revenue growth, more than offset the impact of unfavorable foreign exchange as well as the impact of net investment losses in Insurance. |
| | • | Consolidated operating income of $35.3 million in the Fiscal 2016 Quarter increased $250.3 million as compared to the $215.0 million of operating loss reported in the Fiscal 2015 Quarter. The increase was due primarily to a lesser amount of impairments and bad debt expense in the current quarter, as described further in the Additional Items section. Excluding the impact of impairments and bad debt expense, operating income of $98.5 million in the Fiscal 2016 Quarter increased $63.7 million, or 183%, due primarily to the impact of the higher revenues in Consumer Products. |
| | • | Results reflect a $21.1 million increase in interest expense relative to the Fiscal 2015 Quarter associated with higher overall debt levels, due primarily to financing activities completed in connection with accretive acquisitions. |
| | • | HRG incurred a tax expense of $1.9 million in the Fiscal 2016 Quarter and a 4.3% effective tax rate as compared to a $6.0 million expense in the Fiscal 2015 Quarter and a (5.1)% effective tax rate. The decrease in tax expense in the current quarter was principally due to the recognition of tax benefits on a portion of current year losses from our Energy and Corporate and Other segments in the U.S. that are more likely than not to be realized based on the expected taxable gain from the FGL transaction. |
| | • | Net income from continuing operations attributable to common stockholders of $11.1 million, or $0.06 per common share attributable to controlling interest during the Fiscal 2016 Quarter, as compared to a net loss from continuing operations attributable to common stockholders of $123.5 million, or $0.63 per common share attributable to controlling interest during the Fiscal 2015 Quarter. The improvement was due primarily to the higher operating income as well as a gain on the sale of certain oil and gas assets, as described more fully in the “Additional Items” section. |
| | • | HRG ended Fiscal 2016 Quarter with corporate cash and investments of approximately $295.4 million (primarily held at HRG and HGI Funding LLC), a decrease of $35.9 million from the comparable balance of $331.3 million held as of September 30, 2015 due primarily to the vesting of previously-awarded variable compensation and related tax settlements. |
| | • | In Fiscal 2016 Quarter, HRG received dividends of $14.8 million from its subsidiaries, comprised of $11.3 million and $0.4 million from the Consumer Products and Asset Management segments, respectively, as well as $3.1 million from FGL. |
Additional Items: Compass Transaction During the Fiscal 2016 Quarter, Compass completed the previously-announced sale of its Holly, Waskom and Danville assets, which collectively accounted for approximately 38% of Energy segment revenues in Fiscal 2015. Proceeds from the sale were approximately $151.7 million, and the Company recorded a gain of $105.6 million to its Fiscal 2016 Quarter as a result of this transaction. Proceeds from the transaction, along with cash held on Compass' balance sheet, were used to reduce the borrowings under Compass' credit facility by $167.0 million during the quarter, and as a result, as of December 31st, total borrowings outstanding under Compass' credit facility were $160.0 million. Non-Cash Impairments and Bad Debt Expense Energy Pursuant to SEC reporting requirements, Compass performed a ceiling test at the end of the quarter utilizing simple average first day of the month spot prices for the trailing twelve month period for proved reserves, which may not be indicative of actual market values or forward strip prices for those reserves. As a result of this test, Compass
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