Price Graph
Price
Yield
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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74-1339132
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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450 Park Avenue, 30th Floor
New York, NY
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10022
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(Address of principal executive offices)
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(Zip Code)
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Securities Registered Pursuant to Section 12(b) of the Act:
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.01 par value
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New York Stock Exchange
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Large Accelerated Filer
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¨
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Accelerated Filer
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x
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Non-accelerated Filer
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¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A
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Item 9B
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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•
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our dependence on distributions from our subsidiaries to fund our operations and payments on our debt and other obligations;
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limitations on our ability to successfully identify additional suitable acquisition and investment opportunities and to compete for these opportunities with others who have greater resources;
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the need to provide sufficient capital to our operating businesses;
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the impact of covenants in the indenture governing our 7.875% Senior Notes due 2019 (the “7.875% Notes”), the certificates of designation governing our preferred stock (the “Certificates of Designation”), and future financing or refinancing agreements, on our ability to operate our business and finance our pursuit of additional acquisition opportunities;
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our ability to incur new debt and refinance our existing indebtedness;
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the impact on our business and financial condition of our substantial indebtedness and the significant additional indebtedness and other financing obligations we and our subsidiaries may incur;
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the impact on the holders of our common stock if we issue additional shares of our common stock or preferred stock;
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the impact on the aggregate value of our assets and our stock price from changes in the market prices of publicly traded equity interests we hold, particularly during times of volatility in security prices;
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the impact of additional material charges associated with our oversight of acquired or target businesses and the integration of our financial reporting;
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the impact of restrictive stockholder agreements and securities laws on our ability to dispose of equity interests we hold;
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the impact of decisions by our significant stockholders, whose interest may differ from those of our other stockholders, or their ceasing to remain significant stockholders;
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the effect any interests of our officers, directors, stockholders and their respective affiliates may have in certain transactions in which we are involved;
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our dependence on certain key personnel, and regulatory matters with respect to our Chief Executive Officer and certain funds affiliated with the HCP Stockholders;
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our and our
subsidiaries
’ ability to attract and retain key employees;
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the impact of potential losses and other risks from changes in our portfolio of securities;
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our ability to effectively increase the size of our organization, if needed, and manage our growth;
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the impact of a determination that we are an investment company or personal holding company;
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the impact of future claims arising from operations, agreements and transactions involving former subsidiaries;
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the impact of expending significant resources in considering acquisition targets or business opportunities that are not consummated;
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our ability to successfully integrate the EXCO/HGI JV into our existing operations and achieve the expected economic benefits;
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tax consequences associated with our acquisition, holding and disposition of target companies and assets;
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the impact of delays or difficulty in satisfying the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 or negative reports concerning our internal controls;
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the impact of the relatively low market liquidity for our common stock; and
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the effect of price fluctuations in our common stock caused by general market and economic conditions and a variety of other factors, including factors that affect the volatility of the common stock of any of our publicly held subsidiaries.
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the impact of Spectrum Brands’ substantial indebtedness on its business, financial condition and results of operations;
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the impact of restrictions in Spectrum Brands’ debt instruments on its ability to operate its business, finance its capital needs or pursue or expand business strategies;
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any failure to comply with financial covenants and other provisions and restrictions of Spectrum Brands’ debt instruments;
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Spectrum Brands’ ability to successfully integrate the HHI Business and achieve the expected synergies from that integration at the expected costs;
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the impact of expenses resulting from the implementation of new business strategies, divestitures or current and proposed restructuring activities;
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the impact of fluctuations in commodity prices, costs or availability of raw materials or terms and conditions available from suppliers, including suppliers’ willingness to advance credit;
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interest rate and exchange rate fluctuations;
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the loss of, or a significant reduction in, sales to any significant retail customer(s);
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competitive promotional activity or spending by competitors or price reductions by competitors;
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the introduction of new product features or technological developments by competitors and/or the development of new competitors or competitive brands;
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the effects of general economic conditions, including inflation, recession or fears of a recession, depression or fears of a depression, labor costs and stock market volatility or changes in trade, monetary or fiscal policies in the countries where Spectrum Brands does business;
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changes in consumer spending preferences and demand for Spectrum Brands’ products;
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Spectrum Brands’ ability to develop and successfully introduce new products, protect its intellectual property and avoid infringing the intellectual property of third parties;
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Spectrum Brands’ ability to successfully implement, achieve and sustain manufacturing and distribution cost efficiencies and improvements, and fully realize anticipated cost savings;
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the cost and effect of unanticipated legal, tax or regulatory proceedings or new laws or regulations (including environmental, public health and consumer protection regulations);
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public perception regarding the safety of Spectrum Brands’ products, including the potential for environmental liabilities, product liability claims, litigation and other claims;
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the impact of pending or threatened litigation;
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changes in accounting policies applicable to Spectrum Brands’ business;
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government regulations;
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the seasonal nature of sales of certain of Spectrum Brands’ products;
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the effects of climate change and unusual weather activity;
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the effects of political or economic conditions, terrorist attacks, acts of war or other unrest in international markets;
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the significant costs expected to be incurred in connection with the integration of Spectrum Brands and the HHI Business;
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the risk that Spectrum Brands may become responsible for certain liabilities of the HHI Business;
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the risk that integrating Spectrum Brands’ business with that of the HHI Business may divert Spectrum Brands’ management attention;
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Spectrum Brands dedicating resources of the HHI Business to supply certain products and services to Stanley Black & Decker and its subsidiaries as required following the Hardware Acquisition (as defined herein);
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general customer uncertainty related to the Hardware Acquisition; and
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the limited period of time for which Spectrum Brands has the right to use certain Stanley Black & Decker trademarks, brand names and logos;
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the accuracy of FGL’s assumptions and estimates;
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the accuracy of FGL’s assumptions regarding the fair value and future performance of its investments;
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FGL’s and its insurance subsidiaries’ ability to maintain or improve their financial strength ratings;
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FGL’s and its insurance subsidiaries’ potential need for additional capital to maintain their financial strength and credit ratings and meet other requirements and obligations;
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FGL’s ability to manage its business in a highly regulated industry, which is subject to numerous legal restrictions and regulations;
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regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) underwriting of insurance products and regulation of the sale, underwriting and pricing of products and minimum capitalization and statutory reserve requirements for insurance companies, or the ability of FGL’s insurance subsidiaries to make cash distributions to FGL (including dividends or payments on surplus notes those subsidiaries issue to FGL);
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the impact of FGL’s reinsurers failing to meet or timely meet their assumed obligations, increasing their reinsurance rates, or becoming subject to adverse developments that could materially adversely impact their ability to provide reinsurance to FGL at consistent and economical terms;
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restrictions on FGL’s ability to use captive reinsurers;
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FGL being forced to sell investments at a loss to cover policyholder withdrawals;
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the impact of covenants in the indenture governing FGH’s $300 million 6.375% Senior Notes due 2021 (the “FGH Notes”);
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the impact of interest rate fluctuations on FGL;
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the availability of credit or other financings and the impact of equity and credit market volatility and disruptions on both FGL’s ability to obtain capital and the value and liquidity of FGL’s investments;
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changes in the U.S. federal income tax laws and regulations that may affect the relative income tax advantages of FGL’s products;
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increases in FGL’s valuation allowance against FGL’s deferred tax assets, and restrictions on FGL’s ability to fully utilize such assets;
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FGL being the target or subject of and FGL’s ability to defend itself against litigation (including class action litigation) and respond to enforcement investigations or regulatory scrutiny;
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the performance of third parties including distributors and technology service providers, and providers of outsourced services;
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interruption or other operational failures in telecommunication, information technology and other operational systems, or a failure to maintain the security, integrity, confidentiality or privacy of sensitive data residing on such systems;
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the continued availability of capital required for FGL’s insurance subsidiaries to grow;
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the impact on FGL’s business of new accounting rules or changes to existing accounting rules;
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the risk that FGL’s risk management policies and procedures could leave FGL exposed to unidentified or unanticipated risk;
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general economic conditions and other factors, including prevailing interest and unemployment rate levels and stock and credit market performance which may affect (among other things) FGL’s ability to sell its products, its ability to access capital resources and the costs associated therewith, the fair value of its investments, which could result in impairments and other-than-temporary impairments, and certain liabilities, and the lapse rate and profitability of policies;
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FGL’s ability to protect its intellectual property;
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difficulties arising from FGL’s outsourcing relationships;
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the impact on FGL of man-made catastrophes, pandemics, computer viruses, network security breaches and malicious and terrorist acts;
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FGL’s ability to compete in a highly competitive industry and maintain competitive unit costs;
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the adverse consequences if the independent contractor status of FGL’s independent insurance marketing organizations is successfully challenged;
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the adverse tax consequence to FGL if FGL generates passive income in excess of operating expenses;
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the operating and financial restrictions applicable to FGL, which may prevent FGL from capitalizing on business opportunities;
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the ability of FGL’s subsidiaries and affiliates to generate sufficient cash to service all of their obligations;
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the ability of FGL’s subsidiaries to pay dividends to FGL;
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the ability to maintain or obtain approval of the regulatory authorities, including the Iowa Insurance Division (“IID”) and the New York State Department of Financial Services (“NYDFS”) as required for FGL’s operations and those of its insurance subsidiaries;
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FGL’s ability to attract and retain national marketing organizations and independent agents;
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the ability of FGL’s subsidiaries and affiliates to generate sufficient cash to service all of their obligations; and
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the ability of Front Street and/or Five Island to effectively implement their respective business strategy.
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Salus’ ability to recover amounts that are contractually owed to it by its borrowers;
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Salus’ ability to continue to address a number of issues to implement its strategy and grow its business;
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the impact on Salus resulting from further deterioration in economic conditions;
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Salus’ ability to compete with traditional competitors and new market entrants;
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Salus’ ability to address a variety of operational risks, including reputational risk, legal and compliance risk, the risk of fraud or theft, operational errors and systems malfunctions; and
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Salus’ ability to continue to find attractive lending opportunities given its rapid growth.
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fluctuations in oil, natural gas liquids and natural gas prices sold by EXCO/HGI JV;
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changes in the differential between the New York Mercantile Exchange (“NYMEX”) or other benchmark prices of oil, natural gas liquids and natural gas and the reference or regional index price used to price the EXCO/HGI JV’s actual oil and natural gas sales;
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the EXCO/HGI JV not having any of its own employees and relying on employees supplied by EXCO Parent and its subsidiaries;
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the failure to resolve any material disagreements between HGI Energy and EXCO Parent relating to the business or operation of EXCO/HGI JV;
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the impact of the EXCO/HGI JV’s substantial indebtedness on its business, financial condition and results of operations;
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the EXCO/HGI JV’s ability to acquire or develop additional reserves, accurately evaluate reserve data or the exploitation potential of its properties, and control the development of its properties;
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the EXCO/HGI JV’s ability to market and sell its oil, natural gas liquids and natural gas and its exposure to the credit risk of its customers and other counterparties and the risks associated with drilling activities;
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the inherent uncertainty of estimates of oil and natural gas reserves;
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the risk that the EXCO/HGI JV will be unable to identify or complete, or complete on economically attractive terms, the acquisition of additional properties;
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the EXCO/HGI JV’s ability to successfully operate in a highly regulated and litigious environment, including exposure to operating hazards and uninsured risks;
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EXCO/HGI JV’s ability to effectively mitigate the impact of commodity price volatility from its cash flows with its hedging strategy;
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changes in the U.S. federal income tax laws and regulations that may affect the relative income tax advantages of HGI Energy’s products;
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the impact of future and existing environmental regulations;
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the effects of climate change and unusual weather activity;
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the intense competition in the oil and gas industry, including acquiring properties, contracting for drilling equipment and hiring experienced personnel; and
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the unavailability of pipelines or other facilities interconnected to the EXCO/HGI JV’s gathering and transportation pipelines.
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consumer batteries, including alkaline and zinc carbon batteries, rechargeable batteries and chargers and hearing aid batteries, other specialty batteries and portable lighting products;
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•
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small appliances, including small kitchen appliances and home product appliances;
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•
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pet supplies, including aquatic equipment and supplies, dog and cat treats, small animal foods, clean up and training aids, health and grooming products and bedding;
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electric shaving and grooming devices;
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•
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electric personal care and styling devices;
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home and garden control products, including household insect controls, insect repellents and herbicides; and
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hardware and home improvement products, including residential locksets, builders hardware and plumbing products.
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Percentage of Total Consumer Products Net Sales for the
Fiscal Year Ended September 30,
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2013
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2012
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2011
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Consumer batteries
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23
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%
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29
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%
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30
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%
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Hardware and home improvement products
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21
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%
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—
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%
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—
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%
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Small appliances
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18
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%
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24
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%
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24
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%
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Pet supplies
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15
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%
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19
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%
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18
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%
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Home and garden control products
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10
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%
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12
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%
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11
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%
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Electric shaving and grooming products
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7
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%
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8
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%
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9
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%
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Electric personal care products
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6
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%
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8
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%
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8
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%
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100
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%
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100
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%
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100
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%
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•
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Increase Market Share in FGL’s Existing Market.
FGL believes that increasing demand for retirement and principal protection products combined with an evolving competitive landscape present FGL with significant opportunities to grow with the market and through increased market share. FGL will continue to pursue tactical opportunities to increase shelf space in the IMO market. FGL expects to increase the size of its account management team to strengthen coverage
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•
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Expand the Types of Products FGL Sells.
FGL also expects to develop and distribute new products that will address important unmet needs of middle-income households and a growing senior population. These products are expected to diversify FGL’s asset, liability and revenue mix as well as help it to capitalize on the significant future growth opportunities it perceives. FGL is well-positioned to offer products through its current distribution system in, for example, the group, non-medical and niche life-insurance product markets.
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•
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Diversify FGL’s Distribution Channels.
FGL will leverage its strong capital position and target higher ratings to develop broader relationships with broker-dealers, banks and financial planning professionals, thereby increasing the ways in which FGL reaches its customers. Effective implementation will require phased investment over a number of years in institutional relationships, systems, marketing, wholesaling and product development.
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•
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Selectively Pursue Acquisitions.
Although acquisitions are not the primary focus of FGL’s current business strategy, FGL actively monitors the life insurance and annuity markets for opportunities to acquire businesses, which are compatible with FGL’s existing operations. FGL also looks for opportunities to acquire seasoned blocks of in-force business with measurable experience, which can help leverage its existing operational and corporate structures to generate enhanced returns on invested capital.
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•
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Bottom-line, Profit-oriented Objectives
.
FGL focuses on initiatives that it expects will deliver target profits and avoid markets and products when industry pricing makes it difficult to achieve targeted profit margins.
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(dollars in millions)
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Crediting Rate
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1% to 2%
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2% to 3%
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3% to 4%
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4% to 5%
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5% to 6%
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Account Value
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$21.5
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$139.1
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$1,606
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$554.6
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$190.1
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(dollars in millions)
Years of Surrender Charges Remaining
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Account Value(1)
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Percent of Total
|
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Average Surrender
Charge Percent
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||||
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0-2
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$
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3,531.2
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28.2
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%
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2
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%
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3-4
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2,652.0
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21.2
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%
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6.9
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%
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5-6
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2,030.3
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16.2
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%
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8.9
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%
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|
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7-9
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|
2,622.3
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20.9
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%
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|
10.5
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%
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10 and Greater
|
|
1,684.1
|
|
|
13.5
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%
|
|
13
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%
|
|
|
|
|
$
|
12,519.9
|
|
|
100
|
%
|
|
7.43
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%
|
|
(1)
|
Excludes $3,491.6 million related to Single Premium Immediate Annuities (“SPIA”) contracts, which cannot be surrendered.
|
|
|
|
September 30, 2013
|
|
September 30, 2012
|
||||||||||||
|
(in millions)
|
|
Deposits on
Annuity
Policies
|
|
GAAP
Reserves
|
|
Deposits on
Annuity
Policies
|
|
GAAP
Reserves
|
||||||||
|
Products
|
|
|
|
|
|
|
|
|
||||||||
|
Fixed Indexed Annuities
|
|
$
|
983.1
|
|
|
$
|
9,985.9
|
|
|
$
|
1,614.2
|
|
|
$
|
9,893.2
|
|
|
Fixed Rate Annuities
|
|
38.0
|
|
|
2,708.2
|
|
|
64.5
|
|
|
2,964.2
|
|
||||
|
Single Premium Immediate Annuities
|
|
7.3
|
|
|
3,491.6
|
|
|
7.8
|
|
|
3,583.1
|
|
||||
|
Total
|
|
$
|
1,028.4
|
|
|
$
|
16,185.7
|
|
|
$
|
1,686.5
|
|
|
$
|
16,440.5
|
|
|
(dollars in millions)
Duration
|
|
Amortized
Cost
|
|
% of
Total
|
||
|
0
|
|
$
|
2,141.9
|
|
|
13.5%
|
|
1
|
|
2,206.2
|
|
|
14%
|
|
|
2
|
|
1,302.6
|
|
|
8.2%
|
|
|
3
|
|
1,249.5
|
|
|
7.9%
|
|
|
4
|
|
1,366.8
|
|
|
8.6%
|
|
|
5
|
|
1,060.8
|
|
|
6.7%
|
|
|
6
|
|
856.4
|
|
|
5.4%
|
|
|
7
|
|
933.9
|
|
|
5.9%
|
|
|
8
|
|
902.4
|
|
|
5.7%
|
|
|
9
|
|
488.5
|
|
|
3.1%
|
|
|
10
|
|
459.5
|
|
|
2.9%
|
|
|
11
|
|
661.3
|
|
|
4.2%
|
|
|
12
|
|
809.0
|
|
|
5.1%
|
|
|
13
|
|
745.8
|
|
|
4.7%
|
|
|
14
|
|
480.2
|
|
|
3%
|
|
|
15-20
|
|
147.9
|
|
|
0.9%
|
|
|
Total
|
|
$
|
15,812.7
|
|
|
100%
|
|
•
|
new business administration;
|
|
•
|
hosting of financial systems;
|
|
•
|
service of existing policies;
|
|
•
|
investment accounting and custody;
|
|
•
|
information technology development and maintenance;
|
|
•
|
call centers; and
|
|
•
|
underwriting administration of life insurance applications.
|
|
•
|
licensing to transact business;
|
|
•
|
licensing agents;
|
|
•
|
prescribing which assets and liabilities are to be considered in determining statutory surplus;
|
|
•
|
regulating premium rates for certain insurance products;
|
|
•
|
approving policy forms and certain related materials;
|
|
•
|
determining whether a reasonable basis exists as to the suitability of the annuity purchase recommendations producers make;
|
|
•
|
regulating unfair trade and claims practices;
|
|
•
|
establishing reserve requirements and solvency standards;
|
|
•
|
regulating the amount of dividends that may be paid in any year;
|
|
•
|
regulating the availability of reinsurance or other substitute financing solutions, the terms thereof and the ability of an insurer to take credit on its financial statements for insurance ceded to reinsurers or other substitute financing solutions;
|
|
•
|
fixing maximum interest rates on life insurance policy loans and minimum accumulation or surrender values; and
|
|
•
|
regulating the type, amounts and valuations of investments permitted, transactions with affiliates and other matters.
|
|
|
|
|
(in millions)
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
||||||||||
|
FGL Insurance Ordinary Dividend Capacity
|
|
$
|
67.2
|
|
|
$
|
59.4
|
|
|
$
|
90.2
|
|
|
$
|
84.6
|
|
|
$
|
106.3
|
|
|
FGL Insurance Ordinary Dividends Paid
|
|
—
|
|
|
59.0
|
|
|
40.0
|
|
|
40.0
|
|
|
40.0
|
|
|||||
|
•
|
the establishment of federal regulatory authority over derivatives;
|
|
•
|
the establishment of consolidated federal regulation and resolution authority over systemically important financial services firms;
|
|
•
|
the establishment of the Federal Insurance Office;
|
|
•
|
changes to the regulation of broker dealers and investment advisors;
|
|
•
|
changes to the regulation of reinsurance;
|
|
•
|
changes to regulations affecting the rights of shareholders;
|
|
•
|
the imposition of additional regulation over credit rating agencies;
|
|
•
|
the imposition of concentration limits on financial institutions that restrict the amount of credit that may be extended to a single person or entity; and
|
|
•
|
the clearing of derivative contracts.
|
|
•
|
placing FGL at a competitive disadvantage relative to its competition or other financial services entities;
|
|
•
|
changing the competitive landscape of the financial services sector or the insurance industry;
|
|
•
|
making it more expensive for FGL to conduct its business;
|
|
•
|
requiring the reallocation of significant company resources to government affairs;
|
|
•
|
increasing FGL’s legal and compliance related activities and the costs associated therewith; or
|
|
•
|
otherwise having a material adverse effect on the overall business climate as well as FGL’s financial condition and results of operations.
|
|
•
|
reinsurance solutions that improve the financial position of its clients by increasing their capital base and reducing leverage ratios through the assumption of life and fixed annuity reserves; and
|
|
•
|
providing clients with exit strategies for discontinued lines, closed blocks of in-force life and fixed annuity business in run-off, or life and fixed annuity lines of business not providing a good fit for a company’s growth strategies. With Front Street Bermuda’s ability to manage these contracts, its clients will be able to concentrate their efforts and resources on core strategies.
|
|
•
|
Grow asset base through acquisitions
. EXCO/HGI JV intends to opportunistically acquire oil and natural gas reserves from a variety of sources, including third parties, EXCO Parent and HGI. It is expected that the acquisition focus will be on assets and/or companies that own mature properties with long-lived, predictable production profiles, modest capital requirements and substantial reserve exploitation potential.
|
|
•
|
Maintain a stable production profile
. EXCO/HGI JV intends to pursue drilling of its proved undeveloped inventory and to perform cost-reducing and production enhancement operations to maintain its production on a cost effective basis.
|
|
•
|
Commodity Hedging
. The EXCO/HGI JV intends to use oil and natural gas derivatives and financial risk management instruments to manage its exposure to commodity prices. Management of the EXCO/HGI JV believes that these oil and natural gas derivative contracts may allow the EXCO/HGI JV to mitigate the impact of price fluctuations and achieve a more predictable cash flow from the EXCO/HGI JV’s operations.
|
|
•
|
MLP Structure
. While the EXCO/HGI JV is a private joint venture, its structure is consistent with publicly-traded master limited partnerships, giving the EXCO/HGI JV a higher degree of financing and growth optionality, including potentially accessing public equity and debt markets.
|
|
|
|
As of September 30,
|
|
|
|
|
2013
|
|
|
Oil (Mbbls)
|
|
|
|
|
Developed
|
|
3,107
|
|
|
Undeveloped
|
|
317
|
|
|
Total
|
|
3,424
|
|
|
Natural Gas Liquids (Mmcf) (1)
|
|
|
|
|
Developed
|
|
4,799
|
|
|
Undeveloped
|
|
931
|
|
|
Total
|
|
5,730
|
|
|
Natural Gas (Mmcf)
|
|
|
|
|
Developed
|
|
317,748
|
|
|
Undeveloped
|
|
4,670
|
|
|
Total
|
|
322,418
|
|
|
Natural Gas Equivalent Reserves (MBBL)
|
|
|
|
|
Developed
|
|
365,185
|
|
|
Undeveloped
|
|
12,157
|
|
|
Total
|
|
377,342
|
|
|
PV-10 (in millions) (2)
|
|
|
|
|
Developed
|
|
318.8
|
|
|
Undeveloped
|
|
4.3
|
|
|
Total
|
|
323.1
|
|
|
Standardized Measure (in millions) (3)
|
|
323.1
|
|
|
(1)
|
The prices for NGLs were computed using the average of realized prices for the trailing 12 months.
|
|
(2)
|
The PV-10 is based on the following average spot prices, in each case adjusted for historical differentials. Prices presented in the table below are the trailing 12 month simple average spot price at the first of the month for natural gas at Henry Hub and West Texas Intermediate crude oil at Cushing, Oklahoma.
|
|
|
|
Average spot prices
|
||||||||||
|
|
|
Natural gas (per Mmbtu)
|
|
Oil (per Bbl)
|
|
Natural gas liquid (per Bbl)
|
||||||
|
September 30, 2013
|
|
$
|
3.60
|
|
|
$
|
95.04
|
|
|
$
|
38.64
|
|
|
|
Oil (Mbbls)
|
|
Natural gas (Mmcf)
|
|
Natural gas liquids (Mbbls)
|
|
Equivalent natural gas (Mmcfe)
|
||||
|
Proved Developed Reserves
|
3,107
|
|
|
317,748
|
|
|
4,799
|
|
|
365,180
|
|
|
Proved Undeveloped Reserves
|
317
|
|
|
4,670
|
|
|
931
|
|
|
12,157
|
|
|
Total Proved Reserves
|
3,424
|
|
|
322,418
|
|
|
5,730
|
|
|
377,337
|
|
|
The changes in reserves for the year are as follows:
|
|
|
|
|
|
|
|
||||
|
Inception
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Purchase of reserves in place
|
3,940
|
|
|
331,592
|
|
|
7,353
|
|
|
399,350
|
|
|
Discoveries and extensions
|
188
|
|
|
4,416
|
|
|
753
|
|
|
10,066
|
|
|
Revisions of previous estimates:
|
|
|
|
|
|
|
|
||||
|
Reclassification to unproved reserves (1)
|
(125
|
)
|
|
(5,094
|
)
|
|
(816
|
)
|
|
(10,734
|
)
|
|
Changes in price
|
(125
|
)
|
|
13,116
|
|
|
(135
|
)
|
|
11,556
|
|
|
Other factors
|
(172
|
)
|
|
(7,042
|
)
|
|
(1,127
|
)
|
|
(14,843
|
)
|
|
Sales of reserves in place
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Production
|
(282
|
)
|
|
(14,571
|
)
|
|
(299
|
)
|
|
(18,062
|
)
|
|
September 30, 2013
|
3,424
|
|
|
322,417
|
|
|
5,729
|
|
|
377,337
|
|
|
(1)
|
Represents Proved Undeveloped Reserves reclassified to unproved pursuant to the five year development rule established by the SEC. This reclassification was a result of decisions not to commit development capital in the current commodity price environment. While these locations previously qualified as Proved Undeveloped Reserves as they directly offset a proved location, the EXCO/HGI JV’s current planned capital programs do not support development at this time.
|
|
|
|
|
|
Mmcfe
|
|
|
Purchases of Proved Undeveloped reserves in place
|
20,350
|
|
|
New discoveries and extensions (1)
|
6,772
|
|
|
Proved Undeveloped Reserves transferred to developed (2)
|
(177
|
)
|
|
Proved Undeveloped Reserves transferred to unproved (3)
|
(10,734
|
)
|
|
Other revisions of previous estimates of Proved Undeveloped Reserves (4)
|
(4,054
|
)
|
|
Proved Undeveloped Reserves at September 30, 2013
|
12,157
|
|
|
(1)
|
All of the discoveries and extensions of Proved Undeveloped Reserves during the period from inception to September 30, 2013 occurred in the Permian region.
|
|
(2)
|
Proved Undeveloped Reserves transferred to Proved Developed Reserves in Fiscal 2013 were primarily in the Permian region. Capital costs incurred to convert Proved Undeveloped Reserves to Proved Developed Reserves were $2.7 million.
|
|
(3)
|
Represents Proved Undeveloped Reserves reclassified to unproved pursuant to the five year development rule established by the SEC. This reclassification was a result of modifications to the EXCO/HGI JV’s development program based on recent performance and the current commodity price environment. While these locations qualify as Proved Undeveloped Reserves as they directly offset a proved location, the EXCO/HGI JV’s current planned capital programs do not support development at this time.
|
|
(4)
|
The net downward revisions are due primarily to updated production profiles based on recent performance as well as changes in prices and costs.
|
|
($ in millions, except for volumes and unit sales prices)
|
|
September 30,
2013 |
||
|
Oil
|
|
|
||
|
Revenue
|
|
$
|
26.8
|
|
|
Production sold (Mbbls)
|
|
283
|
|
|
|
Average sales price (per Bbl)
|
|
$
|
94.63
|
|
|
Natural Gas Liquids
|
|
|
||
|
Revenue
|
|
$
|
11.4
|
|
|
Production sold (Mbbls)
|
|
300
|
|
|
|
Average sales price (per Bbl)
|
|
$
|
38.11
|
|
|
Natural Gas
|
|
|
||
|
Revenue
|
|
$
|
52.0
|
|
|
Production sold (Mmcf)
|
|
14,570
|
|
|
|
Average sales price (per Mcf)
|
|
3.57
|
|
|
|
Cost and Expenses
|
|
|
||
|
Average production cost per Mcfe (excluding severance and ad valorem taxes)
|
|
$
|
1.5
|
|
|
General and administrative expenses per Mcfe
|
|
0.27
|
|
|
|
Depreciation, depletion and amortization per Mcfe
|
|
1.72
|
|
|
|
|
For the period from inception to September 30, 2013
|
||||||||||
|
|
Permian Area
|
|
Vernon Field
|
|
Holly Field
|
||||||
|
Oil production sold (Mbbls)
|
217
|
|
|
2
|
|
|
10
|
|
|||
|
NGL production sold (Mbbls)
|
224
|
|
|
n/a
|
|
|
75
|
|
|||
|
Natural gas production sold (Mmcf)
|
1,120
|
|
|
7,482
|
|
|
3,178
|
|
|||
|
Average price Oil (per Bbl)
|
$
|
93.89
|
|
|
$
|
95.15
|
|
|
$
|
95.42
|
|
|
Average price NGL (per Bbl)
|
36.41
|
|
|
n/a
|
|
|
43.52
|
|
|||
|
Average price Gas (per Mmcf)
|
3.31
|
|
|
3.56
|
|
|
3.41
|
|
|||
|
Average price per Mcfe
|
8.57
|
|
|
3.58
|
|
|
9.85
|
|
|||
|
Average production cost per Mcfe (excluding severance and ad valorem taxes)
|
1.71
|
|
|
1.03
|
|
|
1.64
|
|
|||
|
|
|
At September 30, 2013
|
||||||||||||||||
|
|
|
Gross wells (1)
|
|
Net wells
|
||||||||||||||
|
Areas
|
|
Oil
|
|
Natural gas
|
|
Total
|
|
Oil
|
|
Natural gas
|
|
Total
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
East Texas/North Louisiana
|
|
53
|
|
|
960
|
|
|
1,013
|
|
|
37.8
|
|
|
593.8
|
|
|
631.6
|
|
|
Permian and other
|
|
399
|
|
|
49
|
|
|
448
|
|
|
281.2
|
|
|
34.7
|
|
|
315.9
|
|
|
Total
|
|
452
|
|
|
1,009
|
|
|
1,461
|
|
|
319
|
|
|
629
|
|
|
948
|
|
|
(1)
|
As of September 30, 2013, the EXCO/HGI JV held interests in 9 gross wells with multiple completions.
|
|
|
|
Development wells
|
||||||||||||||||
|
|
|
Gross
|
|
Net
|
||||||||||||||
|
|
|
Productive
|
|
Dry
|
|
Total
|
|
Productive
|
|
Dry
|
|
Total
|
||||||
|
Period from inception to September 30, 2013
|
|
15
|
|
|
1
|
|
|
16.0
|
|
|
9.9
|
|
|
0.7
|
|
|
10.6
|
|
|
|
|
At September 30, 2013
|
||||||||||
|
|
|
Developed
|
|
Undeveloped
|
||||||||
|
Area
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
||||
|
East Texas/North Louisiana
|
|
139,620
|
|
|
90,422
|
|
|
8,027
|
|
|
4,175
|
|
|
Permian and other
|
|
27,041
|
|
|
18,441
|
|
|
1,697
|
|
|
1,315
|
|
|
Total
|
|
166,661
|
|
|
108,863
|
|
|
9,724
|
|
|
5,490
|
|
|
•
|
the location of wells;
|
|
•
|
the method of drilling and casing wells;
|
|
•
|
the surface use and restoration of properties upon which wells are drilled;
|
|
•
|
the plugging and abandoning of wells; and
|
|
•
|
notice to surface owners and other third parties.
|
|
•
|
incur additional indebtedness;
|
|
•
|
create liens or engage in sale and leaseback transactions;
|
|
•
|
pay dividends or make distributions in respect of capital stock;
|
|
•
|
make certain restricted payments;
|
|
•
|
sell assets;
|
|
•
|
engage in transactions with affiliates, except on an arms-length basis; or
|
|
•
|
consolidate or merge with, or sell substantially all of our assets to, another person.
|
|
•
|
make it difficult for us to satisfy our obligations with respect to our outstanding and other future debt obligations;
|
|
•
|
increase our vulnerability to general adverse economic and industry conditions or a downturn in our business;
|
|
•
|
impair our ability to obtain additional financing in the future for working capital, investments, acquisitions and other general corporate purposes;
|
|
•
|
require us to dedicate a substantial portion of our cash flows to the payment to our financing sources, thereby reducing the availability of our cash flows to fund working capital, investments, acquisitions and other general corporate purposes; and
|
|
•
|
place us at a disadvantage compared to our competitors.
|
|
•
|
Any of these risks could impact our ability to fund our operations or limit our ability to expand our business, which could have a material adverse effect on our business, financial condition, liquidity and results of operations.
|
|
•
|
default and foreclosure on our assets if our operating revenues after an investment or acquisition are insufficient to repay our financial obligations;
|
|
•
|
acceleration of our obligations to repay the financial obligations even if we make all required payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
|
|
•
|
our immediate payment of all amounts owed, if any, if such financial obligations are payable on demand;
|
|
•
|
our inability to obtain necessary additional financing if such financial obligations contain covenants restricting our ability to obtain such financing while the financial obligations remain outstanding;
|
|
•
|
our inability to pay dividends on our capital stock;
|
|
•
|
using a substantial portion of our cash flow to pay principal and interest or dividends on our financial obligations, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
|
|
•
|
limitations on our flexibility in planning for and reacting to changes in our business and in the industries in which we operate;
|
|
•
|
an event of default that triggers a cross default with respect to other financial obligations, including the notes and our preferred stock;
|
|
•
|
increased vulnerability to adverse changes in general economic, industry, financial, competitive legislative, regulatory and other conditions and adverse changes in government regulation; and
|
|
•
|
limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors.
|
|
•
|
significantly dilute the equity interest and voting power of all other stockholders;
|
|
•
|
further subordinate the rights of holders of our common stock if further preferred stock is issued with rights senior to those afforded our common stock;
|
|
•
|
call for us to make dividend or other payments not available to the holders of our common stock;
|
|
•
|
may adversely affect the prevailing market price of our common stock; and
|
|
•
|
could cause a change in control of our company if a substantial number of shares of our common stock is issued and/or if the purchase price of the preferred stock accretes, which may affect, among other things, our ability to use our net operating loss carryforwards (if any); and cause a “change in control” under the Indenture or Certificates of Designation.
|
|
•
|
the authority of our Board to issue, without stockholder approval, up to 10,000,000 shares of our preferred stock with such terms as our Board may determine;
|
|
•
|
special meetings of our stockholders may be called only by the Chairman of our Board or by our Corporate Secretary upon delivery of a written request executed by three directors (or, if there are fewer than three directors in office at that time, by all incumbent directors);
|
|
•
|
a staggered Board as a result of which only one of the three classes of directors is elected each year;
|
|
•
|
advance notice requirements for nominations for election to our Board or for proposing matters that can be acted on by stockholders at stockholder meetings;
|
|
•
|
the absence of cumulative voting rights; and
|
|
•
|
subject to any special rights of the holders of the holders of our preferred stock to elect directors, removal of incumbent directors only for cause.
|
|
•
|
actual or anticipated fluctuations in our results of operations and the performance of our subsidiaries and their competitors;
|
|
•
|
reaction of the market to our announcement of any future acquisitions or investments;
|
|
•
|
the public’s reaction to our press releases, our other public announcements and our filings with the Commission;
|
|
•
|
changes in general economic conditions;
|
|
•
|
actions of our historical equity investors, including sales of common stock by our the HCP Stockholders, our directors and our executive officers; and
|
|
•
|
actions by institutional investors trading in our stock.
