Harbinger Group Inc.
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SEC Filings

10-Q
HRG GROUP, INC. filed this Form 10-Q on 05/09/2016
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The following table summarizes the components of Net (loss) income from discontinued operations in the accompanying Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2016 and 2015:
 
Three months ended March 31,
 
Six months ended March 31,
 
2016
 
2015
 
2016
 
2015
Revenues:
 
 
 
 
 
 
 
Insurance premiums
$
16.2

 
$
14.2

 
$
31.6

 
$
25.8

Net investment income (a)
226.7

 
207.6

 
448.9

 
416.0

Net investment (losses) gains
(41.7
)
 
(33.4
)
 
24.5

 
25.1

Insurance and investment product fees and other
31.7

 
22.1

 
60.5

 
41.9

Total revenues
232.9

 
210.5

 
565.5

 
508.8

Operating costs and expenses:
 
 
 
 
 
 
 
Benefits and other changes in policy reserves
188.1

 
171.9

 
369.0

 
395.6

Selling, acquisition, operating and general expenses
27.1

 
28.3

 
55.3

 
57.5

Impairments and bad debt expense
1.3

 
(0.4
)
 
1.3

 
0.1

Amortization of intangibles
0.4

 
(3.0
)
 
33.9

 
8.3

Total operating costs and expenses
216.9

 
196.8

 
459.5

 
461.5

Operating income
16.0

 
13.7

 
106.0

 
47.3

Interest expense
(5.9
)
 
(5.9
)
 
(11.8
)
 
(11.8
)
Other income (expense), net
2.5

 
(5.0
)
 
2.5

 
(5.0
)
Write-down of assets of business held for sale to fair value less cost to sell
(23.5
)
 
—

 
(23.5
)
 
—

Net (loss) income before income taxes
(10.9
)
 
2.8

 
73.2

 
30.5

Income tax expense (benefit) (b)
2.2

 
(3.0
)
 
121.9

 
7.7

Net (loss) income
(13.1
)
 
5.8

 
(48.7
)
 
22.8

Less: net income (loss) attributable to noncontrolling interest
1.8

 
(2.8
)
 
11.2

 
0.5

Net (loss) income - attributable to controlling interest
$
(14.9
)
 
$
8.6

 
$
(59.9
)
 
$
22.3

(a) Included in the net investment income attributable to FGL is interest income of $1.2 and $0.6 for the three months ended March 31, 2016 and 2015, respectively and $2.3 and $2.3 for the six months ended March 31, 2016 and 2015, respectively, on debt instruments issued by entities consolidated by HRG as they will continue to exist following the closing of the FGL Merger. The corresponding interest expense is recorded in continuing operations in the accompanying Condensed Consolidated Statements of Operations.
(b) Included in the income tax expense for the six months ended March 31, 2016 was a $90.9 of net income tax expense related to the establishment of a deferred tax liability of $328.6 at March 31, 2016 as a result of classifying the Company’s ownership interest in FGL as held for sale. The deferred tax liability was partially offset by a $237.7 reduction of valuation allowance on HRG’s net operating and capital loss carryforwards expected to offset the FGL taxable gain at March 31, 2016. The remaining liability is expected to be offset by current year losses recognized in Continuing Operations except for $13.0 of estimated alternative minimum taxes.
Compass Asset Sale
As discussed in Note 1, Description of Business, on December 1, 2015, Compass completed the sale of its oil and gas interests located in the Holly, Waskom and Danville Fields in East Texas and North Louisiana. At closing, proceeds from the transaction, approximately $147.5, less estimated expenses of $1.9, were used primarily to reduce borrowings under the Compass Credit Agreement. Following the closing, pursuant to terms of the transaction agreement, Compass received an additional $4.5 in connection with resolving certain title and consent matters during the six months ended March 31, 2016. The Company accounted for the sale in accordance with ASC Topic 932, Property, Plant and Equipment: Extractive Activities - Oil and Gas and recorded a gain on sale of oil and natural gas assets of $105.6 for the six months ended March 31, 2016. The Holly, Waskom and Danville Fields did not represent all or substantially all of Compass full-cost method assets and, as a result, the operations associated with these assets were presented as continuing operations in the accompanying Condensed Consolidated Statements of Operations.


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