SEC Filings
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| 10-K | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| HRG GROUP, INC. filed this Form 10-K on 11/23/2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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See Note 8, Funds Withheld Receivables, to our Consolidated Financial Statements included in Part IV - Item 15. Exhibits, Financial Statements and Schedules for additional information regarding the funds withheld receivables portfolio. Salus Salus expects that its available cash on hand will be sufficient for it to fund its operations going forward, which consists principally of collecting outstanding loans and winding down its business. However, there can be no assurance that unexpected losses and contingencies, such as larger than expected litigation expenses, would not require additional capital to conduct its operations. The Company’s portfolio of asset-based loans receivable, originated by Salus and its co-lender Front Street, are included in “Other assets” in the accompanying Consolidated Balance Sheets as of September 30, 2016 and 2015. The asset-based loans participations by FGL are included in “Assets of business held for sale” in the accompanying Consolidated Balance Sheets as of September 30, 2016 and 2015. See Note 13, Other Assets, to our Consolidated Financial Statements included in Part IV - Item 15. Exhibits, Financial Statements and Schedules for the composition of the asset-based loans portfolio by industry sector, as well as discussion and information regarding the credit quality indicators. FGL (Business Held for Sale) FGL’s principal source of liquidity is dividends from FGH, whose liquidity is, in turn, principally based on dividends from its operating insurance company subsidiaries, Fidelity & Guaranty Life Insurance Company (“FGL Insurance”) and Fidelity & Guaranty Life Insurance Company of New York (“FGL NY Insurance”). FGL Insurance’s and FGL NY Insurance’s primary sources of liquidity are cash flow from insurance premiums and fees and investment income. FGL’s principal use of cash is to fund payments under their annuity and universal life products. FGL Insurance’s and FGL NY Insurance’s cash flows associated with collateral received from and posted with counterparties change as the market value of the underlying derivative contract changes. As the value of a derivative asset declines (or increases), the collateral required to be posted by our counterparties would also decline (or increase). Likewise, when the value of a derivative liability declines (or increases), the collateral we are required to post to our counterparties would also decline (or increase). FGH also maintains lines of credit and long-term debt financing, which provide liquidity but also require debt service. FGL’s principal use of liquidity is to pay dividends to its stockholders, including HRG. Its ability to pay dividends is limited by regulatory and capital adequacy considerations and contractual limitations, including the FGL Merger Agreement, and other limitations applicable to its subsidiaries. See Part I, Item 1A. “Risk Factors-Risks Related to FGL’s and Front Street’s Businesses - FGL’s subsidiaries may not be able to generate sufficient cash to service all of their obligations and may be forced to take other actions to satisfy their obligations, which may not be successful” and “FGL is a holding company with no operations of its own; its ability to pay dividends on its stock will depend on the ability of its subsidiaries to pay dividends to FGL, which may be restricted by law. Front Street is a parent company with limited business operations of its own and conducts most of its business operations through its subsidiaries and its primary source of cash is and will be distributions from its subsidiaries.” 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):
Operating Activities Cash provided by operating activities totaled $558.2 million for Fiscal 2016 as compared to $300.3 million for Fiscal 2015. The $257.9 million improvement in cash provided by operating activities was the result of a (i) $170.1 million increase in cash provided by the Consumer Products segment; (ii) $38.9 million decrease in cash used by the Insurance segment and (iii) $72.8 million increase in cash provided from net withdrawals from contractholder accounts related to the cession between Front Street and FGL, which is reflected in operating cash for the Insurance segment; partially offset by a $10.0 million decrease in dividends received from Compass, which was sold in Fiscal 2016 and is now classified as discontinued operations; and a $2.6 million increase in cash used by the Corporate and Other segment. 97 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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