|
|
•
|
require it to dedicate a large portion of its cash flow to pay principal and interest on its indebtedness, which will reduce the availability of its cash flow to fund working capital, capital expenditures, research and development expenditures and other business activities;
|
|
•
|
increase its vulnerability to general adverse economic and industry conditions;
|
|
•
|
limit its flexibility in planning for, or reacting to, changes in its business and the industry in which it operates;
|
|
•
|
restrict its ability to make strategic acquisitions, dispositions or exploit business opportunities;
|
|
•
|
place it at a competitive disadvantage compared to its competitors that have less debt; and
|
|
•
|
limit its ability to borrow additional funds (even when necessary to maintain adequate liquidity) or dispose of assets.
|
|
•
|
Spectrum Brands competes against many well-established companies that may have substantially greater financial and other resources, including personnel and research and development, and greater overall market share than Spectrum Brands.
|
|
•
|
In some key product lines, Spectrum Brands’ competitors may have lower production costs and higher profit margins than it, which may enable them to compete more aggressively in offering retail discounts, rebates and other promotional incentives.
|
|
•
|
Product improvements or effective advertising campaigns by competitors may weaken consumer demand for Spectrum Brands’ products.
|
|
•
|
Consumer purchasing behavior may shift to distribution channels where Spectrum Brands does not have a strong presence.
|
|
•
|
Consumer preferences may change to lower margin products or products other than those Spectrum Brands markets.
|
|
•
|
Spectrum Brands may not be successful in the introduction, marketing and manufacture of any new products or product innovations or be able to develop and introduce, in a timely manner, innovations to its existing products that satisfy customer needs or achieve market acceptance.
|
|
•
|
currency fluctuations, including, without limitation, fluctuations in the foreign exchange rate of the Euro, British Pound, Brazilian Real and the Mexican Peso;
|
|
•
|
changes in the economic conditions or consumer preferences or demand for its products in these markets;
|
|
•
|
the risk that because its brand names may not be locally recognized, Spectrum Brands must spend significant amounts of time and money to build brand recognition without certainty that it will be successful;
|
|
•
|
labor unrest;
|
|
•
|
political and economic instability, as a result of terrorist attacks, natural disasters or otherwise;
|
|
•
|
lack of developed infrastructure;
|
|
•
|
longer payment cycles and greater difficulty in collecting accounts;
|
|
•
|
restrictions on transfers of funds;
|
|
•
|
import and export duties and quotas, as well as general transportation costs;
|
|
•
|
changes in domestic and international customs and tariffs;
|
|
•
|
changes in foreign labor laws and regulations affecting its ability to hire and retain employees;
|
|
•
|
inadequate protection of intellectual property in foreign countries;
|
|
•
|
unexpected changes in regulatory environments;
|
|
•
|
difficulty in complying with foreign law;
|
|
•
|
difficulty in obtaining distribution and support; and
|
|
•
|
adverse tax consequences.
|
|
•
|
Although contracts with its suppliers address related compliance issues, Spectrum Brands may be unable to procure appropriate Restriction of the Use of Hazardous Substances in Electrical and Electronic Equipment compliant material in sufficient quantity and quality and/or be able to incorporate it into Spectrum Brands’ product procurement processes without compromising quality and/or harming its cost structure.
|
|
•
|
Spectrum Brands may face excess and obsolete inventory risk related to non-compliant inventory that it may hold for which there is reduced demand, and it may need to write down the carrying value of such inventories.
|
|
•
|
Spectrum Brands may be unable to sell certain existing inventories of its batteries in Europe.
|
|
•
|
its ability to identify and develop relationships with qualified suppliers;
|
|
•
|
the terms and conditions upon which it purchases products from its suppliers, including applicable exchange rates, transport costs and other costs, its suppliers’ willingness to extend credit to it to finance its inventory purchases and other factors beyond its control;
|
|
•
|
financial condition of its suppliers;
|
|
•
|
political instability in the countries in which its suppliers are located;
|
|
•
|
its ability to import outsourced products;
|
|
•
|
its suppliers’ noncompliance with applicable laws, trade restrictions and tariffs; or
|
|
•
|
its suppliers’ ability to manufacture and deliver outsourced products according to its standards of quality on a timely and efficient basis.
|
|
•
|
discharges to the air, water and land;
|
|
•
|
the handling and disposal of solid and hazardous substances and wastes; and
|
|
•
|
remediation of contamination associated with release of hazardous substances at its facilities and at off-site disposal locations.
|
|
•
|
employee redeployment, relocation or severance;
|
|
•
|
integration of information systems;
|
|
•
|
combination of research and development teams and processes; and
|
|
•
|
reorganization or closures of facilities.
|
|
•
|
incur additional indebtedness;
|
|
•
|
pay dividends or certain other distributions on its capital stock other than as allowed under the indenture;
|
|
•
|
make certain investments or other restricted payments;
|
|
•
|
place restrictions on the ability of subsidiaries to pay dividends or make other payments to FGH;
|
|
•
|
engage in transactions with stockholders or affiliates;
|
|
•
|
sell certain assets or merge with or into other companies;
|
|
•
|
guarantee indebtedness; and
|
|
•
|
create liens.
|
|
•
|
supply and demand for oil and natural gas and expectations regarding supply and demand;
|
|
•
|
the level of domestic production;
|
|
•
|
the availability of imported oil and natural gas;
|
|
•
|
political and economic conditions and events in foreign oil and natural gas producing nations, including embargoes, continued hostilities in the Middle East and other sustained military campaigns, and acts of terrorism or sabotage;
|
|
•
|
the ability of members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls;
|
|
•
|
the cost and availability of transportation and pipeline systems with adequate capacity;
|
|
•
|
the cost and availability of other competitive fuels;
|
|
•
|
fluctuating and seasonal demand for oil, natural gas and refined products;
|
|
•
|
concerns about climate change or other conservation initiatives and the extent of governmental price controls and regulation of production;
|
|
•
|
regional price differentials and quality differentials of oil and natural gas;
|
|
•
|
the availability of refining capacity;
|
|
•
|
technological advances affecting oil and natural gas production and consumption;
|
|
•
|
weather conditions and natural disasters;
|
|
•
|
foreign and domestic government relations and laws and regulations; and
|
|
•
|
overall economic conditions.
|
|
•
|
EXCO may share certain approval rights over major decisions, which may result in a failure to mutually agree to take action, delays and related additional expenses, and decisions and actions that are taken to obtain mutual consent that are sub-optimal for the EXCO/HGI JV or HGI Energy;
|
|
•
|
disputes between us and EXCO may result in litigation or arbitration that would increase expenses, delay or terminate projects and prevent the employees, officers and directors of the Energy General Partner from focusing their time and effort on its business;
|
|
•
|
the possibility that EXCO might become insolvent or bankrupt, which may result in its removal from the joint venture or failure to perform and may result in HGI Energy having to pay EXCO’s share of joint venture liabilities in order to operate the EXCO/HGI JV;
|
|
•
|
the possibility that the EXCO/HGI JV may incur liabilities as a result of an action taken by EXCO, which would reduce the value of HGI Energy’s interests in the EXCO/HGI JV;
|
|
•
|
that under certain circumstances, neither EXCO nor us has the power to control the EXCO/HGI JV, and an impasse could be reached which might have a negative influence on our investment in the joint venture; and
|
|
•
|
EXCO may decide to sell its interest in the EXCO/HGI JV or resign as operator or service provider of the EXCO/HGI JV and HGI Energy may be unable to, or be unable to timely, replace EXCO or raise the necessary financing to purchase EXCO’s interest.
|
|
•
|
the timing and amount of capital expenditures;
|
|
•
|
the operators’ expertise and financial resources;
|
|
•
|
the approval of other participants in drilling wells; and
|
|
•
|
the selection of suitable technology.
|
|
•
|
fires, explosions and blowouts;
|
|
•
|
pipe failures;
|
|
•
|
abnormally pressured formations; and
|
|
•
|
environmental accidents such as spills, leaks, ruptures or discharges of natural gas, natural gas liquids, oil, process water, well fluids or other hazardous substances into the environment (including impacts to groundwater).
|
|
•
|
injury or loss of life;
|
|
•
|
severe damage to or destruction of property, natural resources and equipment;
|
|
•
|
pollution or other environmental damage;
|
|
•
|
environmental clean-up responsibilities;
|
|
•
|
regulatory investigation;
|
|
•
|
penalties and suspension of operations; or
|
|
•
|
attorneys’ fees and other expenses incurred in the prosecution or defense of litigation.
|
|
Item 1B.
|
Unresolved Staff Comments
|
|
Item 2.
|
Properties
|
|
Facility
|
|
Function
|
|
Global Batteries & Appliances
|
|
|
|
Fennimore, Wisconsin
(1)
|
|
Alkaline Battery Manufacturing
|
|
Portage, Wisconsin
(1)
|
|
Zinc Air Button Cell and Lithium Coin Cell Battery, Foil Shaver Component Manufacturing
|
|
Deforest, Wisconsin
(2)
|
|
Distribution/Returns Center
|
|
Dischingen, Germany
(2)
|
|
Alkaline Battery Manufacturing
|
|
Washington, UK
(2)
|
|
Zinc Air Button Cell Battery Manufacturing & Distribution
|
|
Guatemala City, Guatemala
(1)
|
|
Zinc Carbon Battery Manufacturing
|
|
Jaboatao, Brazil
(1)
|
|
Zinc Carbon Battery Manufacturing
|
|
Dixon, Illinois
(2)
|
|
Battery & Lighting Device Packaging & Distribution
|
|
Ellwangen-Neunheim, Germany
(2)
|
|
Battery & Lighting Device, Electric Shaver & Personal Care Product Distribution
|
|
Redlands, California
(2)
|
|
Warehouse, Electric Shaver & Personal Care Product Distribution
|
|
Manchester, England
(1)
|
|
Warehouse and Sales and administrative office
|
|
Wolverhampton, England
(1)
|
|
Warehouse
|
|
Wolverhampton, England
(2)
|
|
Warehouse
|
|
|
|
|
|
Hardware & Home Improvement
|
|
|
|
Brockville, Canada
(2)
|
|
Hardware & Home Improvement Distribution
|
|
Charlotte, North Carolina
(2)
|
|
Hardware & Home Improvement Distribution
|
|
Cobourg, Canada
(1)
|
|
Hardware & Home Improvement Distribution
|
|
Denison, Texas
(1)
|
|
Hardware & Home Improvement Manufacturing
|
|
Fort Mill, South Carolina
(2)
|
|
Hardware & Home Improvement Manufacturing
|
|
Mexicali, Mexico
(2)
|
|
Hardware & Home Improvement Manufacturing
|
|
Mira Loma, California
(2)
|
|
Hardware & Home Improvement Distribution
|
|
Monterrey, Mexico
(1)
|
|
Hardware & Home Improvement Manufacturing, Sales and Distribution
|
|
Nogales, Mexico
(1)
|
|
Hardware & Home Improvement Manufacturing
|
|
Reading, Pennsylvania
(2)
|
|
Hardware & Home Improvement Manufacturing
|
|
Shenzhen, China
|
|
Hardware & Home Improvement Distribution and administrative office
|
|
Subic Bay, Philippines
(1)
|
|
Hardware & Home Improvement Manufacturing
|
|
Xiamen, China
(2)
|
|
Hardware & Home Improvement Manufacturing
|
|
Xiaolan, China
(1)
|
|
Hardware & Home Improvement Manufacturing
|
|
|
|
|
|
Global Pet Supplies
|
|
|
|
Noblesville, Indiana
(1)
|
|
Pet Supply Manufacturing & Distribution
|
|
Bridgeton, Missouri
(2)
|
|
Pet Supply Manufacturing
|
|
Blacksburg, Virginia
(1)
|
|
Pet Supply Manufacturing
|
|
Melle, Germany
(1)
|
|
Pet Supply Manufacturing
|
|
Melle, Germany
(2)
|
|
Pet Supply Distribution
|
|
Edwardsville, Illinois
(2)
|
|
Pet Supply Distribution
|
|
Phnom Penh, Cambodia
(2)
|
|
Pet Supply Manufacturing
|
|
Roanoke, Virginia
(2)
|
|
Pet Supply Distribution
|
|
|
|
|
|
Home and Garden Business
|
|
|
|
Vinita Park, Missouri
(2)
|
|
Household & Controls and Contract Manufacturing
|
|
Earth City, Missouri
(2)
|
|
Household & Controls Manufacturing
|
|
Item 3.
|
Legal Proceedings
|
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
|
|
High
|
|
Low
|
||||
|
Year ended September 30, 2013
|
|
|
|
|
||||
|
First Quarter
|
|
$
|
10.66
|
|
|
$
|
7.27
|
|
|
Second Quarter
|
|
8.74
|
|
|
7.44
|
|
||
|
Third Quarter
|
|
9.95
|
|
|
7.33
|
|
||
|
Fourth Quarter
|
|
10.50
|
|
|
7.36
|
|
||
|
Year ended September 30, 2012
|
|
|
|
|
||||
|
First Quarter
|
|
$
|
5.81
|
|
|
$
|
2.75
|
|
|
Second Quarter
|
|
5.24
|
|
|
4.02
|
|
||
|
Third Quarter
|
|
8.33
|
|
|
4.50
|
|
||
|
Fourth Quarter
|
|
10.85
|
|
|
7.47
|
|
||
|
Plan category
|
|
Number of securities
to be issued upon
exercise of
outstanding
options, warrants
and rights
(in thousands)
(a)
|
|
Weighted-average
exercise price of
outstanding
options, warrants
and rights
(b)
|
|
Number of securities
remaining
available for future
issuance under
equity compensation
plans (excluding
securities reflected
in column (a))
(in thousands)
(c)
|
||||
|
Equity compensation plans approved by security holders
|
|
7,432
|
|
|
$
|
3.47
|
|
|
8,887
|
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
|
7,432
|
|
|
$
|
3.47
|
|
|
8,887
|
|
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value (in millions) of Shares that May Yet be
Purchased under the Plans or Programs (1)
|
||||||
|
July 1, 2013 through July 31, 2013
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
August 1, 2013 through August 31, 2013
|
|
1,700.0
|
|
|
7.25
|
|
|
1,700.0
|
|
|
37.7
|
|
||
|
September 1, 2013 through September 30, 2013
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37.7
|
|
||
|
|
|
1,700.0
|
|
|
|
|
1,700.0
|
|
|
|
||||
|
(1)
|
On August 8, 2013, we announced that our Board had authorized a share repurchase program of up to $50 million of our stock. The manner of purchase, the number of shares to be purchased and the timing of purchases will be based on the price of HGI's common stock, general business and market conditions and applicable legal requirements, and is subject to the discretion of HGI's management. The program does not require HGI to purchase any specific number of shares or any shares at all, and may be suspended, discontinued or re-instituted at any time without prior notice.
|
|
Item 6.
|
Selected Financial Data
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||||||||||
|
|
|
Year ended September 30,
|
|
Period from
August 31,
2009 through
September 30,
2009
|
|
|
Period from
October 1,
2008 through
August 30,
2009
|
||||||||||||||||||
|
|
|
2013
(1)
|
|
2012
|
|
2011
(2)
|
|
2010
(3)
|
|
|
|
||||||||||||||
|
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Revenues
|
|
$
|
5,543.4
|
|
|
$
|
4,480.7
|
|
|
$
|
3,477.8
|
|
|
$
|
2,567.0
|
|
|
$
|
219.9
|
|
|
|
$
|
2,010.6
|
|
|
Operating income
(4)(5)
|
|
737.4
|
|
|
409.5
|
|
|
163.7
|
|
|
160.5
|
|
|
0.1
|
|
|
|
156.8
|
|
||||||
|
(Loss) income from continuing operations
|
|
(69.0
|
)
|
|
110.7
|
|
|
7.4
|
|
|
(195.5
|
)
|
|
(71.2
|
)
|
|
|
1,100.7
|
|
||||||
|
(Loss) income from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.7
|
)
|
|
0.4
|
|
|
|
(86.8
|
)
|
||||||
|
Net (loss) income
(6)
|
|
(69.0
|
)
|
|
110.7
|
|
|
7.4
|
|
|
(198.2
|
)
|
|
(70.8
|
)
|
|
|
1,013.9
|
|
||||||
|
Net (loss) income attributable to common and participating preferred stockholders
(6)
|
|
(94.2
|
)
|
|
29.9
|
|
|
22.2
|
|
|
(151.9
|
)
|
|
(70.8
|
)
|
|
|
1,013.9
|
|
||||||
|
Restructuring and related charges —
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Cost of goods sold
(7)
|
|
10.0
|
|
|
$
|
9.8
|
|
|
$
|
7.8
|
|
|
$
|
7.1
|
|
|
$
|
0.2
|
|
|
|
$
|
13.2
|
|
|
|
Selling, general and administrative expenses
(7)
|
|
24.0
|
|
|
9.8
|
|
|
20.8
|
|
|
17.0
|
|
|
1.6
|
|
|
|
30.9
|
|
||||||
|
Interest expense
(8)
|
|
(511.9
|
)
|
|
(251.0
|
)
|
|
(249.3
|
)
|
|
(277.0
|
)
|
|
(17.0
|
)
|
|
|
(172.9
|
)
|
||||||
|
(Loss) gain from the change in the fair value of the equity conversion feature of preferred stock
|
|
(101.6
|
)
|
|
(156.6
|
)
|
|
27.9
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
|
Bargain purchase gain from business acquisition
|
|
—
|
|
|
—
|
|
|
158.3
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
|
Gain on contingent purchase price reduction
|
|
—
|
|
|
41.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
|
Reorganization items (expense) income
(9)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.6
|
)
|
|
(4.0
|
)
|
|
|
1,142.8
|
|
||||||
|
Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Net (loss) income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Basic
|
|
$
|
(0.67
|
)
|
|
$
|
0.15
|
|
|
$
|
0.11
|
|
|
$
|
(1.15
|
)
|
|
$
|
(0.55
|
)
|
|
|
$
|
19.76
|
|
|
Diluted
(10)
|
|
(0.67
|
)
|
|
0.15
|
|
|
0.09
|
|
|
(1.15
|
)
|
|
(0.55
|
)
|
|
|
19.76
|
|
||||||
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Basic
|
|
139.9
|
|
|
139.4
|
|
|
139.2
|
|
|
132.4
|
|
|
129.6
|
|
|
|
51.3
|
|
||||||
|
Diluted
(10)
|
|
139.9
|
|
|
139.8
|
|
|
158.4
|
|
|
132.4
|
|
|
129.6
|
|
|
|
51.3
|
|
||||||
|
Cash Flow and Related Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Net cash provided by operating activities
|
|
$
|
522.3
|
|
|
$
|
618.7
|
|
|
$
|
153.1
|
|
|
$
|
51.2
|
|
|
$
|
75.0
|
|
|
|
$
|
1.6
|
|
|
Capital expenditures
(11)
|
|
100.1
|
|
|
53.5
|
|
|
38.2
|
|
|
40.4
|
|
|
2.7
|
|
|
|
8.1
|
|
||||||
|
Depreciation and amortization
|
|
358.6
|
|
|
268.2
|
|
|
95.5
|
|
|
100.7
|
|
|
8.6
|
|
|
|
55.8
|
|
||||||
|
Balance Sheet Data (at year end):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Cash and cash equivalents
|
|
$
|
1,899.7
|
|
|
$
|
1,470.7
|
|
|
$
|
1,137.4
|
|
|
$
|
256.8
|
|
|
$
|
97.8
|
|
|
|
|
||
|
Total assets
|
|
27,908.8
|
|
|
25,200.5
|
|
|
23,590.9
|
|
|
4,016.2
|
|
|
3,020.7
|
|
|
|
|
|||||||
|
Total long-term debt, net of current portion
|
|
4,793.2
|
|
|
2,150.6
|
|
|
2,127.7
|
|
|
1,723.1
|
|
|
1,530.0
|
|
|
|
|
|||||||
|
Total debt
|
|
4,896.1
|
|
|
2,167.0
|
|
|
2,143.8
|
|
|
1,743.8
|
|
|
1,583.5
|
|
|
|
|
|||||||
|
Total stockholders’ equity
|
|
1,133.5
|
|
|
1,177.6
|
|
|
895.4
|
|
|
701.7
|
|
|
660.9
|
|
|
|
|
|||||||
|
(1)
|
Fiscal 2013 includes the results of the Hardware Acquisition’s operations since December 30, 2013, and the results of the EXCO/HGI JV’s operations since its inception on February 14, 2013. The Hardware Acquisition contributed
$869.6 million
in revenues and recorded an operating profit of
$88.7 million
for the period from December 30, 2012 through September 30, 2013. The EXCO/HGI JV contributed
$90.2 million
in revenues and recorded an operating loss of
$45.2 million
for the period from February 14, 2013 through September 30, 2013. Fiscal 2013 also includes
$62.4 million
of acquisition and integration related charges principally associated with the Hardware Acquisition and the acquisition of the EXCO/HGI JV.
|
|
(2)
|
Fiscal 2011 includes the results of FGH’s operations since April 6, 2011. FGH contributed
$290.8 million
in revenues and recorded an operating loss of $18.0 million for the period from April 6, 2011 through September 30, 2011. Fiscal 2011 also includes
$63.6 million
of acquisition and integration related charges principally associated with the SB/RH Merger and the acquisition of FGH.
|
|
(3)
|
Fiscal 2010 includes the results of Russell Hobbs’ operations since June 16, 2010. Russell Hobbs contributed $238.0 million in net sales and recorded operating income of $1.0 million for the period from June 16, 2010 through September 30, 2010, which includes $13.0 million of acquisition and integration related charges. Fiscal 2010 also includes $26.0 million of acquisition and integration related charges associated with the SB/RH Merger. In addition, the results of HGI’s operations have been included since June 16, 2010, the date that common control was first established, which includes $8.0 million of operating expenses.
|
|
(4)
|
Pursuant to Rule 4-10(c)(4) of Regulation S-X, the EXCO/HGI JV was required to compute its ceiling test using the simple average spot price for the trailing twelve month period for oil and natural gas as of
September 30, 2013
, but requested, and received, an exemption from the SEC to exclude the acquisition of these oil and gas properties from the ceiling test assessments for a period of twelve months following the corresponding acquisition dates. During the ceiling test exemption period, the EXCO/HGI JV assessed the properties for potential impairment due to an other than temporary trend that would negatively impact the fair value. The EXCO/HGI JV evaluated these properties for impairment using discounted cash flow models based on internally generated oil and natural gas reserves as of September 30, 2013. The pricing utilized in these models was based on NYMEX futures in a manner consistent with the aforementioned pricing for acquisitions. As a result of this evaluation, the EXCO/HGI JV recognized an impairment of
$54.3 million
to proved oil and natural gas properties based on the excess of unamortized costs over the fair value of
September 30, 2013
. The impairment was primarily due to downward revisions in the oil and natural gas reserves due to recent drilling results, modifications to our development plans, and a decline in natural gas futures prices.
|
|
(5)
|
Pursuant to the guidance in Financial Accounting Standards Board Codification Topic 350:
“Intangibles-Goodwill and Other,”
Spectrum Brands conducts its annual impairment testing of goodwill and indefinite-lived intangible assets. As a result of these analyses, Spectrum Brands recorded non-cash pretax impairment charges of approximately $32.5 million and $34.0 million in Fiscal 2011, and the period from October 1, 2008 through August 30, 2009, respectively. See
Note 13
, Goodwill and Intangibles, of Notes to Consolidated Financial Statements included elsewhere in this report for further details on impairment charges.
|
|
(6)
|
Fiscal 2013 income tax expense of
$187.3 million
includes a non-cash charge of approximately
$152.8 million
resulting from an increase in the valuation allowance against certain net deferred tax assets. Fiscal 2012 income tax benefit of
$85.3 million
includes a non-cash benefit of approximately $142.1 million resulting from a decrease in the valuation allowance against certain net deferred tax assets. Fiscal 2011 income tax expense of
$50.6 million
includes a non-cash charge of approximately $72.3 million resulting from an increase in the valuation allowance against certain net deferred tax assets. Fiscal 2010 income tax expense of $63.2 million includes a non-cash charge of approximately $92.7 million resulting from an increase in the valuation allowance against certain net deferred tax assets. Included in the period from August 31, 2009 through September 30, 2009 is a non-cash tax charge of $58.0 million related to the residual U.S. and foreign taxes on approximately $166 million of actual and deemed distributions of foreign earnings. Income tax expense for the Predecessor for the period from October 1, 2008 through August 30, 2009 includes a non-cash adjustment of approximately $52.1 million resulting from a reduction in the valuation allowance against certain deferred tax assets. Included in income tax expense for the period from October 1, 2008 through August 30, 2009 is a non-cash charge of $104.0 million related to the tax effects of the fresh start adjustments. In addition, income tax expense for the Predecessor for the period includes the tax effect of the gain on the cancellation of debt from the extinguishment of the senior subordinated notes as well as the modification of the senior term credit facility. The tax effect of these gains increased Spectrum Brands’ U.S. net deferred tax asset exclusive of indefinite lived intangibles by approximately $124.0 million. However due to Spectrum Brands’ full valuation allowance on the U.S. net deferred tax asset exclusive of indefinite lived intangibles as of August 30, 2009, the tax effect of the gain on the cancellation of debt and the modification of the senior secured credit facility was offset by a corresponding adjustment to increase the valuation allowance for deferred tax assets by $124.0 million. The tax effect of the fresh start adjustments, the gain on the cancellation of debt and the modification of the senior secured credit facility, net of corresponding adjustments to the valuation allowance, are netted against reorganization items.
|
|
(7)
|
See
Note 24
, Restructuring and Related Charges, of Notes to Consolidated Financial Statements included elsewhere in this report for further discussion.
|
|
(8)
|
Fiscal 2013, 2012, 2011 and 2010 interest expense includes charges totaling $210.1 million, $31.7 million, $37.5 million and $82.7 million, respectively, relating to the refinancing, prepayment and/or amendment of various senior debt. Such charges include cash fees and expenses of $181.2 million, $26.4 million, $5.6 million and $17.0 million, respectively, and non-cash charges for write-off and accelerated amortization of unamortized debt issuance costs and discount/premium of $28.9 million, $5.3 million, $31.9 million and $65.7 million, respectively.
|
|
(9)
|
Reorganization items (expense) income directly relates to Spectrum Brands’ voluntary reorganization under Chapter 11 of the Bankruptcy Code that commenced in February 2009 and concluded in August 2009. In addition to administrative costs related to the reorganization, it reflects during the eleven months ended August 30, 2009, a $1.1 billion gain from fresh-start reporting adjustments and a $147.0 million gain on cancellation of debt.
|
|
(10)
|
In Fiscal 2013, diluted weighted average common shares outstanding do not reflect any conversion effect of the preferred stock or the exercise of dilutive common stock equivalents as both would be antidilutive. For Fiscal 2012, diluted weighted average common shares outstanding assumes only the exercise of dilutive common stock equivalents as the
|
|
(11)
|
Amounts reflect the results of continuing operations only.
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
•
|
In December 2012, we issued $700.0 million aggregate principal amount 7.875% Senior Secured Notes due 2019 (the “7.875% Notes”) and used part of the proceeds of the offering to accept for purchase $498.0 million aggregate principal amount of our 10.625% Senior Secured Notes due 2015 (the “10.625% Notes”) pursuant to a tender offer (the “Tender Offer”) for the 10.625% Notes. The remaining 10.625% Notes were redeemed by the trustee on January 23, 2013. The remainder of the proceeds of the issuance of the 7.875% Notes was used for working capital by the Company and its subsidiaries and for general corporate purposes, including the financing of future acquisitions and businesses. In July 2013, the initial offering of 7.7875% Notes were supplemented by a further issuance of $225.0 million aggregate principal amount of the 7.875% Notes (the “New Notes”.) The New Notes were issued under the same indenture governing the 7.875% Notes by and between the Company and Wells Fargo Bank, National Association, a national banking association, as trustee. The New Notes were priced at 101.50% of par plus accrued interest from July 15, 2013.
|
|
•
|
In December 2012, we assisted the HCP Stockholders with the closing of a secondary offering of 20.0 million shares of common stock at a price to the public of $7.50 per share, increasing our public float and broadening our shareholder base. In addition, in January 2013, the underwriters exercised their option to purchase an additional 3.0 million shares of common stock from the HCP Stockholders. We did not receive any proceeds from the sale of shares in this offering.
|
|
•
|
In February 2013, we finalized a joint venture with EXCO to create the EXCO/HGI JV. The EXCO/HGI JV purchased and will operate certain of EXCO’s producing U.S. conventional oil and natural gas assets in the Permian Basin, East Texas and North Louisiana.
|
|
•
|
In September 30, 2013, we repurchased 1,700.0 thousand shares of our common stock at a price of $7.25 per share from the HCP Stockholders under our $50.0 million share repurchase program.
|
|
•
|
In December 2012, Spectrum Brands acquired the residential hardware and home improvement business (the “HHI Business”) from Stanley Black & Decker, Inc. (“Stanley Black & Decker”) (the “Hardware Acquisition”). The Hardware Acquisition is expected to enhance Spectrum Brand’s top-line growth, margins and free cash flow profile, while providing added scale, greater product diversity and attractive cross-selling opportunities.
|
|
•
|
In December 2012, Spectrum Brands assumed from Spectrum Brands Escrow Corp. $520.0 million aggregate principal amount of 6.375% Senior Notes due 2020 (the “6.375% Notes”) and $570.0 million aggregate principal amount of 6.625% Senior Notes due 2022 (the “6.625% Notes”), in connection with the Hardware Acquisition. Spectrum Brands used the net proceeds from the offering to fund a portion of the purchase price and related fees and expenses for the Hardware Acquisition. Spectrum Brands financed the remaining portion of the Hardware Acquisition with a new $800.0 million term loan facility, of which $100.0 million is in Canadian dollar equivalents (the “HHI Term Loan”). A portion of the HHI Term Loan proceeds were also used to refinance the former term loan facility, maturing June 17, 2016, which had an aggregate amount outstanding of $370.2 million prior to refinancing.
|
|
•
|
In April 2013, the Company completed the acquisition of certain assets of Tong Lung Metal Industry Co. Ltd., a Taiwan Corporation (“TLM Taiwan”), completing the Hardware Acquisition. TLM Taiwan is involved in the production of residential locksets.
|
|
•
|
In September 2013, Spectrum Brands, announced that it had closed on $1.15 billion of term loans (the “New Term Loans”, and together with the HHI Term Loan, the “Term Loan”) pursuant to the New Term Loan Commitment Agreement No. 1 among Spectrum Brands, the lenders party thereto, and Deutsche Bank AG New York Branch, as administrative agent (the “Term Administrative Agent”). The proceeds of the New Term Loans were used (i) to fund the consummation of Spectrum Brands cash tender offer and consent solicitation (the “Tender Offer and Consent Solicitation”) to purchase any and all of its outstanding 9.5% Senior Secured Notes due 2018 (the “9.5% Notes”), (ii) to fund the satisfaction and discharge of the
|
|
•
|
In December 2012, Fidelity & Guaranty Life Holdings, Inc.,”FGH” (formerly, Old Mutual U.S. Life Holdings, Inc.) entered into a coinsurance agreement (the “Reinsurance Agreement”) with Front Street Re (Cayman) Ltd. (“Front Street Cayman”), also an indirect subsidiary of the Company. Pursuant to the Reinsurance Agreement, Front Street Cayman has reinsured approximately 10%, or approximately $1.5 billion of FGH’s policy liabilities, on a funds-withheld basis.
|
|
•
|
In March 2013, FGH issued $300.0 million aggregate principal amount of their 6.375% senior notes, due April 1, 2021, at par value (the “FGL Notes”.) FGH used a portion of the net proceeds from the issuance to pay a special dividend to HGI and expects to use the remainder for general corporate purposes, to support the growth of its subsidiary life insurance company.
|
|
•
|
In August 2013, FGL filed a registration statement on Form S-1 with the SEC relating to a proposed initial public offering of its common stock. All of the shares will be offered by the issuer, FGL. We are not a selling stockholder in the offering.
|
|
•
|
Immediately following closing of the EXCO/HGI JV, the EXCO/HGI JV entered into an agreement to purchase all of the shallow Cotton Valley assets from an affiliate of BG Group, for
$130.7 million
, after customary closing adjustments. The transaction closed on March 5, 2013 and was funded with borrowings from the EXCO/HGI JV Credit Agreement. In connection with the acquisition of the properties from BG Group, the EXCO/HGI JV received an increase to the borrowing base to
$470.0 million
under the EXCO/HGI JV Credit Agreement.
|
|
•
|
Salus originated $779.5 million of new asset-based loan commitments in the
Fiscal 2013
and had
$560.4 million
of loans outstanding as of
September 30, 2013
.
|
|
•
|
In February 2013, Salus announced the closing of Salus CLO 2012-1, Ltd., a collateralized loan obligation (“CLO”) vehicle providing for the issuance of up to
$250.0 million
in collateralized obligations, initially funded with
$175.5 million
of the asset-based loans that Salus had originated through that date. In September 2013 Salus announced the closing of an additional
$300.0 million
note issuance by the CLO, bringing the aggregate amount of notes issued by the CLO to
$550.0 million
. In connection with this transaction, Salus and its affiliates funded the upsize of the CLO with an additional
$167.0 million
contribution from its portfolio of asset-based loans.
|
|
•
|
In connection with the Reinsurance Agreement, Front Street Cayman, FGH and Five Island, also entered into an investment management agreement, pursuant to which Five Island manages a portion of the assets securing Front Street Cayman’s reinsurance obligations under the Reinsurance Agreement, which assets are held by FGL in a segregated account. The assets in the segregated account are invested in accordance with FGL’s existing guidelines.
|
|
•
|
Net loss attributable to common and participating preferred stockholders
decreased
to
$94.2 million
, or
$0.67
per common share attributable to controlling interest (
$0.67
diluted), compared to net income attributable to common and participating preferred stockholders of
$29.9 million
, or
$0.15
per common share attributable to controlling interest (
$0.15
diluted), in
Fiscal 2012
.
|
|
•
|
Our Fiscal
2013
results include the following items:
|
|
◦
|
$248.0 million
of realized investment gains in our Insurance segment; offset by,
|
|
◦
|
a
$101.6 million
loss from the change in the fair value of the equity conversion feature of preferred stock which was the result of an
23.0%
increase
in our stock price from
$8.43
to
$10.37
per share during
Fiscal 2013
;
|
|
◦
|
a
$260.9 million
increase in interest expense, that was primarily due to acquisition and other financing, along with refinancing to lower interest rate debt;
|
|
◦
|
tax expense of
$187.3 million
was primarily driven b
y; which was primarily driven by: (i) the profitability of FGL’s life insurance business; (ii) pre-tax losses in the United States and some foreign jurisdictions for which the tax benefits are offset by valuation allowances; (iii) an increase in the fair value of the equity conversion feature of the Preferred Stock with no tax benefit; (iv) tax amortization of certain indefinite lived intangibles; and (v) tax expense on income in certain foreign jurisdictions for which the Company will not receive tax credits in the United
|
|
◦
|
an impairment of oil and natural gas properties of
$54.3 million
from inception to the period ended
September 30, 2013
, primarily due to recent drilling results, modifications to our development plans, and a decline in natural gas futures prices.
|
|
•
|
We ended the year with corporate cash and investments of approximately
$301.2 million
(primarily held at HGI and HGI Funding, LLC).
