Revenues of $1.2 billion, Up 5% from Prior Year Period; Net Income
Attributable to Common and Participating Preferred Stockholders of $62.0
Million, an Increase of 161%; EPS $0.31 versus $0.12 from Prior Year
Period
Achieves Major Business Milestones During Quarter, including
Refinancing Debt, Expanding Public Float and Shareholder Base, and
Announcing Energy Business Agreement
NEW YORK--(BUSINESS WIRE)--Feb. 8, 2013--
Harbinger Group Inc. ("HGI"; NYSE: HRG), a diversified holding company
focused on acquiring and growing attractive businesses, today announced
its consolidated results for the first quarter of Fiscal 2013 ended on
December 30, 2012. The results include HGI's Consumer Products Business,
which consists of Spectrum Brands Holdings, Inc. (“Spectrum Brands”;
NYSE: SPB), and HGI's Insurance and Financial Services Segments, which
includes HGI's Fidelity & Guaranty Life Holdings, Inc. (“FGL”) and Salus
Capital Partners, LLC (“Salus”) operating subsidiaries.
Philip A. Falcone, HGI Chairman and Chief Executive Officer, said, "We
are very pleased with the first quarter performance, which is a
testament to our ability to identify companies that will increase in
value. As we take HGI to the next level, we remain sharply focused on
building value for shareholders and executing on our strategy of
acquiring and growing attractive businesses over the long term."
Omar Asali, President of HGI, said, “The last several months have been a
watershed period in the continued growth and development of HGI. We
achieved several major milestones, including refinancing our 10.625%
senior secured notes at a significantly lower interest rate and on more
attractive terms, giving us a strong capital structure to support
growth. We completed the secondary offering of 23 million shares by our
majority shareholder, increasing our public float and broadening our
shareholder base with the addition of new, high-quality institutional
investors. We significantly enhanced our Consumer Products business
through Spectrum Brands' acquisition of HHI, adding top-level positions
in North American markets for key residential hardware and home
improvement products. And we announced a third operating business in
Energy through a financially and strategically important joint venture
with EXCO."
First Quarter Fiscal 2013 Business Highlights:
-
Refinanced $500 million aggregate principal amount 10.625% senior
secured notes through issuance of $700 million aggregate principal
amount of new 7.875% senior secured notes, lowering HGI's cost of
capital and extending debt maturities. Remaining proceeds from debt
issuance to be used for working capital and general corporate purposes.
-
Commenced registered secondary public offering of 23 million shares of
HGI common stock by majority shareholder, increasing HGI's public
float and broadening its shareholder base. Announced pricing of 20
million shares on December 13, 2012, with remaining 3 million shares
purchased by underwriters in January of 2013.
-
Completed Spectrum Brands acquisition of Stanley Black & Decker,
Inc.'s Hardware & Home Improvement Group (“HHI”), expected to enhance
Spectrum Brands' top-line growth, margins and free cash flow profile,
while providing added scale, greater product diversity and attractive
cross-selling opportunities.
-
HGI announced an agreement to acquire a new Energy Operating Business
through a joint venture with EXCO Resources, Inc., creating a private
partnership holding long-life, low geological-risk conventional oil
and gas assets that generate steady production and reliable cash
flows. Transaction is expected to close in the second quarter of
Fiscal 2013.
-
Received approval for inaugural $1.5 billion reinsurance treaty
between Front Street Re and Fidelity & Guaranty Life, establishing
HGI's reinsurance platform while also supporting continued growth of
Fidelity & Guaranty Life.
Quarterly Results Highlights:
-
HGI recorded total revenues of $1.2 billion for the first quarter of
Fiscal 2013, an increase of $56.3 million, or 4.8%.
-
Net income attributable to common and participating preferred
stockholders increased to $62.0 million, or $0.31 per common share
attributable to controlling interest ($0.03 diluted), compared to
$23.8 million, or $0.12 per common share attributable to controlling
interest ($0.06 diluted), in the Fiscal 2012 Quarter.
