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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Consolidated net sales by product line for each of those respective periods are as follows (in millions):
 
 
Fiscal Quarter
 
Fiscal Six Months
Product line net sales
 
2016
 
2015
 
Increase /(Decrease)
 
2016
 
2015
 
Increase / (Decrease)
Hardware and home improvement products
 
$
301.7

 
$
289.4

 
$
12.3

 
$
584.3

 
$
560.6

 
$
23.7

Global pet supplies
 
208.5

 
209.8

 
(1.3
)
 
411.9

 
330.4

 
81.5

Consumer batteries
 
178.2

 
181.8

 
(3.6
)
 
430.8

 
422.0

 
8.8

Home and garden control products
 
155.0

 
123.9

 
31.1

 
202.7

 
163.4

 
39.3

Small appliances
 
138.3

 
151.6

 
(13.3
)
 
328.2

 
375.4

 
(47.2
)
Personal care products
 
108.4

 
110.5

 
(2.1
)
 
277.2

 
283.0

 
(5.8
)
Global auto care
 
119.5

 
—

 
119.5

 
193.3

 
—

 
193.3

Total net sales to external customers
 
$
1,209.6

 
$
1,067.0

 
$
142.6

 
$
2,428.4

 
$
2,134.8

 
$
293.6

Cost of consumer products and other goods sold / Consumer products segment gross profit. Consumer products segment gross profit, representing net consumer products sales minus consumer products cost of goods sold, for the Fiscal 2016 Quarter was $462.8 million compared to $374.7 million for the Fiscal 2015 Quarter. Consumer Products segment gross profit for the Fiscal 2016 Six Months was $903.5 million compared to $744.9 million for the Fiscal 2015 Six Months.
Gross profit margin for the Fiscal 2016 Quarter increased to 38.3% from 35.1% in the Fiscal 2015 Quarter. Gross profit margin for the Fiscal 2016 Six Months increased to 37.2% compared to 34.9% for the Fiscal 2015 Six Months. The increases in gross profit margin were primarily due to an increase in sales and the improvement in gross profit margin was primarily attributable to margins contributed by the AAG acquisition, a shift towards higher margin sales and continuing cost improvements.
Selling, acquisition, operating and general expenses. Selling, acquisition, operating and general expenses increased by $25.8 million, or 9.7%, to $290.9 million for the Fiscal 2016 Quarter, from $265.1 million for the Fiscal 2015 Quarter. Selling, acquisition, operating and general expenses increased by $66.3 million, or 13.3%, to $565.5 million for the Fiscal 2016 Six Months, from $499.2 million for the Fiscal 2015 Six Months. The increases in selling, acquisition, operating and general expenses were primarily attributable to increased costs from acquired businesses during the year ended September 30, 2015 and an increase in share based compensation.
Amortization of intangibles. For the Fiscal 2016 Quarter, amortization of intangibles increased to $23.4 million from $21.2 million for the Fiscal 2015 Quarter. For the Fiscal 2016 Six Months, amortization of intangibles increased to $47.0 million from $41.7 million for the Fiscal 2015 Six Months. The increases were as a result of the additional definite lived intangible assets acquired during the year ended September 30, 2015.

Insurance Segment
Presented below is a table that summarizes the results of operations of our Insurance segment and compares the amount of the change between the fiscal periods (in millions):
 
Fiscal Quarter
 
Fiscal Six Months
 
2016
 
2015
 
Increase / (Decrease)
 
2016
 
2015
 
Increase / (Decrease)
Insurance segment revenues
$
39.6

 
$
(38.9
)
 
$
78.5

 
$
29.6

 
$
(4.4
)
 
$
34.0

 
 
 
 
 
 
 
 
 
 
 
 
Benefits and other changes in policy reserves
40.6

 
15.4

 
25.2

 
28.2

 
41.8

 
(13.6
)
Selling, acquisition, operating and general expenses
0.8

 
2.0

 
(1.2
)
 
3.2

 
4.5

 
(1.3
)
Total Insurance segment operating costs and expenses
41.4

 
17.4

 
24.0

 
31.4

 
46.3

 
(14.9
)
 Operating loss - Insurance segment
$
(1.8
)
 
$
(56.3
)
 
$
54.5

 
$
(1.8
)
 
$
(50.7
)
 
$
48.9

For segment reporting purposes, at the inception date of the reinsurance transactions, Front Street elected to apply the fair value option to account for its funds withheld receivables, non-funds withheld assets and future policyholder benefits reserves related to its assumed reinsurance. For consolidated reporting, the results from Front Street’s assumed reinsurance business with FGL is reported on FGL’s historical basis. Upon completion of the FGL Merger, our consolidated results will reflect all reinsurance business on the fair value option.
Insurance segment revenues. For the Fiscal 2016 Quarter, Insurance segment revenues increased $78.5 million to a gain of $39.6 million from a loss of $38.9 million for the Fiscal 2015 Quarter. The increase in Insurance segment revenues was primarily driven by realized losses related to credit impairment losses related to intercompany investments of $42.4 million and asset-based loan participations of $5.1 million that were recorded in the Fiscal 2015 Quarter, coupled with an increase in the fair value of the

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