|
|
•
|
Our Consumer Product’s operating profit for
Fiscal 2013
increased
$49.4 million
, or
16.4%
, to
$351.2 million
from
$301.8 million
for
Fiscal 2012
. Our Consumer Products segment’s adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”)
increased
by
$8.7 million
, or
1.3%
, to
$677.1 million
versus
Fiscal 2012
primarily due to higher sales, synergy benefits and cost reduction initiatives. Adjusted EBITDA margin represented
15.8%
of sales as compared to
15.8%
in
Fiscal 2012
. See Non-GAAP measures below for more details.
|
|
•
|
Our Insurance segment’s operating profit for the
Fiscal 2013
increased
$363.0 million
, to
$522.9 million
from an operating income of
$159.9 million
for the
Fiscal 2012
. Our Insurance segment’s adjusted operating income (“Insurance AOI”)
increased
by
$163.5 million
, or
282.4%
, to
$221.4 million
versus the
Fiscal 2012
, primarily as a result of annual assumption changes made to the surrender rates, earned rates and future index credits used in the FIA embedded derivative reserve calculation, immediate annuity mortality gains caused by large case deaths, and the non-recurrence of an charge for an estimated unreported death claims liability, net of reinsurance, recorded in Fiscal 2012. See Non-GAAP measures below for more details.
|
|
•
|
Our Energy segment’s oil and natural gas revenues were
$90.2 million
for
Fiscal 2013
. Operating loss for
Fiscal 2013
was
$45.2 million
, primarily as the result of the
$54.3 million
impairment of oil and natural gas properties. The Energy segment’s adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA-Energy") for the
Fiscal 2013
was
$39.6 million
. For
Fiscal 2013
, the Energy segment's production was
283.0
MBbl of oil,
300.0
MBbl of natural gas liquids and
14,570.0
Mmcf of natural gas.
|
|
•
|
Our Financial Services segment contributed approximately
$28.9 million
to our consolidated revenues for
Fiscal 2013
from the operations of Salus and Five Island together, gross of revenue from affiliated entities. The Financial Services segment had net income for the
Fiscal 2013
of
$6.2 million
.
|
|
•
|
Through the
year ended September 30, 2013
, we received dividends of approximately
$127.1 million
from our respective subsidiaries, including
$93.0 million
,
$22.8 million
,
$7.5 million
and
$3.8 million
from FGL, Spectrum Brands, the EXCO/HGI JV 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.
|
|
|
Fiscal
|
|
Increase / (Decrease)
|
||||||||||||||||
|
|
2013
|
|
2012
|
|
2011
|
|
2013 compared to 2012
|
|
2012 compared to 2011
|
||||||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Consumer Products
|
$
|
4,085.6
|
|
|
$
|
3,252.4
|
|
|
$
|
3,186.9
|
|
|
$
|
833.2
|
|
|
$
|
65.5
|
|
|
Insurance
|
1,348.4
|
|
|
1,221.8
|
|
|
290.8
|
|
|
126.6
|
|
|
931.0
|
|
|||||
|
Energy
|
90.2
|
|
|
—
|
|
|
—
|
|
|
90.2
|
|
|
—
|
|
|||||
|
Financial Services
|
28.9
|
|
|
8.6
|
|
|
—
|
|
|
20.3
|
|
|
8.6
|
|
|||||
|
Intersegment elimination
|
(9.7
|
)
|
|
(2.1
|
)
|
|
—
|
|
|
(7.6
|
)
|
|
(2.1
|
)
|
|||||
|
Consolidated revenues
|
$
|
5,543.4
|
|
|
$
|
4,480.7
|
|
|
$
|
3,477.7
|
|
|
$
|
1,062.7
|
|
|
$
|
1,003.0
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Operating income (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Consumer Products
|
$
|
351.2
|
|
|
$
|
301.8
|
|
|
$
|
227.9
|
|
|
$
|
49.4
|
|
|
$
|
73.9
|
|
|
Insurance
|
522.9
|
|
|
159.9
|
|
|
(41.5
|
)
|
|
363.0
|
|
|
201.4
|
|
|||||
|
Energy
|
(45.2
|
)
|
|
—
|
|
|
—
|
|
|
(45.2
|
)
|
|
—
|
|
|||||
|
Financial Services
|
10.4
|
|
|
2.5
|
|
|
—
|
|
|
7.9
|
|
|
2.5
|
|
|||||
|
Intersegment elimination
|
(10.9
|
)
|
|
(2.1
|
)
|
|
—
|
|
|
(8.8
|
)
|
|
(2.1
|
)
|
|||||
|
Total segments
|
828.4
|
|
|
462.1
|
|
|
186.4
|
|
|
366.3
|
|
|
275.7
|
|
|||||
|
Corporate and Other
|
(91.0
|
)
|
|
(52.6
|
)
|
|
(22.7
|
)
|
|
(38.4
|
)
|
|
(29.9
|
)
|
|||||
|
Consolidated operating income
|
737.4
|
|
|
409.5
|
|
|
163.7
|
|
|
327.9
|
|
|
245.8
|
|
|||||
|
Interest expense
|
(511.9
|
)
|
|
(251.0
|
)
|
|
(249.3
|
)
|
|
(260.9
|
)
|
|
(1.7
|
)
|
|||||
|
(Loss) gain from the change in the fair value of the equity conversion feature of preferred stock
|
(101.6
|
)
|
|
(156.6
|
)
|
|
27.9
|
|
|
55.0
|
|
|
(184.5
|
)
|
|||||
|
Bargain purchase gain from business acquisition
|
—
|
|
|
—
|
|
|
158.3
|
|
|
—
|
|
|
(158.3
|
)
|
|||||
|
Gain on contingent purchase price reduction
|
—
|
|
|
41.0
|
|
|
—
|
|
|
(41.0
|
)
|
|
41.0
|
|
|||||
|
Other expense, net
|
(5.6
|
)
|
|
(17.5
|
)
|
|
(42.7
|
)
|
|
11.9
|
|
|
25.2
|
|
|||||
|
Consolidated (loss) income from continuing operations before income taxes
|
118.3
|
|
|
25.4
|
|
|
57.9
|
|
|
92.9
|
|
|
(32.5
|
)
|
|||||
|
Income tax expense (benefit)
|
187.3
|
|
|
(85.3
|
)
|
|
50.6
|
|
|
272.6
|
|
|
(135.9
|
)
|
|||||
|
Net (loss) income
|
(69.0
|
)
|
|
110.7
|
|
|
7.3
|
|
|
(179.7
|
)
|
|
103.4
|
|
|||||
|
Less: Net (loss) income attributable to noncontrolling interest
|
(23.2
|
)
|
|
21.2
|
|
|
(34.7
|
)
|
|
(44.4
|
)
|
|
55.9
|
|
|||||
|
Net (loss) income attributable to controlling interest
|
(45.8
|
)
|
|
89.5
|
|
|
42.0
|
|
|
(135.3
|
)
|
|
47.5
|
|
|||||
|
Less: Preferred stock dividends and accretion
|
48.4
|
|
|
59.6
|
|
|
19.8
|
|
|
(11.2
|
)
|
|
39.8
|
|
|||||
|
Net (loss) income attributable to common and participating preferred stockholders
|
$
|
(94.2
|
)
|
|
$
|
29.9
|
|
|
$
|
22.2
|
|
|
$
|
(124.1
|
)
|
|
$
|
7.7
|
|
|
|
|
Fiscal
|
|
Increase / (Decrease)
|
||||||||||||||||
|
|
|
2013
|
|
2012
|
|
2011
|
|
2013 compared to 2012
|
|
2012 compared to 2011
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net consumer product sales
|
|
$
|
4,085.6
|
|
|
$
|
3,252.4
|
|
|
$
|
3,186.9
|
|
|
$
|
833.2
|
|
|
$
|
65.5
|
|
|
Consumer products cost of goods sold
|
|
2,695.3
|
|
|
2,136.8
|
|
|
2,058.0
|
|
|
558.5
|
|
|
78.8
|
|
|||||
|
Consumer products gross profit
|
|
1,390.3
|
|
|
1,115.6
|
|
|
1,128.9
|
|
|
274.7
|
|
|
(13.3
|
)
|
|||||
|
Selling, acquisition, operating and general expenses
|
|
961.3
|
|
|
750.1
|
|
|
843.3
|
|
|
211.2
|
|
|
(93.2
|
)
|
|||||
|
Amortization of intangibles
|
|
77.8
|
|
|
63.7
|
|
|
57.7
|
|
|
14.1
|
|
|
6.0
|
|
|||||
|
Operating income (loss) - Consumer Products segment
|
|
$
|
351.2
|
|
|
$
|
301.8
|
|
|
$
|
227.9
|
|
|
$
|
49.4
|
|
|
$
|
73.9
|
|
|
|
|
Fiscal
|
|
Increase (Decrease)
|
||||||||||||||||
|
Product line net sales
|
|
2013
|
|
2012
|
|
2011
|
|
2013 compared to 2012
|
|
2012 compared to 2011
|
||||||||||
|
Consumer batteries
|
|
$
|
931.7
|
|
|
$
|
948.6
|
|
|
$
|
953.3
|
|
|
$
|
(16.9
|
)
|
|
$
|
(4.7
|
)
|
|
Small appliances
|
|
740.3
|
|
|
771.6
|
|
|
777.8
|
|
|
(31.3
|
)
|
|
(6.2
|
)
|
|||||
|
Hardware and home improvement products
|
|
869.6
|
|
|
—
|
|
|
—
|
|
|
869.6
|
|
|
—
|
|
|||||
|
Pet supplies
|
|
621.8
|
|
|
615.5
|
|
|
578.9
|
|
|
6.3
|
|
|
36.6
|
|
|||||
|
Home and garden control products
|
|
390.5
|
|
|
387.0
|
|
|
353.9
|
|
|
3.5
|
|
|
33.1
|
|
|||||
|
Electric shaving and grooming products
|
|
276.8
|
|
|
279.5
|
|
|
274.6
|
|
|
(2.7
|
)
|
|
4.9
|
|
|||||
|
Electric personal care products
|
|
254.9
|
|
|
250.2
|
|
|
248.4
|
|
|
4.7
|
|
|
1.8
|
|
|||||
|
Total net sales to external customers
|
|
$
|
4,085.6
|
|
|
$
|
3,252.4
|
|
|
$
|
3,186.9
|
|
|
$
|
833.2
|
|
|
$
|
65.5
|
|
|
|
Fiscal
|
|
Increase / (Decrease)
|
||||||||||||||||
|
|
2013
|
|
2012
|
|
2011
|
|
2013 compared to 2012
|
|
2012 compared to 2011
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Insurance premiums
|
$
|
58.8
|
|
|
$
|
55.3
|
|
|
$
|
39.0
|
|
|
$
|
3.5
|
|
|
$
|
16.3
|
|
|
Net investment income
|
715.5
|
|
|
716.2
|
|
|
369.8
|
|
|
(0.7
|
)
|
|
346.4
|
|
|||||
|
Net investment gains (losses)
|
511.6
|
|
|
410.0
|
|
|
(166.9
|
)
|
|
101.6
|
|
|
576.9
|
|
|||||
|
Insurance and investment product fees and other
|
62.5
|
|
|
40.3
|
|
|
48.9
|
|
|
22.2
|
|
|
(8.6
|
)
|
|||||
|
Total Insurance segment revenues
|
1,348.4
|
|
|
1,221.8
|
|
|
290.8
|
|
|
126.6
|
|
|
931.0
|
|
|||||
|
Benefits and other changes in policy reserves
|
531.8
|
|
|
777.4
|
|
|
247.6
|
|
|
(245.6
|
)
|
|
529.8
|
|
|||||
|
Acquisition, operating and general expenses, net of deferrals
|
111.4
|
|
|
123.9
|
|
|
95.8
|
|
|
(12.5
|
)
|
|
28.1
|
|
|||||
|
Amortization of intangibles
|
182.3
|
|
|
160.6
|
|
|
(11.1
|
)
|
|
21.7
|
|
|
171.7
|
|
|||||
|
Total Insurance segment operating costs and expenses
|
825.5
|
|
|
1,061.9
|
|
|
332.3
|
|
|
(236.4
|
)
|
|
729.6
|
|
|||||
|
Operating income - Insurance segment
|
$
|
522.9
|
|
|
$
|
159.9
|
|
|
$
|
(41.5
|
)
|
|
$
|
363.0
|
|
|
$
|
201.4
|
|
|
|
Fiscal
|
|||||||
|
|
2013
|
|
2012
|
|
2011
|
|||
|
Average yield on invested assets
|
4.36
|
%
|
|
4.52
|
%
|
|
4.51
|
%
|
|
Less: Interest credited and option cost
|
3.10
|
%
|
|
3.24
|
%
|
|
3.27
|
%
|
|
Net investment spread
|
1.26
|
%
|
|
1.28
|
%
|
|
1.24
|
%
|
|
|
Fiscal
|
|
Increase / (Decrease)
|
||||||||||||||||
|
|
2013
|
|
2012
|
|
2011
|
|
2013 compared to 2012
|
|
2012 compared to 2011
|
||||||||||
|
Call options:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Gain (loss) on option expiration
|
$
|
131.2
|
|
|
$
|
(53.0
|
)
|
|
$
|
(23.2
|
)
|
|
$
|
184.2
|
|
|
$
|
(29.8
|
)
|
|
Change in unrealized gain (loss)
|
20.4
|
|
|
153.0
|
|
|
(119.5
|
)
|
|
(132.6
|
)
|
|
272.5
|
|
|||||
|
Futures contracts:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Gain (loss) on futures contracts expiration
|
17.4
|
|
|
42.6
|
|
|
(21.4
|
)
|
|
(25.2
|
)
|
|
64.0
|
|
|||||
|
Change in unrealized gain (loss)
|
0.1
|
|
|
3.4
|
|
|
(6.7
|
)
|
|
(3.3
|
)
|
|
10.1
|
|
|||||
|
|
$
|
169.1
|
|
|
$
|
146.0
|
|
|
$
|
(170.8
|
)
|
|
$
|
23.1
|
|
|
$
|
316.8
|
|
|
|
Fiscal
|
|||||||
|
|
2013
|
|
2012
|
|
2011
|
|||
|
S&P 500 Index:
|
|
|
|
|
|
|||
|
Point-to-point strategy
|
5.25
|
%
|
|
2.68
|
%
|
|
4.63
|
%
|
|
Monthly average strategy
|
4.95
|
%
|
|
1.84
|
%
|
|
4.03
|
%
|
|
Monthly point-to-point strategy
|
4.58
|
%
|
|
0.45
|
%
|
|
2.69
|
%
|
|
3 Year high water mark
|
23.28
|
%
|
|
17.51
|
%
|
|
0.04
|
%
|
|
|
Fiscal
|
|
Increase / (Decrease)
|
||||||||||||||||
|
|
2013
|
|
2012
|
|
2011
|
|
2013 compared to 2012
|
|
2012 compared to 2011
|
||||||||||
|
FIA market value option liability
|
$
|
12.2
|
|
|
$
|
177.9
|
|
|
$
|
(263.6
|
)
|
|
$
|
(165.7
|
)
|
|
$
|
441.5
|
|
|
FIA present value future credits & guarantee liability change
|
(215.6
|
)
|
|
7.0
|
|
|
121.1
|
|
|
(222.6
|
)
|
|
(114.1
|
)
|
|||||
|
Index credits, interest credited & bonuses
|
572.7
|
|
|
382.4
|
|
|
292.0
|
|
|
190.3
|
|
|
90.4
|
|
|||||
|
Annuity Payments
|
225.2
|
|
|
241.7
|
|
|
126.4
|
|
|
(16.5
|
)
|
|
115.3
|
|
|||||
|
Other policy benefits and reserve movements
|
(62.7
|
)
|
|
(31.6
|
)
|
|
(28.3
|
)
|
|
(31.1
|
)
|
|
(3.3
|
)
|
|||||
|
Total benefits and other changes in policy reserves
|
$
|
531.8
|
|
|
$
|
777.4
|
|
|
$
|
247.6
|
|
|
$
|
(245.6
|
)
|
|
$
|
529.8
|
|
|
|
Fiscal
|
||
|
|
2013
|
||
|
Oil and natural gas revenues
|
$
|
90.2
|
|
|
Oil and natural gas direct operating costs
|
44.0
|
|
|
|
Oil and natural gas operating margin
|
46.2
|
|
|
|
Acquisition, operating and general expenses, net of deferrals
|
37.1
|
|
|
|
Impairment of oil and natural gas properties
|
54.3
|
|
|
|
Operating loss - Energy segment
|
$
|
(45.2
|
)
|
|
|
|
For the period from inception to September 30,
|
||
|
(dollars in millions, except per unit prices)
|
|
2013
|
||
|
Production:
|
|
|
||
|
Oil (Mbbls)
|
|
283.0
|
|
|
|
Natural gas liquids (Mbbls)
|
|
300.0
|
|
|
|
Natural gas (Mmcf)
|
|
14,570.0
|
|
|
|
Total production (Mmcfe) (1)
|
|
18,068.0
|
|
|
|
Average daily production (Mmcfe)
|
|
79.2
|
|
|
|
Revenues before derivative financial instrument activities:
|
||||
|
Oil
|
|
$
|
26.8
|
|
|
Natural gas liquids
|
|
11.4
|
|
|
|
Natural gas
|
|
52.0
|
|
|
|
Total revenues
|
|
$
|
90.2
|
|
|
Oil and natural gas derivative financial instruments:
|
||||
|
Loss on derivative financial instruments
|
|
$
|
(1.3
|
)
|
|
Average sales price (before cash settlements of derivative financial instruments):
|
||||
|
Oil (per Bbl)
|
|
$
|
94.63
|
|
|
Natural gas liquids (per Bbl)
|
|
38.11
|
|
|
|
Natural gas (per Mcf)
|
|
3.57
|
|
|
|
Natural gas equivalent (per Mcfe)
|
|
4.99
|
|
|
|
Costs and expenses (per Mcfe):
|
|
|
||
|
Oil and natural gas operating costs
|
|
$
|
1.50
|
|
|
Production and ad valorem taxes
|
|
0.55
|
|
|
|
Gathering and transportation
|
|
0.39
|
|
|
|
Depletion
|
|
1.67
|
|
|
|
Depreciation and amortization
|
|
0.05
|
|
|
|
General and administrative
|
|
0.27
|
|
|
|
(1)
|
Mmcfe is calculated by converting one barrel of oil or natural gas liquids into six Mcf of natural gas.
|
|
|
Fiscal
|
|
|
||||||||
|
|
2013
|
|
2012
|
|
Increase / (Decrease)
|
||||||
|
|
|
|
|
|
|
||||||
|
Financial Services segment revenues
|
$
|
28.9
|
|
|
$
|
8.6
|
|
|
$
|
20.3
|
|
|
Financial Services segment operating costs and expenses
|
18.5
|
|
|
6.1
|
|
|
12.4
|
|
|||
|
Operating income - Financial Services segment
|
$
|
10.4
|
|
|
$
|
2.5
|
|
|
$
|
7.9
|
|
|
|
|
Fiscal
|
||||||||||
|
Reconciliation to reported net (loss) income:
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
Reported net (loss) income - consumer products segment
|
|
$
|
(55.3
|
)
|
|
$
|
48.6
|
|
|
$
|
(75.2
|
)
|
|
Add back:
|
|
|
|
|
|
|
||||||
|
Interest expense
|
|
375.6
|
|
|
191.9
|
|
|
208.4
|
|
|||
|
Income tax expense
|
|
27.4
|
|
|
60.4
|
|
|
92.3
|
|
|||
|
HHI Business inventory fair value adjustment
|
|
31.0
|
|
|
—
|
|
|
—
|
|
|||
|
Intangible asset impairment
|
|
—
|
|
|
—
|
|
|
32.0
|
|
|||
|
Pre-acquisition earnings of HHI Business
|
|
30.3
|
|
|
183.1
|
|
|
—
|
|
|||
|
Restructuring and related charges
|
|
34.0
|
|
|
19.6
|
|
|
28.6
|
|
|||
|
Acquisition and integration related charges
|
|
48.4
|
|
|
31.1
|
|
|
37.0
|
|
|||
|
Venezuela devaluation
|
|
2.0
|
|
|
—
|
|
|
—
|
|
|||
|
Adjusted EBIT - consumer products segment
|
|
493.4
|
|
|
534.7
|
|
|
323.1
|
|
|||
|
Depreciation and amortization, net of accelerated depreciation
|
|
|
|
|
|
|
||||||
|
Depreciation of properties
|
|
62.0
|
|
|
40.8
|
|
|
47.1
|
|
|||
|
Amortization of intangibles
|
|
77.8
|
|
|
63.7
|
|
|
57.7
|
|
|||
|
Stock-based compensation
|
|
43.9
|
|
|
29.2
|
|
|
30.4
|
|
|||
|
Adjusted EBITDA - consumer products segment
|
|
$
|
677.1
|
|
|
$
|
668.4
|
|
|
$
|
458.3
|
|
|
|
|
Fiscal
|
||||||||||
|
Reconciliation to reported net income before income taxes:
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
Reported net income before income taxes:
|
|
$
|
511.2
|
|
|
$
|
198.5
|
|
|
$
|
114.9
|
|
|
Interest expense
|
|
11.5
|
|
|
2.5
|
|
|
1.9
|
|
|||
|
Other expense (income)
|
|
0.2
|
|
|
(0.1
|
)
|
|
—
|
|
|||
|
Bargain purchase gain from business acquisition
|
|
—
|
|
|
—
|
|
|
(158.3
|
)
|
|||
|
Gain on contingent purchase price reduction
|
|
—
|
|
|
(41.0
|
)
|
|
—
|
|
|||
|
Reported operating income - insurance segment
|
|
522.9
|
|
|
159.9
|
|
|
(41.5
|
)
|
|||
|
Effect of investment gains, net of offsets
|
|
(248.0
|
)
|
|
(132.4
|
)
|
|
(1.0
|
)
|
|||
|
Effect of change in FIA embedded derivative discount rate, net of offsets
|
|
(53.5
|
)
|
|
18.6
|
|
|
43.0
|
|
|||
|
Effects of transaction-related reinsurance
|
|
—
|
|
|
11.8
|
|
|
24.0
|
|
|||
|
Adjusted operating income - insurance segment
|
|
$
|
221.4
|
|
|
$
|
57.9
|
|
|
$
|
24.5
|
|
|
|
|
Fiscal
|
||
|
Reconciliation to reported net loss:
|
|
2013
|
||
|
Reported net loss - energy segment
|
|
$
|
(56.8
|
)
|
|
Interest expense
|
|
10.3
|
|
|
|
Depreciation, amortization and depletion
|
|
31.0
|
|
|
|
EBITDA - energy segment
|
|
(15.5
|
)
|
|
|
Accretion of discount on asset retirement obligations
|
|
1.2
|
|
|
|
Non-cash write down of oil and natural gas properties
|
|
54.3
|
|
|
|
Loss on derivative financial instruments
|
|
1.3
|
|
|
|
Cash settlements on derivative financial instruments
|
|
(1.8
|
)
|
|
|
Stock based compensation expense
|
|
0.1
|
|
|
|
Adjusted EBITDA - energy segment
|
|
$
|
39.6
|
|
|
|
|
From Inception to the Period Ended September 30,
|
||
|
(in millions)
|
|
2013
|
||
|
Capital expenditures:
|
|
|
||
|
Development capital
|
|
$
|
15.9
|
|
|
Gas gathering and water pipelines
|
|
0.1
|
|
|
|
Lease acquisitions and seismic
|
|
—
|
|
|
|
Corporate and other
|
|
2.1
|
|
|
|
Total
|
|
$
|
18.1
|
|
|
HGI’s Proportionate 74.5% Share
|
|
$
|
13.5
|
|
|
|
|
HGI’s Proportionate Interest
|
|
EXCO/HGI JV
|
||||
|
(in millions)
|
|
September 30,
2013 |
|
September 30,
2013 |
||||
|
Borrowings under the EXCO/HGI JV Credit Agreement
|
|
$
|
271.2
|
|
|
$
|
364.0
|
|
|
Cash
|
|
18.4
|
|
|
24.7
|
|
||
|
Net debt
|
|
$
|
252.8
|
|
|
$
|
339.3
|
|
|
Borrowing base
|
|
$
|
350.2
|
|
|
$
|
470.0
|
|
|
Unused borrowing base (1)
|
|
78.6
|
|
|
105.5
|
|
||
|
Unused borrowing base plus cash (1)
|
|
97.0
|
|
|
130.2
|
|
||
|
|
|
From Inception to the Period Ended September 30,
|
||
|
Average realized pricing:
|
|
2013
|
||
|
Natural gas equivalent per Mcfe
|
|
$
|
4.99
|
|
|
Cash settlements on derivative financial instruments, per Mcfe
|
|
(0.10
|
)
|
|
|
Net price per Mcfe, including derivative financial instruments
|
|
$
|
4.89
|
|
|
|
|
NYMEX gas volume - Mmmbtu
|
|
Weighted average contract price per Mmbtu
|
|
NYMEX oil volume - Mbbls
|
|
Weighted average contract price per Bbls
|
||||||
|
Swaps:
|
|
|
|
|
|
|
|
|
||||||
|
Remainder of 2013
|
|
5,141.0
|
|
|
$
|
3.72
|
|
|
103.0
|
|
|
$
|
94.05
|
|
|
2014
|
|
10,877.0
|
|
|
$
|
4.14
|
|
|
272.0
|
|
|
$
|
91.87
|
|
|
|
|
September 30, 2013
|
|
September 30, 2012
|
||||||||||
|
Asset Class
|
|
Fair Value
|
|
Percent
|
|
Fair Value
|
|
Percent
|
||||||
|
Asset-backed securities
|
|
$
|
1,523.1
|
|
|
9.3
|
%
|
|
$
|
1,027.9
|
|
|
6.1
|
%
|
|
Commercial mortgage-backed securities
|
|
454.4
|
|
|
2.8
|
%
|
|
553.8
|
|
|
3.3
|
%
|
||
|
Corporates
|
|
9,418.3
|
|
|
57.2
|
%
|
|
11,009.0
|
|
|
65.1
|
%
|
||
|
Equities
(a)
|
|
352.5
|
|
|
2.1
|
%
|
|
394.9
|
|
|
2.3
|
%
|
||
|
Hybrids
|
|
428.8
|
|
|
2.6
|
%
|
|
528.2
|
|
|
3.1
|
%
|
||
|
Municipals
|
|
1,007.0
|
|
|
6.1
|
%
|
|
1,224.0
|
|
|
7.2
|
%
|
||
|
Agency residential mortgage-backed securities
|
|
98.6
|
|
|
0.6
|
%
|
|
155.0
|
|
|
0.9
|
%
|
||
|
Non-agency residential mortgage-backed securities
|
|
1,368.0
|
|
|
8.3
|
%
|
|
660.6
|
|
|
3.9
|
%
|
||
|
U.S. Government
|
|
1,001.8
|
|
|
6.1
|
%
|
|
930.4
|
|
|
5.5
|
%
|
||
|
Derivatives
|
|
221.8
|
|
|
1.3
|
%
|
|
200.7
|
|
|
1.2
|
%
|
||
|
Asset-based loans
|
|
560.4
|
|
|
3.4
|
%
|
|
180.1
|
|
|
1.1
|
%
|
||
|
Other (primarily policy loans and other invested assets)
|
|
31.2
|
|
|
0.2
|
%
|
|
53.8
|
|
|
0.3
|
%
|
||
|
Total investments
|
|
$
|
16,465.9
|
|
|
100.0
|
%
|
|
$
|
16,918.4
|
|
|
100.0
|
%
|
|
|
|
September 30, 2013
|
|
September 30, 2012
|
||||||||||
|
Rating
|
|
Fair Value
|
|
Percent
|
|
Fair Value
|
|
Percent
|
||||||
|
AAA
|
|
$
|
1,737.9
|
|
|
11.4
|
%
|
|
$
|
1,842.3
|
|
|
11.4
|
%
|
|
AA
|
|
2,423.1
|
|
|
15.8
|
%
|
|
2,042.9
|
|
|
12.7
|
%
|
||
|
A
|
|
3,791.3
|
|
|
24.8
|
%
|
|
4,280.4
|
|
|
26.6
|
%
|
||
|
BBB
|
|
5,499.0
|
|
|
35.9
|
%
|
|
7,084.0
|
|
|
44.0
|
%
|
||
|
BB
(a)
|
|
442.2
|
|
|
2.9
|
%
|
|
459.0
|
|
|
2.9
|
%
|
||
|
B and below
(b)
|
|
1,406.5
|
|
|
9.2
|
%
|
|
380.3
|
|
|
2.4
|
%
|
||
|
Total
|
|
$
|
15,300.0
|
|
|
100.0
|
%
|
|
$
|
16,088.9
|
|
|
100.0
|
%
|
|
NAIC Designation
|
|
NRSRO Equivalent Rating
|
|
1
|
|
AAA/AA/A
|
|
2
|
|
BBB
|
|
3
|
|
BB
|
|
4
|
|
B
|
|
5
|
|
CCC and lower
|
|
6
|
|
In or near default
|
|
|
|
September 30, 2013
|
|
September 30, 2012
|
||||||||||||||||||
|
NAIC Designation
|
|
Amortized Cost
|
|
Fair Value
|
|
Percent of Total Fair Value
|
|
Amortized Cost
|
|
Fair Value
|
|
Percent of Total Fair Value
|
||||||||||
|
1
|
|
$
|
9,157.0
|
|
|
$
|
9,367.6
|
|
|
61.2
|
%
|
|
$
|
8,070.1
|
|
|
$
|
8,634.0
|
|
|
53.6
|
%
|
|
2
|
|
5,352.6
|
|
|
5,369.7
|
|
|
35.1
|
%
|
|
6,569.1
|
|
|
7,047.4
|
|
|
43.8
|
%
|
||||
|
3
|
|
379.5
|
|
|
389.4
|
|
|
2.6
|
%
|
|
381.3
|
|
|
386.4
|
|
|
2.4
|
%
|
||||
|
4
|
|
132.7
|
|
|
133.0
|
|
|
0.9
|
%
|
|
8.5
|
|
|
8.8
|
|
|
0.1
|
%
|
||||
|
5
|
|
34.4
|
|
|
34.3
|
|
|
0.2
|
%
|
|
8.2
|
|
|
8.2
|
|
|
0.1
|
%
|
||||
|
6
|
|
5.9
|
|
|
6.0
|
|
|
—
|
%
|
|
3.8
|
|
|
4.1
|
|
|
—
|
%
|
||||
|
|
|
$
|
15,062.1
|
|
|
$
|
15,300.0
|
|
|
100.0
|
%
|
|
$
|
15,041.0
|
|
|
$
|
16,088.9
|
|
|
100.0
|
%
|
|
September 30, 2013
|
|
September 30, 2012
|
||||||||||||||||||||||||||
|
NAIC Designation
|
|
NRSRO
|
|
Percent of Total Fair Value
|
|
NAIC Designation
|
|
NRSRO
|
|
Percent of Total Fair Value
|
||||||||||||||||||
|
1
|
|
92.5
|
%
|
|
AAA
|
|
4.8
|
%
|
|
2007
|
|
21.8
|
%
|
|
1
|
|
92.5
|
%
|
|
AAA
|
|
11.0
|
%
|
|
2007
|
|
21.8
|
%
|
|
2
|
|
6.0
|
%
|
|
AA
|
|
2.3
|
%
|
|
2006
|
|
23.9
|
%
|
|
2
|
|
5.0
|
%
|
|
AA
|
|
20.3
|
%
|
|
2006
|
|
23.9
|
%
|
|
3
|
|
0.7
|
%
|
|
A
|
|
8.7
|
%
|
|
2005 and prior
|
|
54.3
|
%
|
|
3
|
|
1.6
|
%
|
|
A
|
|
9.9
|
%
|
|
2005 and prior
|
|
54.3
|
%
|
|
4
|
|
0.5
|
%
|
|
BBB
|
|
3.9
|
%
|
|
|
|
100.0
|
%
|
|
4
|
|
0.8
|
%
|
|
BBB
|
|
0.6
|
%
|
|
|
|
100.0
|
%
|
|
5
|
|
0.3
|
%
|
|
BB and below
|
|
80.3
|
%
|
|
|
|
|
|
5
|
|
—
|
%
|
|
BB and below
|
|
58.2
|
%
|
|
|
|
|
||
|
6
|
|
—
|
%
|
|
|
|
100.0
|
%
|
|
|
|
|
|
6
|
|
0.1
|
%
|
|
|
|
100.0
|
%
|
|
|
|
|
||
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||
|
|
|
September 30, 2013
|
|
September 30, 2012
|
||||||||||
|
Asset Class
|
|
Fair Value
|
|
Percent
|
|
Fair Value
|
|
Percent
|
||||||
|
ABS CLO
|
|
$
|
1,328.0
|
|
|
87.2
|
%
|
|
$
|
967.0
|
|
|
94.1
|
%
|
|
ABS Car Loan
|
|
11.7
|
|
|
0.8
|
%
|
|
4.6
|
|
|
0.4
|
%
|
||
|
ABS Credit Card
|
|
—
|
|
|
—
|
%
|
|
10.5
|
|
|
1.0
|
%
|
||
|
ABS Home Equity
|
|
68.1
|
|
|
4.5
|
%
|
|
—
|
|
|
—
|
%
|
||
|
ABS Other
|
|
107.3
|
|
|
7.0
|
%
|
|
35.7
|
|
|
3.5
|
%
|
||
|
ABS Utility
|
|
8.0
|
|
|
0.5
|
%
|
|
10.0
|
|
|
1.0
|
%
|
||
|
Total ABS
|
|
$
|
1,523.1
|
|
|
100.0
|
%
|
|
$
|
1,027.8
|
|
|
100.0
|
%
|
|
|
September 30, 2013
|
|
September 30, 2012
|
||||||||||||||||||||||||||
|
|
Number of securities
|
|
Amortized Cost
|
|
Unrealized Losses
|
|
Fair Value
|
|
Number of securities
|
|
Amortized Cost
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||||||||
|
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
United States Government full faith and credit
|
18
|
|
|
$
|
758.9
|
|
|
$
|
(4.0
|
)
|
|
$
|
754.9
|
|
|
6
|
|
|
$
|
0.9
|
|
|
$
|
(0.2
|
)
|
|
$
|
0.7
|
|
|
United States Government sponsored agencies
|
17
|
|
|
10.1
|
|
|
(0.2
|
)
|
|
9.9
|
|
|
10
|
|
|
7.3
|
|
|
(0.1
|
)
|
|
7.2
|
|
||||||
|
United States municipalities, states and territories
|
71
|
|
|
518.5
|
|
|
(40.8
|
)
|
|
477.7
|
|
|
18
|
|
|
72.2
|
|
|
(1.1
|
)
|
|
71.1
|
|
||||||
|
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Finance, insurance and real estate
|
170
|
|
|
1,867.9
|
|
|
(84.2
|
)
|
|
1,783.7
|
|
|
31
|
|
|
241.7
|
|
|
(4.9
|
)
|
|
236.8
|
|
||||||
|
Manufacturing, construction and mining
|
48
|
|
|
537.1
|
|
|
(36.0
|
)
|
|
501.1
|
|
|
10
|
|
|
95.6
|
|
|
(3.0
|
)
|
|
92.6
|
|
||||||
|
Utilities and related sectors
|
73
|
|
|
546.8
|
|
|
(19.2
|
)
|
|
527.6
|
|
|
7
|
|
|
48.5
|
|
|
(0.4
|
)
|
|
48.1
|
|
||||||
|
Wholesale/retail trade
|
45
|
|
|
362.9
|
|
|
(13.6
|
)
|
|
349.3
|
|
|
7
|
|
|
59.1
|
|
|
(1.3
|
)
|
|
57.8
|
|
||||||
|
Services, media and other
|
50
|
|
|
513.7
|
|
|
(32.1
|
)
|
|
481.6
|
|
|
4
|
|
|
21.9
|
|
|
(0.4
|
)
|
|
21.5
|
|
||||||
|
Hybrid securities
|
6
|
|
|
55.3
|
|
|
(3.3
|
)
|
|
52.0
|
|
|
8
|
|
|
130.7
|
|
|
(9.6
|
)
|
|
121.1
|
|
||||||
|
Non-agency residential mortgage-backed securities
|
85
|
|
|
408.5
|
|
|
(13.4
|
)
|
|
395.1
|
|
|
26
|
|
|
119.0
|
|
|
(4.3
|
)
|
|
114.7
|
|
||||||
|
Commercial mortgage-backed securities
|
10
|
|
|
33.0
|
|
|
(1.6
|
)
|
|
31.4
|
|
|
9
|
|
|
13.9
|
|
|
(2.4
|
)
|
|
11.5
|
|
||||||
|
Asset-backed securities
|
56
|
|
|
416.0
|
|
|
(5.2
|
)
|
|
410.8
|
|
|
17
|
|
|
178.9
|
|
|
(1.6
|
)
|
|
177.3
|
|
||||||
|
Equity securities
|
17
|
|
|
161.1
|
|
|
(10.3
|
)
|
|
150.8
|
|
|
3
|
|
|
45.8
|
|
|
(1.3
|
)
|
|
44.5
|
|
||||||
|
|
666
|
|
|
$
|
6,189.8
|
|
|
$
|
(263.9
|
)
|
|
$
|
5,925.9
|
|
|
156
|
|
|
$
|
1,035.5
|
|
|
$
|
(30.6
|
)
|
|
$
|
1,004.9
|
|
|
|
September 30, 2013
|
|
September 30, 2012
|
||||||||||||||||||||||||||
|
|
Number of securities
|
|
Amortized Cost
|
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Number of securities
|
|
Amortized Cost
|
|
Fair Value
|
|
Gross Unrealized Losses
|
||||||||||||||
|
Investment grade:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Less than six months
|
9
|
|
|
$
|
78.3
|
|
|
$
|
60.9
|
|
|
$
|
(17.4
|
)
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Six months or more and less than twelve months
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
2.6
|
|
|
0.9
|
|
|
(1.7
|
)
|
||||||
|
Twelve months or greater
|
1
|
|
|
0.6
|
|
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Total investment grade
|
10
|
|
|
78.9
|
|
|
60.9
|
|
|
(18.0
|
)
|
|
3
|
|
|
2.6
|
|
|
0.9
|
|
|
(1.7
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Below investment grade:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Less than six months
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Six months or more and less than twelve months
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
0.8
|
|
|
0.5
|
|
|
(0.3
|
)
|
||||||
|
Twelve months or greater
|
2
|
|
|
0.4
|
|
|
—
|
|
|
(0.4
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Total below investment grade
|
4
|
|
|
0.4
|
|
|
—
|
|
|
(0.4
|
)
|
|
2
|
|
|
0.8
|
|
|
0.5
|
|
|
(0.3
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Total
|
14
|
|
|
$
|
79.3
|
|
|
$
|
60.9
|
|
|
$
|
(18.4
|
)
|
|
5
|
|
|
$
|
3.4
|
|
|
$
|
1.4
|
|
|
$
|
(2.0
|
)
|
|
|
|
Fiscal
|
|
Increase / (Decrease)
|
||||||||||||||||
|
Cash provided by (used in):
|
|
2013
|
|
2012
|
|
2011
|
|
2013 compared to 2012
|
|
2012 compared to 2011
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Operating activities
|
|
$
|
522.3
|
|
|
$
|
622.5
|
|
|
$
|
155.5
|
|
|
$
|
(100.2
|
)
|
|
$
|
467.0
|
|
|
Investing activities
|
|
(2,010.8
|
)
|
|
(185.6
|
)
|
|
532.0
|
|
|
(1,825.2
|
)
|
|
(717.6
|
)
|
|||||
|
Financing activities
|
|
1,922.0
|
|
|
(102.7
|
)
|
|
192.1
|
|
|
2,024.7
|
|
|
(294.8
|
)
|
|||||
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(4.5
|
)
|
|
(0.9
|
)
|
|
0.9
|
|
|
(3.6
|
)
|
|
(1.8
|
)
|
|||||
|
Net increase in cash and cash equivalents
|
|
$
|
429.0
|
|
|
$
|
333.3
|
|
|
$
|
880.5
|
|
|
$
|
95.7
|
|
|
$
|
(547.2
|
)
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
|
Total
|
|
2014
|
|
2015 to 2016
|
|
2017 to 2018
|
|
After 2018
|
||||||||||
|
Annuity and universal life products
(a)
|
|
$
|
19,062.7
|
|
|
$
|
1,898.5
|
|
|
$
|
3,673.1
|
|
|
$
|
2,927.7
|
|
|
$
|
10,563.4
|
|
|
Debt, excluding capital lease obligations
(b)
|
|
4,909.7
|
|
|
102.9
|
|
|
157.0
|
|
|
954.8
|
|
|
3,695.0
|
|
|||||
|
Interest payments, excluding capital lease obligations
(b)
|
|
1,756.3
|
|
|
275.1
|
|
|
538.1
|
|
|
500.9
|
|
|
442.2
|
|
|||||
|
Capital lease obligations
(c)
|
|
109.0
|
|
|
8.3
|
|
|
16.5
|
|
|
13.1
|
|
|
71.1
|
|
|||||
|
Operating lease obligations
(d)
|
|
185.8
|
|
|
41.7
|
|
|
64.5
|
|
|
41.2
|
|
|
38.4
|
|
|||||
|
Employee benefit obligations
(e)
|
|
125.5
|
|
|
10.7
|
|
|
21.6
|
|
|
24.2
|
|
|
69.0
|
|
|||||
|
Letters of credit
(f)
|
|
37.2
|
|
|
31.8
|
|
|
5.4
|
|
|
—
|
|
|
—
|
|
|||||
|
Unfunded asset-based lending commitments
(g)
|
|
190.4
|
|
|
13.7
|
|
|
110.1
|
|
|
66.6
|
|
|
—
|
|
|||||
|
Other liabilities
(h)
|
|
0.6
|
|
|
0.3
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|||||
|
Total contractual obligations
|
|
$
|
26,377.2
|
|
|
$
|
2,383.0
|
|
|
$
|
4,586.6
|
|
|
$
|
4,528.5
|
|
|
$
|
14,879.1
|
|
|
(a)
|
Consists of projected payments through the year 2030 that FGL is contractually obligated to pay to annuity and universal life policyholders. The payments are derived from actuarial models which assume a level interest rate scenario and incorporate assumptions regarding mortality and persistency, when applicable. These assumptions are based on historical experience, but actual amounts will differ.