-
HGI's Fiscal 2013 first quarter results include $87.9 million of costs
incurred by HGI and Spectrum Brands related to the extinguishment of
HGI's 10.625% notes, and the financing of the HHI acquisition,
respectively. Partially offsetting these expenses, HGI's stock price
depreciation of 11.0% from $8.43 to $7.50 per share during the Fiscal
2013 Quarter resulted in a $68.9 million liability decrease related to
the fair value of the preferred stock equity conversion feature, which
represents a non-cash gain to net income. In addition, HGI realized
$125.7 million of investment gains in its Insurance Segment.
-
During the quarter, HGI received dividends from FGL of $20 million.
HGI received total dividends for the Trailing 12 Months Ended December
30, 2012, of $71 million, including dividends from FGL, Spectrum
Brands and Salus.
-
HGI ended the quarter with corporate cash and short-term investments
of approximately $489.2 million (primarily held at HGI and HGI Funding
LLC), which supports HGI's business strategy and growth of existing
businesses.
Quarterly Segment Highlights:
-
For the first quarter of Fiscal 2013, HGI's Consumer Products segment
had record net sales of $870.3 million, a $21.5 million, or 2.5%,
increase from $848.8 million for the Fiscal 2012 Quarter; excluding
negative foreign exchange impact, net sales grew 3.2% versus the prior
quarter.
-
Consumer Products segment operating income was $68.2 million compared
to $83.7 million in the first quarter of Fiscal 2012. The decrease
reflects acquisition and integration costs primarily related to the
HHI acquisition. Consumer Products segment adjusted earnings before
interest, taxes, depreciation and amortization (“Adjusted EBITDA”)
increased by $5.6 million, or 4.5%, to $130.7 million versus the prior
year quarter on higher sales, synergy benefits and cost reduction
initiatives. Adjusted EBITDA margin represented 15.0% of sales
compared to 14.7% in the first quarter of Fiscal 2012.
-
Insurance segment product sales for the first quarter of Fiscal 2013
were $254.9 million, compared to $372.5 million in the comparable
period of Fiscal 2012, reflecting product and pricing changes to
maintain target profitability.
-
As of December 30, 2012, the Insurance segment had a net US GAAP book
value of $1.3 billion (including accumulated other comprehensive
income (“AOCI”) of $422.9 million), up from $1.2 billion as of
September 30, 2012. Net unrealized gains on available for sale
investments were $1.0 billion on a U.S. GAAP basis.
-
Salus originated $175.0 million of new asset-based loan commitments in
the first quarter of Fiscal 2013 Quarter. Salus had $207.4 million of
loans outstanding as of December 30, 2012, and contributed
approximately $5.1 million to HGI's consolidated earnings for the
Fiscal 2013 first quarter.
Mr. Asali said, “Our Consumer Products and Insurance and Financial
Services businesses performed well during the quarter and continued to
successfully execute on strategic plans to drive long-term growth and
profitability. HGI's Insurance segment ended the quarter with a net U.S.
GAAP book value of $1.3 billion, up from $1.2 billion as of September
30, 2012, as we continued to build the value of this business. While
first quarter results for the Consumer Products segment were affected by
costs related to the HHI acquisition, Spectrum Brands delivered another
record for first quarter net sales and adjusted EBITDA, and is well
positioned for continued strong performance given the value proposition
of its products and the addition of renowned, market-leading brands
gained through the HHI acquisition."
Detail on First Quarter Fiscal 2013 Results:
HGI's consolidated revenues for the first quarter of Fiscal 2013 were
$1.22 billion, compared to $1.17 billion for the first quarter of Fiscal
2012. Revenues for Consumer Products, which reflect the Spectrum Brands
business, were $870.3 million in first quarter of Fiscal 2013 compared
to $848.8 million in the year-ago period, an increase of 2.5% (or 3.2%
excluding negative foreign exchange impact). The Insurance and Financial
Services Segments contributed $352.0 million to HGI's revenues in the
quarter compared to $317.2 million in the first quarter of Fiscal 2012.
