Revenues Up 39%, Operating Income Increased 124% from Prior Year
Period
Results Reflect Continued Success and Strong Trajectory Across All
Operating Segments
HGI Board Authorized $50 Million Stock Repurchase Program
Underscoring Commitment to Realizing and Building Long Term Value
NEW YORK--(BUSINESS WIRE)--Aug. 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 third quarter of Fiscal 2013 ended on
June 30, 2013 (the "Fiscal 2013 Quarter"). The results include HGI's
four segments:
-
Consumer Products, which consists of Spectrum Brands Holdings, Inc.
(“Spectrum Brands”; NYSE: SPB);
-
Insurance, which includes Fidelity & Guaranty Life Holdings, Inc.
(“FGL”) and Front Street Re, Ltd. ("FSR");
-
Energy, which includes the company's EXCO/HGI Joint Venture (the
"EXCO/HGI JV"); and
-
Financial Services, which includes Salus Capital Partners, LLC
(“Salus”) and Five Island Asset Management, LLC ("Five Island").
Philip Falcone, HGI Chairman and Chief Executive Officer, said, “HGI
performance this quarter demonstrates the value of our diversified
holding company model and the strength of our underlying operating
subsidiaries, as they continue to execute on their business strategies.
HGI remains well positioned for the future and we look forward to
continuing to grow the powerful platform we have built and increasing
shareholder value.”
Omar Asali, President of HGI, said, “We had a strong quarter
operationally as evidenced by the 39% increase in revenues and a 124%
increase in operating income. Operating income at our Consumer Products
segment increased by 22% as a result of the continued positive
performance of Spectrum Brands, including the successful integration of
the Hardware and Home Improvement business ("HHI"). The Insurance
segment generated operating income of just over $78.5 million, compared
to a small loss in the Fiscal 2012 quarter. Additionally, both the
Energy segment, which we established in February, and Financial Services
continue to ramp up nicely. We see significant value in each of our
operating businesses and strong growth potential, and we expect that HGI
will continue to benefit from their success."
Separately, HGI announced today that its Board of Directors approved a
share repurchase program of up to $50 million of HGI common stock. This
stock repurchase program underscores HGI's ability to act
opportunistically and capitalize on the significant value it sees in HGI
and HGI's underlying businesses.
Third Quarter Fiscal 2013 Results Highlights:
-
HGI recorded total revenues of $1.4 billion for the Fiscal 2013
Quarter, an increase of $398.4 million, or 39.4% from the third
quarter of Fiscal 2012 (the "Fiscal 2012 Quarter").
-
Consolidated operating income was $182.6 million in the Fiscal 2013
Quarter, compared to $81.5 million in the Fiscal 2012 Quarter, an
increase of $101.1 million (124.0%).
-
Net income attributable to common and participating preferred
stockholders increased to $91.6 million, or $0.45 per common share
attributable to controlling interest ($0.25 diluted), compared to a
net loss of $149.1 million, or $1.07 per common share attributable to
controlling interest ($1.07 diluted), in the Fiscal 2012 Quarter.
-
Fiscal 2013 Quarter results include a $52.6 million gain from the
change in the fair value of the equity conversion feature of preferred
stock which was the result of HGI's stock price decreasing 8.7% from
$8.26 to $7.54 per share during the quarter; $20.4 million of realized
investment gains in the Insurance segment; and tax expense of $36.8
million.
-
Spectrum Brands paid a quarterly common stock dividend of $0.25 per
share on May 14, 2013, resulting in $7.6 million in dividends to HGI.
Through the nine months ended June 30, 2013, HGI received dividends of
approximately $108.7 million from its subsidiaries, including $93.0
million, $15.0 million and $0.7 million from FGL, Spectrum Brands and
Salus, respectively. The FGL dividend of $93.0 million includes the
special dividend of $73.0 million paid out of the proceeds from the
$300.0 million aggregate principal amount of the FGL notes.
-
HGI ended the quarter with corporate cash and short-term investments
of approximately $122.0 million (primarily held at HGI and HGI
Funding, LLC), which supports HGI's business strategy and growth of
existing businesses.
-
Subsequent to quarter-end, HGI completed a successful tack-on notes
offering of $225.0 million in senior-secured notes. The offering was
approximately 4x over-subscribed and upsized from an initial offering
of $150.0 million in senior secured notes.
