SEC Filings
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| 8-K | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| HRG GROUP, INC. filed this Form 8-K on 08/29/2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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(b) Represents the increase in cash and cash equivalents resulting from the consideration received, less estimated expenses and repayment of debt (in millions):
(c) Adjustment to reflect the Energy Notes Exchange and Transfer. In February 2013, in connection with the Company’s acquisition of an interest in Compass, HGI Energy entered into note purchase agreements, one of which was with Fidelity & Guaranty Life, a majority-owned subsidiary of the Company (“FGL”), for $50.0 million notional aggregate principal amount due February 14, 2021 (the “HGI Energy Note to FGL”). The remaining $50.0 million of HGI Energy’s notes was held by Front Street Re (Cayman) Ltd., a wholly-owned subsidiary of the Company (“Front Street”) and a reinsurance funds withheld account, for which Front Street bears the investment risk, and therefore eliminated in the Company’s condensed consolidated balance sheet as of June 30, 2016. Since FGL was reported as a business held for sale, the HGI Energy Note to FGL was not eliminated in the Company’s condensed consolidated balance sheet as of June 30, 2016. Upon completion of the Compass Sale, the $50.0 million HGI Energy Note to FGL was exchanged for $46.0 million notional aggregate amount of new notes of HGI Energy and subsequently transferred to a reinsurance funds withheld account, for which Front Street bears the investment risk. As a result, the adjustment to reflect the Energy Notes Exchange is a decrease in both debt and assets in business held for sale of $4.0 million. The transfer of the new notes to the reinsurance funds withheld account results in the elimination of the funds withheld receivables and debt balances as Front Street is a business held for use. As a result, the adjustment to reflect the Energy Notes Transfer is a $46.0 million decrease in both debt and funds withheld receivables. (d) Adjustment to reflect the estimated net impact on the Company’s stockholders’ equity related to the Energy Transactions, consisting of a gain on the sale of Compass of $59.3 million and a change to the Company’s estimated alternative minimum tax liability as a result of the Compass Sale - see (l) below. (e) Adjustments to reflect the elimination of the oil and natural gas revenues; oil and natural gas direct operating costs; other operating and general expenses; impairments of oil and natural gas properties; and other income and expenses, primarily related to derivative gains and losses attributable to Compass. (f) Adjustment to reflect the reduction of interest expense for the effect of the repayment of amounts outstanding under the Compass Credit Agreement of $5.3 million, $9.9 million, $7.7 million and $4.7 million for the nine months ended June 30, 2016 and the years ended September 30, 2015, 2014 and 2013, respectively; as well as $3.4 million reduction in interest expense related to the Energy Notes Exchange for the nine months ended June 30, 2016. The interest expense on the HGI Energy Note to FGL was eliminated upon consolidation in the condensed consolidated statements of operations for the years ended September 30, 2015, 2014 and 2013 since FGL was presented as held for use in these respective periods. (g) Adjustment to reflect the elimination of the gain on the HWD Asset Sale of $105.6 million for the nine months ended June 30, 2016. (h) Compass is not directly subject to federal income taxes. Instead, its taxable income or loss is allocated to its individual partners. However due to a full valuation allowance over deferred tax assets at the Company, these losses will not impact the net deferred tax balances. (i) Adjustment to reflect non-controlling interest in Compass’ pro forma net income adjustments using non-controlling interest factors of 0.3% and 0.2% for the nine months ended June 30, 2016 and the year ended September 30, 2015, respectively. (j) Basic and diluted earnings per share were recalculated based on the following weighted-average common shares outstanding for the nine months ended June 30, 2016 and years ended September 30, 2015, 2014 and 2013:
(k) Adjustment to reflect the elimination of HGI Energy’s gain upon gaining control of an equity method investment of $141.2 million. During the year ended September 30, 2015, HGI Energy closed a transaction to buy EXCO Resources, Inc.’s remaining 25.5% economic interest in Compass that resulted in HGI Energy owning an economic interest of 99.8% in Compass and 100.0% of the ownership interests in the general partner of Compass. As a result of this transaction, Compass became a consolidated subsidiary of the Company. In accordance with ASC Topic 805, Business Combinations: Simplifying the Accounting for Measurement-Period Adjustments, if the acquirer holds a noncontrolling equity investment in the acquiree immediately before obtaining control, the acquirer must remeasure its investment to fair value as of the acquisition date and recognize any remeasurement gains or losses in earnings. Subsequent to the acquisition, the Company was the majority owner of Compass and the holder of a controlling interest. As a result, upon gaining a controlling interest the Company revalued its existing equity-method 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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