HGI's consolidated operating income was $215.4 million for the first
quarter of Fiscal 2013 compared to operating income of $111.8 million in
the comparable period in Fiscal 2012. HGI reported consolidated net
income attributable to common and participating preferred stockholders
of $62.0 million, or $0.31 per common share attributable to controlling
interest ($0.03 diluted), compared to $23.8 million, or $0.12 per common
share attributable to controlling interest ($0.06 diluted), in the
Fiscal 2012 first quarter.
Fiscal 2013 first quarter consolidated net income attributable to common
and participating preferred stockholders was affected by an $87.2
million increase in interest expense from the first quarter of Fiscal
2012. First quarter Fiscal 2013 interest expense was $143.1 million
compared to $55.9 million in the year-ago period. The increase in
quarterly interest expense was principally due to $58.9 million of fees
incurred by HGI related to the extinguishment of the 10.625% Notes, and
$29.0 million of costs incurred by Spectrum Brands associated with the
financing of the HHI acquisition.
HGI's first quarter Fiscal 2013 results were also affected by a $68.9
million liability decrease in the fair market value of the equity
conversion feature of HGI's preferred stock, which results in a non-cash
gain to earnings, in addition to realizing $125.7 million of investment
gains in our Insurance Segment.
Consumer Products:
Consumer Products net sales increased $21.5 million, or 2.5%, to $870.3
million in the first quarter of Fiscal 2013 from $848.8 million in the
first quarter of Fiscal 2012. Excluding negative foreign exchange
impacts of $6.0 million, net sales increased 3.2%. Consumer batteries,
pet supplies, and home and garden control products all reported higher
revenues compared to the first quarter of Fiscal 2012. In addition, the
new hardware and home improvement (HHI) business added $34.0 million in
sales. Small appliance sales declined by 9.5% primarily reflecting the
planned and continued elimination of low margin promotions. Sales of
electric shaving and grooming products declined slightly, while electric
personal care sales were flat.
Gross profit, representing net consumer products sales minus consumer
products cost of goods sold, for the Fiscal 2013 Quarter was $288.2
million compared to $284.1 million for the Fiscal 2012 Quarter,
representing a $4.1 million increase. Gross profit margin, representing
gross profit as a percentage of consumer products net sales, for the
quarter was 33.1% compared to 33.5% in Fiscal 2012 first quarter. The
slight decrease in gross profit margin was driven by increased cost of
goods sold due to the sale of inventory, which was revalued in
connection with the HHI acquisition, which more than offset gross profit
improvement resulting from the planned and previously announced exit of
low margin products in the small appliances category of nearly $20
million.
Consumer Products operating income was $68.2 million in the first
quarter of Fiscal 2013 from $83.7 million in the first quarter of Fiscal
2012, as higher sales were offset by acquisition and integration costs
primarily related to the HHI acquisition.
Adjusted earnings before interest, taxes, depreciation and amortization
(“Adjusted EBITDA”) increased by $5.6 million, or 4.5%, to $130.7
million versus the first quarter of Fiscal 2012. First quarter Fiscal
2013 Adjusted EBITDA included $3.2 million from HHI and $3.0 million
from the FURminator® acquisition completed on December 22, 2011.
Adjusted EBITDA is a non-U.S. GAAP measure that excludes interest,
income tax expense, restructuring and related charges, acquisition and
integration related charges, intangible asset impairment and
depreciation and amortization expenses - see “Non-U.S. GAAP Measures”
and a reconciliation of Adjusted EBITDA to the Consumer Product
segment's operating income below.