Quarterly Segment Highlights:
-
Consumer Products segment operating income for the Fiscal 2013
Quarter increased by $20.5 million, or 21.5%, to $115.7 million from
$95.2 million in the Fiscal 2012 Quarter, and adjusted earnings before
interest, taxes, depreciation and amortization ("Adjusted EBITDA")
increased by 1.9% to $188.5 million from $185.0 million. See Non- GAAP
measures below for more details.
-
On April 8, 2013, Spectrum Brands completed the acquisition of the
Taiwanese residential lockset business, Tong Lung Metal Industry,
closing the second and final stage of the acquisition of HHI.
-
Insurance segment operating income for the Fiscal 2013 Quarter
increased $80.0 million, to $78.5 million from an operating loss of
$1.5 million for the Fiscal 2012 Quarter.
-
On July 17, 2013, Standard & Poor's Ratings Services upgraded Fidelity
& Guaranty Life to investment grade financial strength (BBB- from BB+)
with a positive outlook. Fidelity & Guaranty Life continued to deliver
strong GAAP and statutory results, with GAAP book value (ex AOCI)
increasing approximately 63% from the Fiscal 2012 Quarter, and
statutory total adjusted capital increasing approximately 32%.
-
Energy segment oil and natural gas revenues were $37.8 million
for the Fiscal 2013 Quarter and operating income for the Fiscal 2013
Quarter was $4.8 million. Energy segment Adjusted EBITDA for the
Fiscal 2013 Quarter was $16.0 million. See Non-GAAP measures below for
more details.
-
Financial Services segment reported operating income of $4.1
million in the Fiscal 2013 Quarter, compared to $0.5 million during
the Fiscal 2012 Quarter. Salus Capital Partners closed on seven
transactions in Fiscal 2013 Quarter bringing the total number of deals
since inception to 40 and cumulative committed capital to over $800
million.
Detail on Third Quarter Fiscal 2013 Results:
HGI's consolidated revenues for the Fiscal 2013 Quarter were $1.4
billion, compared to $1.0 billion for the Fiscal 2012 Quarter. The
increase was primarily driven by the HHI acquisition in the Consumer
Products segment, and to a lesser extent, realized and unrealized gains
on derivative instruments, contributions from the newly formed EXCO/HGI
JV, and new business activity in the Financial Services segment.
HGI's consolidated operating income for the Fiscal 2013 Quarter
increased by $101.1 million, or 124.0%, to $182.6 million from $81.5
million for the Fiscal 2012 Quarter. The increase was primarily the
result of favorable investment gains in the Insurance segment, the HHI
acquisition in the Consumer Products segment, and new business activity
in the Energy and Financial Services segments. The increase was offset
in part by increased salary and overhead costs in the Corporate segment
to support growth in the business.
HGI reported a net income attributable to common stockholders of $91.6
million, or $0.45 per common share attributable to controlling interest
($0.25 diluted), compared to a net loss of $149.1 million, or $1.07 per
common share attributable to controlling interest ($1.07 diluted), in
the Fiscal 2012 Quarter.
HGI's Fiscal 2013 Quarter results include a $52.6 million gain from the
change in the fair value of the equity conversion feature of preferred
stock, which was the result of HGI's stock price decreasing 8.7% from
$8.26 to $7.54 per share during the quarter and tax expense of $36.8
million resulting in an effective tax rate of 23.7%.
Consumer Products:
Consumer Products net sales for the Fiscal 2013 Quarter increased $265.0
million, or 32.1%, to $1.09 billion from $824.8 million in the Fiscal
2012 Quarter. The increase was primarily due to sales from the HHI
acquisition. The increase was offset in part by a decline in household
insect control sales in the Home and Garden product line due to the late
arrival of warm weather that resulted in a delay to the major selling
season for these products; the planned exit from marginally profitable
products in small appliances, largely in North America; and lower
consumer battery sales resulting from the non-recurrence of promotions
and inventory management at key retailers.
In its second full quarter since the acquisition by Spectrum
Brands on December 17, 2012, the hardware and home improvement products
category recorded net sales of $285.2 million, an increase of 12.7%
compared to $253.0 million as if combined with the Consumer Products
segment in the Fiscal 2012 Quarter. The revenue growth was primarily
driven by double-digit improvements in the product category's U.S.
residential security and plumbing businesses. The hardware and home
improvement product category recorded net income, as adjusted, of $40.1
in the Fiscal 2013 Quarter. The Adjusted EBITDA margin for the hardware
and home improvement product category in the Fiscal 2013 Quarter
approached 18.6%. The integration of HHI is on track and proceeding well.
