Harbinger Group Inc.
    Print Page | Close Window

SEC Filings

10-Q
HRG GROUP, INC. filed this Form 10-Q on 08/09/2016
Entire Document
 << Previous Page | Next Page >>

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 nine months ended June 30, 2016 and 2015:
 
Three months ended June 30,
 
Nine months ended June 30,
 
2016
 
2015
 
2016
 
2015
Revenues:
 
 
 
 
 
 
 
Insurance premiums
$
20.8

 
$
17.2

 
$
52.4

 
$
43.0

Net investment income (a)
236.3

 
212.1

 
685.2

 
628.1

Net investment (losses) gains (b)
(21.0
)
 
76.8

 
3.5

 
101.9

Insurance and investment product fees and other
33.0

 
23.2

 
93.5

 
65.1

Total revenues
269.1

 
329.3

 
834.6

 
838.1

Operating costs and expenses:
 
 
 
 
 
 
 
Benefits and other changes in policy reserves
216.3

 
78.5

 
585.3

 
474.1

Selling, acquisition, operating and general expenses
25.6

 
27.2

 
82.2

 
84.8

Amortization of intangibles
7.4

 
77.4

 
41.3

 
85.7

Total operating costs and expenses
249.3

 
183.1

 
708.8

 
644.6

Operating income
19.8

 
146.2

 
125.8

 
193.5

Interest expense
(5.1
)
 
(5.9
)
 
(16.9
)
 
(17.7
)
Other income (expense), net
1.9

 
2.1

 
4.4

 
(2.9
)
Write-down of assets of business held for sale to fair value less cost to sell
(217.2
)
 
—

 
(240.7
)
 
—

Net (loss) income before income taxes
(200.6
)
 
142.4

 
(127.4
)
 
172.9

Income tax expense (c)
7.8

 
39.5

 
129.7

 
47.2

Net (loss) income
(208.4
)
 
102.9

 
(257.1
)
 
125.7

Less: net income attributable to noncontrolling interest
1.9

 
16.6

 
13.1

 
17.1

Net (loss) income - attributable to controlling interest
$
(210.3
)
 
$
86.3

 
$
(270.2
)
 
$
108.6

(a) Included in the net investment income attributable to FGL is interest income of $1.1 for the three months ended June 30, 2016 and 2015 and $3.4 for the nine months ended June 30, 2016 and 2015 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 “Net investments (losses) gains” are charges related to the change in expected recovery rates of asset-based loans. Such charges are presented as “Impairments and bad debt expense” on the Company’s accompanying Condensed Consolidated Statements of Operations.
(c) Included in the income tax expense for the nine months ended June 30, 2016 was a $90.9 of net income tax expense related to the establishment of a deferred tax liability of $253.0 at June 30, 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 $162.1 reduction of valuation allowance on HRG’s net operating and capital loss carryforwards expected to offset the FGL taxable gain at June 30, 2016. The remaining liability is expected to be offset by current year losses recognized in continuing operations except for $15.0 of estimated alternative minimum taxes.
Compass Asset Sale and Compass 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. 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 nine months ended June 30, 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.
Further, as discussed in Note 1, Description of Business, on July 1, 2016, the Company entered into the Compass Sale Agreement. The Company’s interest in Compass met all of the held for sale criteria established by ASC 360 on July 1, 2016, subsequent to the end of the third fiscal quarter of 2016. The disposal represents all of the remaining oil and gas properties that were accounted for using the full-cost method as of June 30, 2016. The operations of Compass will be presented as discontinued operations starting in the fourth fiscal quarter of 2016. See Note 17, Subsequent Events for additional details.


14
 << Previous Page | Next Page >>