In December 2012, Spectrum Brands issued $520.0 million aggregate
principal amount of 6.375% Senior Notes due 2020 and $570.0 million
aggregate principal amount of 6.625% Senior Notes due 2022. The proceeds
from the offerings were used to fund a portion of the HHI acquisition.
Spectrum Brands financed the remaining portion of the HHI acquisition
with a new $800.0 million term loan facility. A portion of the term loan
proceeds were also used to extinguish the former term loan facility,
which had an aggregate amount outstanding of $370.2 million prior to
extinguishment.
For more information on HGI's Consumer Products segment, interested
parties should read Spectrum Brands' announcements and public filings,
including Spectrum Brands' first quarter earnings announcement, by
reviewing Spectrum Brands' filings with the Securities & Exchange
Commission at www.sec.gov.
Insurance and Financial Services:
First quarter Fiscal 2013 insurance total product sales were $254.9
million compared to $372.5 million in the first quarter of Fiscal 2012.
The decrease reflects product and pricing changes made by FGL to the
core fixed index annuity portfolio to maintain target profitability. Due
to these product revisions during calendar year 2012, fixed indexed
annuities (“FIA”) product sales declined 29% to $243.1 million compared
to the first quarter of Fiscal 2012. Total product sales increased 69%
in the twelve months ended on December 30, 2012 to $1.6 billion compared
to $929.3 million for the twelve months prior to the end of first
quarter of Fiscal 2012. FGL continues to maintain its position in the
top-ten industry ranking for FIA sales with total FIA sales in the last
twelve months of more than $1.5 billion compared with $781.1 million for
the twelve months prior to the end of first quarter Fiscal 2012, driven
by the success of FGL's flagship product Prosperity EliteSM.
FGL has approximately $17.7 billion of cash and invested assets under
management as of December 30, 2012, compared to $17.8 billion as of
September 30, 2012. Estimated risk-based capital (RBC) ratio at December
30, 2012 remained well in excess of 350%.
The Insurance segment reported operating income of $165.3 million for
the first quarter of Fiscal 2013, an increase of $128.9 million, from
$36.4 million for the first quarter of Fiscal 2012.
First quarter 2013 results included realized investment gains of $125.7
million, net of related intangibles amortization, compared to $18.2
million of net realized investment gains in the comparable period of
Fiscal 2012. The increase in net realized investment gains was the
result of strategic portfolio repositioning to shorten the overall
portfolio duration combined with the realization of certain
tax-advantaged built-in-gains.
Adjusted operating income was $33.0 million (pre-tax) for the first
quarter of Fiscal 2013, reflecting solid business performance, as FGL
continues to execute on its business strategy. Adjusted operating income
is a non-U.S. GAAP insurance industry measure that eliminates the impact
of realized investment gains (losses), the effect of interest rate
changes on the FIA embedded derivative liability, and the effects of
acquisition-related reinsurance transactions - see “Non-U.S. GAAP
Measures” and a reconciliation of adjusted operating income to the
Insurance segment's operating income below.
As of December 30, 2012, HGI's Insurance segment had a net U.S. GAAP
book value of $1.3 billion (including AOCI of $422.9 million), up from
$1.2 billion as of September 30, 2012. As of December 30, 2012, the
Insurance segment's available for sale investment portfolio had $1.0
billion in net unrealized gains on a U.S. GAAP basis. FGL's investment
portfolio continues to be conservatively positioned, has shortened the
portfolio duration over the past twelve months, and remains well matched
against its liability profile.
On December 17, 2012, HGI announced that FGL had received approval from
the Maryland Insurance Administration to enter into a reinsurance treaty
with Front Street Re (Cayman) Ltd., also a wholly-owned subsidiary of
HGI. Under the terms of the reinsurance treaty, Fidelity & Guaranty Life
ceded approximately 10%, or approximately $1.5 billion of liabilities,
of its annuity business to Front Street Re. The transaction was
effective December 31, 2012, for which the effects will be eliminated in
consolidation.