|
|
(b)
|
For more information concerning debt, see
Note 16
to our Consolidated Financial Statements.
|
|
(c)
|
Capital lease payments due by fiscal year include executory costs and imputed interest.
|
|
(d)
|
For more information concerning operating leases, see
Note 26
to our Consolidated Financial Statements.
|
|
(e)
|
Employee benefit obligations represent the sum of our estimated future minimum required funding for our qualified defined benefit plans through fiscal year 2023 based on actuarially determined estimates and projected future benefit payments from our unfunded postretirement plans. For additional information about our employee benefit obligations, see
Note 20
to our Consolidated Financial Statements.
|
|
(f)
|
Consists entirely of standby letters of credit that back the performance of certain entities under various credit facilities, insurance policies and lease arrangements.
|
|
(g)
|
Consists entirely of unfunded asset-based lending commitments of Salus.
|
|
(h)
|
At
September 30, 2013
, our Consolidated Balance Sheet includes
$13.8 million
of tax reserves for uncertain tax positions. However, it is not possible to predict or estimate the timing of payments for these obligations and, accordingly, they are not reflected in the above table. We cannot predict the ultimate outcome of income tax audits currently in progress for certain of our companies; however, it is reasonably possible that during the next 12 months some portion of our unrecognized tax benefits could be recognized.
|
|
Percentage of Annual Net Consumer Products Sales
|
|
|
|
|
|
|
|||
|
|
|
Fiscal Year Ended September 30,
|
|||||||
|
Fiscal Quarter Ended
|
|
2013
|
|
2012
|
|
2011
|
|||
|
December
|
|
21
|
%
|
|
26
|
%
|
|
27
|
%
|
|
March
|
|
24
|
%
|
|
23
|
%
|
|
22
|
%
|
|
June
|
|
27
|
%
|
|
25
|
%
|
|
25
|
%
|
|
September
|
|
28
|
%
|
|
26
|
%
|
|
26
|
%
|
|
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
|
Prices via third party pricing services
|
|
$
|
790.9
|
|
|
$
|
14,308.3
|
|
|
$
|
—
|
|
|
$
|
15,099.2
|
|
|
Priced via independent broker quotations
|
|
—
|
|
|
—
|
|
|
415.2
|
|
|
415.2
|
|
||||
|
Priced via other methods
|
|
—
|
|
|
—
|
|
|
67.3
|
|
|
67.3
|
|
||||
|
Total
|
|
$
|
790.9
|
|
|
$
|
14,308.3
|
|
|
$
|
482.5
|
|
|
$
|
15,581.7
|
|
|
% of total
|
|
5.1
|
%
|
|
91.8
|
%
|
|
3.1
|
%
|
|
100.0
|
%
|
||||
|
•
|
Assumptions related to interest rate spreads and credit losses also impact estimated gross profits for all applicable products with credited rates. These assumptions are based on the current investment portfolio yields and credit quality, estimated future crediting rates, capital markets, and estimates of future interest rates and defaults.
|
|
•
|
Other significant assumptions include estimated policyholder behavior assumptions, such as surrender, lapse, and annuitization rates. FGH uses a combination of actual and industry experience when setting and updating our policyholder behavior assumptions and such assumptions require considerable judgment.
|
|
(in millions)
|
|
As of September 30, 2013
|
||
|
A change to the long-term interest rate assumption of - 50 basis points
|
|
$
|
(48.1
|
)
|
|
A change to the longer-term interest assumption of +50 basis points
|
|
38.0
|
|
|
|
An assumed 10% increase in surrender rate
|
|
(9.9
|
)
|
|
|
•
|
Lower assumed interest rates and higher assumed annuity surrender rates tend to decrease the balances of DAC and VOBA, thus decreasing income before income taxes.
|
|
•
|
Higher assumed interest rates and lower assumed annuity surrender rates tend to increase the balances of DAC and VOBA, thus increasing income before income taxes.
|
|
•
|
the quality and quantity of available data;
|
|
•
|
the interpretation of this data;
|
|
•
|
the accuracy of various mandated economic assumptions; and
|
|
•
|
the technical qualifications, experience and judgment of the persons preparing the estimates.
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
|
•
|
Management of the business has primary responsibility for the day-to-day management of risk.
|
|
•
|
The risk management function has the primary responsibility to align risk taking with strategic planning through risk tolerance and limit setting.
|
|
•
|
The internal audit function provides an ongoing independent (i.e. outside of the risk organization) and objective assessment of the effectiveness of internal controls, including financial and operational risk management.
|
|
•
|
At-risk limits on sensitivities of earnings and regulatory capital to the capital markets provide the fundamental framework to manage capital markets risks including the risk of asset / liability mismatch;
|
|
•
|
Duration and convexity mismatch limits;
|
|
•
|
Credit risk concentration limits; and
|
|
•
|
Investment and derivative guidelines.
|
|
•
|
Regulatory Capital Sensitivities: the potential reduction, under a moderate capital markets stress scenario, of the excess of available statutory capital above the minimum required under the NAIC regulatory RBC methodology; and
|
|
•
|
Earnings Sensitivities: the potential reduction in results of operations under a moderate capital markets stress scenario. Maintaining a consistent level of earnings helps us to finance our operations, support capital requirements and provide funds to pay dividends to stockholders.
|
|
•
|
The timing and amount of redemptions and prepayments in FGH’s asset portfolio;
|
|
•
|
FGH’s derivative portfolio;
|
|
•
|
Death benefits and other claims payable under the terms of FGH’s insurance products;
|
|
•
|
Lapses and surrenders in FGH’s insurance products;
|
|
•
|
Minimum interest guarantees in FGH’s insurance products; and
|
|
•
|
Book value guarantees in FGH’s insurance products.
|
|
|
|
|
|
Financial Strength Rating
|
|
||||||
|
Parent Company / Principal Reinsurers
|
|
Reinsurance recoverable
|
|
AM Best
|
|
S&P
|
|
Moody’s
|
|
||
|
Wilton Reassurance
|
|
$
|
1,481.0
|
|
|
A
|
|
Not rated
|
|
Not rated
|
|
|
Security Life of Denver
|
|
205.7
|
|
|
Not rated
|
|
Not rated
|
|
A
|
|
|
|
Scottish RE (US), INC
|
|
170.0
|
|
|
A
|
|
A-
|
|
A3
|
|
|
|
Keyport
|
|
113.8
|
|
|
A-
|
|
BBB
|
|
Baa2
|
|
|
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
|
Item 9A.
|
Controls and Procedures
|
|
Item 9B.
|
Other Information
|
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
|
Item 11.
|
Executive Compensation
|
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
|
Item 14.
|
Principal Accounting Fees and Services
|
|
Item 15.
|
Exhibits, Financial Statements and Schedules
|
|
Exhibit
No.
|
|
Description of Exhibits
|
|
|
|
|
|
2.1
|
|
Contribution and Exchange Agreement, dated as of September 10, 2010, by and among Harbinger Group Inc., Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations Fund, L.P. and Global Opportunities Breakaway Ltd. (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed September 14, 2010 (File No. 1-4219)).
|
|
|
|
|
|
2.2
|
|
Amendment, dated as of November 5, 2010, to the Contribution and Exchange Agreement, dated as of September 10, 2010, by and among Harbinger Group Inc., Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Special Situations Fund, L.P. and Global Opportunities Breakaway Ltd. (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 filed November 9, 2010 (File No. 1-4219)).
|
|
|
|
|
|
2.3
|
|
Unit Purchase and Contribution Agreement dated as of November 5, 2012 by and among EXCO Resources, Inc., EXCO Operating Company, LP, EXCO/HGI JV Assets, LLC, and HGI Energy Holdings, LLC (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed November 9, 2012 (File No. 1-4219)).
|
|
|
|
|
|
2.4
|
|
First Amendment to Unit Purchase and Contribution Agreement and Closing Agreement, dated as of February 14, 2013, by and among EXCO Resources, Inc., EXCO Operating Company, LP, EXCO/HGI JV Assets, LLC, and HGI Energy Holdings, LLC (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on February 21, 2013 (File No. 1-4219)).
|
|
|
|
|
|
2.5
|
|
Purchase and Sale Agreement, dated as of February 14, 2013, by and between BG US Production Company, LLC and EXCO Operating Company, LP (incorporated herein by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K filed on February 21, 2013 (File No. 1-4219)).
|
|
|
|
|
|
2.6
|
|
Purchase and Sale Agreement, dated as of February 14, 2013, by and between BG US Production Company, LLC and EXCO Operating Company, LP (incorporated herein by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K filed on February 21, 2013 (File No. 1-4219)).
|
|
|
|
|
|
2.7
|
|
Letter Agreement, dated as February 14, 2013, by and among, EXCO Resources, Inc., EXCO Operating Company, LP, EXCO/HGI JV Assets, LLC, EXCO/HGI GP, LLC, and EXCO/HGI Production Partners, LP (incorporated herein by reference to Exhibit 2.3 to the Company's Current Report on Form 8-K filed on February 21, 2013 (File No. 1-4219)).
|
|
|
|
|
|
2.8
|
|
First Amendment to Purchase and Sale Agreement, dated as of March 5, 2013, by and among EXCO/HGI JV Assets, LLC and BG US Production Company, LLC (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on March 7, 2013 (File No. 1-4219)).
|
|
|
|
|
|
3.1
|
|
Certificate of Incorporation of Harbinger Group Inc. (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed December 28, 2009 (File No. 1-4219)).
|
|
|
|
|
|
3.2
|
|
Bylaws of Harbinger Group Inc. (incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed December 28, 2009 (File No. 1-4219)).
|
|
|
|
|
|
4.1
|
|
Indenture governing the 7.875% Senior Secured Notes due 2019, dated as of December 24, 2012, by and between Harbinger Group Inc. and Wells Fargo, National Association, as trustee (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed December 26, 2012 (File No. 1-4219)).
|
|
|
|
|
|
4.2
|
|
Security Agreement, dated as of January 7, 2011, between Harbinger Group Inc. and Wells Fargo Bank, National Association (incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-4 filed January 28, 2011, as amended (File No. 333-171924)).
|
|
|
|
|
|
4.3
|
|
Collateral Trust Agreement, dated as of January 7, 2011, between Harbinger Group Inc. and Wells Fargo Bank, National Association (incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-4 filed January 28, 2011, as amended (File No. 333-171924)).
|
|
|
|
|
|
4.4
|
|
Registration Rights Agreement, dated as of September 10, 2010, by and among Harbinger Group Inc., Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations Fund, L.P. and Global Opportunities Breakaway Ltd. (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed September 14, 2010 (File No. 1-4219)).
|
|
|
|
|
|
4.5
|
|
Certificate of Designation of Series A Participating Convertible Preferred Stock of Harbinger Group Inc., adopted on May 12, 2011 (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed May 13, 2011 (File No. 1-4219)).
|
|
Exhibit
No.
|
|
Description of Exhibits
|
|
|
|
|
|
4.6
|
|
Registration Rights Agreement, dated as of May 12, 2011, by and among Harbinger Group Inc., CF Turul LLC, an affiliate of funds managed by Fortress Investment Group LLC or its affiliates, Providence TMT Debt Opportunity Fund II, L.P., PECM Strategic Funding L.P. and Wilton Re Holdings Limited (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed May 13, 2011 (File No. 1-4219)).
|
|
|
|
|
|
4.7
|
|
Certificate of Designation of Series A-2 Participating Convertible Preferred Stock of Harbinger Group Inc. (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed August 5, 2011 (File No. 1-4219)).
|
|
|
|
|
|
4.8
|
|
Certificate of Amendment of Certificate of Designation of Series A Participating Convertible Preferred Stock of Harbinger Group Inc. (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed August 5, 2011 (File No. 1-4219)).
|
|
|
|
|
|
4.9
|
|
Registration Rights Agreement dated as of December 24, 2012, by and between Harbinger Group Inc. and the initial purchases named therein (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed December 26, 2012 (File No. 1-4219)).
|
|
|
|
|
|
4.10
|
|
Registration Rights Agreement dated as of July 23, 2013, by and between Harbinger Group Inc. and the initial purchases named therein (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed July 23, 2013 (File No. 1-4219)).
|
|
|
|
|
|
10.1†
|
|
Zapata Supplemental Pension Plan effective as of April 1, 1992 (incorporated herein by reference to Exhibit 10(b) to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1992 (File No. 1-4219)).
|
|
|
|
|
|
10.2†
|
|
Zapata Amended and Restated 1996 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 3, 2007 (File No. 1-4219)).
|
|
|
|
|
|
10.3
|
|
Investment and Distribution Agreement between Zap.Com and Zapata (incorporated herein by reference to Exhibit No. 10.1 to Zap.Com’s Registration Statement on Form S-1 filed April 13, 1999, as amended (File No. 333-76135)).
|
|
|
|
|
|
10.4
|
|
Services Agreement between Zap.Com and Zapata (incorporated herein by reference to Exhibit No. 10.2 to Zap.Com’s Registration Statement on Form S-1 filed April 13, 1999, as amended (File No. 333-76135)).
|
|
|
|
|
|
10.5
|
|
Tax Sharing and Indemnity Agreement between Zap.Com and Zapata (incorporated herein by reference to Exhibit No. 10.3 to Zap.Com’s Annual Report on Form 10-K for the year ended December 31, 2007 filed March 7, 2008 (File No. 000-27729)).
|
|
|
|
|
|
10.6
|
|
Registration Rights Agreement between Zap.Com and Zapata (incorporated herein by reference to Exhibit No. 10.4 to Zap.Com’s Registration Statement on Form S-1 filed April 13, 1999, as amended (File No. 333-76135)).
|
|
|
|
|
|
10.7†
|
|
Form of February 28, 2003 Indemnification Agreement by and among Zapata and the directors and officers of the Company (incorporated herein by reference to Exhibit 10(q) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 filed March 26, 2003 (File No. 1-4219)).
|
|
|
|
|
|
10.8†
|
|
Form of March 1, 2002 Director Stock Option Agreement by and among Zapata and the non-employee directors of the Company (incorporated herein by reference to Exhibit 10(r) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 filed March 26, 2003 (File No. 1-4219)).
|
|
|
|
|
|
10.9†
|
|
Summary of Zapata Corporation Senior Executive Retiree Health Care Benefit Plan (incorporated herein by reference to Exhibit 10(u) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 filed March 13, 2007 (File No. 1-4219)).
|
|
|
|
|
|
10.10†
|
|
Form of Indemnification Agreement by and among Zapata and Zap.Com Corporation and the Directors or Officers of Zapata and Zap.Com Corporation. (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 31, 2009 filed November 4, 2009 (File No. 1-4219)).
|
|
|
|
|
|
10.11†
|
|
Form of Indemnification Agreement by and among Zapata and the Directors or Officers of Zapata only (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 31, 2009 filed November 4, 2009 (File No. 1-4219)).
|
|
|
|
|
|
10.12†
|
|
Form of Indemnification Agreement by and among Harbinger Group Inc. and its Directors or Officers (incorporated herein by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 filed March 9, 2010 (File No. 1-4219)).
|
|
|
|
|
|
Exhibit
No.
|
|
Description of Exhibits
|
|
10.15
|
|
Stockholder Agreement, dated as of February 9, 2010, by and among Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situation Fund, L.P., Global Opportunities Breakaway Ltd. and Spectrum Brands Holdings, Inc.; Harbinger Group Inc. became a party to this agreement on January 7, 2011 (incorporated herein by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed November 5, 2010 (File No. 1-4219)).
|
|
|
|
|
|
10.16
|
|
Registration Rights Agreement, dated as of February 9, 2010, by and among Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations Fund, L.P., Global Opportunities Breakaway Ltd., Avenue International Master, L.P., Avenue Investments, L.P., Avenue Special Situations Fund IV, L.P., Avenue Special Situations Fund V, L.P., Avenue-CDP Global Opportunities Fund, L.P. and Spectrum Brands Holdings, Inc.; Harbinger Group Inc. became a party to this agreement on January 7, 2011 (incorporated herein by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K filed November 5, 2010 (File No. 1-4219)).
|
|
|
|
|
|
10.17†
|
|
Form of Indemnification Agreement by and among Harbinger Group Inc. and its Directors and Officers, as amended and restated on February 23, 2011 (incorporated herein by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 filed March 11, 2011 (File No. 1-4219)).
|
|
|
|
|
|
10.18
|
|
First Amended and Restated Stock Purchase Agreement, dated as of February 17, 2011, between Harbinger OM, LLC, a Delaware limited liability company, and OM Group (UK) Limited, a private limited company incorporated in England and Wales (incorporated herein by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed March 9, 2011 (File No. 1-4219)).
|
|
|
|
|
|
10.19
|
|
Letter Agreement, dated April 6, 2011, between OM Group (UK) Limited and Harbinger OM, LLC; Letter Agreement, dated April 6, 2011, from Old Mutual PLC and OM Group (UK) Limited to Harbinger OM, LLC (incorporated herein by reference to Exhibits 2.2 and 2.3 to the Company’s Current Report on Form 8-K filed April 11, 2011 (File No. 1-4219)).
|
|
|
|
|
|
10.20
|
|
Securities Purchase Agreement, dated as of May 12, 2011, by and among Harbinger Group Inc., CF Turul LLC, an affiliate of funds managed by Fortress Investment Group LLC or its affiliates, Providence TMT Debt Opportunity Fund II, L.P., PECM Strategic Funding L.P. and Wilton Re Holdings Limited (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 13, 2011 (File No. 1-4219)).
|
|
|
|
|
|
10.21
|
|
Securities Purchase Agreement, dated as of August 1, 2011, by and among Harbinger Group Inc., Quantum Partners LP, a Cayman Islands exempted limited partnership, JHL Capital Group Master Fund L.P., a Cayman Islands exempted limited partnership, and certain funds and/or accounts managed and/or advised by DDJ Capital Management, LLC and First Amendment to Securities Purchase Agreement, dated as of August 4, 2011, by and among the parties to the Securities Purchase Agreement dated as of August 1, 2011 and Luxor Capital Partners, LP, a Delaware limited partnership, Luxor Wavefront, LP, a Delaware limited partnership, Luxor Capital Partners Offshore Fund, LP, a Cayman Islands limited partnership, OC 19 Master Fund, L.P. - LCG, a Cayman Islands limited partnership, and GAM Equity Six Inc., a British Virgin Islands company (incorporated herein by reference to Exhibits 10.1 and 10.2 to the Company’s Current Report on Form 8-K filed August 5, 2011 (File No. 1-4219)).
|
|
|
|
|
|
10.22†
|
|
Employment Agreement, dated as of January 9, 2012, by and between Harbinger Group Inc. and Omar Asali (incorporated herein by reference to Exhibit 10.1 to the Company’s Amendment No. 1 to Annual Report on Form 10-K filed January 30, 2012 (File No. 1-4219)).
|
|
|
|
|
|
10.23†
|
|
Employment Agreement, dated as of January 11, 2012, by and between Harbinger Group Inc. and David M. Maura (incorporated herein by reference to Exhibit 10.2 to the Company’s Amendment No. 1 to Annual Report on Form 10-K filed January 30, 2012 (File No. 1-4219)).
|
|
|
|
|
|
10.24†
|
|
Harbinger Group Inc. 2011 Omnibus Equity Award Plan, adopted as of September 15, 2011 (incorporated herein by reference to Exhibit 10.4 to the Company’s Amendment No. 1 to Annual Report on Form 10-K filed January 30, 2012 (File No. 1-4219)).
|
|
|
|
|
|
10.25†
|
|
Harbinger Group Inc. 2011 Omnibus Equity Award Plan, adopted as of September 15, 2011 (incorporated herein by reference to Exhibit 10.4 to the Company’s Amendment No. 1 to Annual Report on Form 10-K filed January 30, 2012 (File No. 1-4219)).
|
|
|
|
|
|
10.26†
|
|
Harbinger Group Inc. 2011 Omnibus Equity Award Plan Form of Restricted Stock Agreement (incorporated herein by reference to Exhibit 10.5 to the Company’s Amendment No. 1 to Annual Report on Form 10-K filed January 30, 2012 (File No. 1-4219))
|
|
|
|
|
|
10.27†
|
|
Employment Agreement dated as of February 24, 2012 by and between Harbinger Group Inc., a Delaware corporation, and Thomas A. Williams (incorporated herein by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the quarter ended April 1, 2012 (File No. 1-4219)).
|
|
|
|
|
|
Exhibit
No.
|
|
Description of Exhibits
|
|
10.28†
|
|
Employment Agreement dated as of November 1, 2012 by and between Harbinger Group, Inc. and Michael Sena (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 5, 2012 (File No. 1-4219)).
|
|
|
|
|
|
10.29
|
|
Appalachia Letter Agreement, dated as of November 5, 2012, by and among EXCO Resources, Inc., EXCO Operating Company, LP, HGI Energy Holdings, LLC and Harbinger Group Inc. (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed November 9, 2012 (File No. 1-4219)).
|
|
|
|
|
|
10.30
|
|
Services Agreement, by and between Harbinger Capital Partners LLC and Harbinger Group Inc. (incorporated herein by reference to Exhibit 10.36 to the Company’s Annual Report on Form 10-K filed November 27, 2012 (File No. 1-4219)).
|
|
|
|
|
|
10.31
|
|
Amended and Restated Agreement of Limited Partnership of EXCO/HGI Production Partners, LP, effective as of February 14, 2013 (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 21, 2013 (File No. 1-4219)).
|
|
|
|
|
|
10.32
|
|
Amended and Restated Limited Liability Company Agreement of EXCO/HGI GP, LLC, effective as of February 14, 2013 (incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on February 21, 2013 (File No. 1-4219)).
|
|
|
|
|
|
10.33
|
|
Employment Agreement, dated as of June 17, 2013 by and between the Company and Michael Kuritzkes (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed August 9, 2013 (File No: 1-4219)).
|
|
|
|
|
|
10.34
|
|
Guarantee and Pledge Agreement, dated as of April 6, 2011, among Harbinger OM, LLC, the Grantor parties thereto and OM Group (UK) Limited (incorporated herein by reference to Exhibit 10.2 to Fidelity & Guaranty’s Registration Statement on Form S-1 filed on October 17, 2013 (File No. 333-190880).
|
|
|
|
|
|
18.1
|
|
Preferability Letter from Independent Registered Public Accounting Firm Regarding Change in Accounting Principle (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed August 9, 2013 (File No: 1-4219))
|
|
|
|
|
|
21.1*
|
|
Subsidiaries of the Registrant.
|
|
|
|
|
|
23.1*
|
|
Consent of KPMG LLP
|
|
|
|
|
|
23.2*
|
|
Consent of Lee Keeling and Associates, Inc., Independent Petroleum Engineers
|
|
|
|
|
|
31.1*
|
|
Certification of CEO Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
31.2*
|
|
Certification of CFO Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
32.1**
|
|
Certification of CEO Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
32.2**
|
|
Certification of CFO Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
99.1*
|
|
September 30, 2013 Report of Lee Keeling and Associates, Inc.
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.**
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema.**
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase.**
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Definition Linkbase.**
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase.**
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase.**
|
|
†
|
Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to the requirements of Item 15(a)(3) of Form 10-K.
|
|
*
|
Filed herewith
|
|
**
|
Furnished herewith
|
|
|
|
HARBINGER GROUP INC.
(Registrant)
|
|
|
|
|
|
|
|
Dated:
|
November 27, 2013
|
By:
|
/s/ THOMAS A. WILLIAMS
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
(on behalf of the Registrant and as Principal Financial Officer)
|
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/ PHILIP A. FALCONE
Philip A. Falcone
|
|
Chief Executive Officer
(Principal Executive Officer) and
Chairman of the Board
|
|
November 27, 2013
|
|
|
|
|
|
|
|
/s/ THOMAS A. WILLIAMS
Thomas A. WIlliams
|
|
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
|
November 27, 2013
|
|
|
|
|
|
|
|
/s/ MICHAEL J. SENA
Michael J. Sena
|
|
Chief Accounting Officer
(Principal Accounting Officer)
|
|
November 27, 2013
|
|
|
|
|
|
|
|
/s/ OMAR M. ASALI
Omar M. Asali
|
|
President and Director
|
|
November 27, 2013
|
|
|
|
|
|
|
|
/s/ LAP WAI CHAN
Lap Wai Chan
|
|
Director
|
|
November 27, 2013
|
|
|
|
|
|
|
|
/s/ FRANK IANNA
Frank Ianna
|
|
Director
|
|
November 27, 2013
|
|
|
|
|
|
|
|
/s/ KEITH M. HLADEK
Keith M. Hladek
|
|
Director
|
|
November 27, 2013
|
|
|
|
|
|
|
|
/s/ GERALD LUTERMAN
Gerald Luterman
|
|
Director
|
|
November 27, 2013
|
|
|
|
|
|
|
|
/s/ DAVID M. MAURA
David M. Maura
|
|
Director
|
|
November 27, 2013
|
|
|
|
|
|
|
|
/s/ ROBIN ROGER
Robin Roger
|
|
Director
|
|
November 27, 2013
|
|
(11) Inventories
, net
|
|
|
(20) Employee Benefit
Obligations
|
|
|
|
September 30,
2013 |
|
September 30,
2012 |
||||
|
|
|
|
|
||||
|
ASSETS
|
|
|
|
||||
|
Investments (Note 5) :
|
|
|
|
||||
|
Fixed maturities
|
$
|
15,300.0
|
|
|
$
|
16,088.9
|
|
|
Equity securities
|
352.5
|
|
|
394.9
|
|
||
|
Derivatives
|
221.8
|
|
|
200.7
|
|
||
|
Asset-based loans
|
560.4
|
|
|
180.1
|
|
||
|
Other invested assets
|
31.2
|
|
|
53.8
|
|
||
|
Total investments
|
16,465.9
|
|
|
16,918.4
|
|
||
|
Cash and cash equivalents
|
1,899.7
|
|
|
1,470.7
|
|
||
|
Receivables, net (Note 10)
|
611.3
|
|
|
414.4
|
|
||
|
Inventories, net (Note 11)
|
632.9
|
|
|
452.6
|
|
||
|
Accrued investment income
|
161.2
|
|
|
191.6
|
|
||
|
Reinsurance recoverable (Note 21)
|
2,363.7
|
|
|
2,363.1
|
|
||
|
Deferred tax assets (Note 23)
|
293.4
|
|
|
312.7
|
|
||
|
Properties, including oil and natural gas properties, net (Note 12)
|
993.3
|
|
|
221.6
|
|
||
|
Goodwill (Note 13)
|
1,476.7
|
|
|
694.2
|
|
||
|
Intangibles, including DAC and VOBA, net (Note 13)
|
2,729.1
|
|
|
1,988.5
|
|
||
|
Other assets (Note 14)
|
281.6
|
|
|
172.6
|
|
||
|
Total assets
|
$
|
27,908.8
|
|
|
$
|
25,200.4
|
|
|
|
|
|
|
||||
|
LIABILITIES AND EQUITY
|
|
|
|
||||
|
|
|
|
|
||||
|
Insurance reserves:
|
|
|
|
||||
|
Contractholder funds
|
$
|
15,248.2
|
|
|
$
|
15,290.4
|
|
|
Future policy benefits
|
3,556.8
|
|
|
3,614.8
|
|
||
|
Liability for policy and contract claims
|
51.5
|
|
|
91.1
|
|
||
|
Funds withheld from reinsurers
|
39.4
|
|
|
54.7
|
|
||
|
Total insurance reserves
|
18,895.9
|
|
|
19,051.0
|
|
||
|
Debt (Note 16)
|
4,896.1
|
|
|
2,167.0
|
|
||
|
Accounts payable and other current liabilities (Note 15)
|
1,012.7
|
|
|
754.2
|
|
||
|
Equity conversion feature of preferred stock (Note 6 and Note 18)
|
330.8
|
|
|
232.0
|
|
||
|
Employee benefit obligations (Note 20)
|
99.6
|
|
|
95.1
|
|
||
|
Deferred tax liabilities (Note 23)
|
492.8
|
|
|
382.4
|
|
||
|
Other liabilities (Note 17)
|
718.0
|
|
|
600.6
|
|
||
|
Total liabilities
|
26,445.9
|
|
|
23,282.3
|
|
||
|
|
|
|
|
||||
|
Commitments and contingencies (Note 26)
|
|
|
|
||||
|
|
|
|
|
||||
|
Temporary equity (Note 18) :
|
|
|
|
||||
|
Redeemable preferred stock, $0.01 par; 10,000.0 thousand preferred shares authorized; 394.2 and 400.0 thousand shares outstanding with aggregate liquidation preference of $617.1 and $626.0 at September 30, 2013 and 2012, respectively, and other temporary equity.
|
329.4
|
|
|
319.2
|
|
||
|
|
|
|
|
||||
|
Harbinger Group Inc. stockholders' equity:
|
|
|
|
||||
|
Common stock, $0.01 par; 500,000.0 thousand shares authorized; 142,381.1 and 140,184.0 thousand shares issued and outstanding at September 30, 2013 and 2012, respectively.
