Harbinger Group Inc.
    Print Page | Close Window

SEC Filings

10-Q
HRG GROUP, INC. filed this Form 10-Q on 02/07/2017
Entire Document
 << Previous Page | Next Page >>

Results of Operations
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 Quarter
 
2017
 
2016
 
Increase / (Decrease)
Revenues:
 
 
 
 
 
Consumer Products
$
1,211.8

 
$
1,218.8

 
$
(7.0
)
Insurance
(28.7
)
 
(10.0
)
 
(18.7
)
Intersegment adjustments and eliminations
6.2

 
(5.4
)
 
11.6

Consolidated segment revenues
1,189.3

 
1,203.4

 
(14.1
)
Corporate and Other
0.3

 
6.0

 
(5.7
)
Total revenues
$
1,189.6

 
$
1,209.4

 
$
(19.8
)
Operating income:
 
 
 
 
 
Consumer Products
$
151.0

 
$
142.5

 
$
8.5

Insurance
(15.4
)
 
—

 
(15.4
)
Intersegment adjustments and eliminations (a)
2.3

 
(19.0
)
 
21.3

Total segment operating income
137.9

 
123.5

 
14.4

Corporate and Other
(20.2
)
 
(23.7
)
 
3.5

Consolidated operating income
117.7

 
99.8

 
17.9

Interest expense
(91.7
)
 
(95.2
)
 
3.5

Other income (expense), net
1.4

 
(0.7
)
 
2.1

Income from continuing operations before income taxes
27.4

 
3.9

 
23.5

Income tax expense (benefit)
25.4

 
(5.6
)
 
31.0

Net income from continuing operations
2.0

 
9.5

 
(7.5
)
Income (loss) from discontinued operations, net of tax
258.8

 
(2.5
)
 
261.3

Net income
260.8

 
7.0

 
253.8

Less: Net income attributable to noncontrolling interest
48.6

 
40.9

 
7.7

Net income (loss) attributable to controlling interest
$
212.2

 
$
(33.9
)
 
$
246.1

(a) 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 the Company’s 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 the Company’s consolidated reporting, we have recorded a net intersegment adjustment to operating loss of $3.2 million and $17.1 million for the Fiscal 2017 Quarter and the Fiscal 2016 Quarter, respectively. Upon completion of the FGL Merger, the Company’s consolidated results will reflect all reinsurance business on the fair value option.
Revenues. Revenues for the Fiscal 2017 Quarter decreased $19.8 million, or 1.6%, to $1,189.6 million from $1,209.4 million for the Fiscal 2016 Quarter. The decrease was primarily due to lower net sales from our Consumer Products segment mainly as a result of the effect of foreign exchange rates; lower revenues generated by Salus as a result of the continued run-off of the asset-backed loan portfolio; and a decrease in fair value of the funds withheld receivables with third parties in the Insurance segment due to higher interest rates and wider credit spreads.
Consolidated operating income. Consolidated operating income for the Fiscal 2017 Quarter increased $17.9 million, or 17.9%, to $117.7 million from $99.8 million for the Fiscal 2016 Quarter. The increase was primarily due to increased profitability in our Consumer Products segment and lower impairments and loan loss provision expense in our Corporate and Other segment.
Interest Expense. Interest expense decreased $3.5 million to $91.7 million for the Fiscal 2017 Quarter from $95.2 million for the Fiscal 2016 Quarter. The decrease was primarily due to the effect of refinancing activities at Spectrum Brands.
Other income (expense), net. Other income increased $2.1 million to $1.4 million for the Fiscal 2017 Quarter from $0.7 million expense for the Fiscal 2016 Quarter, which was primarily driven by lower foreign exchange losses in the Fiscal 2017 Quarter as compared to the Fiscal 2016 Quarter.
Income Taxes. For the Fiscal 2017 Quarter, our effective tax rate of 92.7% differed from the expected U.S. statutory tax rate of 35.0% and was primarily impacted by U.S. pretax losses in our Corporate and Other segment in the U.S. where the tax benefits are not more-likely-than-not to be realized, resulting in the recording of valuation allowance.
For the Fiscal 2016 Quarter, our effective tax rate of (143.6)% differed from the expected U.S. statutory tax rate of 35.0% and was impacted by the expected utilization of a portion of Spectrum Brand’s U.S. net operating losses (“NOL”) that were previously

38
 << Previous Page | Next Page >>