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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considered impaired for reporting purposes and are individually evaluated for impairment.
During the three and six months ended March 31, 2016, the Company recognized charge-offs of $2.6 and $15.2, respectively. For the three and six months ended March 31, 2016, the Company recorded net increases (decreases) in the allowance for credit losses of $4.1 and $(0.1), respectively, for a total provision for credit losses of $6.7 and $15.1, respectively. The internal risk rating of two and four delinquent loans was categorized as doubtful during the three and six months ended March 31, 2016, respectively. Salus has assessed the adequacy of its allowance for credit losses and believes the level of allowance for credit losses to be adequate to mitigate inherent losses in the portfolio.
During the three and six months ended March 31, 2015, the Company recognized charge-offs of $51.1. For the three and six months ended March 31, 2015, the Company also recorded net decreases in the allowance for credit losses of $17.4 and $17.2, respectively, for a total provision for credit losses of $68.5 and $68.3, respectively. The internal risk rating of one delinquent loan was categorized as doubtful during the three and six months ended March 31, 2015.
During the fiscal year ended September 30, 2015, the bankruptcy court overseeing the Chapter 11 proceedings of RadioShack Corp. (“RadioShack”) approved the sale of 1,743 of the company’s stores to General Wireless Inc., an affiliate of Standard General LP. Salus was the lender under RadioShack’s $250.0 term loan placed in December 2013 with a net exposure to Salus and Front Street of $93.0 and $7.0, respectively, after giving effect to a $50.0 participation by FGL and a non-qualifying participation of $100.0 held by a third party. During the fiscal year ended September 30, 2015, the $100.0 held by a third party was repaid in full because this third party had the right of first out in the case of a bankruptcy under an intercreditor agreement with Salus. During the six months ended March 31, 2015, the Company recognized charge-offs of $51.1, excluding any charge-offs related to FGL’s participations which are included in “(Loss) income from discontinued operations, net of tax” in the accompanying Condensed Consolidated Statements of Operations; and an additional net increase in the provision of credit losses of $17.2 related to the loan with RadioShack. No additional changes to the provision for credit losses were recorded during the three and six months ended March 31, 2016. The extent to which Salus and Front Street will be able to recover amounts owed to them by RadioShack is dependent on a number of factors, including ongoing litigation. There can be no assurance of the amount that Salus and its affiliates will recover from the RadioShack loan.
 
Internal Risk Rating
 
Pass
 
Special Mention
 
Substandard
 
Doubtful
 
Total
March 31, 2016
$
12.1

 
$
33.0

 
$
17.1

 
$
122.4

 
$
184.6

September 30, 2015 (As Adjusted)
$
69.0

 
$
32.4

 
$
74.0

 
$
99.2

 
$
274.6


(6) Derivatives
The fair value of outstanding derivatives recorded in the accompanying Condensed Consolidated Balance Sheets were as follows:
Asset Derivatives
 
Classification
 
March 31,
2016
 
September 30,
2015
 
 
 
 
 
 
(As Adjusted)
Derivatives designated as hedging instruments:
 
 
 
 
 
 
Foreign exchange contracts
 
Receivables, net
 
$
2.3

 
$
5.2

Commodity swaps
 
Receivables, net
 
0.2

 

Commodity swaps
 
Other assets
 
0.1

 

Foreign exchange contracts
 
Other assets
 
0.1

 
0.4

Total asset derivatives designated as hedging instruments
 
 
 
2.7

 
5.6

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
Call options
 
Funds withheld receivables
 
7.6

 
5.4

Call options
 
Other assets
 
2.5

 
1.0

Commodity contracts
 
Receivables, net
 
1.4

 
7.9

Foreign exchange contracts
 
Receivables, net
 
1.0

 
0.4

Total asset derivatives
 
 
 
$
15.2

 
$
20.3


15

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