Gross profit, representing Consumer Products' net sales minus its cost
of goods sold, for the Fiscal 2013 Quarter was $382.8 million compared
to $291.7 million for the Fiscal 2012 Quarter. The HHI acquired products
contributed $101.4 million in gross profit. Spectrum Brands' gross
profit margin, representing gross profit as a percentage of its net
sales, for the Fiscal 2013 Quarter decreased slightly to 35.1% from
35.4% for the Fiscal 2012 Quarter. The decrease in gross profit margin
was driven by unfavorable product mix and increased product costs.
Consumer Products operating income increased $20.5 million to $115.7
million in the Fiscal 2013 Quarter compared to $95.2 million in the
Fiscal 2012 Quarter. The increase was due to the HHI acquisition
contributing $39.4 million of operating income, which was partially
offset by additional selling, acquisition, operating and general
expenses from the inclusion of HHI and a decrease in the global
batteries and appliances businesses profit due to decreased sales;
unfavorable product mix and pricing pressures in the U.S.
Adjusted EBITDA-Consumer Products for the Fiscal 2013 Quarter was $188.5
million, an increase of 1.9% compared to $185.0 million in the Fiscal
2012 Quarter, including the HHI acquisition in the prior year period on
a pro forma basis, reflecting higher sales, synergy benefits and cost
reduction initiatives. Adjusted EBITDA-Consumer Products as a percentage
of Consumer Products net sales improved slightly to 17.3% versus 17.2%
in the Fiscal 2012 Quarter, including the HHI acquisition in the prior
year period on a pro forma basis. Legacy Spectrum Brands' Adjusted
EBITDA-Consumer Products of $135.5 million in the Fiscal 2013 Quarter
represented the eleventh consecutive quarter of year-over-year adjusted
EBITDA growth, starting with the first quarter of fiscal 2011. Adjusted
EBITDA-Consumer Products is a non-GAAP measure that excludes interest,
income tax expense, restructuring and related charges, acquisition and
integration related charges, and depreciation and amortization expenses
- see “Non-GAAP Measures” and a reconciliation of Adjusted
EBITDA-Consumer Products to the Consumer Product segment's operating
income below.
For more information on HGI's Consumer Products segment, interested
parties should read Spectrum Brands' announcements and public filings,
including Spectrum Brands' third quarter earnings announcement, by
visiting Spectrum Brands' filings with the Securities & Exchange
Commission at www.sec.gov.
Insurance:
The insurance segment recorded annuity sales, which for GAAP purposes
are recorded as deposit liabilities (i.e. contract holder funds), for
the Fiscal 2013 Quarter of $270.8 million compared to $468.0 million in
the Fiscal 2012 Quarter. On a sequential basis, annuity sales increased
11% as compared to the Fiscal 2013 second quarter. During the Fiscal
2013 Quarter, FGL refreshed its flagship Prosperity Elite fixed deferred
index annuity and launched a new traditional fixed annuity, Simplicity
Elite, targeted at solving income distribution needs for seniors.
The insurance segment reported operating income of $78.5 million for the
Fiscal 2013 Quarter versus an operating loss of $1.5 million for the
Fiscal 2012 Quarter. During the Fiscal 2013 Quarter the revaluation of
liabilities to reflect increased interest rates resulted in an increase
in operating income of $52.3 million quarter over quarter. In the Fiscal
2012 Quarter, a one-time charge in connection with FGL's use of the U.S.
Social Security Administration's Death Master File to identify potential
life insurance claims reduced operating earnings by $11.0 million.
The segment recorded adjusted operating income of $23.7 million
(pre-tax) for the Fiscal 2013 Quarter, an increase of $20.3 million from
$3.4 million for the Fiscal 2012 Quarter. The increase is primarily due
to the absence of the one-time $11.0 million net increase in the claims
liability recorded in the prior year quarter as referenced above.
Adjusted operating income is a non-GAAP insurance industry measure that
eliminates the impact of realized investment gains (losses), the effect
of interest rate changes on the fixed indexed annuities ("FIA") embedded
derivative liability, and the effects of acquisition-related reinsurance
transactions - see “Non-GAAP Measures” and a reconciliation of adjusted
operating income to the Insurance segment's operating income below.