About Harbinger Group Inc.
Harbinger Group Inc. (“HGI”; NYSE: HRG) is a diversified holding
company. HGI's principal operations are conducted through subsidiaries
that offer life insurance and annuity products; and branded consumer
products, such as batteries, personal care products, small household
appliances, pet supplies, and home and garden pest control products. HGI
is principally focused on acquiring controlling and other equity stakes
in businesses across a diversified range of industries and growing its
existing businesses. In addition to HGI's intention to acquire
controlling equity interests, HGI may also from time to time make
investments in debt instruments and acquire minority equity interests in
companies. Harbinger Group Inc. is headquartered in New York and traded
on the New York Stock Exchange under the symbol HRG. For more
information on HGI, visit: harbingergroupinc.com.
Forward Looking Statements
“Safe Harbor” Statement Under the Private Securities Litigation Reform
Act of 1995: This document contains, and certain oral statements made by
our representatives from time to time may contain, forward-looking
statements, including those statements related to the transactions with
regards to the joint venture with EXCO Resources, Inc (the
"Partnership"). Such statements are subject to risks and uncertainties
that could cause actual results, events and developments to differ
materially from those set forth in or implied by such statements. These
statements are based on the beliefs and assumptions of HGI's management
and the management of HGI's subsidiaries (including target businesses).
Generally, forward-looking statements include information concerning
possible or assumed future actions, events, results, strategies and
expectations and are generally identifiable by use of the words
“believes,” “expects,” “intends,” “anticipates,” “plans,” “seeks,”
“estimates,” “projects,” “may,” “will” “could,” “might,” or “continues”
or similar expressions. Factors that could cause actual results, events
and developments to differ include, without limitation: the risk that
closing of the transactions with regards to the Partnership will not
occur, will be delayed or will close on terms materially different than
expected, including, in the case of the Partnership transaction, as a
result of title and environmental diligence of properties to be
acquired, commodity price risks, drilling and production risks, related
financing plans, reserve estimates and values, statements about the
Partnership's properties and potential reserves and production levels.
Other factors could cause actual results, events and developments to
differ include, without limitation: the ability of HGI's subsidiaries
(including, target businesses following their acquisition) to generate
sufficient net income and cash flows to make upstream cash
distributions, capital market conditions, HGI and its subsidiaries
ability to identifying any suitable future acquisition opportunities,
efficiencies/cost avoidance, cost savings, income and margins, growth,
economies of scale, combined operations, future economic performance,
conditions to, and the timetable for, completing the integration of
financial reporting of acquired or target businesses with HGI or HGI
subsidiaries, completing future acquisitions and dispositions,
litigation, potential and contingent liabilities, management's plans,
changes in regulations, taxes and the those forward looking statements
included under the caption “Risk Factors” in HGI's most recent Annual
Report on Form 10-K and Quarterly Report on Form 10-Q. All
forward-looking statements described herein are qualified by these
cautionary statements and there can be no assurance that the actual
results, events or developments referenced herein will occur or be
realized. HGI does not undertake any obligation to update or revise
forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operation
results.
Non-U.S. GAAP Measures
Management believes that certain non-U.S. GAAP financial measures may be
useful in certain instances to provide additional meaningful comparisons
between current results and results in prior operating periods.
Reconciliations of such measures to the most comparable U.S. GAAP
measures are included herein.
Our Consumer Products Segment uses adjusted earnings before interest,
taxes, depreciation and amortization (“Adjusted EBITDA”), a non-U.S.
GAAP financial measure. Management believes that Adjusted EBITDA is
significant to gaining an understanding of Spectrum Brands' results as
it is frequently used by the financial community to provide insight into
an organization's operating trends and facilitates comparisons between
peer companies, since interest, taxes, depreciation and amortization can
differ greatly between organizations as a result of differing capital
structures and tax strategies. Adjusted EBITDA also can be a useful
measure of our Consumer Product Segment's ability to service debt and is
one of the measures used for determining Spectrum Brand's debt covenant
compliance. Adjusted EBITDA excludes certain items that are unusual in
nature or not comparable from period to period.
