Harbinger Group Inc.
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SEC Filings

10-Q
HRG GROUP, INC. filed this Form 10-Q on 05/05/2017
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Discussion of Consolidated Cash Flows
Summary of Consolidated Cash Flows
Presented below is a table that summarizes the cash provided or used in our continuing 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):
 
 
Fiscal Six Months
 
 
2017
 
2016
 
Increase / (Decrease)
Net change in cash due to continuing operating activities:
 
 
 
 
 
 
Consumer Products
 
$
30.1

 
$
(144.5
)
 
$
174.6

Insurance, including eliminations related to the cession between Front Street and FGL
 
59.5

 
73.2

 
(13.7
)
Corporate and Other
 
(112.3
)
 
(106.6
)
 
(5.7
)
Net change in cash due to continuing operating activities
 
(22.7
)
 
(177.9
)
 
155.2

Net change in cash due to continuing investing activities
 
(27.8
)
 
88.3

 
(116.1
)
Net change in cash due to continuing financing activities
 
(122.5
)
 
(113.8
)
 
(8.7
)
Effect of exchange rate changes on cash and cash equivalents
 
(4.0
)
 
(0.3
)
 
(3.7
)
Net change in cash and cash equivalents in continuing operations
 
$
(177.0
)
 
$
(203.7
)
 
$
26.7

Operating Activities
Cash used in operating activities totaled $22.7 million for the Fiscal 2017 Six Months as compared to cash used of $177.9 million for the Fiscal 2016 Six Months. The $155.2 million decrease in cash used was primarily the result of a $174.6 million increase in cash provided by the Consumer Products segment; partially offset by (i) $13.7 million decrease in cash provided by operating activities by the Insurance segment, including eliminations related to the cession between Front Street and FGL primarily as a result of the run-off of the reinsurance agreements with FGL and (ii) $5.7 million increase in cash used in operating activities by the Corporate and Other segment, primarily due to higher cash bonus payments related to fiscal year 2016 as compared to fiscal year 2015 that were paid during the Fiscal 2017 Six Months and Fiscal 2016 Six Months, respectively.
The $174.6 million increase in cash provided by operating activities in the Consumer Products segment was primarily due to (i) $167.1 million incremental cash generated from the segment operations; including cash contributed by working capital of $164.0 million, primarily from decreases of receivables and inventory due to working capital management initiatives; (ii) decrease in cash paid for interest of $23.4 million due to a reduction in annualized interest costs; (iii) $13.5 million decrease in cash paid for restructuring and integration related costs; and (iv) a decrease in cash paid for income taxes of $4.9 million. These increases were partially offset by (i) cash paid to Stanley Black & Decker, Inc. of $23.2 million as a non-recurring settlement of transitional operating costs subsequent to the acquisition of the hardware and home improvement business that was acquired in 2013; (ii) non-recurring financing costs of $5.6 million associated with a premium on redemption of the 6.375% Notes and costs for re-pricing the USD Term Loan; and (iii) increased corporate expenditures of $5.5 million.
Investing Activities
Cash used in investing activities was $27.8 million for the Fiscal 2017 Six Months and was primarily related to purchases of property, plant and equipment by Spectrum Brands of $51.3 million; partially offset by cash proceeds from the net repayment of asset-based loans of $25.3 million.
Cash provided by investing activities was $88.3 million for the Fiscal 2016 Six Months and was primarily related to (i) $74.7 million of cash provided from the net repayment of asset-based loans; and (ii) $52.2 million of cash provided from sales, maturities and repayments, net of purchases, of fixed maturity securities and other investments. Partially offsetting these inflows were purchases of property, plant and equipment by Spectrum Brands of $38.8 million.
Financing Activities
Cash used in financing activities was $122.5 million for the Fiscal 2017 Six Months and was primarily related to (i) debt repayment by Spectrum Brands of $151.6 million, including $129.7 million for the redemption of the 6.375% Notes; (ii) purchases of Spectrum Brands stock of $103.1 million; (iii) cash used for payment of contractholder account withdrawals, net of account deposits of $59.0 million; (iv) share-based award tax withholding payments of $37.4 million; (v) dividend paid by Spectrum Brands to noncontrolling interests of $19.8 million; and (vi) debt repayment at Salus of $19.4 million; partially offset by (i) proceeds, net of debt issuance costs, from the Revolver Facility and other notes by Spectrum Brands of $213.4 million and the 2017 Loan by HRG of $48.9 million and (ii) proceeds from the exercise of stock options of $5.5 million.
Cash used in financing activities was $113.8 million for the Fiscal 2016 Six Months and was primarily related to the (i) $126.4 million repayment of debt primarily by Salus; (ii) cash used for payment of contractholder account withdrawals, net of contractholder

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