FGL has approximately $17.4 billion of assets under management as of
June 30, 2013, compared to $18.1 billion as of March 31, 2013. The
investment portfolio continues to be conservatively positioned in its
credit and duration profile and well matched against its liabilities.
As of June 30, 2013, HGI's Insurance segment had a net GAAP book value
of $1,110.3 million (excluding AOCI of $175.4 million). As of June 30,
2013, the Insurance segment's investment portfolio had $469.3 million in
net unrealized gains on a GAAP basis.
Estimated risk-based capital (RBC) ratio at June 30, 2013 remained in
excess of 350%. FGL's statutory total adjusted capital at June 30, 2013
was approximately $1,167.0 million.
In July, Standard & Poor's Rating Services upgraded the FGL insurance
operating subsidiaries to investment grade recognizing the businesses'
improved capital position, strong operating performance and competitive
positions.
Energy:
Oil and natural gas revenues were $37.8 million for the Fiscal 2013
Quarter. Operating income for the Fiscal 2013 Quarter was $4.8 million.
Energy segment adjusted earnings before interest, taxes, depreciation
and amortization ("Adjusted EBITDA-Energy") for the Fiscal 2013 Quarter
was $16.0 million. Adjusted EBITDA-Energy is a non-GAAP measure that
excludes non-recurring other operating items, accretion of discount on
asset retirement obligations, non-cash changes in the fair value of
derivatives, non-cash write-downs of assets, and stock-based
compensation - see “Non-GAAP Measures” and a reconciliation of Adjusted
EBITDA-Energy to the Energy segment's operating income below.
For the Fiscal 2013 Quarter, the Energy segment's production net was 119
MBbl of oil, 126 MBbl of natural gas liquids and 5,953.0 Mmcf of natural
gas. For the period from inception to June 30, 2013, the Energy
segment's production was 177 MBbl of oil, 180 MBbl of natural gas
liquids and 8,726 Mmcf of natural gas.
Financial Services:
Financial Services reported operating income of $4.1 million in the
Fiscal 2013 Quarter, compared to $0.5 million during the Fiscal 2012
Quarter. The growth in operating income was the result of an increase in
asset-backed loans originated by Salus, from $145.5 million in the
Fiscal 2012 Quarter, to $586.4 million in the Fiscal 2013 Quarter. In
the Fiscal 2013 Quarter, Salus closed on seven transactions, bringing
the total number of deals since inception to 40 and cumulative committed
capital to over $800 million.
Also contributing to operating income in the Fiscal 2013 Quarter was an
increase in asset management fees earned from Five Island, a recently
formed, wholly-owned asset management company. The infrastructure and
operational build out of Five Island continued during the Fiscal 2013
Quarter with Eli Ullum, joining as Portfolio Manager on July 8, 2013.
About Harbinger Group Inc.
Harbinger Group Inc. (“HGI”; NYSE: HRG) is a diversified holding
company. HGI's principal operations are conducted through companies
that: offer life insurance and annuity products; branded consumer
products (such as consumer batteries, residential locksets, residential
builders' hardware, faucets, shaving and grooming products, personal
care products, small household appliances, specialty pet supplies, lawn
and garden and home pest control products, and personal insect
repellents); and asset-backed loans; and own energy assets. 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 regarding our subsidiaries'
ability to pay dividends. 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 distributions from
subsidiaries, other 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 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 identify 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 Reports on Form
10-Q filed during fiscal 2013. 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-GAAP Measures
Management believes that certain non-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 GAAP measures
are included herein.
Our Consumer Products segment uses adjusted earnings before interest,
taxes, depreciation and amortization (“Adjusted EBITDA-Consumer
Products”), a non-GAAP financial measure. Management believes that
Adjusted EBITDA-Consumer Products 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-Consumer Products can also 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-Consumer Products excludes certain items
that are unusual in nature or not comparable from period to period.
Our Insurance segment uses Adjusted Operating Income, a non-GAAP
financial measure frequently used throughout the insurance industry.
Adjusted Operating Income is calculated by adjusting the reported
insurance segment operating income to eliminate the impact of 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.
Our Energy segment uses adjusted earnings before interest, taxes,
depreciation and amortization (“Adjusted EBITDA-Energy”), a non-GAAP
financial measure. Management believes that Adjusted EBITDA-Energy is
significant to gaining an understanding of the EXCO/HGI Partnership's
results as it is frequently used by the financial community and
management 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-Energy excludes certain items that are
unusual in nature or not comparable from period to period such as
accretion of discount on asset retirement obligations, non-cash changes
in the fair value of derivatives, non-cash write-downs of assets, and
stock-based compensation.