Our Insurance Segment uses Adjusted Operating Income, a non-U.S. GAAP
financial measure frequently used throughout the insurance industry.
Adjusted Operating Income net investment gains, excluding gains and
losses on derivatives and including net other-than-temporary impairment
losses recognized in operations, the effect of changes in the rates used
to discount the FIA embedded derivative liability and the effects of
acquisition-related reinsurance transactions. While these adjustments
are an integral part of the overall performance of our Insurance
Segment, market conditions impacting these items can overshadow the
underlying performance of the business. Accordingly, we believe using a
measure which excludes their impact is effective in analyzing the trends
of our Insurance Segment's operations.
While management believes that non-U.S. GAAP measurements are useful
supplemental information, such adjusted results are not intended to
replace U.S. GAAP financial results and should be read in conjunction
with those U.S. GAAP results.
(Tables Follow)
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HARBINGER GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
December 30, 2012
|
|
|
|
September 30, 2012
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturities
|
|
|
|
|
|
|
$
|
16,476.6
|
|
|
|
|
$
|
16,088.9
|
|
Equity securities
|
|
|
|
|
|
|
312.1
|
|
|
|
|
394.9
|
|
Derivative investments
|
|
|
|
|
|
|
156.4
|
|
|
|
|
200.7
|
|
Asset-backed loans
|
|
|
|
|
|
|
204.8
|
|
|
|
|
180.1
|
|
Other invested assets
|
|
|
|
|
|
|
66.6
|
|
|
|
|
53.8
|
|
Total investments
|
|
|
|
|
|
|
17,216.5
|
|
|
|
|
16,918.4
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
1,103.7
|
|
|
|
|
1,470.7
|
|
Receivables, net
|
|
|
|
|
|
|
566.7
|
|
|
|
|
414.4
|
|
Inventories, net
|
|
|
|
|
|
|
679.2
|
|
|
|
|
452.6
|
|
Accrued investment income
|
|
|
|
|
|
|
153.0
|
|
|
|
|
191.6
|
|
Reinsurance recoverable
|
|
|
|
|
|
|
2,378.5
|
|
|
|
|
2,363.1
|
|
Deferred tax assets
|
|
|
|
|
|
|
189.0
|
|
|
|
|
312.7
|
|
Properties, net
|
|
|
|
|
|
|
328.0
|
|
|
|
|
221.6
|
|
Goodwill
|
|
|
|
|
|
|
1,421.3
|
|
|
|
|
694.2
|
|
Intangibles, including DAC and VOBA, net
|
|
|
|
|
|
|
2,475.7
|
|
|
|
|
1,988.5
|
|
Other assets
|
|
|
|
|
|
|
347.2
|
|
|
|
|
172.6
|
|
Total assets
|
|
|
|
|
|
|
$
|
26,858.8
|
|
|
|
|
$
|
25,200.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
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|
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|
|
|
|
|
|
Insurance reserves:
|
|
|
|
|
|
|
|
|
|
|
|
Contractholder funds
|
|
|
|
|
|
|
$
|
15,349.0
|
|
|
|
|
$
|
15,290.4
|
|
Future policy benefits
|
|
|
|
|
|
|
3,592.3
|
|
|
|
|
3,614.8
|
|
Liability for policy and contract claims
|
|
|
|
|
|
|
99.7
|
|
|
|
|
91.1
|
|
Total insurance reserves
|
|
|
|
|
|
|
19,041.0
|
|
|
|
|
18,996.3
|
|
Debt
|
|
|
|
|
|
|
3,917.8
|
|
|
|
|
2,167.0
|
|
Accounts payable and other current liabilities
