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Harbinger Group Inc. Reports First Quarter Fiscal 2013 Results

(Tables Follow)

                 
 

HARBINGER GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

 
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
 
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  




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