While management believes that non-GAAP measurements are useful
supplemental information, such adjusted results are not intended to
replace GAAP financial results and should be read in conjunction with
those GAAP results.
(Tables Follow)
|
|
|
|
|
|
|
HARBINGER GROUP INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2013
|
|
September 30, 2012
|
|
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
Fixed maturities
|
|
|
|
$
|
15,578.3
|
|
|
$
|
16,088.9
|
|
Equity securities
|
|
|
|
337.0
|
|
|
394.9
|
|
Derivatives
|
|
|
|
227.4
|
|
|
200.7
|
|
Asset-backed loans
|
|
|
|
430.2
|
|
|
180.1
|
|
Other invested assets
|
|
|
|
27.6
|
|
|
53.8
|
|
Total investments
|
|
|
|
16,600.5
|
|
|
16,918.4
|
|
Cash and cash equivalents
|
|
|
|
1,243.7
|
|
|
1,470.7
|
|
Receivables, net
|
|
|
|
611.3
|
|
|
414.4
|
|
Inventories, net
|
|
|
|
707.3
|
|
|
452.6
|
|
Accrued investment income
|
|
|
|
159.9
|
|
|
191.6
|
|
Reinsurance recoverable
|
|
|
|
2,371.0
|
|
|
2,363.1
|
|
Deferred tax assets
|
|
|
|
279.9
|
|
|
312.7
|
|
Properties, including oil and natural gas properties, net
|
|
|
|
999.4
|
|
|
221.6
|
|
Goodwill
|
|
|
|
1,470.2
|
|
|
694.2
|
|
Intangibles, including DAC and VOBA, net
|
|
|
|
2,649.9
|
|
|
1,988.5
|
|
Other assets
|
|
|
|
271.9
|
|
|
172.6
|
|
Total assets
|
|
|
|
$
|
27,365.0
|
|
|
$
|
25,200.4
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance reserves:
|
|
|
|
|
|
|
Contractholder funds
|
|
|
|
$
|
15,342.6
|
|
|
$
|
15,290.4
|
|
Future policy benefits
|
|
|
|
3,576.2
|
|
|
3,614.8
|
|
Liability for policy and contract claims
|
|
|
|
66.9
|
|
|
91.1
|
|
Funds withheld from reinsurers
|
|
|
|
39.5
|
|
|
54.7
|
|
Total insurance reserves
|
|
|
|
19,025.2
|
|
|
19,051.0
|
|
Debt
|
|
|
|
4,554.3
|
|
|
2,167.0
|
|
Accounts payable and other current liabilities
|
|
|
|
843.4
|
|
|
754.2
|
|
Equity conversion feature of preferred stock
|
|
|
|
147.3
|
|
|
232.0
|
|
Employee benefit obligations
|
|
|
|
114.1
|
|
|
95.1
|
|
Deferred tax liabilities
|
|
|
|
508.4
|
|
|
382.4
|
|
Other liabilities
|
|
|
|
439.6
|
|
|
600.6
|
|
Total liabilities
|
|
|
|
25,632.3
|
|
|
23,282.3
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporary equity:
|
|
|
|
|
|
|
Redeemable preferred stock
|
|
|
|
325.4
|
|
|
319.2
|
|
|
|
|
|
|
|
|
Harbinger Group Inc. stockholders' equity:
|
|
|
|
|
|
|
Common stock
|
|
|
|
1.4
|
|
|
1.4
|
|
Additional paid-in capital
|
|
|
|
834.3
|
|
|
861.2
|
|
Retained earnings (Accumulated deficit)
|
|
|
|
9.7
|
|
|
(98.2
|
)
|
Accumulated other comprehensive income
|
|
|
|
140.0
|
|
|
413.2
|
|
Total Harbinger Group Inc. stockholders' equity
|
|
|
|
985.4
|
|
|
1,177.6
|
|
Noncontrolling interest
|
|
|
|
421.9
|
|
|
421.3
|
|
Total permanent equity
|
|
|
|
1,407.3
|
|
|
1,598.9
|
|
Total liabilities and equity
|
|
|
|
$
|
27,365.0
|
|
|
$
|
25,200.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HARBINGER GROUP INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
June 30, 2013
|
|
|
July 1, 2012
|
|
|
June 30, 2013
|
|
|
July 1, 2012
|