|
1.4
|
|
|
1.4
|
|
||
|
Additional paid-in capital
|
828.0
|
|
|
861.2
|
|
||
|
Accumulated deficit
|
(192.4
|
)
|
|
(98.2
|
)
|
||
|
Accumulated other comprehensive income
|
87.7
|
|
|
413.2
|
|
||
|
Total Harbinger Group Inc. stockholders' equity
|
724.7
|
|
|
1,177.6
|
|
||
|
Noncontrolling interest
|
408.8
|
|
|
421.3
|
|
||
|
Total permanent equity
|
1,133.5
|
|
|
1,598.9
|
|
||
|
Total liabilities and equity
|
$
|
27,908.8
|
|
|
$
|
25,200.4
|
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Revenues:
|
|
|
|
|
|
|
||||||
|
Net consumer product sales
|
|
$
|
4,085.6
|
|
|
$
|
3,252.4
|
|
|
$
|
3,186.9
|
|
|
Oil and natural gas
|
|
90.2
|
|
|
—
|
|
|
—
|
|
|||
|
Insurance premiums
|
|
58.8
|
|
|
55.3
|
|
|
39.0
|
|
|||
|
Net investment income
|
|
734.7
|
|
|
722.7
|
|
|
369.8
|
|
|||
|
Net investment gains (losses)
|
|
511.6
|
|
|
410.0
|
|
|
(166.9
|
)
|
|||
|
Insurance and investment product fees and other
|
|
62.5
|
|
|
40.3
|
|
|
48.9
|
|
|||
|
Total revenues
|
|
5,543.4
|
|
|
4,480.7
|
|
|
3,477.7
|
|
|||
|
Operating costs and expenses:
|
|
|
|
|
|
|
||||||
|
Consumer products cost of goods sold
|
|
2,695.3
|
|
|
2,136.8
|
|
|
2,058.0
|
|
|||
|
Oil and natural gas direct operating costs
|
|
44.0
|
|
|
—
|
|
|
—
|
|
|||
|
Benefits and other changes in policy reserves
|
|
531.8
|
|
|
777.4
|
|
|
247.6
|
|
|||
|
Selling, acquisition, operating and general expenses
|
|
1,220.5
|
|
|
932.7
|
|
|
961.8
|
|
|||
|
Impairment of oil and natural gas properties
|
|
54.3
|
|
|
—
|
|
|
—
|
|
|||
|
Amortization of intangibles
|
|
260.1
|
|
|
224.3
|
|
|
46.6
|
|
|||
|
Total operating costs and expenses
|
|
4,806.0
|
|
|
4,071.2
|
|
|
3,314.0
|
|
|||
|
Operating income
|
|
737.4
|
|
|
409.5
|
|
|
163.7
|
|
|||
|
Interest expense
|
|
(511.9
|
)
|
|
(251.0
|
)
|
|
(249.3
|
)
|
|||
|
(Loss) gain from the change in the fair value of the equity conversion feature of preferred stock
|
|
(101.6
|
)
|
|
(156.6
|
)
|
|
27.9
|
|
|||
|
Bargain purchase gain from business acquisition
|
|
—
|
|
|
—
|
|
|
158.3
|
|
|||
|
Gain on contingent purchase price reduction
|
|
—
|
|
|
41.0
|
|
|
—
|
|
|||
|
Other expense, net
|
|
(5.6
|
)
|
|
(17.5
|
)
|
|
(42.7
|
)
|
|||
|
Income from continuing operations before income taxes
|
|
118.3
|
|
|
25.4
|
|
|
57.9
|
|
|||
|
Income tax expense (benefit)
|
|
187.3
|
|
|
(85.3
|
)
|
|
50.6
|
|
|||
|
Net (loss) income
|
|
(69.0
|
)
|
|
110.7
|
|
|
7.3
|
|
|||
|
Less: Net (loss) income attributable to noncontrolling interest
|
|
(23.2
|
)
|
|
21.2
|
|
|
(34.7
|
)
|
|||
|
Net (loss) income attributable to controlling interest
|
|
(45.8
|
)
|
|
89.5
|
|
|
42.0
|
|
|||
|
Less: Preferred stock dividends and accretion
|
|
48.4
|
|
|
59.6
|
|
|
19.8
|
|
|||
|
Net (loss) income attributable to common and participating preferred stockholders
|
|
$
|
(94.2
|
)
|
|
$
|
29.9
|
|
|
$
|
22.2
|
|
|
|
|
|
|
|
|
|
||||||
|
Net (loss) income per common share attributable to controlling interest:
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Basic
|
|
$
|
(0.67
|
)
|
|
$
|
0.15
|
|
|
$
|
0.11
|
|
|
Diluted
|
|
$
|
(0.67
|
)
|
|
$
|
0.15
|
|
|
$
|
0.09
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
|
|
|
|
|
|
||||||
|
Net (loss) income
|
$
|
(69.0
|
)
|
|
$
|
110.7
|
|
|
$
|
7.3
|
|
|
|
|
|
|
|
|
||||||
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
|
Foreign currency translation losses
|
(6.6
|
)
|
|
(8.6
|
)
|
|
(10.6
|
)
|
|||
|
Net unrealized (loss) gain on derivative instruments
|
|
|
|
|
|
||||||
|
Changes in derivative instruments before reclassification adjustment
|
(2.0
|
)
|
|
(1.8
|
)
|
|
(6.0
|
)
|
|||
|
Net reclassification adjustment for (gains) losses included in net income
|
(0.9
|
)
|
|
3.1
|
|
|
13.4
|
|
|||
|
Changes in derivative instruments after reclassification adjustment
|
(2.9
|
)
|
|
1.3
|
|
|
7.4
|
|
|||
|
Changes in deferred income tax asset/liability
|
(0.2
|
)
|
|
(0.7
|
)
|
|
(2.7
|
)
|
|||
|
Deferred tax valuation allowance adjustments
|
0.6
|
|
|
0.9
|
|
|
(0.3
|
)
|
|||
|
Net unrealized (loss) gain on derivative instruments
|
(2.5
|
)
|
|
1.5
|
|
|
4.4
|
|
|||
|
Actuarial adjustments to pension plans
|
|
|
|
|
|
||||||
|
Changes in actuarial adjustments before reclassification adjustment
|
9.6
|
|
|
(15.4
|
)
|
|
(7.6
|
)
|
|||
|
Net reclassification adjustment for losses included in cost of goods sold
|
1.6
|
|
|
0.9
|
|
|
—
|
|
|||
|
Net reclassification adjustment for gains included in selling and general and administrative expenses
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|||
|
Changes in actuarial adjustments to pension plans
|
11.0
|
|
|
(14.5
|
)
|
|
(7.6
|
)
|
|||
|
Changes in deferred income tax asset/liability
|
(5.1
|
)
|
|
3.6
|
|
|
2.0
|
|
|||
|
Deferred tax valuation allowance adjustments
|
(0.1
|
)
|
|
(0.8
|
)
|
|
3.5
|
|
|||
|
Net actuarial adjustments to pension plans
|
5.8
|
|
|
(11.7
|
)
|
|
(2.1
|
)
|
|||
|
Unrealized investment (losses) gains:
|
|
|
|
|
|
||||||
|
Changes in unrealized investment (losses) gains before reclassification adjustment
|
(490.5
|
)
|
|
906.5
|
|
|
420.9
|
|
|||
|
Net reclassification adjustment for gains included in net income
|
(333.4
|
)
|
|
(263.9
|
)
|
|
(3.9
|
)
|
|||
|
Changes in unrealized investment (losses) gains after reclassification adjustment
|
(823.9
|
)
|
|
642.6
|
|
|
417.0
|
|
|||
|
Adjustments to intangible assets
|
327.3
|
|
|
(218.5
|
)
|
|
(172.0
|
)
|
|||
|
Changes in deferred income tax asset/liability
|
173.1
|
|
|
(148.5
|
)
|
|
(85.7
|
)
|
|||
|
Net unrealized (loss) gain on investments
|
(323.5
|
)
|
|
275.6
|
|
|
159.3
|
|
|||
|
Non-credit related other-than-temporary impairment:
|
|
|
|
|
|
||||||
|
Changes in non-credit related other-than-temporary impairment
|
—
|
|
|
(1.5
|
)
|
|
0.5
|
|
|||
|
Adjustments to intangible assets
|
—
|
|
|
0.6
|
|
|
(0.2
|
)
|
|||
|
Changes in deferred income tax asset/liability
|
—
|
|
|
0.3
|
|
|
(0.1
|
)
|
|||
|
Net non-credit related other than-temporary impairment
|
—
|
|
|
(0.6
|
)
|
|
0.2
|
|
|||
|
Net change to derive comprehensive (loss) income for the period
|
(326.8
|
)
|
|
256.2
|
|
|
151.2
|
|
|||
|
Comprehensive (loss) income
|
(395.8
|
)
|
|
366.9
|
|
|
158.5
|
|
|||
|
Less: Comprehensive (loss) income attributable to the noncontrolling interest:
|
|
|
|
|
|
||||||
|
Net (loss) income
|
(23.2
|
)
|
|
21.2
|
|
|
(34.7
|
)
|
|||
|
Other comprehensive loss
|
(2.2
|
)
|
|
(8.6
|
)
|
|
(3.7
|
)
|
|||
|
|
(25.4
|
)
|
|
12.6
|
|
|
(38.4
|
)
|
|||
|
Comprehensive (loss) income attributable to the controlling interest
|
$
|
(370.4
|
)
|
|
$
|
354.3
|
|
|
$
|
196.9
|
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Stockholder’s Equity
|
|
Noncontrolling Interest
|
|
Total Permanent Equity
|
|||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Balances at September 30, 2010
|
139.2
|
|
|
$
|
1.4
|
|
|
$
|
855.8
|
|
|
$
|
(150.3
|
)
|
|
$
|
(5.2
|
)
|
|
$
|
701.7
|
|
|
$
|
476.2
|
|
|
$
|
1,177.9
|
|
|
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
42.0
|
|
|
—
|
|
|
42.0
|
|
|
(34.7
|
)
|
|
7.3
|
|
|||||||
|
Unrealized investment gains, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
159.3
|
|
|
159.3
|
|
|
—
|
|
|
159.3
|
|
|||||||
|
Non-credit related other-than-temporary impairments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|||||||
|
Other unrealized gains
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.3
|
|
|
2.3
|
|
|
2.1
|
|
|
4.4
|
|
|||||||
|
Actuarial adjustments to pension plans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.7
|
)
|
|
(1.7
|
)
|
|
(0.4
|
)
|
|
(2.1
|
)
|
|||||||
|
Translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.2
|
)
|
|
(5.2
|
)
|
|
(5.4
|
)
|
|
(10.6
|
)
|
|||||||
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
196.9
|
|
|
(38.4
|
)
|
|
158.5
|
|
||||||||||||
|
Issuance of subsidiary stock
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
(0.3
|
)
|
|
(0.7
|
)
|
|
27.1
|
|
|
26.4
|
|
|||||||
|
Exercise of stock options
|
0.2
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|||||||
|
Stock compensation
|
—
|
|
|
—
|
|
|
16.6
|
|
|
—
|
|
|
—
|
|
|
16.6
|
|
|
13.9
|
|
|
30.5
|
|
|||||||
|
Restricted stock surrendered for tax withholding
|
—
|
|
|
—
|
|
|
(1.4
|
)
|
|
—
|
|
|
—
|
|
|
(1.4
|
)
|
|
(1.2
|
)
|
|
(2.6
|
)
|
|||||||
|
Capital contribution from a principal stockholder
|
—
|
|
|
—
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
|
—
|
|
|
1.7
|
|
|||||||
|
Preferred stock dividends and accretion
|
—
|
|
|
—
|
|
|
—
|
|
|
(19.8
|
)
|
|
—
|
|
|
(19.8
|
)
|
|
—
|
|
|
(19.8
|
)
|
|||||||
|
Balances at September 30, 2011
|
139.4
|
|
|
1.4
|
|
|
872.7
|
|
|
(128.1
|
)
|
|
149.4
|
|
|
895.4
|
|
|
477.6
|
|
|
1,373.0
|
|
|||||||
|
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
89.5
|
|
|
—
|
|
|
89.5
|
|
|
21.2
|
|
|
110.7
|
|
|||||||
|
Unrealized investment gains, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
275.6
|
|
|
275.6
|
|
|
—
|
|
|
275.6
|
|
|||||||
|
Non-credit related other-than-temporary impairments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|
(0.6
|
)
|
|
—
|
|
|
(0.6
|
)
|
|||||||
|
Other unrealized gains
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
|
0.8
|
|
|
0.7
|
|
|
1.5
|
|
|||||||
|
Actuarial adjustments to pension plans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.6
|
)
|
|
(6.6
|
)
|
|
(5.1
|
)
|
|
(11.7
|
)
|
|||||||
|
Translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.4
|
)
|
|
(4.4
|
)
|
|
(4.2
|
)
|
|
(8.6
|
)
|
|||||||
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
354.3
|
|
|
12.6
|
|
|
366.9
|
|
||||||||||||
|
Purchases of subsidiary stock
|
—
|
|
|
—
|
|
|
(26.0
|
)
|
|
—
|
|
|
(1.0
|
)
|
|
(27.0
|
)
|
|
(58.0
|
)
|
|
(85.0
|
)
|
|||||||
|
Stock compensation
|
0.8
|
|
|
—
|
|
|
16.6
|
|
|
—
|
|
|
—
|
|
|
16.6
|
|
|
14.6
|
|
|
31.2
|
|
|||||||
|
Restricted stock surrendered for tax withholding
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
(1.9
|
)
|
|
(4.0
|
)
|
|||||||
|
Preferred stock dividends and accretion
|
—
|
|
|
—
|
|
|
—
|
|
|
(59.6
|
)
|
|
—
|
|
|
(59.6
|
)
|
|
—
|
|
|
(59.6
|
)
|
|||||||
|
Dividend paid by subsidiary to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23.6
|
)
|
|
(23.6
|
)
|
|||||||
|
Balances at September 30, 2012
|
140.2
|
|
|
1.4
|
|
|
861.2
|
|
|
(98.2
|
)
|
|
413.2
|
|
|
1,177.6
|
|
|
421.3
|
|
|
1,598.9
|
|
|||||||
|
Net Loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(45.8
|
)
|
|
—
|
|
|
(45.8
|
)
|
|
(23.2
|
)
|
|
(69.0
|
)
|
|||||||
|
Unrealized investment losses, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(323.5
|
)
|
|
(323.5
|
)
|
|
—
|
|
|
(323.5
|
)
|
|||||||
|
Non-credit related other-than-temporary impairments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
Other unrealized losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|
(1.5
|
)
|
|
(1.0
|
)
|
|
(2.5
|
)
|
|||||||
|
Actuarial adjustments to pension plans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.1
|
|
|
4.1
|
|
|
1.7
|
|
|
5.8
|
|
|||||||
|
Translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.7
|
)
|
|
(3.7
|
)
|
|
(2.9
|
)
|
|
(6.6
|
)
|
|||||||
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
(370.4
|
)
|
|
(25.4
|
)
|
|
(395.8
|
)
|
||||||||||||
|
Repurchase of common stock
|
(1.7
|
)
|
|
—
|
|
|
(12.3
|
)
|
|
—
|
|
|
—
|
|
|
(12.3
|
)
|
|
—
|
|
|
(12.3
|
)
|
|||||||
|
Issuance of subsidiary stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
Purchases of subsidiary stock
|
—
|
|
|
—
|
|
|
(58.8
|
)
|
|
—
|
|
|
(0.9
|
)
|
|
(59.7
|
)
|
|
(17.4
|
)
|
|
(77.1
|
)
|
|||||||
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
Stock compensation
|
3.1
|
|
|
—
|
|
|
44.5
|
|
|
—
|
|
|
—
|
|
|
44.5
|
|
|
13.1
|
|
|
57.6
|
|
|||||||
|
Restricted stock surrendered for tax withholding
|
—
|
|
|
—
|
|
|
(13.8
|
)
|
|
—
|
|
|
—
|
|
|
(13.8
|
)
|
|
(8.5
|
)
|
|
(22.3
|
)
|
|||||||
|
Preferred stock dividends and accretion
|
—
|
|
|
—
|
|
|
—
|
|
|
(48.4
|
)
|
|
—
|
|
|
(48.4
|
)
|
|
—
|
|
|
(48.4
|
)
|
|||||||
|
Conversion of preferred stock
|
0.8
|
|
|
—
|
|
|
7.2
|
|
|
—
|
|
|
—
|
|
|
7.2
|
|
|
—
|
|
|
7.2
|
|
|||||||
|
Noncontrolling interest in acquired subsidiary
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43.0
|
|
|
43.0
|
|
|||||||
|
Dividend paid by subsidiary to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17.3
|
)
|
|
(17.3
|
)
|
|||||||
|
Balances at September 30, 2013
|
142.4
|
|
|
$
|
1.4
|
|
|
$
|
828.0
|
|
|
$
|
(192.4
|
)
|
|
$
|
87.7
|
|
|
$
|
724.7
|
|
|
$
|
408.8
|
|
|
$
|
1,133.5
|
|
|
HARBINGER GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
|
|||||||||||
|
|
Year ended September 30,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
|
|
|
|
|
|
||||||
|
Cash flows from operating activities:
|
|
|
|
|
|
||||||
|
Net (loss) income
|
$
|
(69.0
|
)
|
|
$
|
110.7
|
|
|
$
|
7.3
|
|
|
Adjustments to reconcile net (loss) income to operating cash flows:
|
|
|
|
|
|
||||||
|
Depreciation of properties
|
98.6
|
|
|
44.0
|
|
|
48.8
|
|
|||
|
Amortization of intangibles
|
260.1
|
|
|
224.3
|
|
|
46.6
|
|
|||
|
Intangible asset impairment
|
—
|
|
|
—
|
|
|
32.5
|
|
|||
|
Impairment of oil and natural gas properties
|
54.3
|
|
|
—
|
|
|
—
|
|
|||
|
Stock compensation
|
61.5
|
|
|
31.2
|
|
|
30.5
|
|
|||
|
Amortization of debt issuance costs
|
18.1
|
|
|
12.8
|
|
|
15.0
|
|
|||
|
Amortization of debt discount
|
3.0
|
|
|
1.3
|
|
|
5.4
|
|
|||
|
Write-off of debt issuance costs on retired debt
|
32.4
|
|
|
2.9
|
|
|
15.4
|
|
|||
|
Write-off of debt discount on retired debt
|
(3.1
|
)
|
|
(0.5
|
)
|
|
9.0
|
|
|||
|
Deferred income taxes
|
170.7
|
|
|
(197.4
|
)
|
|
16.5
|
|
|||
|
Bargain purchase gain from business acquisition
|
—
|
|
|
—
|
|
|
(158.3
|
)
|
|||
|
Gain on contingent purchase price reduction
|
—
|
|
|
(41.0
|
)
|
|
—
|
|
|||
|
Cost of trading securities acquired for resale
|
—
|
|
|
(643.8
|
)
|
|
(770.5
|
)
|
|||
|
Proceeds from trading securities sold
|
—
|
|
|
766.1
|
|
|
757.0
|
|
|||
|
Interest credited/index credits to contractholder account balances
|
375.0
|
|
|
586.8
|
|
|
140.0
|
|
|||
|
Collateral received (paid)
|
72.0
|
|
|
49.3
|
|
|
(148.4
|
)
|
|||
|
Amortization of fixed maturity discounts and premiums
|
16.7
|
|
|
86.9
|
|
|
59.9
|
|
|||
|
Net recognized (gains) losses on investments and derivatives
|
(411.8
|
)
|
|
(231.9
|
)
|
|
181.2
|
|
|||
|
Charges assessed to contractholders for mortality and administration
|
(31.5
|
)
|
|
(14.9
|
)
|
|
(28.4
|
)
|
|||
|
Deferred policy acquisition costs
|
(147.4
|
)
|
|
(194.9
|
)
|
|
(41.2
|
)
|
|||
|
Cash transferred to reinsurer
|
—
|
|
|
(176.8
|
)
|
|
(52.6
|
)
|
|||
|
Non-cash increase to cost of goods sold due to the sale of HHI Business acquisition inventory
|
31.0
|
|
|
—
|
|
|
—
|
|
|||
|
Non-cash restructuring and related charges
|
—
|
|
|
5.2
|
|
|
15.1
|
|
|||
|
Changes in operating assets and liabilities:
|
(8.3
|
)
|
|
202.2
|
|
|
(25.3
|
)
|
|||
|
Net change in cash due to operating activities
|
522.3
|
|
|
622.5
|
|
|
155.5
|
|
|||
|
|
|
|
|
|
|
||||||
|
Cash flows from investing activities:
|
|
|
|
|
|
||||||
|
Proceeds from investments sold, matured or repaid
|
9,432.2
|
|
|
6,206.7
|
|
|
1,699.9
|
|
|||
|
Cost of investments acquired
|
(8,940.8
|
)
|
|
(5,972.7
|
)
|
|
(1,809.0
|
)
|
|||
|
Acquisitions, net of cash acquired
|
(2,014.8
|
)
|
|
(185.1
|
)
|
|
684.4
|
|
|||
|
Asset-based loans originated, net
|
(386.6
|
)
|
|
(181.5
|
)
|
|
—
|
|
|||
|
Capital expenditures
|
(100.1
|
)
|
|
(53.5
|
)
|
|
(38.2
|
)
|
|||
|
Other investing activities, net
|
(0.7
|
)
|
|
0.5
|
|
|
(5.1
|
)
|
|||
|
Net change in cash due to investing activities
|
(2,010.8
|
)
|
|
(185.6
|
)
|
|
532.0
|
|
|||
|
|
|
|
|
|
|
||||||
|
Cash flows from financing activities:
|
|
|
|
|
|
||||||
|
Proceeds from issuance of new debt
|
4,444.0
|
|
|
517.0
|
|
|
498.5
|
|
|||
|
Repayment of debt, including tender and call premiums
|
(1,608.5
|
)
|
|
(524.6
|
)
|
|
(230.5
|
)
|
|||
|
Revolving credit facility activity
|
(299.9
|
)
|
|
0.4
|
|
|
5.8
|
|
|||
|
Debt issuance costs
|
(100.4
|
)
|
|
(11.2
|
)
|
|
(28.8
|
)
|
|||
|
Proceeds from issuance of preferred stock, net of issuance cost
|
—
|
|
|
—
|
|
|
386.0
|
|
|||
|
Purchases of subsidiary stock, net
|
(77.1
|
)
|
|
(85.0
|
)
|
|
—
|
|
|||
|
Contractholder account deposits
|
1,361.8
|
|
|
2,040.5
|
|
|
495.0
|
|
|||
|
Contractholder account withdrawals
|
(1,712.5
|
)
|
|
(1,979.6
|
)
|
|
(960.0
|
)
|
|||
|
Dividend paid by subsidiary to noncontrolling interest
|
(17.4
|
)
|
|
(23.6
|
)
|
|
—
|
|
|||
|
Dividends paid on preferred stock
|
(33.4
|
)
|
|
(31.7
|
)
|
|
—
|
|
|||
|
Share based award tax withholding payments
|
(22.3
|
)
|
|
(3.9
|
)
|
|
(2.5
|
)
|
|||
|
Common stock repurchased
|
(12.3
|
)
|
|
—
|
|
|
—
|
|
|||
|
Other financing activities, net
|
—
|
|
|
(1.0
|
)
|
|
28.6
|
|
|||
|
Net change in cash due to financing activities
|
1,922.0
|
|
|
(102.7
|
)
|
|
192.1
|
|
|||
|
Effect of exchange rate changes on cash and cash equivalents
|
(4.5
|
)
|
|
(0.9
|
)
|
|
0.9
|
|
|||
|
Net change in cash and cash equivalents
|
429.0
|
|
|
333.3
|
|
|
880.5
|
|
|||
|
Cash and cash equivalents at beginning of period
|
1,470.7
|
|
|
1,137.4
|
|
|
256.9
|
|
|||
|
Cash and cash equivalents at end of period
|
$
|
1,899.7
|
|
|
$
|
1,470.7
|
|
|
$
|
1,137.4
|
|
|
|
|
|
|
|
|
||||||
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
|
Cash paid for interest
|
$
|
450.4
|
|
|
$
|
238.6
|
|
|
$
|
190.2
|
|
|
Cash paid for taxes, net
|
53.4
|
|
|
47.2
|
|
|
37.2
|
|
|||
|
•
|
The estimated range and period until recovery;
|
|
•
|
Current delinquencies and nonperforming assets of underlying collateral;
|
|
•
|
Expected future default rates;
|
|
•
|
Collateral value by vintage, geographic region, industry concentration or property type;
|
|
•
|
Subordination levels or other credit enhancements as of the balance sheet date as compared to origination; and
|
|
•
|
Contractual and regulatory cash obligations.
|
|
•
|
FGH does not expect full recovery of its amortized cost based on the estimate of cash flows expected to be collected;
|
|
•
|
FGH intends to sell a security; or
|
|
•
|
It is more likely than not that FGH will be required to sell a security prior to recovery.
|
|
•
|
Pass
- Loans with standard, acceptable levels of credit risk. Salus scores these loans between 1 and 5;
|
|
•
|
Special mention
- Loans that have potential weaknesses that deserve close attention, and which, if left uncorrected, may result in deterioration of our credit position at some future date. Salus scores these loans as a 6;
|
|
•
|
Substandard
- Loans that are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well‑defined weakness or weaknesses and are characterized by the distinct possibility that Salus will sustain some loss if the deficiencies are not corrected. Although substandard loans in the aggregate may have a distinct potential for loss, an individual loan’s loss potential does not have to be distinct for the asset to be rated substandard. Salus scores these loans as either 7 or 8 depending on the accrual status; and
|
|
•
|
Doubtful
- Loans that have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses make collection or liquidation in full improbable based on currently existing facts, conditions, and values. Salus scores these loans as either a 9 or 10.
|
|
|
Year ended
|
|||||||
|
|
|
September 30,
2012 |
|
September 30,
2011 |
||||
|
|
|
|
|
|
||||
|
Net change in cash due to operating activities
|
|
$
|
4.0
|
|
|
$
|
2.5
|
|
|
|
|
|
|
|
||||
|
Net change in cash due to financing activities
|
|
$
|
(4.0
|
)
|
|
$
|
(2.5
|
)
|
|
Negotiated sales price, excluding TLM Taiwan
|
|
$
|
1,300.0
|
|
|
Working capital and other adjustments at December 17, 2012 close
|
|
(10.7
|
)
|
|
|
Final working capital adjustment
|
|
(7.7
|
)
|
|
|
Final purchase price, excluding TLM Taiwan
|
|
1,281.6
|
|
|
|
Negotiated sales price, TLM Taiwan
|
|
100.0
|
|
|
|
Final TLM Taiwan working capital and other adjustments
|
|
(6.5
|
)
|
|
|
Total HHI Business purchase price
|
|
$
|
1,375.1
|
|
|
|
HHI Business Preliminary Valuation
|
|
TLM Taiwan Preliminary Valuation
|
|
|
|
Preliminary Valuation
|
||||||||
|
|
December 30,
2012 |
|
June 30,
2013 |
|
Adjustments/reclassifications
|
|
September 30,
2013 |
||||||||
|
Cash
|
$
|
17.4
|
|
|
$
|
0.8
|
|
|
$
|
5.8
|
|
|
$
|
24.0
|
|
|
Accounts receivable
|
104.6
|
|
|
—
|
|
|
4.0
|
|
|
108.6
|
|
||||
|
Inventory
|
207.2
|
|
|
1.1
|
|
|
0.1
|
|
|
208.4
|
|
||||
|
Prepaid expenses and other
|
13.3
|
|
|
2.2
|
|
|
(6.2
|
)
|
|
9.3
|
|
||||
|
Property, plant and equipment
|
104.5
|
|
|
36.8
|
|
|
(2.9
|
)
|
|
138.4
|
|
||||
|
Intangible assets
|
470.0
|
|
|
17.1
|
|
|
2.0
|
|
|
489.1
|
|
||||
|
Other long-term assets
|
3.1
|
|
|
0.1
|
|
|
4.4
|
|
|
7.6
|
|
||||
|
Total assets acquired
|
920.1
|
|
|
58.1
|
|
|
7.2
|
|
|
985.4
|
|
||||
|
Accounts payable
|
130.1
|
|
|
—
|
|
|
8.0
|
|
|
138.1
|
|
||||
|
Deferred tax liability - current
|
7.1
|
|
|
—
|
|
|
0.1
|
|
|
7.2
|
|
||||
|
Accrued liabilities
|
37.6
|
|
|
0.2
|
|
|
5.0
|
|
|
42.8
|
|
||||
|
Deferred tax liability - long-term
|
104.7
|
|
|
1.9
|
|
|
9.8
|
|
|
116.4
|
|
||||
|
Other long-term liabilities
|
11.2
|
|
|
8.1
|
|
|
0.4
|
|
|
19.7
|
|
||||
|
Total liabilities assumed
|
290.7
|
|
|
10.2
|
|
|
23.3
|
|
|
324.2
|
|
||||
|
Total identifiable net assets
|
629.4
|
|
|
47.9
|
|
|
(16.1
|
)
|
|
661.2
|
|
||||
|
Non-controlling interests
|
(2.2
|
)
|
|
—
|
|
|
(1.7
|
)
|
|
(3.9
|
)
|
||||
|
Goodwill
|
662.1
|
|
|
45.6
|
|
|
10.1
|
|
|
717.8
|
|
||||
|
Total net assets acquired
|
$
|
1,289.3
|
|
|
$
|
93.5
|
|
|
$
|
(7.7
|
)
|
|
$
|
1,375.1
|
|
|
•
|
Inventories
- An adjustment of
$31.0
was recorded to adjust inventory to fair value. Finished goods were valued at estimated selling prices less the sum of costs of disposal and a reasonable profit allowance for the selling effort.
|
|
•
|
Property, plant and equipment, net
- An adjustment of
$10.0
was recorded to adjust the net book value of property, plant and equipment to fair value giving consideration to the highest and best use of the assets. The valuation of the property, plant and equipment was based on the cost approach.
|
|
•
|
Certain indefinite-lived intangible assets were valued using a relief from royalty methodology. Customer relationships and certain definite-lived intangible assets were valued using a multi-period excess earnings method. The total fair value of indefinite and definite lived intangibles was
$489.1
. A summary of the significant key inputs is as follows:
|
|
•
|
Spectrum Brands valued customer relationships using the income approach, specifically the multi-period excess earnings method. In determining the fair value of the customer relationships, the multi-period excess earnings approach values the intangible asset at the present value of the incremental after-tax cash flows attributable only to the customer relationship after deducting contributory asset charges. The incremental after-tax cash flows attributable to the subject intangible asset are then discounted to their present value. Only expected sales from current customers were used, which included an expected growth rate of
2.5%
-
15.5%
. Spectrum Brands assumed a customer retention rate of approximately
95.0%
, which was supported by historical retention rates. Income taxes were estimated at
17.0%
-
35.0%
and amounts were discounted using a rate of
12.0%
. The customer relationships were valued at
$90.0
under this approach and will be amortized over
20
years.
|
|
•
|
Spectrum Brands valued indefinite lived trade names and trademarks using the income approach, specifically the relief from royalty method. Under this method, the asset value was determined by estimating the hypothetical royalties that would have to be paid if the trade name was not owned. Royalty rates were selected based on consideration of several factors, including prior transactions of the HHI Business, related trademarks and trade names, other similar trademark licensing and transaction agreements and the relative profitability and perceived contribution of the trademarks and trade names. Royalty rates used in the determination of the fair values of trade names and trademarks ranged from
3.0%
-
5.0%
of expected net sales related to the respective trade names and trademarks. Spectrum Brands anticipates using the majority of the trade names and trademarks for an indefinite period as demonstrated by the sustained use of each subject trademark. In estimating the fair value of the trademarks and trade names, net sales for significant trade names and trademarks were estimated to grow at a rate of
2.5%
-
5.0%
annually with a terminal year growth rate of
2.5%
. Income taxes were estimated at
35.0%
and amounts were discounted using a rate of
12.0%
. Trade name and trademarks were valued at
$331.0
under this approach.
|
|
•
|
Spectrum Brands valued definite lived trade names using the income approach, specifically the relief from royalty method. Under this method, the asset value was determined by estimating the hypothetical royalties that would have to be paid if the trade name was not owned. Royalty rates were selected based on consideration of several factors, including prior transactions of the HHI Business, related trademarks and trade names, other similar trademark licensing and transaction agreements and the relative profitability and perceived contribution of the trademarks and trade names. The royalty rates used in the determination of the fair values of the trade names ranged from
1.0%
-
3.5%
of expected net sales related to the respective trade name. Spectrum Brands assumed an
8
year useful life of the trade name. In estimating the fair value of the trade name, net sales for the trade name were estimated to grow at a rate of
2.5%
-
15.5%
annually. Income taxes were estimated at
17.0%
-
35.0%
and amounts were discounted using a rate of
12.0%
. The trade names were valued at
$4.1
under this approach.
|
|
•
|
Spectrum Brands valued a trade name license agreement using the income approach, specifically the relief from royalty method. Under this method, the asset value was determined by estimating the hypothetical royalties that would have to be paid if the trade name was not owned. Royalty rates were selected based on consideration of several factors, including prior transactions of the HHI Business, related trademarks and trade names, other similar trademark licensing and transaction agreements and the relative profitability and perceived contribution of the trademarks and trade names. The royalty rate used in the determination of the fair value of the trade name license agreement was
4.0%
of expected net sales related to the respective trade name. In estimating the fair value of the trade name license agreement, net sales were estimated to grow at a rate of
2.5%
-
5.0%
annually. Spectrum Brands assumed a
5
year useful life of the trade name license agreement. Income taxes were estimated at
35.0%
and amounts were discounted using a rate of
12.0%
. The trade name license agreement was valued at
$13.0
under this approach.
|
|
•
|
Spectrum Brands valued technology using the income approach, specifically the relief from royalty method. Under this method, the asset value was determined by estimating the hypothetical royalties that would have to be paid if the technology was not owned. Royalty rates were selected based on consideration of several factors, including prior transactions of the HHI Business, related licensing agreements and the importance of the technology and profit levels, among other considerations. Royalty rates used in the determination of the fair values of technologies ranged from
4.0%
-
5.0%
of expected net sales related to the respective technology. Spectrum Brands anticipates using these technologies through the legal life of the underlying patent and therefore the expected life of these technologies was equal to the remaining legal life of the underlying patents which was
10
years. In estimating the fair value of the technologies, net sales were estimated to grow at a rate of
2.5%
-
31.0%
annually. Income taxes were estimated at
35.0%
and amounts were discounted using the rate of
12.0%
. The technology assets were valued at
$51.0
under this approach.
|
|
•
|
Deferred tax liabilities, net - An adjustment of
$123.6
was recorded to adjust deferred taxes for the preliminary fair value adjustments made in accounting for the purchase.
