Harbinger Group Inc.
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SEC Filings

10-K
HRG GROUP, INC. filed this Form 10-K on 11/23/2016
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The carrying values of cash and cash equivalents, receivables, accounts payable and short term debt approximate fair value based on the short-term nature of these assets and liabilities. The carrying values of goodwill, intangible assets and other long-lived assets are tested annually or more frequently if an event occurs that indicates an impairment loss may have been incurred, using fair value measurements with unobservable inputs (Level 3).
The carrying values and estimated fair values for debt as of September 30, 2016 and 2015 are as follows:
 
 
2016
 
2015
 
 
Carrying
 
 
 
Carrying
 
 
(in millions)
 
Amount
 
Fair Value
 
Amount
 
Fair Value
Total debt - SBH
 
$
3,620.2

 
$
3,865.1

 
$
3,905.9

 
$
4,085.8

Total debt - SB/RH
 
3,620.2

 
3,865.1

 
3,940.6

 
4,120.5

The fair value measurements of the Company’s debt represent non-active market exchange-traded securities which are valued at quoted input prices that are directly observable or indirectly observable through corroboration with observable market data (Level 2).
NOTE 6 - RECEIVABLES
The allowance for uncollectible receivables as of September 30, 2016 and 2015 was $46.8 million and $44.0 million, respectively. The following is a rollforward of the allowance for the years ended September 30, 2016, 2015 and 2014:
 
 
Beginning
 
Charged to
 
 
 
Other
 
Ending
(in millions)
 
Balance
 
Profit & Loss
 
Deductions
 
Adjustments
 
Balance
September 30, 2016
 
$
44.0

 
$
15.6

 
$
(12.0
)
 
$
(0.8
)
 
$
46.8

September 30, 2015
 
 48.6

 
 6.0

 
 (6.3)

 
 (4.3)

 
 44.0

September 30, 2014
 
 37.4

 
 7.4

 
 (2.4)

 
 6.2

 
 48.6

The Company has a broad range of customers including many large retail outlet chains, one of which accounts for a significant percentage of its sales volume. This major customer represented 15%, 15% and 16% of the Company’s Net Sales during years ended September 30, 2016, 2015 and 2014, respectively. This major customer also represented 15% and 16% of the Company’s Trade Receivables as of September 30, 2016 and 2015, respectively.
We have entered into various factoring agreements and early pay programs with our customers to sell our trade receivables under non-recourse agreements in exchange for cash proceeds. A loss on sales is recognized for any discount and factoring fees associated with the transfer. We utilize factoring arrangements as an integral part of our financing for working capital. These transactions are treated as a sale and are accounted for as a reduction in trade receivables because the agreements transfer effective control over and risk related to the receivables to buyers. In some instances, we may continue to service the transferred receivable after the factoring has occurred, but in most cases we do not service any factored accounts, and any servicing of the trade receivable does not constitute significant continuing involvement or preclude the recognition of a sale. We do not carry any material servicing assets or liabilities. Cash proceeds from these arrangements are reflected as operating activities. The aggregate gross amount factored under these facilities was $2,055.0 million, $1,938.0 million and $1,575.0 million for the years ended September 30, 2016, 2015 and 2014, respectively. The cost of factoring such trade receivables was $10.1 million, $6.5 million and $9.7 million for the years ended September 30, 2016, 2015 and 2014 and reflected in the Consolidated Statements of Income as General and Administrative Expense.
NOTE 7 - INVENTORY
Inventories as of September 30, 2016 and 2015 consist of the following:
(in millions)
 
2016
 
2015
Raw materials
 
$
127.5

 
$
132.4

Work-in-process
 
43.6

 
37.9

Finished goods
 
569.5

 
610.5

 
 
$
740.6

 
$
780.8




S-29

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