Harbinger Group Inc.
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SEC Filings

10-Q
HRG GROUP, INC. filed this Form 10-Q on 02/07/2017
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counterparties; however, no assurance can be given as to the future performance of such reinsurance counterparty or as to the recoverability of any such claims.
Receivables
The allowance for uncollectible receivables as of December 31, 2016 and September 30, 2016 was $48.0 and $46.8, respectively. Through Spectrum Brands, 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 customer represents approximately 11.6% and 13.1% of the Company’s “Receivables, net” in the accompanying Condensed Consolidated Balance Sheets at December 31, 2016 and September 30, 2016, respectively.

(4) Divestitures
The following table summarizes the components of “Income (loss) from discontinued operations, net of tax” in the accompanying Condensed Consolidated Statements of Operations for the three months ended December 31, 2016 and 2015:
 
Three months ended December 31,
 
2016
 
2015
Income (loss) from discontinued operations, net of tax attributable to FGL
$
258.8

 
$
(35.6
)
Income from discontinued operations, net of tax attributable to Compass Production Partners, LP (“Compass”)
—

 
33.1

Income (loss) from discontinued operations, net of tax
$
258.8

 
$
(2.5
)
FGL Merger Agreement
As previously discussed in Note 1, Description of Business, as a result of the FGL Merger Agreement, the Company’s ownership interest in FGL has been classified as held for sale in the accompanying Condensed Consolidated Balance Sheets and FGL’s operations were classified as discontinued operations in the accompanying Condensed Consolidated Statements of Operations.
The following table summarizes the major categories of assets and liabilities of FGL classified as held for sale in the accompanying Condensed Consolidated Balance Sheets at December 31, 2016 and September 30, 2016:
 
December 31,
2016
 
September 30,
2016
Assets
 
 
 
Investments, including loans and receivables from affiliates
$
21,192.8

 
$
21,140.9

Cash and cash equivalents
631.9

 
863.9

Accrued investment income
200.7

 
213.7

Reinsurance recoverable
3,443.7

 
3,463.9

Deferred tax assets
47.2

 
—

Properties, plant and equipment, net
19.7

 
18.5

Deferred acquisition costs and value of business acquired, net
1,270.9

 
1,065.5

Other assets
213.0

 
335.1

Write-down of assets of business held for sale to fair value less cost to sell
(218.3
)
 
(362.8
)
Total assets of business held for sale
$
26,801.6

 
$
26,738.7

Liabilities
 
 
 
Insurance reserves
$
24,134.3

 
$
23,944.6

Debt
400.0

 
398.8

Accounts payable and other current liabilities
39.6

 
57.0

Deferred tax liabilities
—

 
9.9

Other liabilities
626.6

 
689.9

Total liabilities of business held for sale
$
25,200.5

 
$
25,100.2

At December 31, 2016, the carrying value of the Company’s interest in FGL was $218.3 higher than the fair value less cost to sell based on the sales price and as a result, during the three months ended December 31, 2016, the Company partially reversed the previously recorded $362.8 write-down of assets of business held for sale by $144.5.
The balances included in the accompanying Condensed Consolidated Balance Sheets and in the table above reflect transactions between the businesses held for sale and businesses held for use that are expected to continue to exist after the closing of the FGL Merger. Such transactions are not eliminated to reflect the continuing operations and balances held for sale. As a result, adjustments to the carrying value of certain intercompany assets recorded by FGL were reversed upon consolidation in the Company’s Condensed Consolidated Financial Statements.

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