|
|
|
|
November 8,
2012 |
||
|
Negotiated sales price
|
|
$
|
50.0
|
|
|
Preliminary working capital adjustment
|
|
(0.4
|
)
|
|
|
Final working capital adjustment
|
|
0.1
|
|
|
|
Preliminary purchase price
|
|
$
|
49.7
|
|
|
|
Preliminary Valuation
|
|
|
|
Preliminary Valuation
|
||||||
|
|
December 30,
2012 |
|
Adjustments/reclassifications
|
|
September 30,
2013 |
||||||
|
Cash
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
0.9
|
|
|
Intangible asset
|
35.5
|
|
|
(6.2
|
)
|
|
29.3
|
|
|||
|
Other assets
|
2.7
|
|
|
(2.5
|
)
|
|
0.2
|
|
|||
|
Total assets acquired
|
39.1
|
|
|
(8.7
|
)
|
|
30.4
|
|
|||
|
Total liabilities assumed
|
14.4
|
|
|
(5.6
|
)
|
|
8.8
|
|
|||
|
Total identifiable net assets
|
24.7
|
|
|
(3.1
|
)
|
|
21.6
|
|
|||
|
Non-controlling interest
|
(39.0
|
)
|
|
(0.1
|
)
|
|
(39.1
|
)
|
|||
|
Goodwill
|
63.9
|
|
|
3.3
|
|
|
67.2
|
|
|||
|
Total identifiable net assets
|
$
|
49.6
|
|
|
$
|
0.1
|
|
|
$
|
49.7
|
|
|
•
|
Spectrum Brands valued the technology assets using the income approach, specifically the relief from royalty method. Under this method, the asset value was determined by estimating the hypothetical royalties that would have to be paid if the technology was not owned. Royalty rates were selected based on consideration of several factors, including prior transactions of Shaser, related licensing agreements and the importance of the technology and profit levels, among other considerations. The royalty rate used in the determination of the fair value of the technology asset was
10.5%
of expected net sales related to the technology. Spectrum Brands anticipates using the technology through the legal life of the underlying patent and therefore the expected life of the technology was equal to the remaining legal life of the underlying patent which was
13
years. In estimating the fair value of the technology, net sales were estimated to grow at a long-term rate of
3.0%
annually. Income taxes were estimated at
35.0%
and amounts were discounted using the rate of
11.0%
. The technology asset was valued at approximately
$29.3
under this approach.
|
|
•
|
Spectrum Brands valued the non-controlling interest in Shaser, a private company, by applying both income and market approaches. Under these methods, the non-controlling value was determined by using a discounted cash flow method, a guideline companies method, and a recent transaction approach. In estimating the fair value of the non-controlling interest, key assumptions include (i) cash flow projections based on market participant data and estimates by Spectrum Brands management, with net sales estimated to grow at a terminal growth rate of
3.0%
annually, income taxes estimated at
35.0%
, and amounts discounted using a rate of
17.0%
, (ii) financial multiples of companies deemed to be similar to Shaser, and (iii) adjustments because of lack of control or lack of marketability that market participants would consider when estimating the fair value of the non-controlling interest in Shaser. The non-controlling interest was valued at
$39.0
under this approach.
|
|
•
|
Spectrum Brands, in connection with valuing the non-controlling interest in Shaser, also valued the Call Option. In addition to the valuation methods and key assumptions discussed above, Spectrum Brands compared the forecasted revenue and EBITDA multiples, as defined, associated with the Call Option to current guideline companies. The Call Option was determined to have an immaterial value under this approach.
|
|
|
EXCO's Contributed Assets
February 14, 2013 |
|
BG Cotton Valley Assets
March 5, 2013 |
||||||||||||
|
|
EXCO/HGI JV
|
|
HGI's Proportionate Interest
|
|
EXCO/HGI JV
|
|
HGI's Proportionate Interest
|
||||||||
|
Assets acquired:
|
|
|
|
|
|
|
|
||||||||
|
Cash
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Oil and natural gas properties
|
|
|
|
|
|
|
|
||||||||
|
Unproved oil and natural gas properties
|
65.1
|
|
|
48.5
|
|
|
7.2
|
|
|
5.4
|
|
||||
|
Proved developed and undeveloped oil and natural gas properties
|
632.2
|
|
|
471.0
|
|
|
130.9
|
|
|
97.5
|
|
||||
|
Total oil and natural gas properties
|
697.3
|
|
|
519.5
|
|
|
138.1
|
|
|
102.9
|
|
||||
|
Gas Gathering and other assets
|
32.7
|
|
|
24.5
|
|
|
—
|
|
|
—
|
|
||||
|
Liabilities assumed:
|
|
|
|
|
|
|
|
||||||||
|
Accounts payable and other current liabilities
|
(10.8
|
)
|
|
(8.0
|
)
|
|
—
|
|
|
—
|
|
||||
|
Other liabilities
|
(24.8
|
)
|
|
(18.5
|
)
|
|
(7.4
|
)
|
|
(5.5
|
)
|
||||
|
Total purchase price
|
$
|
694.5
|
|
|
$
|
517.6
|
|
|
$
|
130.7
|
|
|
$
|
97.4
|
|
|
|
|
Provisional
Amounts
|
|
Fiscal 2012
Measurement
Period
Adjustments
|
|
Final Amounts
|
||||||
|
Investments, cash and accrued investment income, including cash acquired of $1,040.5
|
|
$
|
17,705.4
|
|
|
$
|
—
|
|
|
$
|
17,705.4
|
|
|
Reinsurance recoverable
|
|
929.8
|
|
|
15.2
|
|
|
945.0
|
|
|||
|
Intangible assets (VOBA)
|
|
577.2
|
|
|
—
|
|
|
577.2
|
|
|||
|
Deferred tax assets
|
|
256.6
|
|
|
(3.9
|
)
|
|
252.7
|
|
|||
|
Other assets
|
|
72.8
|
|
|
—
|
|
|
72.8
|
|
|||
|
Total assets acquired
|
|
19,541.8
|
|
|
11.3
|
|
|
19,553.1
|
|
|||
|
Contractholder funds and future policy benefits
|
|
18,415.0
|
|
|
—
|
|
|
18,415.0
|
|
|||
|
Liability for policy and contract claims
|
|
60.4
|
|
|
—
|
|
|
60.4
|
|
|||
|
Note payable
|
|
95.0
|
|
|
—
|
|
|
95.0
|
|
|||
|
Other liabilities
|
|
475.3
|
|
|
4.1
|
|
|
479.4
|
|
|||
|
Total liabilities assumed
|
|
19,045.7
|
|
|
4.1
|
|
|
19,049.8
|
|
|||
|
Net assets acquired
|
|
496.1
|
|
|
7.2
|
|
|
503.3
|
|
|||
|
Cash consideration, net of $5.0 re-characterized as expense
|
|
345.0
|
|
|
—
|
|
|
345.0
|
|
|||
|
Bargain purchase gain
|
|
$
|
151.1
|
|
|
$
|
7.2
|
|
|
$
|
158.3
|
|
|
Deferred tax assets:
|
|
|
||
|
DAC
|
|
$
|
96.8
|
|
|
Insurance reserves and claim related adjustments
|
|
401.7
|
|
|
|
Net operating losses
|
|
128.4
|
|
|
|
Capital losses (carryovers and deferred)
|
|
267.5
|
|
|
|
Tax credits
|
|
75.2
|
|
|
|
Other deferred tax assets
|
|
24.1
|
|
|
|
Total deferred tax assets
|
|
993.7
|
|
|
|
Valuation allowance
|
|
(405.4
|
)
|
|
|
Deferred tax assets, net of valuation allowance
|
|
588.3
|
|
|
|
Deferred tax liabilities:
|
|
|
||
|
VOBA
|
|
202.0
|
|
|
|
Investments
|
|
121.2
|
|
|
|
Other deferred tax liabilities
|
|
12.4
|
|
|
|
Total deferred tax liabilities
|
|
335.6
|
|
|
|
Net deferred tax assets
|
|
$
|
252.7
|
|
|
|
September 30,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
(a)
|
||||||
|
|
|
|
|
|
|
||||||
|
Revenues:
|
|
|
|
|
|
||||||
|
Reported revenues
|
$
|
5,543.4
|
|
|
$
|
4,480.7
|
|
|
$
|
3,477.7
|
|
|
FGH adjustment (b)
|
—
|
|
|
—
|
|
|
685.8
|
|
|||
|
HHI adjustment
|
191.8
|
|
|
973.6
|
|
|
975.1
|
|
|||
|
EXCO/HGI JV adjustment
|
53.7
|
|
|
149.3
|
|
|
213.8
|
|
|||
|
Pro forma revenues
|
$
|
5,788.9
|
|
|
$
|
5,603.6
|
|
|
$
|
5,352.4
|
|
|
|
|
|
|
|
|
||||||
|
Net (loss) income:
|
|
|
|
|
|
||||||
|
Reported net (loss) income
|
$
|
(69.0
|
)
|
|
$
|
110.7
|
|
|
$
|
7.3
|
|
|
FGH adjustment (b)
|
—
|
|
|
—
|
|
|
84.9
|
|
|||
|
HHI adjustment
|
4.9
|
|
|
76.1
|
|
|
77.0
|
|
|||
|
EXCO/HGI JV adjustment
|
(0.4
|
)
|
|
(6.8
|
)
|
|
49.4
|
|
|||
|
Pro forma net (loss) income
|
$
|
(64.5
|
)
|
|
$
|
180.0
|
|
|
$
|
218.6
|
|
|
|
|
|
|
|
|
||||||
|
Basic net (loss) income per common share attributable to controlling interest:
|
|
|
|
|
|
||||||
|
Reported net (loss) income per common share
|
$
|
(0.67
|
)
|
|
$
|
0.15
|
|
|
$
|
0.11
|
|
|
FGH adjustment
|
—
|
|
|
—
|
|
|
0.61
|
|
|||
|
HHI adjustment
|
0.04
|
|
|
0.55
|
|
|
0.55
|
|
|||
|
EXCO/HGI JV adjustment
|
—
|
|
|
(0.05
|
)
|
|
0.35
|
|
|||
|
Pro forma net (loss) income per common share
|
$
|
(0.63
|
)
|
|
$
|
0.65
|
|
|
$
|
1.62
|
|
|
|
|
|
|
|
|
||||||
|
Diluted net (loss) income per common share attributable to controlling interest:
|
|
|
|
|
|
||||||
|
Reported diluted net (loss) income per common share
|
$
|
(0.67
|
)
|
|
$
|
0.15
|
|
|
$
|
0.09
|
|
|
FGH adjustment
|
—
|
|
|
—
|
|
|
0.54
|
|
|||
|
HHI adjustment
|
0.04
|
|
|
0.54
|
|
|
0.49
|
|
|||
|
EXCO/HGI JV adjustment
|
—
|
|
|
(0.05
|
)
|
|
0.31
|
|
|||
|
Pro forma diluted net (loss) income per common share
|
$
|
(0.63
|
)
|
|
$
|
0.64
|
|
|
$
|
1.43
|
|
|
(a)
|
Reported revenues and net income for
Fiscal 2011
include the actual reported results of FGH for the approximate six month period subsequent to April 6, 2011. Reported net income also includes the
$158.3
non-recurring bargain purchase gain which was recorded as of the FGL Acquisition Date, and reflects the retrospective measurement period adjustments disclosed above.
|
|
(b)
|
The pro forma information primarily reflects the following pro forma adjustments applied to FGH’s historical results:
|
|
•
|
Reduction in net investment income to reflect amortization of the premium on fixed maturity securities — available-for-sale resulting from the fair value adjustment of these assets;
|
|
•
|
Reversal of amortization associated with the elimination of FGH’s historical DAC;
|
|
•
|
Amortization of VOBA associated with the establishment of VOBA arising from the acquisition;
|
|
•
|
Adjustments to reflect the impacts of the recapture of the life business from OM Re and the retrocession of the majority of the recaptured business and the reinsurance of certain life business previously not reinsured to an unaffiliated third party reinsurer, including the amortization of the related
$13.8
Structuring Fee;
|
|
•
|
Adjustments to eliminate interest expense on notes payable to seller and add interest expense on the new
$95.0
surplus note payable (which was subsequently settled in October 2011);
|
|
•
|
Adjustments to reflect the full-period effect of interest expense on the initial
$350.0
of
10.625%
Notes issued on November 15, 2010, the proceeds of which were used to fund the FGL Acquisition; and
|
|
•
|
Reversal of the change in the deferred tax valuation allowance included in the income tax provision.
|
|
|
September 30,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
SB/RH Merger
|
|
|
|
|
|
||||||
|
Integration costs
|
$
|
3.5
|
|
|
$
|
10.2
|
|
|
$
|
23.1
|
|
|
Employee termination charges
|
0.2
|
|
|
3.9
|
|
|
8.1
|
|
|||
|
Legal and professional fees
|
—
|
|
|
1.5
|
|
|
4.9
|
|
|||
|
|
3.7
|
|
|
15.6
|
|
|
36.1
|
|
|||
|
HHI Business
|
|
|
|
|
|
||||||
|
Legal and professional fees
|
27.7
|
|
|
—
|
|
|
—
|
|
|||
|
Integration costs
|
8.9
|
|
|
—
|
|
|
—
|
|
|||
|
Employee termination charges
|
0.3
|
|
|
—
|
|
|
—
|
|
|||
|
|
36.9
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
|
FGL
|
—
|
|
|
—
|
|
|
22.7
|
|
|||
|
Spectrum Brands
|
—
|
|
|
—
|
|
|
1.1
|
|
|||
|
EXCO/HGI JV
|
9.2
|
|
|
—
|
|
|
—
|
|
|||
|
FURminator
|
2.3
|
|
|
7.9
|
|
|
—
|
|
|||
|
BlackFlag
|
0.2
|
|
|
3.4
|
|
|
—
|
|
|||
|
Shaser
|
4.8
|
|
|
—
|
|
|
—
|
|
|||
|
Other
|
5.3
|
|
|
7.9
|
|
|
3.7
|
|
|||
|
Total acquisition and integration related charges
|
$
|
62.4
|
|
|
$
|
34.8
|
|
|
$
|
63.6
|
|
|
|
September 30, 2013
|
||||||||||||||||||
|
|
Cost or Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
|
Carrying Value
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Fixed-maturity securities, available-for sale
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Asset-backed securities
|
$
|
1,505.7
|
|
|
$
|
22.6
|
|
|
$
|
(5.2
|
)
|
|
$
|
1,523.1
|
|
|
$
|
1,523.1
|
|
|
Commercial mortgage-backed securities
|
431.3
|
|
|
24.7
|
|
|
(1.6
|
)
|
|
454.4
|
|
|
454.4
|
|
|||||
|
Corporates
|
9,314.7
|
|
|
288.7
|
|
|
(185.1
|
)
|
|
9,418.3
|
|
|
9,418.3
|
|
|||||
|
Hybrids
|
412.6
|
|
|
19.5
|
|
|
(3.3
|
)
|
|
428.8
|
|
|
428.8
|
|
|||||
|
Municipals
|
998.8
|
|
|
49.0
|
|
|
(40.8
|
)
|
|
1,007.0
|
|
|
1,007.0
|
|
|||||
|
Agency residential mortgage-backed securities
|
96.5
|
|
|
2.4
|
|
|
(0.3
|
)
|
|
98.6
|
|
|
98.6
|
|
|||||
|
Non-agency residential mortgage-backed securities
|
1,304.0
|
|
|
77.4
|
|
|
(13.4
|
)
|
|
1,368.0
|
|
|
1,368.0
|
|
|||||
|
U.S. Government
|
998.5
|
|
|
7.2
|
|
|
(3.9
|
)
|
|
1,001.8
|
|
|
1,001.8
|
|
|||||
|
Total fixed maturities
|
15,062.1
|
|
|
491.5
|
|
|
(253.6
|
)
|
|
15,300.0
|
|
|
15,300.0
|
|
|||||
|
Equity securities
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Available-for-sale
|
274.6
|
|
|
6.7
|
|
|
(10.3
|
)
|
|
271.0
|
|
|
271.0
|
|
|||||
|
Held for trading
|
120.1
|
|
|
0.6
|
|
|
(39.2
|
)
|
|
81.5
|
|
|
81.5
|
|
|||||
|
Total equity securities
|
394.7
|
|
|
7.3
|
|
|
(49.5
|
)
|
|
352.5
|
|
|
352.5
|
|
|||||
|
Derivatives
|
141.7
|
|
|
88.5
|
|
|
(8.4
|
)
|
|
221.8
|
|
|
221.8
|
|
|||||
|
Asset-based loans
|
560.4
|
|
|
—
|
|
|
—
|
|
|
560.4
|
|
|
560.4
|
|
|||||
|
Other invested assets
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Policy loans and other invested assets
|
31.2
|
|
|
—
|
|
|
—
|
|
|
31.2
|
|
|
31.2
|
|
|||||
|
Total investments
|
$
|
16,190.1
|
|
|
$
|
587.3
|
|
|
$
|
(311.5
|
)
|
|
$
|
16,465.9
|
|
|
$
|
16,465.9
|
|
|
|
September 30, 2012
|
||||||||||||||||||
|
|
Cost or Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
|
Carrying Value
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Fixed-maturity securities, available-for-sale
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Asset-backed securities
|
$
|
1,010.9
|
|
|
$
|
18.6
|
|
|
$
|
(1.6
|
)
|
|
$
|
1,027.9
|
|
|
$
|
1,027.9
|
|
|
Commercial mortgage-backed securities
|
520.0
|
|
|
36.2
|
|
|
(2.4
|
)
|
|
553.8
|
|
|
553.8
|
|
|||||
|
Corporates
|
10,211.8
|
|
|
807.2
|
|
|
(10.0
|
)
|
|
11,009.0
|
|
|
11,009.0
|
|
|||||
|
Hybrids
|
519.0
|
|
|
18.8
|
|
|
(9.6
|
)
|
|
528.2
|
|
|
528.2
|
|
|||||
|
Municipals
|
1,083.2
|
|
|
141.9
|
|
|
(1.1
|
)
|
|
1,224.0
|
|
|
1,224.0
|
|
|||||
|
Agency residential mortgage-backed securities
|
149.5
|
|
|
5.8
|
|
|
(0.3
|
)
|
|
155.0
|
|
|
155.0
|
|
|||||
|
Non-agency residential mortgage-backed securities
|
629.1
|
|
|
35.8
|
|
|
(4.3
|
)
|
|
660.6
|
|
|
660.6
|
|
|||||
|
U.S. Government
|
917.5
|
|
|
12.9
|
|
|
—
|
|
|
930.4
|
|
|
930.4
|
|
|||||
|
Total fixed-maturity securities
|
15,041.0
|
|
|
1,077.2
|
|
|
(29.3
|
)
|
|
16,088.9
|
|
|
16,088.9
|
|
|||||
|
Equity securities
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Available-for-sale
|
237.5
|
|
|
11.9
|
|
|
(1.3
|
)
|
|
248.1
|
|
|
248.1
|
|
|||||
|
Held for trading
|
191.8
|
|
|
—
|
|
|
(45.0
|
)
|
|
146.8
|
|
|
146.8
|
|
|||||
|
Total equity securities
|
429.3
|
|
|
11.9
|
|
|
(46.3
|
)
|
|
394.9
|
|
|
394.9
|
|
|||||
|
Derivatives
|
142.1
|
|
|
67.0
|
|
|
(8.4
|
)
|
|
200.7
|
|
|
200.7
|
|
|||||
|
Asset-based loans
|
180.1
|
|
|
—
|
|
|
—
|
|
|
180.1
|
|
|
180.1
|
|
|||||
|
Other invested assets
|
|
|
|
|
|
|
|
|
|
||||||||||
|
U.S. Treasuries and certificate of deposit, held-to-maturity
|
35.0
|
|
|
—
|
|
|
—
|
|
|
35.0
|
|
|
35.0
|
|
|||||
|
Policy loans and other invested assets
|
18.8
|
|
|
—
|
|
|
—
|
|
|
18.8
|
|
|
18.8
|
|
|||||
|
Total other invested assets
|
53.8
|
|
|
—
|
|
|
—
|
|
|
53.8
|
|
|
53.8
|
|
|||||
|
Total investments
|
$
|
15,846.3
|
|
|
$
|
1,156.1
|
|
|
$
|
(84.0
|
)
|
|
$
|
16,918.4
|
|
|
$
|
16,918.4
|
|
|
|
September 30, 2013
|
||||||
|
|
Amortized Cost
|
|
Fair Value
|
||||
|
Corporates, Non-structured Hybrids, Municipal and U.S. Government securities:
|
|
|
|
||||
|
Due in one year or less
|
$
|
978.5
|
|
|
$
|
982.4
|
|
|
Due after one year through five years
|
2,739.1
|
|
|
2,805.8
|
|
||
|
Due after five years through ten years
|
2,972.4
|
|
|
3,000.9
|
|
||
|
Due after ten years
|
5,007.5
|
|
|
5,037.5
|
|
||
|
Subtotal
|
11,697.5
|
|
|
11,826.6
|
|
||
|
Other securities which provide for periodic payments:
|
|
|
|
||||
|
Asset-backed securities
|
1,505.7
|
|
|
1,523.1
|
|
||
|
Commercial-mortgage-backed securities
|
431.3
|
|
|
454.3
|
|
||
|
Structured hybrids
|
27.1
|
|
|
29.4
|
|
||
|
Agency residential mortgage-backed securities
|
96.5
|
|
|
98.6
|
|
||
|
Non-agency residential mortgage-backed securities
|
1,304.0
|
|
|
1,368.0
|
|
||
|
Total fixed maturity available-for-sale securities
|
$
|
15,062.1
|
|
|
$
|
15,300.0
|
|
|
|
September 30, 2013
|
||||||||||||||||||||||
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
|
|
Fair Value
|
|
Gross Unrealized
Losses
|
|
Fair Value
|
|
Gross Unrealized
Losses
|
|
Fair Value
|
|
Gross Unrealized
Losses
|
||||||||||||
|
Available-for-sale securities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Asset-backed securities
|
$
|
329.3
|
|
|
$
|
(4.5
|
)
|
|
$
|
81.5
|
|
|
$
|
(0.7
|
)
|
|
$
|
410.8
|
|
|
$
|
(5.2
|
)
|
|
Commercial-mortgage-backed securities
|
26.6
|
|
|
(0.5
|
)
|
|
4.9
|
|
|
(1.1
|
)
|
|
31.5
|
|
|
(1.6
|
)
|
||||||
|
Corporates
|
3,457.2
|
|
|
(175.0
|
)
|
|
186.0
|
|
|
(10.1
|
)
|
|
3,643.2
|
|
|
(185.1
|
)
|
||||||
|
Equities
|
118.6
|
|
|
(9.1
|
)
|
|
32.2
|
|
|
(1.2
|
)
|
|
150.8
|
|
|
(10.3
|
)
|
||||||
|
Hybrids
|
52.0
|
|
|
(3.3
|
)
|
|
—
|
|
|
—
|
|
|
52.0
|
|
|
(3.3
|
)
|
||||||
|
Municipals
|
333.3
|
|
|
(27.3
|
)
|
|
144.4
|
|
|
(13.5
|
)
|
|
477.7
|
|
|
(40.8
|
)
|
||||||
|
Agency residential mortgage-backed securities
|
9.8
|
|
|
(0.1
|
)
|
|
1.1
|
|
|
(0.2
|
)
|
|
10.9
|
|
|
(0.3
|
)
|
||||||
|
Non-agency residential mortgage-backed securities
|
325.2
|
|
|
(12.2
|
)
|
|
69.9
|
|
|
(1.2
|
)
|
|
395.1
|
|
|
(13.4
|
)
|
||||||
|
U.S. Government
|
753.9
|
|
|
(3.9
|
)
|
|
—
|
|
|
—
|
|
|
753.9
|
|
|
(3.9
|
)
|
||||||
|
Total available-for-sale securities
|
$
|
5,405.9
|
|
|
$
|
(235.9
|
)
|
|
$
|
520.0
|
|
|
$
|
(28.0
|
)
|
|
$
|
5,925.9
|
|
|
$
|
(263.9
|
)
|
|
Total number of available-for-sale securities in an unrealized loss position
|
|
|
588
|
|
|
|
|
78
|
|
|
|
|
666
|
|
|||||||||
|
|
September 30, 2012
|
||||||||||||||||||||||
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
|
|
Fair Value
|
|
Gross Unrealized
Losses
|
|
Fair Value
|
|
Gross Unrealized
Losses
|
|
Fair Value
|
|
Gross Unrealized
Losses
|
||||||||||||
|
Available-for-sale securities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Asset-backed securities
|
$
|
169.8
|
|
|
$
|
(1.0
|
)
|
|
$
|
7.5
|
|
|
$
|
(0.6
|
)
|
|
$
|
177.3
|
|
|
$
|
(1.6
|
)
|
|
Commercial-mortgage-backed securities
|
0.8
|
|
|
(0.8
|
)
|
|
10.7
|
|
|
(1.6
|
)
|
|
11.5
|
|
|
(2.4
|
)
|
||||||
|
Corporates
|
411.3
|
|
|
(8.1
|
)
|
|
45.5
|
|
|
(1.9
|
)
|
|
456.8
|
|
|
(10.0
|
)
|
||||||
|
Equities
|
—
|
|
|
—
|
|
|
44.5
|
|
|
(1.3
|
)
|
|
44.5
|
|
|
(1.3
|
)
|
||||||
|
Hybrids
|
13.4
|
|
|
(0.4
|
)
|
|
107.7
|
|
|
(9.2
|
)
|
|
121.1
|
|
|
(9.6
|
)
|
||||||
|
Municipals
|
71.1
|
|
|
(1.1
|
)
|
|
—
|
|
|
—
|
|
|
71.1
|
|
|
(1.1
|
)
|
||||||
|
Agency residential mortgage-backed securities
|
1.8
|
|
|
(0.2
|
)
|
|
6.1
|
|
|
(0.1
|
)
|
|
7.9
|
|
|
(0.3
|
)
|
||||||
|
Non-agency residential mortgage-backed securities
|
12.9
|
|
|
(0.3
|
)
|
|
101.8
|
|
|
(4.0
|
)
|
|
114.7
|
|
|
(4.3
|
)
|
||||||
|
Total available-for-sale securities
|
$
|
681.1
|
|
|
$
|
(11.9
|
)
|
|
$
|
323.8
|
|
|
$
|
(18.7
|
)
|
|
$
|
1,004.9
|
|
|
$
|
(30.6
|
)
|
|
Total number of available-for-sale securities in an unrealized loss position
|
|
|
100
|
|
|
|
|
56
|
|
|
|
|
156
|
|
|||||||||
|
|
Year ended September 30,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
Beginning balance
|
$
|
2.7
|
|
|
$
|
0.7
|
|
|
$
|
—
|
|
|
Increases attributable to credit losses on securities:
|
|
|
|
|
|
||||||
|
Other-than-temporary impairment was previously recognized
|
—
|
|
|
0.1
|
|
|
—
|
|
|||
|
Other-than-temporary impairment was not previously recognized
|
—
|
|
|
1.9
|
|
|
0.7
|
|
|||
|
Ending balance
|
$
|
2.7
|
|
|
$
|
2.7
|
|
|
$
|
0.7
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
Other-than-temporary impairments recognized in net income:
|
|
|
|
|
|
||||||
|
Corporates
|
$
|
1.2
|
|
|
$
|
4.1
|
|
|
$
|
1.5
|
|
|
Non-agency residential mortgage-backed securities
|
1.2
|
|
|
7.5
|
|
|
5.1
|
|
|||
|
Equities
|
—
|
|
|
—
|
|
|
11.0
|
|
|||
|
Hybrids
|
—
|
|
|
9.7
|
|
|
—
|
|
|||
|
Other invested assets
|
0.5
|
|
|
1.5
|
|
|
0.4
|
|
|||
|
Total other-than-temporary impairments
|
$
|
2.9
|
|
|
$
|
22.8
|
|
|
$
|
18.0
|
|
|
|
September 30,
2013 |
|
September 30, 2012
|
||||
|
Asset-based loans, by major industry:
|
|
|
|
||||
|
Wholesale
|
$
|
56.8
|
|
|
$
|
77.2
|
|
|
Apparel
|
252.9
|
|
|
70.1
|
|
||
|
Jewelry
|
125.8
|
|
|
27.9
|
|
||
|
Other
|
130.1
|
|
|
6.3
|
|
||
|
Total asset-based loans
|
565.6
|
|
|
181.5
|
|
||
|
Less: Allowance for credit losses
|
5.2
|
|
|
1.4
|
|
||
|
Total asset-based loans, net
|
$
|
560.4
|
|
|
$
|
180.1
|
|
|
|
Year ended September 30,
|
||||||
|
|
2013
|
|
2012
|
||||
|
Allowance for credit losses:
|
|
|
|
||||
|
Balance at beginning of year
|
$
|
1.4
|
|
|
$
|
—
|
|
|
Provision for credit losses
|
3.8
|
|
|
1.4
|
|
||
|
Charge-offs
|
—
|
|
|
—
|
|
||
|
Recoveries
|
—
|
|
|
—
|
|
||
|
Balance at end of year
|
$
|
5.2
|
|
|
$
|
1.4
|
|
|
|
Internal Risk Rating
|
||||||||||||||||||
|
|
Pass
|
|
Special Mention
|
|
Substandard
|
|
Doubtful
|
|
Total
|
||||||||||
|
September 30, 2013
|
$
|
306.9
|
|
|
$
|
36.7
|
|
|
$
|
222.0
|
|
|
$
|
—
|
|
|
$
|
565.6
|
|
|
September 30, 2012
|
$
|
91.6
|
|
|
$
|
89.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
181.5
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
Fixed maturity available-for-sale securities
|
$
|
686.2
|
|
|
$
|
707.1
|
|
|
$
|
364.8
|
|
|
Equity available-for-sale securities
|
14.8
|
|
|
14.0
|
|
|
10.2
|
|
|||
|
Policy loans
|
0.8
|
|
|
0.7
|
|
|
1.5
|
|
|||
|
Invested cash and short-term investments
|
1.4
|
|
|
4.9
|
|
|
0.1
|
|
|||
|
Other investments
|
48.3
|
|
|
7.7
|
|
|
0.3
|
|
|||
|
Gross investment income
|
751.5
|
|
|
734.4
|
|
|
376.9
|
|
|||
|
External investment expense
|
(16.8
|
)
|
|
(11.7
|
)
|
|
(7.1
|
)
|
|||
|
Net investment income
|
$
|
734.7
|
|
|
$
|
722.7
|
|
|
$
|
369.8
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
Net realized gains before other-than-temporary impairments
|
$
|
332.9
|
|
|
$
|
287.2
|
|
|
$
|
34.9
|
|
|
Gross other-than-temporary impairments
|
(2.9
|
)
|
|
(24.3
|
)
|
|
(17.5
|
)
|
|||
|
Non-credit portion of other-than-temporary impairments included in other comprehensive income
|
—
|
|
|
1.5
|
|
|
(0.5
|
)
|
|||
|
Net realized gains on fixed maturity available-for-sale securities
|
330.0
|
|
|
264.4
|
|
|
16.9
|
|
|||
|
Realized gains on equity securities
|
12.6
|
|
|
0.9
|
|
|
(10.9
|
)
|
|||
|
Net realized gains on securities
|
342.6
|
|
|
265.3
|
|
|
6.0
|
|
|||
|
Realized gains (losses) on certain derivative instruments
|
20.5
|
|
|
(10.3
|
)
|
|
(44.8
|
)
|
|||
|
Unrealized gains on certain derivative instruments
|
148.6
|
|
|
156.3
|
|
|
(126.0
|
)
|
|||
|
Change in fair value of derivatives
|
169.1
|
|
|
146.0
|
|
|
(170.8
|
)
|
|||
|
Realized gains on other invested assets
|
(0.1
|
)
|
|
(1.3
|
)
|
|
(2.1
|
)
|
|||
|
Net investment gains (losses)
|
$
|
511.6
|
|
|
$
|
410.0
|
|
|
$
|
(166.9
|
)
|
|
|
Year ended September 30,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
Proceeds from investments sold, matured or repaid:
|
|
|
|
|
|
||||||
|
Available-for-sale
|
$
|
8,986.9
|
|
|
$
|
5,833.4
|
|
|
$
|
1,482.2
|
|
|
Held-to-maturity
|
—
|
|
|
109.6
|
|
|
101.8
|
|
|||
|
Trading (acquired for holding)
|
92.9
|
|
|
106.1
|
|
|
29.5
|
|
|||
|
Derivatives and other
|
352.4
|
|
|
157.6
|
|
|
86.4
|
|
|||
|
|
$
|
9,432.2
|
|
|
$
|
6,206.7
|
|
|
$
|
1,699.9
|
|
|
Cost of investments acquired:
|
|
|
|
|
|
||||||
|
Available-for-sale
|
$
|
(8,757.5
|
)
|
|
$
|
(5,640.1
|
)
|
|
$
|
(1,286.0
|
)
|
|
Held-to-maturity
|
—
|
|
|
(68.7
|
)
|
|
(123.4
|
)
|
|||
|
Trading (acquired for holding)
|
(20.8
|
)
|
|
(122.3
|
)
|
|
(332.7
|
)
|
|||
|
Derivatives and other
|
(162.5
|
)
|
|
(141.6
|
)
|
|
(66.9
|
)
|
|||
|
|
$
|
(8,940.8
|
)
|
|
$
|
(5,972.7
|
)
|
|
$
|
(1,809.0
|
)
|
|
Asset Derivatives
|
|
Classification
|
|
September 30,
2013 |
|
September 30,
2012 |
||||
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
||||
|
Commodity swap and option agreements
|
|
Receivables, net
|
|
$
|
0.4
|
|
|
$
|
1.0
|
|
|
Commodity swap and option agreements
|
|
Other assets
|
|
—
|
|
|
1.0
|
|
||
|
Foreign exchange forward agreements
|
|
Receivables, net
|
|
1.7
|
|
|
1.2
|
|
||
|
Total asset derivatives designated as hedging instruments
|
|
|
|
2.1
|
|
|
3.2
|
|
||
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
||||
|
Commodity contracts
|
|
Receivables, net
|
|
3.7
|
|
|
—
|
|
||
|
Call options
|
|
Derivatives
|
|
221.8
|
|
|
200.7
|
|
||
|
Foreign exchange contracts
|
|
Receivables, net
|
|
0.1
|
|
|
—
|
|
||
|
Total asset derivatives
|
|
|
|
$
|
227.7
|
|
|
$
|
203.9
|
|
|
Liability Derivatives
|
|
Classification
|
|
September 30,
2013 |
|
September 30,
2012 |
||||
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
||||
|
Commodity contracts
|
|
Accounts payable and other current liabilities
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
Foreign exchange forward agreements
|
|
Accounts payable and other current liabilities
|
|
4.6
|
|
|
3.1
|
|
||
|
Foreign exchange contracts
|
|
Other liabilities
|
|
0.1
|
|
|
—
|
|
||
|
Total liability derivatives designated as hedging instruments
|
|
|
|
5.2
|
|
|
3.1
|
|
||
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
||||
|
Commodity contracts
|
|
Other liabilities
|
|
1.9
|
|
|
—
|
|
||
|
FIA embedded derivative
|
|
Contractholder funds
|
|
1,544.4
|
|
|
1,550.8
|
|
||
|
Futures contracts
|
|
Other liabilities
|
|
1.0
|
|
|
0.9
|
|
||
|
Foreign exchange forward contracts
|
|
Accounts payable and other current liabilities
|
|
5.3
|
|
|
4.0
|
|
||
|
Foreign exchange forward contracts
|
|
Accounts payable and other current liabilities
|
|
—
|
|
|
2.9
|
|
||
|
Equity conversion feature of preferred stock
|
|
Equity conversion feature of preferred stock
|
|
330.8
|
|
|
232.0
|
|
||
|
Total liability derivatives
|
|
|
|
$
|
1,888.6
|
|
|
$
|
1,793.7
|
|
|
Derivatives in Cash Flow Hedging Relationships
|
|
Amount of Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion)
|
|
Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
|
|
Amount of Gain ( Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)
|
|
Classification
|
||||||||||||||||||||||||||||||
|
Year ended September 30,
|
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
|
|
||||||||||||||||||
|
Commodity contracts
|
|
$
|
(2.6
|
)
|
|
$
|
1.6
|
|
|
$
|
(1.7
|
)
|
|
$
|
(0.6
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
2.6
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
(0.1
|
)
|
|
Consumer products cost of goods sold
|
|
Interest rate contracts
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.9
|
)
|
|
(3.3
|
)
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
(a)
|
Interest expense
|
|||||||||
|
Foreign exchange contracts
|
|
0.9
|
|
|
0.1
|
|
|
(0.5
|
)
|
|
0.9
|
|
|
(0.5
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Net consumer products sales
|
|||||||||
|
Foreign exchange contracts
|
|
(0.3
|
)
|
|
(3.5
|
)
|
|
(3.7
|
)
|
|
0.6
|
|
|
(0.6
|
)
|
|
(12.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Consumer products cost of goods sold
|
|||||||||
|
Total
|
|
$
|
(2.0
|
)
|
|
$
|
(1.8
|
)
|
|
$
|
(6.0
|
)
|
|
$
|
0.9
|
|
|
$
|
(3.1
|
)
|
|
$
|
(13.2
|
)
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
(0.3
|
)
|
|
|
|
(a)
|
Reclassified from AOCI associated with the prepayment of portions of Spectrum Brands’ senior credit facility (see
Note 16
).