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net consumer product sales
|
|
|
|
$
|
1,089.8
|
|
|
$
|
824.8
|
|
|
$
|
2,947.8
|
|
|
$
|
2,419.9
|
|
Oil and natural gas
|
|
|
|
|
37.8
|
|
|
|
—
|
|
|
|
54.5
|
|
|
|
—
|
|
Insurance premiums
|
|
|
|
|
19.0
|
|
|
|
12.1
|
|
|
|
46.9
|
|
|
|
42.2
|
|
Net investment income
|
|
|
|
|
189.6
|
|
|
|
179.2
|
|
|
|
539.7
|
|
|
|
539.0
|
|
Net investment gains (losses)
|
|
|
|
|
58.3
|
|
|
|
(12.9
|
)
|
|
|
411.5
|
|
|
|
254.6
|
|
Insurance and investment product fees and other
|
|
|
|
|
16.1
|
|
|
|
9.0
|
|
|
|
44.4
|
|
|
|
28.2
|
|
Total revenues
|
|
|
|
|
1,410.6
|
|
|
|
1,012.2
|
|
|
|
4,044.8
|
|
|
|
3,283.9
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer products cost of goods sold
|
|
|
|
|
707.0
|
|
|
|
533.1
|
|
|
|
1,954.0
|
|
|
|
1,584.1
|
|
Oil and natural gas direct operating costs
|
|
|
|
|
18.1
|
|
|
|
—
|
|
|
|
26.9
|
|
|
|
—
|
|
Benefits and other changes in policy reserves
|
|
|
|
|
107.2
|
|
|
|
141.0
|
|
|
|
431.7
|
|
|
|
559.7
|
|
Selling, acquisition, operating and general expenses
|
|
|
|
|
310.7
|
|
|
|
213.6
|
|
|
|
879.6
|
|
|
|
692.4
|
|
Amortization of intangibles
|
|
|
|
|
85.0
|
|
|
|
43.0
|
|
|
|
220.6
|
|
|
|
158.5
|
|
Total operating costs and expenses
|
|
|
|
|
1,228.0
|
|
|
|
930.7
|
|
|
|
3,512.8
|
|
|
|
2,994.7
|
|
Operating income
|
|
|
|
|
182.6
|
|
|
|
81.5
|
|
|
|
532.0
|
|
|
|
289.2
|
|
Interest expense
|
|
|
|
|
(83.9
|
)
|
|
|
(54.4
|
)
|
|
|
(302.7
|
)
|
|
|
(194.4
|
)
|
Gain (loss) from the change in the fair value of the equity
conversion feature of preferred stock
|
|
|
|
|
52.6
|
|
|
|
(125.5
|
)
|
|
|
81.9
|
|
|
|
(124.0
|
)
|
Gain on contingent purchase price reduction
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
41.0
|
|
Other income (expense), net
|
|
|
|
|
4.2
|
|
|
|
(17.5
|
)
|
|
|
(7.7
|
)
|
|
|
(26.0
|
)
|
Income (loss) from continuing operations before income taxes
|
|
|
|
|
155.5
|
|
|
|
(115.9
|
)
|
|
|
303.5
|
|
|
|
(14.2
|
)
|
Income tax expense (benefit)
|
|
|
|
|
36.8
|
|
|
|
(5.8
|
)
|
|
|
167.2
|
|
|
|
50.6
|
|
Net income (loss)
|
|
|
|
|
118.7
|
|
|
|
(110.1
|
)
|
|
|
136.3
|
|
|
|
(64.8
|
)
|
Less: Net income (loss) attributable to noncontrolling interest
|
|
|
|
|
15.1
|
|
|
|
25.0
|
|
|
|
(8.1
|
)
|
|
|
18.8
|
|
Net income (loss) attributable to controlling interest
|
|
|
|
|
103.6
|
|
|
|
(135.1
|
)
|
|
|
144.4
|
|
|
|
(83.6
|
)
|
Less: Preferred stock dividends and accretion
|
|
|
|
|
12.0
|
|
|
|
14.0
|
|
|
|
36.3
|
|
|
|
45.6
|
|
Net income (loss) attributable to common and participating preferred
stockholders
|
|
|
|
$
|
91.6
|
|
|
$
|
(149.1
|
)
|
|
$
|
108.1
|
|
|
$
|
(129.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share attributable to controlling
interest:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
0.45
|
|
|
$
|
(1.07
|
)
|
|
$
|
0.54
|
|
|
$
|
(0.93
|
)
|
Diluted
|
|
|
|
$
|
0.25
|
|
|
$
|
(1.07
|
)
|
|
$
|
0.30
|
|
|
$
|
(0.93
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
Nine months ended
|
|
|
|
|
June 30, 2013
