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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Results of Operations
Fiscal 2016 Compared to Fiscal 2015, and Fiscal 2015 Compared to Fiscal 2014
Presented below is a table that summarizes our results of operations and compares the amount of the change between the fiscal periods (in millions):
 
Fiscal
 
Increase / (Decrease)
 
2016
 
2015
 
2014
 
2016 compared to 2015
 
2015 compared to 2014
Revenues:
 
 
 
 
 
 
 
 
 
Consumer Products
$
5,039.7

 
$
4,690.4

 
$
4,429.1

 
$
349.3

 
$
261.3

Insurance
150.4

 
(98.8
)
 
144.3

 
249.2

 
(243.1
)
Intersegment elimination (a)
16.4

 
54.7

 
7.8

 
(38.3
)
 
46.9

Consolidated segment revenues
5,206.5

 
4,646.3

 
4,581.2

 
560.2

 
65.1

Corporate and Other
8.9

 
63.4

 
53.5

 
(54.5
)
 
9.9

Total revenues
$
5,215.4

 
$
4,709.7

 
$
4,634.7

 
$
505.7

 
$
75.0

 
 
 
 
 
 
 
 
 
 
Operating income (loss):
 
 
 
 
 
 
 
 
 
Consumer Products
$
656.3

 
$
474.1

 
$
481.9

 
$
182.2

 
$
(7.8
)
Insurance
(12.4
)
 
(68.7
)
 
40.1

 
56.3

 
(108.8
)
Intersegment elimination (a,b)
68.1

 
(62.9
)
 
32.5

 
131.0

 
(95.4
)
Total segment operating income
712.0

 
342.5

 
554.5

 
369.5

 
(212.0
)
Corporate and Other and eliminations
(84.0
)
 
(296.7
)
 
(127.1
)
 
212.7

 
(169.6
)
Consolidated operating income
628.0

 
45.8

 
427.4

 
582.2

 
(381.6
)
Interest expense
(397.1
)
 
(401.6
)
 
(298.8
)
 
4.5

 
(102.8
)
Loss from the change in the fair value of the equity conversion feature of preferred stock
—

 
—

 
(12.7
)
 
—

 
12.7

Gain on deconsolidation of subsidiary
—

 
38.5

 
—

 
(38.5
)
 
38.5

Other income (expense), net
1.0

 
10.2

 
(11.9
)
 
(9.2
)
 
22.1

Income (loss) from continuing operations before income taxes
231.9

 
(307.1
)
 
104.0

 
539.0

 
(411.1
)
Income tax expense (benefit)
41.5

 
(16.2
)
 
89.6

 
57.7

 
(105.8
)
Net income (loss) from continuing operations
190.4

 
(290.9
)
 
14.4

 
481.3

 
(305.3
)
(Loss) income from discontinued operations, net of tax
(224.3
)
 
(221.5
)
 
87.3

 
(2.8
)
 
(308.8
)
Net (loss) income
(33.9
)
 
(512.4
)
 
101.7

 
478.5

 
(614.1
)
Less: Net income attributable to noncontrolling interest
164.9

 
44.4

 
112.0

 
120.5

 
(67.6
)
Net loss attributable to controlling interest
(198.8
)
 
(556.8
)
 
(10.3
)
 
358.0

 
(546.5
)
Less: Preferred stock dividends, accretion and loss on conversion
—

 
—

 
73.6

 
—

 
(73.6
)
Net loss attributable to common and participating preferred stockholders
$
(198.8
)
 
$
(556.8
)
 
$
(83.9
)
 
$
358.0

 
$
(472.9
)
(a) The Intersegment eliminations primarily represent the reversal and reclassification of impairments recorded in our Insurance segment on affiliated investments, as well as usual intercompany transactions for the period. For Fiscal 2015, the Insurance segment eliminations include the reversal of intercompany asset impairments of  $57.1 million.
(b) For its stand-alone reporting purposes, Front Street elected, since inception, 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 our consolidated reporting, the results from Front Street’s assumed reinsurance business with FGL is reported on FGL’s historical basis. Accordingly, in order to align our consolidated reporting, we have recorded a net intersegment adjustment to operating income (loss) of $59.7 million, $(115.4) million and $45.1 million for Fiscal 2016, 2015 and 2014, respectively. Upon completion of the FGL Merger, our consolidated results will reflect all reinsurance business on the fair value option.
Revenues. Revenues for Fiscal 2016 increased $505.7 million, or 10.7%, to $5,215.4 million from $4,709.7 million for Fiscal 2015. The increase was primarily due to growth from acquisitions and organic net sales from our Consumer Products segment, coupled with an increase in fair value of the underlying fixed maturity debt securities included in the funds withheld receivables in the Insurance segment due to lower interest rates and tighter credit spreads. These increases were partially offset by negative impact of foreign exchange in the Consumer Products segment; lower sales revenue associated with FOH that was deconsolidated in Fiscal 2015; and lower investment income as a result of the decrease in the asset-based loan portfolio of Salus.
Revenues for Fiscal 2015 increased $75.0 million, or 1.6%, to $4,709.7 million from $4,634.7 million for Fiscal 2014. The increase was primarily due to sales growth driven by acquisitions in the Consumer Products segment. This was offset by the

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