|
|
Derivatives Not Designated as Hedging Instruments
|
|
Gain (Loss) Recognized in Income on Derivatives
|
|
Classification
|
||||||||||
|
|
|
Year ended September 30,
|
|
|
||||||||||
|
|
|
2013
|
|
2012
|
|
2011
|
|
|
||||||
|
Equity conversion feature of preferred stock
|
|
$
|
(101.6
|
)
|
|
$
|
(156.6
|
)
|
|
$
|
27.9
|
|
|
(Loss) gain from the change in the fair value of the equity conversion feature of preferred stock
|
|
Oil and natural gas commodity contracts
|
|
(1.3
|
)
|
|
—
|
|
|
—
|
|
|
Other expense, net
|
|||
|
Commodity contracts
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
Consumer products cost of goods sold
|
|||
|
Foreign exchange contracts
|
|
(3.6
|
)
|
|
5.9
|
|
|
(5.1
|
)
|
|
Other expense, net
|
|||
|
Call options
|
|
151.6
|
|
|
100.0
|
|
|
(142.7
|
)
|
|
Net investment gains (losses)
|
|||
|
Futures contracts
|
|
17.5
|
|
|
46.0
|
|
|
(28.1
|
)
|
|
Net investment gains (losses)
|
|||
|
Available-for-sale embedded derivatives
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
Net investment income
|
|||
|
FIA embedded derivatives
|
|
(6.4
|
)
|
|
154.5
|
|
|
(70.0
|
)
|
|
Benefits and other changes in policy reserves
|
|||
|
Total
|
|
$
|
56.1
|
|
|
$
|
150.2
|
|
|
$
|
(218.0
|
)
|
|
|
|
(in millions, except volumes and prices)
|
|
Volume Mmmbtus/Mbbls
|
|
Weighted average strike price per Mmbtu/Bbl
|
|
September 30,
2013 |
|||||
|
Natural gas:
|
|
|
|
|
|
|
|||||
|
Swaps:
|
|
|
|
|
|
|
|||||
|
Remainder of 2013
|
|
5,141.0
|
|
|
$
|
3.72
|
|
|
$
|
0.6
|
|
|
2014
|
|
10,877.0
|
|
|
4.14
|
|
|
3.0
|
|
||
|
Total natural gas
|
|
16,018.0
|
|
|
|
|
$
|
3.6
|
|
||
|
Oil:
|
|
|
|
|
|
|
|||||
|
Swaps:
|
|
|
|
|
|
|
|||||
|
Remainder of 2013
|
|
103.0
|
|
|
$
|
94.05
|
|
|
$
|
(0.8
|
)
|
|
2014
|
|
272.0
|
|
|
91.87
|
|
|
(0.9
|
)
|
||
|
Total oil
|
|
375.0
|
|
|
|
|
$
|
(1.7
|
)
|
||
|
Total oil and natural gas derivatives
|
|
|
|
|
|
$
|
1.9
|
|
|||
|
|
|
|
|
September 30, 2013
|
|
September 30, 2012
|
||||||||||||||||||||||||||||
|
Counterparty
|
|
Credit Rating
(Moody’s/S&P)
|
|
Notional
Amount
|
|
Fair Value
|
|
Collateral
|
|
Net Credit Risk
|
|
Notional
Amount
|
|
Fair Value
|
|
Collateral
|
|
Net Credit Risk
|
||||||||||||||||
|
Merrill Lynch
|
|
NA/A
|
|
$
|
2,037.8
|
|
|
$
|
70.7
|
|
|
$
|
—
|
|
|
70.7
|
|
|
$
|
1,884.0
|
|
|
$
|
64.1
|
|
|
$
|
—
|
|
|
$
|
64.1
|
|
|
|
Deutsche Bank
|
|
A2/A
|
|
1,620.4
|
|
|
51.7
|
|
|
23.0
|
|
|
28.7
|
|
|
1,816.5
|
|
|
61.7
|
|
|
—
|
|
|
61.7
|
|
||||||||
|
Morgan Stanley
|
|
Baa1/A
|
|
2,264.1
|
|
|
75.7
|
|
|
49.0
|
|
|
26.7
|
|
|
1,634.7
|
|
|
51.6
|
|
|
—
|
|
|
51.6
|
|
||||||||
|
Royal Bank of Scotland
|
|
A3/A
|
|
364.3
|
|
|
20.3
|
|
|
—
|
|
|
20.3
|
|
|
353.9
|
|
|
19.6
|
|
|
—
|
|
|
19.6
|
|
||||||||
|
Barclay's Bank
|
|
A2/A
|
|
120.8
|
|
|
3.4
|
|
|
—
|
|
|
3.4
|
|
|
131.3
|
|
|
3.1
|
|
|
—
|
|
|
3.1
|
|
||||||||
|
Credit Suisse
|
|
A2/A-
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.0
|
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
||||||||
|
|
|
|
|
$
|
6,407.4
|
|
|
$
|
221.8
|
|
|
$
|
72.0
|
|
|
$
|
149.8
|
|
|
$
|
5,830.4
|
|
|
$
|
200.7
|
|
|
$
|
—
|
|
|
$
|
200.7
|
|
|
|
|
September 30,
2013 |
||
|
Maximum loss exposure
|
|
$
|
337.8
|
|
|
Asset-based loans receivable
|
|
$
|
337.8
|
|
|
Cash and other assets
|
|
156.7
|
|
|
|
Total assets of consolidated VIE
|
|
494.5
|
|
|
|
Long-term debt
|
|
485.0
|
|
|
|
Other liabilities
|
|
2.9
|
|
|
|
Total liabilities of consolidated VIE
|
|
$
|
487.9
|
|
|
|
|
September 30,
2013 |
||
|
Assets
|
|
|
||
|
Total current assets
|
|
$
|
54.4
|
|
|
Oil and natural gas properties, net
|
|
741.5
|
|
|
|
Other assets
|
|
32.7
|
|
|
|
Total assets
|
|
$
|
828.6
|
|
|
|
|
|
||
|
Liabilities and members’ equity
|
|
|
||
|
Total current liabilities
|
|
$
|
44.9
|
|
|
Total long-term liabilities
|
|
397.3
|
|
|
|
Total members’ equity
|
|
386.4
|
|
|
|
Total liabilities and members’ equity
|
|
$
|
828.6
|
|
|
|
|
Year Ended
|
||
|
|
|
September 30,
2013 |
||
|
Revenues
|
|
$
|
121.1
|
|
|
Costs and Expenses
|
|
|
||
|
Oil and natural gas direct operating costs
|
|
59.0
|
|
|
|
Selling, acquisition, operating and general expenses
|
|
49.5
|
|
|
|
Impairment of proved oil and natural gas properties
|
|
72.8
|
|
|
|
Total costs and expenses
|
|
181.3
|
|
|
|
Operating loss
|
|
(60.2
|
)
|
|
|
Other expense, net
|
|
(8.0
|
)
|
|
|
Net loss
|
|
$
|
(68.2
|
)
|
|
|
September 30, 2013
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair Value
|
||||||||
|
Assets
|
|
|
|
|
|
|
|
||||||||
|
Cash and cash equivalents (a)
|
$
|
1,899.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,899.7
|
|
|
Contingent purchase price reduction receivable
|
—
|
|
|
—
|
|
|
41.0
|
|
|
41.0
|
|
||||
|
Derivatives:
|
|
|
|
|
|
|
|
||||||||
|
Foreign exchange forward agreements
|
—
|
|
|
1.8
|
|
|
—
|
|
|
1.8
|
|
||||
|
Commodity swap and option agreements
|
—
|
|
|
4.1
|
|
|
—
|
|
|
4.1
|
|
||||
|
Call options and futures contracts
|
—
|
|
|
221.8
|
|
|
—
|
|
|
221.8
|
|
||||
|
Fixed maturity securities, available-for-sale:
|
|
|
|
|
|
|
|
||||||||
|
Asset-backed securities
|
—
|
|
|
1,518.1
|
|
|
5.0
|
|
|
1,523.1
|
|
||||
|
Commercial mortgage-backed securities
|
—
|
|
|
448.7
|
|
|
5.7
|
|
|
454.4
|
|
||||
|
Corporates
|
—
|
|
|
8,957.2
|
|
|
461.1
|
|
|
9,418.3
|
|
||||
|
Hybrids
|
—
|
|
|
428.8
|
|
|
—
|
|
|
428.8
|
|
||||
|
Municipals
|
—
|
|
|
1,007.0
|
|
|
—
|
|
|
1,007.0
|
|
||||
|
Agency residential mortgage-backed securities
|
—
|
|
|
98.6
|
|
|
—
|
|
|
98.6
|
|
||||
|
Non-agency residential mortgage-backed securities
|
—
|
|
|
1,368.0
|
|
|
—
|
|
|
1,368.0
|
|
||||
|
U.S. Government
|
790.9
|
|
|
210.9
|
|
|
—
|
|
|
1,001.8
|
|
||||
|
Equity securities:
|
|
|
|
|
|
|
|
||||||||
|
Available-for-sale
|
—
|
|
|
271.0
|
|
|
—
|
|
|
271.0
|
|
||||
|
Trading
|
70.8
|
|
|
—
|
|
|
10.7
|
|
|
81.5
|
|
||||
|
Total financial assets
|
$
|
2,761.4
|
|
|
$
|
14,536.0
|
|
|
$
|
523.5
|
|
|
$
|
17,820.9
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
|
Derivatives:
|
|
|
|
|
|
|
|
||||||||
|
FIA embedded derivatives, included in contractholder funds
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,544.4
|
|
|
$
|
1,544.4
|
|
|
Futures contracts
|
—
|
|
|
1.0
|
|
|
—
|
|
|
1.0
|
|
||||
|
Foreign exchange forward agreements
|
—
|
|
|
10.0
|
|
|
—
|
|
|
10.0
|
|
||||
|
Commodity swap and option agreements
|
—
|
|
|
2.4
|
|
|
—
|
|
|
2.4
|
|
||||
|
Equity conversion feature of preferred stock
|
—
|
|
|
—
|
|
|
330.8
|
|
|
330.8
|
|
||||
|
Total financial liabilities
|
$
|
—
|
|
|
$
|
13.4
|
|
|
$
|
1,875.2
|
|
|
$
|
1,888.6
|
|
|
|
September 30, 2012
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair Value
|
||||||||
|
Assets
|
|
|
|
|
|
|
|
||||||||
|
Cash and cash equivalents (a)
|
$
|
1,468.4
|
|
|
$
|
2.3
|
|
|
$
|
—
|
|
|
$
|
1,470.7
|
|
|
Contingent purchase price reduction receivable
|
—
|
|
|
—
|
|
|
41.0
|
|
|
41.0
|
|
||||
|
Derivatives:
|
|
|
|
|
|
|
|
||||||||
|
Foreign exchange forward agreements
|
—
|
|
|
1.2
|
|
|
—
|
|
|
1.2
|
|
||||
|
Commodity swap and option agreements
|
—
|
|
|
2.0
|
|
|
—
|
|
|
2.0
|
|
||||
|
Call options
|
—
|
|
|
200.7
|
|
|
—
|
|
|
200.7
|
|
||||
|
Fixed maturity securities, available-for-sale:
|
|
|
|
|
|
|
|
||||||||
|
Asset-backed securities
|
—
|
|
|
1,012.0
|
|
|
15.9
|
|
|
1,027.9
|
|
||||
|
Commercial mortgage-backed securities
|
—
|
|
|
548.8
|
|
|
5.0
|
|
|
553.8
|
|
||||
|
Corporates
|
—
|
|
|
10,873.7
|
|
|
135.3
|
|
|
11,009.0
|
|
||||
|
Hybrids
|
—
|
|
|
519.4
|
|
|
8.8
|
|
|
528.2
|
|
||||
|
Municipals
|
—
|
|
|
1,224.0
|
|
|
—
|
|
|
1,224.0
|
|
||||
|
Agency residential mortgage-backed securities
|
—
|
|
|
155.0
|
|
|
—
|
|
|
155.0
|
|
||||
|
Non-agency residential mortgage-backed securities
|
—
|
|
|
660.6
|
|
|
—
|
|
|
660.6
|
|
||||
|
U.S. Government
|
930.4
|
|
|
—
|
|
|
—
|
|
|
930.4
|
|
||||
|
Equity securities
|
|
|
|
|
|
|
|
||||||||
|
Available-for-sale
|
—
|
|
|
248.1
|
|
|
—
|
|
|
248.1
|
|
||||
|
Trading
|
146.8
|
|
|
—
|
|
|
—
|
|
|
146.8
|
|
||||
|
Total financial assets
|
$
|
2,545.6
|
|
|
$
|
15,447.8
|
|
|
$
|
206.0
|
|
|
$
|
18,199.4
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
|
Derivatives:
|
|
|
|
|
|
|
|
||||||||
|
FIA embedded derivatives, included in contractholder funds
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,550.8
|
|
|
$
|
1,550.8
|
|
|
Futures contracts
|
—
|
|
|
0.9
|
|
|
—
|
|
|
0.9
|
|
||||
|
Foreign exchange forward agreements
|
—
|
|
|
10.0
|
|
|
—
|
|
|
10.0
|
|
||||
|
Commodity swap and option agreements
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Equity conversion feature of preferred stock
|
—
|
|
|
—
|
|
|
232.0
|
|
|
232.0
|
|
||||
|
Total financial liabilities
|
$
|
—
|
|
|
$
|
10.9
|
|
|
$
|
1,782.8
|
|
|
$
|
1,793.7
|
|
|
(a)
|
The fair values of cash equivalents and equity investments set forth above are generally based on quoted or observed market prices.
|
|
(b)
|
The carrying amounts of trade receivables, accounts payable, accrued investment income and portions of other insurance liabilities approximate fair value due to their short duration and, accordingly, they are not presented in the tables above.
|
|
|
|
|
|
|
|
Fair Value at
|
|
Range (Weighted average)
|
||||||||
|
Assets
|
|
Valuation Technique
|
|
Unobservable Input(s)
|
|
September 30,
2013 |
|
September 30,
2012 |
|
September 30,
2013 |
|
September 30, 2012
|
||||
|
Contingent purchase price reduction receivable
|
|
Discounted cash flow
|
|
Probability of collection
|
|
$
|
41.0
|
|
|
$
|
41.0
|
|
|
88% - 96% (92%)
|
|
88% - 96% (92%)
|
|
|
|
|
|
Expected term
|
|
|
|
|
|
9 months
|
|
9 months
|
||||
|
|
|
|
|
Discount rate
|
|
|
|
|
|
1%
|
|
0.72%
|
||||
|
|
|
|
|
Credit insurance risk premium
|
|
|
|
|
|
11%
|
|
12%
|
||||
|
Asset-backed securities
|
|
Broker-quoted
|
|
Offered quotes
|
|
5.0
|
|
|
15.9
|
|
|
100% - 107% (101%)
|
|
100% - 110% (103%)
|
||
|
Commercial mortgage-backed securities
|
|
Broker-quoted
|
|
Offered quotes
|
|
5.7
|
|
|
5.0
|
|
|
96%
|
|
101%
|
||
|
Corporates
|
|
Broker-quoted
|
|
Offered quotes
|
|
404.5
|
|
|
103.3
|
|
|
0% - 113% (90%)
|
|
0% - 141% (69%)
|
||
|
Corporates
|
|
Market Pricing
|
|
Quoted prices
|
|
56.6
|
|
|
32.0
|
|
|
90% - 131% (97%)
|
|
88% - 158% (98%)
|
||
|
Hybrids
|
|
Market Pricing
|
|
Quoted prices
|
|
—
|
|
|
8.8
|
|
|
—
|
|
0% - 103% (25%)
|
||
|
Equity
|
|
Option Pricing
|
|
Risk-adjusted rate
|
|
10.7
|
|
|
—
|
|
|
25.0%
|
|
—
|
||
|
|
|
|
|
Risk-free discount factor
|
|
|
|
|
|
0.999
|
|
—
|
||||
|
|
|
|
|
Risk-adjusted discount factor
|
|
|
|
|
|
0.995
|
|
—
|
||||
|
|
|
|
|
Upward movement factor (Mu)
|
|
|
|
|
|
1.1
|
|
—
|
||||
|
|
|
|
|
Downward movement factor (Md)
|
|
|
|
|
|
0.9
|
|
—
|
||||
|
|
|
|
|
Probability of upward movement (Pu)
|
|
|
|
|
|
48.6%
|
|
—
|
||||
|
|
|
|
|
Probability of downward movement (Pd)
|
|
|
|
|
|
51.4%
|
|
—
|
||||
|
Total
|
|
|
|
|
|
$
|
523.5
|
|
|
$
|
206.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
FIA embedded derivatives, included in contractholder funds
|
|
Discounted cash flow
|
|
Market value of option
|
|
$
|
1,544.4
|
|
|
$
|
1,550.8
|
|
|
0% - 38% (4%)
|
|
0% - 31% (4%)
|
|
|
|
|
|
SWAP rates
|
|
|
|
|
|
2% - 3% (2%)
|
|
0.76% - 2% (1%)
|
||||
|
|
|
|
|
Mortality multiplier
|
|
|
|
|
|
80%
|
|
70%
|
||||
|
|
|
|
|
Surrender rates
|
|
|
|
|
|
0.50% - 75% (7%)
|
|
2% - 50% (7%)
|
||||
|
|
|
|
|
Non-performance spread
|
|
|
|
|
|
0.25% - 0.25% (0.25%)
|
|
0.25% - 0.25% (0.25%)
|
||||
|
Equity conversion feature of preferred stock
|
|
Monte Carlo simulation / Option model
|
|
Annualized volatility of equity
|
|
330.8
|
|
|
232.0
|
|
|
42%
|
|
41%
|
||
|
|
|
|
|
Discount yield
|
|
|
|
|
|
11%
|
|
12% - 13% (12%)
|
||||
|
|
|
|
|
Non-cash accretion rate
|
|
|
|
|
|
0%
|
|
0%
|
||||
|
|
|
|
|
Calibration adjustment
|
|
|
|
|
|
0% - 1.0% (0.3%)
|
|
10% - 13% (11%)
|
||||
|
Total
|
|
|
|
|
|
$
|
1,875.2
|
|
|
$
|
1,782.8
|
|
|
|
|
|
|
|
Year ended September 30, 2013
|
||||||||||||||||||||||||||||||
|
|
Balance at Beginning
of Period
|
|
Total Gains (Losses)
|
|
|
|
|
|
|
|
Net transfer In (Out) of
Level 3 (a)
|
|
Balance at End of
Period
|
||||||||||||||||||
|
|
|
Included in
Earnings
|
|
Included in
AOCI
|
|
Purchases
|
|
Sales
|
|
Settlements
|
|
|
|||||||||||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Contingent purchase price reduction receivable
|
$
|
41.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
41.0
|
|
|
Fixed maturity securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Asset-backed securities
|
15.9
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
(10.5
|
)
|
|
5.0
|
|
||||||||
|
Commercial mortgage-backed securities
|
5.0
|
|
|
—
|
|
|
(0.3
|
)
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.7
|
|
||||||||
|
Corporates
|
135.3
|
|
|
(0.3
|
)
|
|
(13.4
|
)
|
|
406.0
|
|
|
(9.6
|
)
|
|
(23.1
|
)
|
|
(33.8
|
)
|
|
461.1
|
|
||||||||
|
Hybrids
|
8.8
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.7
|
)
|
|
—
|
|
||||||||
|
Equity securities - trading
|
—
|
|
|
—
|
|
|
—
|
|
|
10.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.7
|
|
||||||||
|
Equity securities - available-for-sale
|
—
|
|
|
0.2
|
|
|
—
|
|
|
10.5
|
|
|
(10.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
Total assets at fair value
|
$
|
206.0
|
|
|
$
|
(0.1
|
)
|
|
$
|
(14.0
|
)
|
|
$
|
428.2
|
|
|
$
|
(20.3
|
)
|
|
$
|
(23.3
|
)
|
|
$
|
(53.0
|
)
|
|
$
|
523.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
Balance at Beginning
of Period |
|
Total (Gains) Losses
|
|
|
|
|
|
|
|
Net transfer In (Out) of
Level 3 (a) |
|
Balance at End of
Period |
||||||||||||||||||
|
|
|
Included in
Earnings |
|
Included in
AOCI |
|
Purchases
|
|
Sales
|
|
Settlements
|
|
|
|||||||||||||||||||
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
FIA embedded derivatives, included in contractholder funds
|
$
|
1,550.8
|
|
|
$
|
(6.4
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,544.4
|
|
|
Equity conversion feature of preferred stock
|
232.0
|
|
|
101.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.8
|
)
|
|
—
|
|
|
330.8
|
|
||||||||
|
Total liabilities at fair value
|
$
|
1,782.8
|
|
|
$
|
95.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2.8
|
)
|
|
$
|
—
|
|
|
$
|
1,875.2
|
|
|
(a)
|
The net transfers in and out of Level 3 during the
year ended September 30, 2013
were exclusively to or from Level 2.
|
|
|
Year ended September 30, 2012
|
||||||||||||||||||||||||||||||
|
|
Balance at Beginning
of Period |
|
Total Gains (Losses)
|
|
|
|
|
|
|
|
Net transfer In (Out) of
Level 3 (a) |
|
Balance at End of
Period |
||||||||||||||||||
|
|
|
Included in
Earnings |
|
Included in
AOCI |
|
Purchases
|
|
Sales
|
|
Settlements
|
|
|
|||||||||||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Contingent purchase price reduction receivable
|
$
|
—
|
|
|
$
|
41.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
41.0
|
|
|
Fixed maturity securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Asset-backed securities
|
374.5
|
|
|
—
|
|
|
7.4
|
|
|
410.7
|
|
|
—
|
|
|
(38.8
|
)
|
|
(737.9
|
)
|
|
15.9
|
|
||||||||
|
Commercial mortgage-backed securities
|
—
|
|
|
—
|
|
|
—
|
|
|
5.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.0
|
|
||||||||
|
Corporates
|
159.7
|
|
|
—
|
|
|
(3.6
|
)
|
|
1.3
|
|
|
(26.8
|
)
|
|
(14.2
|
)
|
|
18.9
|
|
|
135.3
|
|
||||||||
|
Hybrids
|
5.2
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.7
|
|
|
8.8
|
|
||||||||
|
Municipals
|
—
|
|
|
—
|
|
|
0.1
|
|
|
10.2
|
|
|
—
|
|
|
—
|
|
|
(10.3
|
)
|
|
—
|
|
||||||||
|
Agency residential mortgage-backed securities
|
3.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.3
|
)
|
|
—
|
|
||||||||
|
Non-agency residential mortgage-backed securities
|
3.8
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
(0.3
|
)
|
|
(2.9
|
)
|
|
—
|
|
||||||||
|
Total assets at fair value
|
$
|
546.5
|
|
|
$
|
40.9
|
|
|
$
|
3.8
|
|
|
$
|
427.2
|
|
|
$
|
(27.3
|
)
|
|
$
|
(53.3
|
)
|
|
$
|
(731.8
|
)
|
|
$
|
206.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
Balance at Beginning
of Period |
|
Total (Gains) Losses
|
|
|
|
|
|
|
|
Net transfer In (Out) of
Level 3 (a) |
|
Balance at End of
Period |
||||||||||||||||||
|
|
|
Included in
Earnings |
|
Included in
AOCI |
|
Purchases
|
|
Sales
|
|
Settlements
|
|
|
|||||||||||||||||||
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
FIA embedded derivatives, included in contractholder funds
|
$
|
1,396.3
|
|
|
$
|
154.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,550.8
|
|
|
Equity conversion feature of preferred stock
|
75.4
|
|
|
156.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
232.0
|
|
||||||||
|
Available-for-sale embedded derivatives
|
0.4
|
|
|
(0.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
Total liabilities at fair value
|
$
|
1,472.1
|
|
|
$
|
310.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,782.8
|
|
|
(a)
|
The net transfers in and out of Level 3 during the
year ended September 30, 2012
was exclusively to or from Level 2.
|
|
|
Year ended September 30, 2011
|
||||||||||||||||||||||||||||||
|
|
Balance at FGL Acquisition Date
|
|
Total Gains (Losses)
|
|
|
|
|
|
|
|
Net transfer In (Out) of
Level 3 (a) |
|
Balance at End of
Period |
||||||||||||||||||
|
|
|
Included in
Earnings |
|
Included in
AOCI |
|
Purchases
|
|
Sales
|
|
Settlements
|
|
|
|||||||||||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Fixed maturity securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Asset-backed securities
|
$
|
400.0
|
|
|
$
|
—
|
|
|
$
|
0.8
|
|
|
$
|
2.0
|
|
|
$
|
—
|
|
|
$
|
(13.7
|
)
|
|
$
|
(14.6
|
)
|
|
$
|
374.5
|
|
|
Corporates
|
197.6
|
|
|
2.0
|
|
|
5.4
|
|
|
10.4
|
|
|
(48.9
|
)
|
|
(6.7
|
)
|
|
(0.1
|
)
|
|
159.7
|
|
||||||||
|
Hybrids
|
8.3
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.0
|
)
|
|
5.2
|
|
||||||||
|
Agency residential mortgage-backed securities
|
3.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.3
|
|
||||||||
|
Non-agency residential mortgage-backed securities
|
18.5
|
|
|
2.4
|
|
|
0.4
|
|
|
—
|
|
|
(15.7
|
)
|
|
(1.8
|
)
|
|
—
|
|
|
3.8
|
|
||||||||
|
Total assets at fair value
|
$
|
627.7
|
|
|
$
|
4.4
|
|
|
$
|
6.5
|
|
|
$
|
12.4
|
|
|
$
|
(64.6
|
)
|
|
$
|
(22.2
|
)
|
|
$
|
(17.7
|
)
|
|
$
|
546.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
Balance at FGL Acquisition Date
|
|
Total (Gains) Losses
|
|
|
|
|
|
|
|
Net transfer In (Out) of
Level 3 (a) |
|
Balance at End of
Period |
||||||||||||||||||
|
|
|
Included in
Earnings |
|
Included in
AOCI |
|
Purchases
|
|
Sales
|
|
Settlements
|
|
|
|||||||||||||||||||
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
FIA embedded derivatives, included in contractholder funds
|
$
|
1,466.3
|
|
|
$
|
(70.0
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,396.3
|
|
|
Equity conversion feature of preferred stock
|
—
|
|
|
(27.9
|
)
|
|
—
|
|
|
—
|
|
|
103.3
|
|
|
—
|
|
|
—
|
|
|
75.4
|
|
||||||||
|
Available-for-sale embedded derivatives
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
||||||||
|
Total liabilities at fair value
|
$
|
1,466.7
|
|
|
$
|
(97.9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
103.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,472.1
|
|
|
(a)
|
The net transfers in and out of Level 3 during the
year ended September 30, 2011
was exclusively to or from Level 2.
|
|
|
September 30, 2013
|
||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair Value
|
|
Carrying Amount
|
||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Policy loans and other invested assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31.2
|
|
|
$
|
31.2
|
|
|
$
|
31.2
|
|
|
Asset-based loans
|
—
|
|
|
—
|
|
|
560.4
|
|
|
560.4
|
|
|
560.4
|
|
|||||
|
Total financial assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
591.6
|
|
|
$
|
591.6
|
|
|
$
|
591.6
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total debt (a)
|
$
|
—
|
|
|
$
|
4,773.2
|
|
|
$
|
—
|
|
|
$
|
4,773.2
|
|
|
$
|
4,896.1
|
|
|
Redeemable preferred stock, excluding equity conversion feature
|
—
|
|
|
—
|
|
|
377.1
|
|
|
377.1
|
|
|
329.4
|
|
|||||
|
Investment contracts, included in contractholder funds
|
—
|
|
|
—
|
|
|
12,378.6
|
|
|
12,378.6
|
|
|
13,703.8
|
|
|||||
|
Total financial liabilities
|
$
|
—
|
|
|
$
|
4,773.2
|
|
|
$
|
12,755.7
|
|
|
$
|
17,528.9
|
|
|
$
|
18,929.3
|
|
|
|
September 30, 2012
|
||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Estimated Fair Value
|
|
Carrying Amount
|
||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
|
U.S. Treasuries and certificate of deposit, held-to-maturity
|
$
|
—
|
|
|
$
|
35.0
|
|
|
$
|
—
|
|
|
$
|
35.0
|
|
|
$
|
35.0
|
|
|
Policy loans and other invested assets
|
—
|
|
|
—
|
|
|
18.8
|
|
|
18.8
|
|
|
18.8
|
|
|||||
|
Asset-based loans
|
—
|
|
|
—
|
|
|
180.1
|
|
|
180.1
|
|
|
180.1
|
|
|||||
|
Total financial assets
|
$
|
—
|
|
|
$
|
35.0
|
|
|
$
|
198.9
|
|
|
$
|
233.9
|
|
|
$
|
233.9
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total debt (a)
|
$
|
524.0
|
|
|
$
|
1,804.8
|
|
|
$
|
—
|
|
|
$
|
2,328.8
|
|
|
$
|
2,167.0
|
|
|
Redeemable preferred stock, excluding equity conversion feature
|
—
|
|
|
—
|
|
|
368.9
|
|
|
368.9
|
|
|
319.2
|
|
|||||
|
Investment contracts, included in contractholder funds
|
—
|
|
|
—
|
|
|
12,271.9
|
|
|
12,271.9
|
|
|
13,739.6
|
|
|||||
|
Total financial liabilities
|
$
|
524.0
|
|
|
$
|
1,804.8
|
|
|
$
|
12,640.8
|
|
|
$
|
14,969.6
|
|
|
$
|
16,225.8
|
|
|
(a)
|
The fair values of debt set forth above are generally based on quoted or observed market prices.
|
|
(b)
|
The carrying amounts of trade receivables, accounts payable, accrued investment income and portions of other insurance liabilities approximate fair value due to their short duration and, accordingly, they are not presented in the tables above.