|
|
|
|
|
|
|
736.2
|
|
|
|
|
754.2
|
|
Equity conversion feature of preferred stock
|
|
|
|
|
|
|
163.1
|
|
|
|
|
232.0
|
|
Employee benefit obligations
|
|
|
|
|
|
|
100.2
|
|
|
|
|
95.1
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
492.3
|
|
|
|
|
382.4
|
|
Other liabilities
|
|
|
|
|
|
|
416.8
|
|
|
|
|
655.3
|
|
Total liabilities
|
|
|
|
|
|
|
24,867.4
|
|
|
|
|
23,282.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporary equity:
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable preferred stock
|
|
|
|
|
|
|
323.0
|
|
|
|
|
319.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harbinger Group Inc. stockholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
|
1.4
|
|
|
|
|
1.4
|
|
Additional paid-in capital
|
|
|
|
|
|
|
848.3
|
|
|
|
|
861.2
|
|
Accumulated deficit
|
|
|
|
|
|
|
(36.4
|
)
|
|
|
|
(98.2
|
)
|
Accumulated other comprehensive income
|
|
|
|
|
|
|
403.3
|
|
|
|
|
413.2
|
|
Total Harbinger Group Inc. stockholders' equity
|
|
|
|
|
|
|
1,216.6
|
|
|
|
|
1,177.6
|
|
Noncontrolling interest
|
|
|
|
|
|
|
451.8
|
|
|
|
|
421.3
|
|
Total permanent equity
|
|
|
|
|
|
|
1,668.4
|
|
|
|
|
1,598.9
|
|
Total liabilities and equity
|
|
|
|
|
|
|
$
|
26,858.8
|
|
|
|
|
$
|
25,200.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HARBINGER GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
|
December 30, 2012
|
|
|
|
January 1, 2012
|
|
|
|
|
|
|
|
(Unaudited)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Net consumer product sales
|
|
|
|
|
|
|
$ 870.3
|
|
|
|
|
$
|
848.8
|
|
Insurance premiums
|
|
|
|
|
|
|
13.8
|
|
|
|
|
|
16.8
|
|
Net investment income
|
|
|
|
|
|
|
178.0
|
|
|
|
|
|
186.8
|
|
Net investment gains
|
|
|
|
|
|
|
146.5
|
|
|
|
|
|
103.9
|
|
Insurance and investment product fees and other
|
|
|
|
|
|
|
13.7
|
|
|
|
|
|
9.7
|
|
Total revenues
|
|
|
|
|
|
|
1,222.3
|
|
|
|
|
|
1,166.0
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Consumer products cost of goods sold
|
|
|
|
|
|
|
582.1
|
|
|
|
|
|
564.7
|
|
Benefits and other changes in policy reserves
|
|
|
|
|
|
|
83.6
|
|
|
|
|
|
176.9
|
|
Selling, acquisition, operating and general expenses
|
|
|
|
|
|
|
254.6
|
|
|
|
|
|
255.9
|
|
Amortization of intangibles
|
|
|
|
|
|
|
86.6
|
|
|
|
|
|
56.7
|
|
Total operating costs and expenses
|
|
|
|
|
|
|
1,006.9
|
|
|
|
|
|
1,054.2
|
|
Operating income
|
|
|
|
|
|
|
215.4
|
|
|
|
|
|
111.8
|
|
Interest expense
|
|
|
|
|
|
|
(143.1
|
)
|
|
|
|
|
(55.9
|
)
|
Gain from the change in the fair value of the equity conversion
feature of preferred stock
|
|
|
|
|
|
|
68.9
|
|
|
|
|
|
27.9
|
|
Other (expense) income, net
|
|
|
|
|
|
|
(8.7
|
)
|
|
|
|
|
1.2
|
|
Income from continuing operations before income taxes
|
|
|
|
|
|
|
132.5
|
|
|
|
|
|
85.0
|
|
Income tax expense
|
|
|
|
|
|
|
64.4
|
|
|
|
|
|
39.5
|
|
Net income
|
|
|
|
|
|
|
68.1
|
|
|
|
|
|
45.5
|
|
Less: Net (loss) income attributable to noncontrolling interest