|
|
|
July 1, 2012
|
|
|
June 30, 2013
|
|
|
July 1, 2012
|
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Reported operating income - consumer products segment
|
|
|
|
$
|
115.7
|
|
|
$
|
95.2
|
|
|
$
|
236.1
|
|
|
$
|
234.2
|
|
Add: Other expense not included above
|
|
|
|
|
(2.6
|
)
|
|
|
(2.2
|
)
|
|
|
(7.9
|
)
|
|
|
(2.2
|
)
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HHI Business inventory fair value adjustment
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
31.0
|
|
|
|
—
|
|
Pre-acquisition earnings of HHI Business
|
|
|
|
|
—
|
|
|
|
52.5
|
|
|
|
30.3
|
|
|
|
130.1
|
|
Restructuring and related charges
|
|
|
|
|
13.2
|
|
|
|
3.9
|
|
|
|
27.7
|
|
|
|
15.9
|
|
Acquisition and integration related charges
|
|
|
|
|
7.7
|
|
|
|
5.2
|
|
|
|
40.5
|
|
|
|
20.6
|
|
Venezuela devaluation
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2.0
|
|
|
|
—
|
|
Adjusted EBIT - consumer products segment
|
|
|
|
|
134.0
|
|
|
|
154.6
|
|
|
|
359.7
|
|
|
|
398.6
|
|
Depreciation and amortization, net of accelerated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of properties
|
|
|
|
|
16.4
|
|
|
|
9.8
|
|
|
|
42.6
|
|
|
|
28.7
|
|
Amortization of intangibles
|
|
|
|
|
20.3
|
|
|
|
16.1
|
|
|
|
57.5
|
|
|
|
46.5
|
|
Stock-based compensation
|
|
|
|
|
17.8
|
|
|
|
4.5
|
|
|
|
32.6
|
|
|
|
15.8
|
|
Adjusted EBITDA - consumer products segment
|
|
|
|
$
|
188.5
|
|
|
$
|
185.0
|
|
|
$
|
492.4
|
|
|
$
|
489.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table below shows the adjustments made to the reported operating
income of the Energy segment to calculate its Adjusted EBITDA:
|
|
|
|
Three months ended
|
|
Nine months ended
|
|
|
|
|
June 30, 2013
|
|
June 30, 2013
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Reported operating income - energy segment
|
|
|
|
$
|
4.8
|
|
|
$
|
5.3
|
|
Depreciation, amortization and depletion
|
|
|
|
12.7
|
|
|
18.5
|
|
EBITDA - energy segment
|
|
|
|
17.5
|
|
|
23.8
|
|
Accretion of discount on asset retirement obligations
|
|
|
|
0.4
|
|
|
0.7
|
|
Realized loss on derivative financial instruments
|
|
|
|
(1.9
|
)
|
|
(1.3
|
)
|
Adjusted EBITDA - energy segment
|
|
|
|
$
|
16.0
|
|
|
$
|
23.2
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
Nine months ended
|
|
|
|
|
June 30, 2013
|
|
|
July 1, 2012
|
|
|
June 30, 2013
|
|
|
July 1, 2012
|
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Reported operating income - insurance segment
|
|
|
|
$
|
78.5
|
|
|
$
|
(1.5
|
)
|
|
$
|
351.5
|
|
|
$
|
89.5
|
|
Effect of investment gains, net of offsets
|
|
|
|
|
(20.4
|
)
|
|
|
(17.2
|
)
|
|
|
(206.1
|
)
|
|
|
(72.2
|
)
|
Effect of change in FIA embedded derivative discount rate, net of
offsets
|
|
|
|
|
(34.4
|
)
|
|
|
17.9
|
|
|
|
(58.8
|
)
|
|
|
10.8
|
|
Effects of transaction-related reinsurance
|
|
|
|
|
—
|
|
|
|
4.2
|
|
|
|
—
|
|
|
|
11.8
|
|
Adjusted operating income - insurance segment
|
|
|
|
$
|
23.7
|
|
|
$
|
3.4
|
|
|
$
|
86.6
|
|
|
$
|
39.9
|
|
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
|