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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Discussion of Consolidated Cash Flows
Summary of Consolidated Cash Flows
Presented below is a table that summarizes the cash provided or used in our activities and the amount of the respective increases or decreases in cash provided or used from those continuing activities between the fiscal periods (in millions):
 
 
Fiscal Six Months
Cash provided by (used in) continuing activities:
 
2016
 
2015
 
Increase / (Decrease)
Operating activities
 
$
(185.0
)
 
$
(301.5
)
 
$
116.5

Investing activities
 
236.5

 
(345.5
)
 
582.0

Financing activities
 
(280.8
)
 
346.4

 
(627.2
)
Effect of exchange rate changes on cash and cash equivalents
 
(0.3
)
 
(11.9
)
 
11.6

Net change in cash and cash equivalents in continuing operations
 
$
(229.6
)
 
$
(312.5
)
 
$
82.9

Operating Activities
Cash used in operating activities totaled $185.0 million for the Fiscal 2016 Six Months as compared to cash used of $301.5 million for the Fiscal 2015 Six Months. The $116.5 million decrease in cash used was the result of (i) $48.1 million decrease in cash used by the Corporate and Other segment; (ii) $35.8 million decrease in cash used by the Consumer Products segment; and (iii) a $2.6 million decrease in cash used by the Asset Management segment, offset by (i) $18.9 million increase in cash used by the Energy segment; and (ii) $3.7 million increase in cash used by the Insurance segment (which also reflects an increase in cash used for net withdrawals from contractholder accounts related to the cession between Front Street and FGL, which is reflected in operating cash for the Insurance segment).
The $48.1 million decrease in cash used by the Corporate and Other segment was primarily due to the of severance costs associated with the departure of the Company’s former CEO during the Fiscal 2015 Quarter, as well as lower acquisition and integration costs, and legal expenses for the Fiscal 2016 Six Months when compared to the Fiscal 2015 Six Months.
The $35.8 million decrease in cash used by operating activities in the Consumer Products segment was primarily due to the i) cash generated from higher Adjusted EBITDA of $101.8 million; (ii) a decrease in cash paid for restructuring and related charges of $3.2 million; partially offset by (i) an increase in cash paid for interest of $37.3 million, (ii) an increase in cash paid for acquisition and integration costs of $11.9 million, (iii) an increase in cash paid for income taxes of $2.2 million and (iv) $17.8 million of incremental use of cash for working capital driven by higher inventory and higher receivables due to seasonal working capital needs and the addition of AAG, along with lower accounts payable and accrued expenses.
The $18.9 million increase in cash used by the Energy segment was primarily due to lower cash earnings as a result of the decline in average sales price for oil, natural gas and natural gas liquids during the Fiscal 2016 Six Months.
Investing Activities
Cash provided by investing activities was $236.5 million for the Fiscal 2016 Six Months and was primarily related to (i) $152.6 million proceeds from the Compass Asset Sale; (ii) net repayment of asset-based loans of $74.7 million; and (iii) $52.2 million of cash provided from sales, maturities and repayments, net of purchases, of fixed maturity securities and other investments. Partially offsetting these inflows were capital expenditures of $42.3 million.
Cash used in investing activities was $345.5 million for the Fiscal 2015 Six Months and was primarily related to (i) $421.5 million of cash used in the acquisition of the approximately 25.5% interest in Compass, Spectrum Brands’ acquisitions of European IAMS and Eukanuba and Tell Manufacturing, Inc. and Front Street’s acquisition of Ability Reinsurance (Bermuda) Limited; and (ii) capital expenditures of $42.1 million. Partially offsetting these outflows was $58.9 million of cash provided from sales, maturities and repayments, net of purchases, of fixed maturity securities and other investments and $58.6 million of cash provided from the net repayment of asset-based loans.
Financing Activities
Cash used in financing activities was $280.8 million for the Fiscal 2016 Six Months and was primarily used in (i) repayment of $167.0 million of the Compass Credit Agreement; (ii) $126.4 million of repayment of debt primarily by Salus; (iii) cash used for payment of contractholder account withdrawals, net of account deposits of $69.5 million; (iv) purchases of Spectrum Brands stock of $49.6 million; (v) share based award tax withholding payments of $27.3 million; and (vi) dividend paid by Spectrum Brands to noncontrolling interests of $18.2 million, partially offset by borrowing under the Spectrum Brands’ Revolver Facility of $175.0 million.
Cash provided by financing activities was $346.4 million for the Fiscal 2015 Six Months and was primarily provided from (i) proceeds from issuance of debt, net of financing costs of $426.9 million; and (ii) $42.0 million from borrowing under Spectrum

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