|
|
|
|
|
|
|
(6.0
|
)
|
|
|
|
|
6.0
|
|
Net income attributable to controlling interest
|
|
|
|
|
|
|
74.1
|
|
|
|
|
|
39.5
|
|
Less: Preferred stock dividends and accretion
|
|
|
|
|
|
|
12.1
|
|
|
|
|
|
15.7
|
|
Net income attributable to common and participating preferred
stockholders
|
|
|
|
|
|
|
$ 62.0
|
|
|
|
|
$
|
23.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share attributable to controlling interest:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
$ 0.31
|
|
|
|
|
$
|
0.12
|
|
Diluted
|
|
|
|
|
|
|
$ 0.03
|
|
|
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HARBINGER GROUP INC. AND SUBSIDIARIES
ADJUSTED EBITDA AND ADJUSTED OPERATING INCOME RECONCILIATIONS
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
The table below shows the adjustments made to the reported
operating income of the consumer products segment to calculate its
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
December 30, 2012
|
|
|
|
January 1, 2012
|
|
|
|
|
(Unaudited)
|
Reconciliation to reported Consumer Product
Segment operating income:
|
|
|
|
|
|
|
|
|
|
|
|
Reported operating income - Consumer Products Segment
|
|
|
$
|
68.2
|
|
|
|
|
$
|
83.7
|
|
Add: Other expense not included above
|
|
|
|
(1.6
|
)
|
|
|
|
(2.2
|
)
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to non-controlling interest
|
|
|
|
0.5
|
|
|
|
|
—
|
|
HHI Business inventory fair value adjustment
|
|
|
|
5.2
|
|
|
|
|
—
|
|
Restructuring and related charges
|
|
|
|
6.6
|
|
|
|
|
7.7
|
|
Acquisition and integration related charges
|
|
|
|
20.8
|
|
|
|
|
7.6
|
|
Adjusted EBIT - consumer products segment
|
|
|
|
99.7
|
|
|
|
|
96.8
|
|
Depreciation and amortization, net of accelerated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of properties
|
|
|
|
10.7
|
|
|
|
|
9.3
|
|
Amortization of intangibles
|
|
|
|
17.1
|
|
|
|
|
14.6
|
|
Stock-based compensation
|
|
|
|
3.2
|
|
|
|
|
4.4
|
|
Adjusted EBITDA - Consumer Products Segment
|
|
|
$
|
130.7
|
|
|
|
|
$
|
125.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table below shows the adjustments made to the reported
operating income (loss) of the insurance segment to calculate its
pretax adjusted operating income:
|
|
|
|
|
Three months ended
|
|
December 30, 2012
|
|
|
|
January 1, 2012
|
|
(Unaudited)
|
Reconciliation to reported operating income:
|
|
|
|
|
|
|
Reported operating income - insurance segment
|
$
|
165.3
|
|
|
|
|
$
|
36.4
|
|
Effect of investment gains, net of offsets
|
(125.7
|
)
|
|
|
|
(18.2
|
)
|
Effect of change in FIA embedded derivative discount rate, net of
offsets
|
(6.6
|
)
|
|
|
|
2.8
|
|
Effects of transaction-related reinsurance
|
—
|
|
|
|
|
3.1
|
|
Adjusted operating income
|
$33.0
|
|
|
|
|
$
|
24.1
|
|
Source: Harbinger Group Inc.
For investor inquiries: Harbinger Group Inc. Investor
Relations Tara Glenn, 212-906-8560
or For
media inquires: Sard Verbinnen & Co Jamie Tully or
Michael Henson, 212-687-8080
|