|
|
|
September 30,
2013 |
|
September 30,
2012 |
||||
|
Trade accounts receivable
|
|
|
|
||||
|
Consumer products
|
$
|
518.7
|
|
|
$
|
357.2
|
|
|
Oil and natural gas
|
16.7
|
|
|
—
|
|
||
|
Total trade accounts receivable
|
535.4
|
|
|
357.2
|
|
||
|
Less: Allowance for doubtful trade accounts receivable
|
37.4
|
|
|
21.9
|
|
||
|
Total trade accounts receivable, net
|
498.0
|
|
|
335.3
|
|
||
|
Contingent purchase price reduction receivable (Note 4)
|
41.0
|
|
|
41.0
|
|
||
|
Other receivables
|
72.3
|
|
|
38.1
|
|
||
|
Total receivables, net
|
$
|
611.3
|
|
|
$
|
414.4
|
|
|
Period
|
|
Balance at Beginning of
Period
|
|
Charged to
Costs and
Expenses
|
|
Deductions
|
|
Other
Adjustments
|
|
Balance at
End of Period
|
||||||||||
|
Fiscal 2013
|
|
$
|
21.9
|
|
|
$
|
15.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
37.4
|
|
|
Fiscal 2012
|
|
14.1
|
|
|
7.8
|
|
|
—
|
|
|
—
|
|
|
21.9
|
|
|||||
|
Fiscal 2011
|
|
4.3
|
|
|
9.8
|
|
|
—
|
|
|
—
|
|
|
14.1
|
|
|||||
|
|
September 30,
2013 |
|
September 30,
2012 |
||||
|
Raw materials
|
$
|
97.3
|
|
|
$
|
58.5
|
|
|
Work-in-process
|
40.6
|
|
|
23.4
|
|
||
|
Finished goods
|
495.0
|
|
|
370.7
|
|
||
|
Total inventories, net
|
$
|
632.9
|
|
|
$
|
452.6
|
|
|
|
September 30,
2013 |
|
September 30,
2012 |
||||
|
Oil and natural gas properties (full cost accounting method)
|
|
|
|
||||
|
Unproved oil and natural gas properties and development costs not being amortized
|
$
|
36.4
|
|
|
$
|
—
|
|
|
Proved developed and undeveloped oil and natural gas properties
|
546.0
|
|
|
—
|
|
||
|
Less: Accumulated depletion
|
(30.1
|
)
|
|
—
|
|
||
|
Total oil and natural gas properties, net
|
552.3
|
|
|
—
|
|
||
|
Other properties
|
|
|
|
||||
|
Land, buildings and improvements
|
169.8
|
|
|
93.6
|
|
||
|
Gas gathering assets
|
21.1
|
|
|
—
|
|
||
|
Machinery, equipment and other
|
488.3
|
|
|
325.7
|
|
||
|
Construction in progress
|
46.8
|
|
|
18.4
|
|
||
|
Total other properties, at cost
|
726.0
|
|
|
437.7
|
|
||
|
Less: Accumulated depreciation
|
285.0
|
|
|
216.1
|
|
||
|
Total other properties, net
|
441.0
|
|
|
221.6
|
|
||
|
Total properties, including oil and natural gas properties, net
|
$
|
993.3
|
|
|
$
|
221.6
|
|
|
|
|
|
Intangible Assets
|
||||||||||||||||||||
|
|
Goodwill
|
|
Indefinite Lived
|
|
Definite Lived
|
|
VOBA
|
|
DAC
|
|
Total
|
||||||||||||
|
Balance at Balance at September 30, 2011
|
$
|
610.3
|
|
|
$
|
826.8
|
|
|
$
|
857.1
|
|
|
$
|
419.1
|
|
|
$
|
38.1
|
|
|
$
|
2,141.1
|
|
|
Acquisitions (Note 4)
|
85.9
|
|
|
22.0
|
|
|
82.1
|
|
|
—
|
|
|
—
|
|
|
104.1
|
|
||||||
|
Deferrals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
194.9
|
|
|
194.9
|
|
||||||
|
Less: Components of amortization -
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Periodic amortization
|
—
|
|
|
—
|
|
|
(63.7
|
)
|
|
(171.9
|
)
|
|
(20.2
|
)
|
|
(255.8
|
)
|
||||||
|
Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
28.9
|
|
|
1.9
|
|
|
30.8
|
|
||||||
|
Unlocking
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.5
|
)
|
|
3.1
|
|
|
0.6
|
|
||||||
|
Reclassifications
|
—
|
|
|
(3.5
|
)
|
|
3.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Adjustment for unrealized investment (gains), net
|
—
|
|
|
—
|
|
|
—
|
|
|
(169.3
|
)
|
|
(48.6
|
)
|
|
(217.9
|
)
|
||||||
|
Effect of translation
|
(2.0
|
)
|
|
(4.2
|
)
|
|
(5.1
|
)
|
|
—
|
|
|
—
|
|
|
(9.3
|
)
|
||||||
|
Balance at Balance at September 30, 2012
|
694.2
|
|
|
841.1
|
|
|
873.9
|
|
|
104.3
|
|
|
169.2
|
|
|
1,988.5
|
|
||||||
|
Acquisitions (Note 4)
|
786.6
|
|
|
331.0
|
|
|
188.3
|
|
|
—
|
|
|
—
|
|
|
519.3
|
|
||||||
|
Deferrals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
147.4
|
|
|
147.4
|
|
||||||
|
Less: Components of amortization -
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Periodic amortization
|
—
|
|
|
—
|
|
|
(77.8
|
)
|
|
(194.6
|
)
|
|
(62.1
|
)
|
|
(334.5
|
)
|
||||||
|
Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
21.8
|
|
|
9.5
|
|
|
31.3
|
|
||||||
|
Unlocking
|
—
|
|
|
—
|
|
|
—
|
|
|
35.8
|
|
|
7.3
|
|
|
43.1
|
|
||||||
|
Reclassifications
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Adjustment for unrealized investment losses, net
|
—
|
|
|
—
|
|
|
—
|
|
|
258.0
|
|
|
69.3
|
|
|
327.3
|
|
||||||
|
Effect of translation
|
(4.1
|
)
|
|
6.0
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
6.7
|
|
||||||
|
Balance at Balance at September 30, 2013
|
$
|
1,476.7
|
|
|
$
|
1,178.1
|
|
|
$
|
985.1
|
|
|
$
|
225.3
|
|
|
$
|
340.6
|
|
|
$
|
2,729.1
|
|
|
|
September 30, 2013
|
|
September 30, 2012
|
|
|
||||||||||||||||||||
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
|
|
Amortizable Life
|
||||||||||||
|
Customer relationships
|
$
|
885.9
|
|
|
$
|
(160.8
|
)
|
|
$
|
725.1
|
|
|
$
|
796.2
|
|
|
$
|
(113.0
|
)
|
|
$
|
683.2
|
|
|
15 to 20 years
|
|
Trade names
|
171.6
|
|
|
(44.7
|
)
|
|
126.9
|
|
|
150.8
|
|
|
(28.3
|
)
|
|
122.5
|
|
|
1 to 12 years
|
||||||
|
Technology assets
|
172.1
|
|
|
(39.0
|
)
|
|
133.1
|
|
|
91.0
|
|
|
(22.8
|
)
|
|
68.2
|
|
|
4 to 17 years
|
||||||
|
|
$
|
1,229.6
|
|
|
$
|
(244.5
|
)
|
|
$
|
985.1
|
|
|
$
|
1,038.0
|
|
|
$
|
(164.1
|
)
|
|
$
|
873.9
|
|
|
|
|
|
Year ended
|
||||||||||
|
|
September 30,
2013 |
|
September 30,
2012 |
|
September 30,
2011 |
||||||
|
Customer relationships
|
$
|
44.9
|
|
|
$
|
40.2
|
|
|
$
|
38.3
|
|
|
Trade names
|
16.6
|
|
|
14.4
|
|
|
12.6
|
|
|||
|
Technology assets
|
16.3
|
|
|
9.1
|
|
|
6.8
|
|
|||
|
|
$
|
77.8
|
|
|
$
|
63.7
|
|
|
$
|
57.7
|
|
|
|
|
Estimated Amortization Expense
|
||||||
|
Fiscal Year
|
|
VOBA
|
|
DAC
|
||||
|
2014
|
|
$
|
47.1
|
|
|
$
|
29.8
|
|
|
2015
|
|
45.3
|
|
|
32.5
|
|
||
|
2016
|
|
39.6
|
|
|
31.7
|
|
||
|
2017
|
|
32.4
|
|
|
30.0
|
|
||
|
2018
|
|
26.4
|
|
|
28.1
|
|
||
|
2019 and thereafter
|
|
115.9
|
|
|
169.9
|
|
||
|
|
September 30,
2013 |
|
September 30,
2012 |
||||
|
Prepaid expenses and other current assets
|
$
|
75.9
|
|
|
$
|
53.1
|
|
|
Debt issuance costs
|
100.9
|
|
|
50.9
|
|
||
|
Deferred charges and other assets
|
104.8
|
|
|
68.6
|
|
||
|
Total other assets
|
$
|
281.6
|
|
|
$
|
172.6
|
|
|
|
September 30,
2013 |
|
September 30,
2012 |
||||
|
Accounts payable
|
$
|
530.3
|
|
|
$
|
325.9
|
|
|
Accrued expenses and other
|
206.1
|
|
|
155.5
|
|
||
|
Wages and benefits
|
134.2
|
|
|
110.9
|
|
||
|
Accrued interest
|
53.4
|
|
|
50.4
|
|
||
|
Income taxes payable
|
48.9
|
|
|
96.6
|
|
||
|
Restructuring and related charges
|
16.7
|
|
|
6.6
|
|
||
|
Oil and natural gas revenues and royalties payable
|
14.9
|
|
|
—
|
|
||
|
Accrued dividends on Preferred Stock
|
8.2
|
|
|
8.3
|
|
||
|
Total accounts payable and other current liabilities
|
$
|
1,012.7
|
|
|
$
|
754.2
|
|
|
|
|
September 30, 2013
|
|
September 30, 2012
|
||||||||||
|
|
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
||||||
|
HGI:
|
|
|
|
|
|
|
|
|
||||||
|
7.875% Senior Secured Notes, due July 15, 2019
|
|
$
|
925.0
|
|
|
7.9
|
%
|
|
$
|
—
|
|
|
—
|
|
|
10.625% Senior Secured Notes, due November 15, 2015
|
|
—
|
|
|
—
|
|
|
500.0
|
|
|
10.6
|
%
|
||
|
Spectrum Brands:
|
|
|
|
|
|
|
|
|
||||||
|
Term Loan, due December 17, 2019
|
|
594.7
|
|
|
4.7
|
%
|
|
—
|
|
|
—
|
|
||
|
Term Loan, due September 4, 2019
|
|
300.0
|
|
|
3.6
|
%
|
|
—
|
|
|
—
|
|
||
|
Term Loan, due September 4, 2022
|
|
850.0
|
|
|
3.0
|
%
|
|
—
|
|
|
—
|
|
||
|
Former term loan facility
|
|
—
|
|
|
—
|
|
|
370.2
|
|
|
5.1
|
%
|
||
|
9.5% Senior Secured Notes, due June 15, 2018
|
|
—
|
|
|
—
|
|
|
950.0
|
|
|
9.5
|
%
|
||
|
6.75% Senior Notes, due March 15, 2020
|
|
300.0
|
|
|
6.8
|
%
|
|
300.0
|
|
|
6.8
|
%
|
||
|
6.375% Senior Notes, due November 15, 2020
|
|
520.0
|
|
|
6.4
|
%
|
|
—
|
|
|
—
|
|
||
|
6.625% Senior Notes, due November 15, 2022
|
|
570.0
|
|
|
6.6
|
%
|
|
—
|
|
|
—
|
|
||
|
ABL Facility, expiring May 24, 2017
|
|
—
|
|
|
5.7
|
%
|
|
—
|
|
|
4.3
|
%
|
||
|
Other notes and obligations
|
|
28.5
|
|
|
8.5
|
%
|
|
18.1
|
|
|
10.9
|
%
|
||
|
Capitalized lease obligations
|
|
67.4
|
|
|
6.2
|
%
|
|
26.7
|
|
|
6.2
|
%
|
||
|
FGH
|
|
|
|
|
|
|
|
|
||||||
|
6.375% Senior Notes, due April 1, 2021
|
|
300.0
|
|
|
6.4
|
%
|
|
—
|
|
|
—
|
|
||
|
EXCO/HGI JV
|
|
|
|
|
|
|
|
|
||||||
|
EXCO/HGI JV Credit Agreement, due February 14, 2018
|
|
271.2
|
|
|
2.7
|
%
|
|
—
|
|
|
—
|
|
||
|
Salus
|
|
|
|
|
|
|
|
|
||||||
|
Unaffiliated long-term debt of consolidated variable-interest entity
|
|
182.9
|
|
|
6.6
|
%
|
|
—
|
|
|
—
|
|
||
|
Total
|
|
4,909.7
|
|
|
|
|
2,165.0
|
|
|
|
||||
|
Original issuance (discounts) premiums on debt, net
|
|
(13.6
|
)
|
|
|
|
2.0
|
|
|
|
||||
|
Total debt
|
|
4,896.1
|
|
|
|
|
2,167.0
|
|
|
|
||||
|
Less current maturities
|
|
102.9
|
|
|
|
|
16.4
|
|
|
|
||||
|
Non-current portion of debt
|
|
$
|
4,793.2
|
|
|
|
|
$
|
2,150.6
|
|
|
|
||
|
Fiscal Year
|
|
Scheduled Maturities
|
||
|
2014
|
|
$
|
102.9
|
|
|
2015
|
|
79.3
|
|
|
|
2016
|
|
77.7
|
|
|
|
2017
|
|
671.7
|
|
|
|
2018
|
|
283.1
|
|
|
|
Thereafter
|
|
3,695.0
|
|
|
|
|
|
$
|
4,909.7
|
|
|
•
|
maintain a consolidated current ratio (as defined in the agreement of at least
1.0
to 1.0 as of the end of any fiscal quarter; and
|
|
•
|
not permit the EXCO/HGI JV’s ratio of consolidated funded indebtedness (as defined in the agreement) to consolidated EBITDAX (as defined in the agreement) to be greater than
4.5
to 1.0 at the end of any fiscal quarter.
|
|
|
September 30,
2013 |
|
September 30,
2012 |
||||
|
Amounts payable for investment purchases
|
$
|
208.2
|
|
|
$
|
206.7
|
|
|
Retained asset account
|
207.5
|
|
|
203.7
|
|
||
|
Amounts payable to reinsurers
|
46.9
|
|
|
32.0
|
|
||
|
Remittances and items not allocated
|
44.1
|
|
|
29.5
|
|
||
|
Oil and natural gas asset-retirement obligations
|
25.4
|
|
|
—
|
|
||
|
Other
|
185.9
|
|
|
128.7
|
|
||
|
Total other liabilities
|
$
|
718.0
|
|
|
$
|
600.6
|
|
|
|
|
September 30,
2013 |
||
|
Asset retirement obligations at inception
|
|
$
|
18.5
|
|
|
Activity during the period:
|
|
|
||
|
Liabilities incurred during the period
|
|
0.1
|
|
|
|
Liabilities settled during the period
|
|
—
|
|
|
|
Adjustment to liability due to acquisitions
|
|
5.6
|
|
|
|
Accretion of discount
|
|
1.2
|
|
|
|
Asset retirement obligations at end of period
|
|
25.4
|
|
|
|
Less: Current portion
|
|
0.6
|
|
|
|
Long-term portion
|
|
$
|
24.8
|
|
|
|
|
Series A
(280 shares)
|
|
Series A-2
(120 shares)
|
|
Total
|
||||||
|
Initial issuance price in Fiscal 2011
|
|
$
|
280.0
|
|
|
$
|
120.0
|
|
|
$
|
400.0
|
|
|
Principal accretion:
|
|
|
|
|
|
|
||||||
|
Fiscal 2011
|
|
4.3
|
|
|
0.7
|
|
|
5.0
|
|
|||
|
Fiscal 2012
|
|
8.6
|
|
|
3.7
|
|
|
12.3
|
|
|||
|
Fiscal 2013
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Cumulative principal accretion
|
|
12.9
|
|
|
4.4
|
|
|
17.3
|
|
|||
|
Redemption value of preferred stock converted into common stock upon election of holder
|
|
—
|
|
|
(5.9
|
)
|
|
(5.9
|
)
|
|||
|
Redemption value as of September 30, 2013
|
|
292.9
|
|
|
118.5
|
|
|
411.4
|
|
|||
|
Bifurcation of embedded conversion feature at issuance
|
|
(85.7
|
)
|
|
(17.6
|
)
|
|
(103.3
|
)
|
|||
|
Issuance costs
|
|
(11.1
|
)
|
|
(3.0
|
)
|
|
(14.1
|
)
|
|||
|
Accretion:
|
|
|
|
|
|
|
||||||
|
Fiscal 2011
|
|
4.2
|
|
|
0.5
|
|
|
4.7
|
|
|||
|
Fiscal 2012
|
|
11.7
|
|
|
2.8
|
|
|
14.5
|
|
|||
|
Fiscal 2013
|
|
12.4
|
|
|
3.7
|
|
|
16.1
|
|
|||
|
Carrying value of Preferred Stock as of September 30, 2013
|
|
$
|
224.4
|
|
|
$
|
104.9
|
|
|
$
|
329.3
|
|
|
|
|
Unrealized
Investment
Gains, net
|
|
Non-credit
Related
Other-than-
temporary
Impairments
|
|
Other
Unrealized
Gains (Losses)
— Cash Flow
Hedges
|
|
Actuarial
Adjustments
to Pension
Plans
|
|
Cumulative
Translation
Adjustments
|
|
Total
|
||||||||||||
|
Cumulative components at September 30, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Gross amounts (after reclassification adjustments)
|
|
$
|
235.7
|
|
|
$
|
(1.0
|
)
|
|
$
|
(2.6
|
)
|
|
$
|
(28.9
|
)
|
|
$
|
(10.3
|
)
|
|
$
|
192.9
|
|
|
Intangible assets adjustments
|
|
(63.2
|
)
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(62.8
|
)
|
||||||
|
Tax effects
|
|
(61.1
|
)
|
|
0.2
|
|
|
0.3
|
|
|
(0.8
|
)
|
|
3.5
|
|
|
(57.9
|
)
|
||||||
|
Noncontrolling interest
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|
11.9
|
|
|
2.7
|
|
|
15.5
|
|
||||||
|
|
|
$
|
111.4
|
|
|
$
|
(0.4
|
)
|
|
$
|
(1.4
|
)
|
|
$
|
(17.8
|
)
|
|
$
|
(4.1
|
)
|
|
$
|
87.7
|
|
|
Cumulative components at September 30, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Gross amounts (after reclassification adjustments)
|
|
$
|
1,059.6
|
|
|
$
|
(1.0
|
)
|
|
$
|
0.3
|
|
|
$
|
(39.9
|
)
|
|
$
|
(3.7
|
)
|
|
$
|
1,015.3
|
|
|
Intangible assets adjustments
|
|
(390.5
|
)
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(390.1
|
)
|
||||||
|
Tax effects
|
|
(234.2
|
)
|
|
0.2
|
|
|
(0.1
|
)
|
|
4.4
|
|
|
3.5
|
|
|
(226.2
|
)
|
||||||
|
Noncontrolling interest
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
14.2
|
|
|
0.1
|
|
|
14.2
|
|
||||||
|
|
|
$
|
434.9
|
|
|
$
|
(0.4
|
)
|
|
$
|
0.1
|
|
|
$
|
(21.3
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
413.2
|
|
|
|
|
Pension and Deferred
Compensation Benefits
|
|
Other Benefits
|
||||||||||||
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
Change in benefit obligation
|
|
|
|
|
|
|
|
|
||||||||
|
Benefit obligation, beginning of year
|
|
$
|
260.7
|
|
|
$
|
228.7
|
|
|
$
|
0.6
|
|
|
$
|
0.5
|
|
|
Liabilities assumed through acquisitions
|
|
14.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Service cost
|
|
3.0
|
|
|
2.0
|
|
|
—
|
|
|
—
|
|
||||
|
Interest cost
|
|
10.6
|
|
|
11.4
|
|
|
—
|
|
|
0.1
|
|
||||
|
Actuarial loss (gain)
|
|
1.1
|
|
|
31.3
|
|
|
(0.1
|
)
|
|
—
|
|
||||
|
Participant contributions
|
|
0.1
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
||||
|
Curtailments
|
|
(1.5
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
||||
|
Benefits paid
|
|
(17.4
|
)
|
|
(10.9
|
)
|
|
—
|
|
|
—
|
|
||||
|
Foreign currency exchange rate changes
|
|
3.2
|
|
|
(2.0
|
)
|
|
—
|
|
|
—
|
|
||||
|
Benefit obligation, end of year
|
|
$
|
274.5
|
|
|
$
|
260.7
|
|
|
$
|
0.4
|
|
|
$
|
0.6
|
|
|
Change in plan assets
|
|
|
|
|
|
|
|
|
||||||||
|
Fair value of plan assets, beginning of year
|
|
$
|
168.6
|
|
|
$
|
143.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Assets acquired through acquisitions
|
|
6.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Actual return on plan assets
|
|
18.3
|
|
|
22.3
|
|
|
—
|
|
|
—
|
|
||||
|
Employer contributions
|
|
12.9
|
|
|
13.6
|
|
|
—
|
|
|
—
|
|
||||
|
Employee contributions
|
|
0.1
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
||||
|
Benefits paid
|
|
(17.4
|
)
|
|
(10.9
|
)
|
|
—
|
|
|
—
|
|
||||
|
Plan expenses paid
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Foreign currency exchange rate changes
|
|
1.6
|
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
||||
|
Fair value of plan assets, end of year
|
|
$
|
190.8
|
|
|
$
|
168.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Accrued Benefit Cost / Funded Status
|
|
$
|
(83.7
|
)
|
|
$
|
(92.1
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
(0.6
|
)
|
|
Range of assumptions:
|
|
|
|
|
|
|
|
|
||||||||
|
Discount rate
|
|
1.8% to 13%
|
|
|
4% to 13.5%
|
|
|
4.7
|
%
|
|
4.0
|
%
|
||||
|
Expected return on plan assets
|
|
3.6% to 7.8%
|
|
|
4% to 7.8%
|
|
|
N/A
|
|
|
N/A
|
|
||||
|
Rate of compensation increase
|
|
2.3% to 5.5%
|
|
|
2.3% to 5.5%
|
|
|
N/A
|
|
|
N/A
|
|
||||
|
|
|
Pension and Deferred Compensation Benefits
|
|
Other Benefits
|
||||||||||||||||||||
|
|
|
Year ended September 30,
|
|
Year ended September 30,
|
||||||||||||||||||||
|
|
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
||||||||||||
|
Components of net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Service cost
|
|
$
|
3.4
|
|
|
$
|
2.4
|
|
|
$
|
2.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Interest cost
|
|
10.6
|
|
|
11.4
|
|
|
11.2
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
||||||
|
Expected return on assets
|
|
(9.7
|
)
|
|
(9.1
|
)
|
|
(8.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Amortization of prior service cost
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Curtailment gain
|
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Recognized net actuarial (gain) loss
|
|
2.1
|
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||||||
|
Net periodic cost (benefit)
|
|
$
|
5.6
|
|
|
$
|
5.7
|
|
|
$
|
5.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Weighted Average Allocation
|
|||||||
|
|
|
Target
|
|
Actual
|
|||||
|
|
|
2013
|
|
2013
|
|
2012
|
|||
|
Asset Category
|
|
|
|
|
|
|
|||
|
Equity securities
|
|
0-60%
|
|
|
52
|
%
|
|
50
|
%
|
|
Fixed income securities
|
|
0-40%
|
|
|
19
|
%
|
|
21
|
%
|
|
Other
|
|
0-100%
|
|
|
29
|
%
|
|
29
|
%
|
|
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
Fiscal Year
|
|
||
|
2014
|
$
|
10.7
|
|
|
2015
|
10.0
|
|
|
|
2016
|
11.6
|
|
|
|
2017
|
11.9
|
|
|
|
2018
|
12.3
|
|
|
|
2019 to 2023
|
69.0
|
|
|
|
|
|
|
|
September 30,
|
||||||
|
|
|
Fair Value Hierarchy
(a)
|
|
2013
|
|
2012
|
||||
|
U.S. defined benefit plan assets:
|
|
|
|
|
|
|
||||
|
Mutual funds — equity
|
|
Level 1
|
|
$
|
32.8
|
|
|
$
|
20.5
|
|
|
Common collective trusts — equity
|
|
Level 2
|
|
19.9
|
|
|
25.8
|
|
||
|
Common collective trusts — fixed income
|
|
Level 2
|
|
20.5
|
|
|
19.5
|
|
||
|
Other
|
|
Level 2
|
|
0.6
|
|
|
0.6
|
|
||
|
Total U.S. defined benefit plan assets
|
|
|
|
73.8
|
|
|
66.4
|
|
||
|
International defined benefit plan assets:
|
|
|
|
|
|
|
||||
|
Common collective trusts — equity
|
|
Level 2
|
|
46.5
|
|
|
38.5
|
|
||
|
Common collective trusts — fixed income
|
|
Level 2
|
|
15.9
|
|
|
15.7
|
|
||
|
Insurance contracts — general fund
|
|
Level 2
|
|
37.7
|
|
|
40.6
|
|
||
|
Other
|
|
Level 1
|
|
6.6
|
|
|
—
|
|
||
|
Other
|
|
Level 2
|
|
10.3
|
|
|
7.4
|
|
||
|
Total International defined benefit plan assets
|
|
|
|
117.0
|
|
|
102.2
|
|
||
|
Total defined benefit plan assets
|
|
|
|
$
|
190.8
|
|
|
$
|
168.6
|
|
|
(a)
|
The fair value measurements of the Company’s defined benefit plan assets are based on unadjusted quoted prices for identical assets and liabilities in active markets (Level 1) for mutual funds and observable market price inputs (Level 2) for common collective trusts and other investments. Each collective trust’s valuation is based on its calculation of net asset value per share reflecting the fair value of its underlying investments. Since each of these collective trusts allows redemptions at net asset value per share at the measurement date, its valuation is categorized as a Level 2 fair value measurement. The fair values of insurance contracts and other investments are also based on observable market price inputs (Level 2).
|
|
|
Year ended September 30,
|
||||||||||||||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||||||||||||||
|
|
Insurance Premiums
|
|
Benefits and Other Changes in Insurance Policy Reserves
|
|
Insurance Premiums
|
|
Benefits and Other Changes in Insurance Policy Reserves
|
|
Insurance Premiums
|
|
Benefits and Other Changes in Insurance Policy Reserves
|
||||||||||||
|
Direct
|
$
|
279.2
|
|
|
$
|
776.5
|
|
|
$
|
298.0
|
|
|
$
|
1,033.4
|
|
|
$
|
157.8
|
|
|
$
|
392.1
|
|
|
Assumed
|
32.8
|
|
|
23.3
|
|
|
47.2
|
|
|
34.9
|
|
|
22.8
|
|
|
19.5
|
|
||||||
|
Ceded
|
(253.2
|
)
|
|
(268.0
|
)
|
|
(289.9
|
)
|
|
(290.9
|
)
|
|
(141.6
|
)
|
|
(164.0
|
)
|
||||||
|
Net
|
$
|
58.8
|
|
|
$
|
531.8
|
|
|
$
|
55.3
|
|
|
$
|
777.4
|
|
|
$
|
39.0
|
|
|
$
|
247.6
|
|
|
|
|
HGI
|
|
FGH
|
||||||||||||||||||
|
Stock Option Awards
|
|
Options
|
|
Weighted Average Exercise Price
|
|
Weighted
Average Grant
Date Fair Value
|
|
Options
|
|
Weighted Average Exercise Price
|
|
Weighted
Average Grant
Date Fair Value
|
||||||||||
|
Stock options outstanding at September 30, 2012
|
|
2,285
|
|
|
$
|
4.96
|
|
|
$
|
1.77
|
|
|
201
|
|
|
$
|
38.20
|
|
|
$
|
3.90
|
|
|
Granted
|
|
1,734
|
|
|
8.57
|
|
|
3.56
|
|
|
195
|
|
|
49.49
|
|
|
3.85
|
|
||||
|
Exercised
|
|
(32
|
)
|
|
6.08
|
|
|
2.23
|
|
|
(31
|
)
|
|
39.19
|
|
|
3.90
|
|
||||
|
Forfeited or expired
|
|
(33
|
)
|
|
6.18
|
|
|
2.32
|
|
|
(30
|
)
|
|
43.96
|
|
|
3.87
|
|
||||
|
Stock options outstanding at September 30, 2013
|
|
3,954
|
|
|
6.52
|
|
|
2.55
|
|
|
335
|
|
|
44.23
|
|
|
3.87
|
|
||||
|
Stock options vested and exercisable at September 30, 2013
|
|
833
|
|
|
6.12
|
|
|
2.34
|
|
|
40
|
|
|
38.21
|
|
|
3.90
|
|
||||
|
Stock options outstanding and expected to vest
|
|
3,121
|
|
|
6.63
|
|
|
2.60
|
|
|
283
|
|
|
44.16
|
|
|
3.87
|
|
||||
|
|
|
HGI
|
|
Spectrum Brands
|
||||||||||
|
Restricted Stock Awards
|
|
Shares
|
|
Weighted
Average Grant
Date Fair Value
|
|
Shares
|
|
Weighted
Average Grant
Date Fair Value
|
||||||
|
Restricted stock outstanding at September 30, 2012
|
|
830
|
|
|
$
|
4.93
|
|
|
13
|
|
|
$
|
28.00
|
|
|
Granted
|
|
3,319
|
|
|
8.53
|
|
|
—
|
|
|
—
|
|
||
|
Vested
|
|
(651
|
)
|
|
8.25
|
|
|
(13
|
)
|
|
28.00
|
|
||
|
Forfeited
|
|
(42
|
)
|
|
8.02
|
|
|
—
|
|
|
—
|
|
||
|
Restricted stock outstanding at September 30, 2013
|
|
3,456
|
|
|
7.72
|
|
|
—
|
|
|
—
|
|
||
|
Restricted stock expected to vest
|
|
3,456
|
|
|
7.72
|
|
|
—
|
|
|
—
|
|
||
|
|
|
HGI
|
|
Spectrum Brands
|
|
FGH
|
|||||||||||||||
|
Restricted Stock Units
|
|
Units
|
|
Weighted
Average Grant
Date Fair Value
|
|
Units
|
|
Weighted
Average Grant
Date Fair Value
|
|
Units
|
|
Weighted
Average Grant
Date Fair Value
|
|||||||||
|
Restricted stock units outstanding at September 30, 2012
|
|
17
|
|
|
$
|
4.61
|
|
|
1,931
|
|
|
$
|
28.45
|
|
|
—
|
|
|
$
|
—
|
|
|
Granted
|
|
9
|
|
|
8.33
|
|
|
700
|
|
|
45.97
|
|
|
53
|
|
|
49.58
|
|
|||
|
Vested
|
|
(17
|
)
|
|
4.61
|
|
|
(1,211
|
)
|
|
28.25
|
|
|
—
|
|
|
—
|
|
|||
|
Forfeited
|
|
(9
|
)
|
|
8.33
|
|
|
(302
|
)
|
|
30.36
|
|
|
(7
|
)
|
|
49.45
|
|
|||
|
Restricted stock units outstanding at September 30, 2013
|
|
—
|
|
|
—
|
|
|
1,118
|
|
|
39.11
|
|
|
46
|
|
|
49.60
|
|
|||
|
Restricted stock units vested and exercisable at September 30, 2013
|
|
22
|
|
|
4.61
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Restricted stock units expected to vest
|
|
—
|
|
|
—
|
|
|
1,118
|
|
|
39.11
|
|
|
42
|
|
|
49.54
|
|
|||
|
|
2013
|
|
2012
|
|
Risk-free interest rate
|
0.84% to 1.86%
|
|
0.97% to 1.19%
|
|
Assumed dividend yield
|
—%
|
|
—%
|
|
Expected option term
|
5.3 to 6.2 years
|
|
6 years
|
|
Volatility
|
41.9% to 44%
|
|
33% to 35.5%
|
|
|
2013
|
|
2012
|
|
Risk-free interest rate
|
0.8%
|
|
0.8%
|
|
Assumed dividend yield
|
6%
|
|
10%
|
|
Expected option term
|
4.5 years
|
|
4.5 years
|
|
Volatility
|
27%
|
|
35%
|
|
|
|
Shares
|
|
Weighted average grant date fair value per share
|
|||
|
Non-vested awards at February 14, 2013
|
|
—
|
|
|
$
|
—
|
|
|
Granted
|
|
102
|
|
|
10.00
|
|
|
|
Non-vested awards at September 30, 2013
|
|
102
|
|
|
$
|
10.00
|
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
Income from continuing operations before income taxes:
|
|
|
|
|
|
|
||||||
|
United States
|
|
$
|
(78.9
|
)
|
|
$
|
(146.5
|
)
|
|
$
|
(74.8
|
)
|
|
Outside the United States
|
|
197.2
|
|
|
171.9
|
|
|
132.7
|
|
|||
|
Total income from continuing operations before taxes
|
|
$
|
118.3
|
|
|
$
|
25.4
|
|
|
$
|
57.9
|
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
Current:
|
|
|
|
|
|
|
||||||
|
Federal
|
|
$
|
(32.5
|
)
|
|
$
|
74.4
|
|
|
$
|
(0.9
|
)
|
|
Foreign
|
|
47.7
|
|
|
38.1
|
|
|
32.7
|
|
|||
|
State
|
|
1.4
|
|
|
(0.4
|
)
|
|
2.3
|
|
|||
|
Total current
|
|
16.6
|
|
|
112.1
|
|
|
34.1
|
|
|||
|
Deferred:
|
|
|
|
|
|
|
||||||
|
Federal
|
|
169.0
|
|
|
(199.2
|
)
|
|
(20.6
|
)
|
|||
|
Foreign
|
|
2.1
|
|
|
5.2
|
|
|
28.1
|
|
|||
|
State
|
|
(0.4
|
)
|
|
(3.4
|
)
|
|
9.0
|
|
|||
|
Total deferred
|
|
170.7
|
|
|
(197.4
|
)
|
|
16.5
|
|
|||
|
Income tax expense (benefit)
|
|
$
|
187.3
|
|
|
$
|
(85.3
|
)
|
|
$
|
50.6
|
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
Expected income tax (benefit) expense at Federal statutory rate
|
|
$
|
41.4
|
|
|
$
|
8.9
|
|
|
$
|
20.3
|
|
|
Valuation allowance for deferred tax assets
|
|
152.8
|
|
|
(142.1
|
)
|
|
72.3
|
|
|||
|
Preferred stock equity conversion feature
|
|
35.6
|
|
|
54.8
|
|
|
(9.5
|
)
|
|||
|
Residual tax on foreign earnings
|
|
(7.0
|
)
|
|
29.8
|
|
|
19.0
|
|
|||
|
Foreign rate differential
|
|
(18.8
|
)
|
|
(14.1
|
)
|
|
(12.6
|
)
|
|||
|
Bargain purchase gain
|
|
—
|
|
|
—
|
|
|
(55.4
|
)
|
|||
|
Gain on contingent purchase price reduction
|
|
—
|
|
|
(14.3
|
)
|
|
—
|
|
|||
|
Permanent items
|
|
5.7
|
|
|
9.5
|
|
|
10.7
|
|
|||
|
Non-deductible stock based compensation
|
|
1.7
|
|
|
—
|
|
|
—
|
|
|||
|
Exempt foreign income
|
|
(5.9
|
)
|
|
(5.8
|
)
|
|
(0.4
|
)
|
|||
|
Unrecognized tax benefits
|
|
4.1
|
|
|
(4.4
|
)
|
|
(2.8
|
)
|
|||
|
State and local income taxes
|
|
(32.2
|
)
|
|
(8.5
|
)
|
|
1.2
|
|
|||
|
Dividends received deduction
|
|
1.4
|
|
|
(0.9
|
)
|
|
—
|
|
|||
|
Inflationary adjustments
|
|
(0.2
|
)
|
|
(0.8
|
)
|
|
(1.5
|
)
|
|||
|
Capitalized transaction costs
|
|
5.6
|
|
|
0.3
|
|
|
2.8
|
|
|||
|
Deferred tax correction of immaterial prior period error
|
|
—
|
|
|
—
|
|
|
4.9
|
|
|||
|
Other
|
|
3.1
|
|
|
2.3
|
|
|
1.6
|
|
|||
|
Reported income tax expense (benefit)
|
|
$
|
187.3
|
|
|
$
|
(85.3
|
)
|
|
$
|
50.6
|
|
|
Effective tax rate
|
|
158.3
|
%
|
|
(335.9
|
)%
|
|
87.3
|
%
|
|||
|
|
|
September 30,
2013 |
|
September 30,
2012 |
||||
|
Current deferred tax assets:
|
|
|
|
|
||||
|
Employee benefits
|
|
$
|
15.4
|
|
|
$
|
29.5
|
|
|
Restructuring
|
|
7.1
|
|
|
8.1
|
|
||
|
Inventories and receivables
|
|
24.3
|
|
|
22.5
|
|
||
|
Employee compensation
|
|
5.4
|
|
|
—
|
|
||
|
Marketing and promotional accruals
|
|
14.1
|
|
|
8.3
|
|
||
|
Capitalized transaction costs
|
|
0.1
|
|
|
0.1
|
|
||
|
Unrealized losses on mark-to-market securities
|
|
12.6
|
|
|
10.2
|
|
||
|
Other
|
|
23.9
|
|
|
15.1
|
|
||
|
Valuation allowance
|
|
(55.0
|
)
|
|
(49.0
|
)
|
||
|
Total current deferred tax assets
|
|
47.9
|
|
|
44.8
|
|
||
|
Current deferred tax liabilities:
|
|
|
|
|
||||
|
Inventories and receivables
|
|
(2.7
|
)
|
|
(2.6
|
)
|
||
|
Unrealized gains
|
|
(0.4
|
)
|
|
(1.2
|
)
|
||
|
Other
|
|
(11.7
|
)
|
|
(7.9
|
)
|
||
|
Total current deferred tax liabilities
|
|
(14.8
|
)
|
|
(11.7
|
)
|
||
|
Noncurrent deferred tax assets:
|
|
|
|
|
||||
|
Employee benefits
|
|
$
|
49.5
|
|
|
$
|
37.5
|
|
|
Restructuring and purchase accounting
|
|
0.3
|
|
|
0.4
|
|
||
|
Net operating loss, credit and capital loss carry forwards
|
|
1,029.5
|
|
|
914.5
|
|
||
|
Prepaid royalty
|
|
7.0
|
|
|
7.0
|
|
||
|
Properties
|
|
9.7
|
|
|
3.2
|
|
||
|
Capitalized transaction costs
|
|
0.6
|
|
|
—
|
|
||
|
Unrealized losses on mark-to-market securities
|
|
2.1
|
|
|
12.7
|
|
||
|
Long-term debt
|
|
0.7
|
|
|
4.0
|
|
||
|
Intangibles
|
|
3.9
|
|
|
4.3
|
|
||
|
Deferred acquisition costs
|
|
0.4
|
|
|
9.9
|
|
||
|
Insurance reserves and claim related adjustments
|
|
477.7
|
|
|
620.3
|
|
||
|
Outside basis differences on partnership interests
|
|
21.3
|
|
|
—
|
|
||
|
Other
|
|
32.8
|
|
|
30.8
|
|
||
|
Valuation allowance
|
|
(762.2
|
)
|
|
(611.1
|
)
|
||
|
Total noncurrent deferred tax assets
|
|
873.3
|
|
|
1,033.5
|
|
||
|
Noncurrent deferred tax liabilities:
|
|
|
|
|
||||
|
Properties
|
|
(27.5
|
)
|
|
(15.3
|
)
|
||
|
Unrealized gains
|
|
(13.1
|
)
|
|
(15.8
|
)
|
||
|
Intangibles
|
|
(735.5
|
)
|
|
(596.2
|
)
|
||
|
Value of business acquired
|
|
(67.3
|
)
|
|
(36.5
|
)
|
||
|
Deferred acquisition costs
|
|
(63.7
|
)
|
|
—
|
|
||
|
Tax on unremitted foreign earnings
|
|
(18.6
|
)
|
|
(29.2
|
)
|
||
|
Investments
|
|
(156.5
|
)
|
|
(438.7
|
)
|
||
|
Other
|
|
(23.4
|
)
|
|
(4.5
|
)
|
||
|
Total noncurrent deferred tax liabilities
|
|
(1,105.6
|
)
|
|
(1,136.2
|
)
|
||
|
Total gross deferred tax assets
|
|
$
|
921.2
|
|
|
$
|
1,078.3
|
|
|
Total gross deferred tax liabilities
|
|
$
|
(1,120.4
|
)
|
|
$
|
(1,147.9
|
)
|
|
•
|
FGH has three years of cumulative US GAAP pre-tax income;
|
|
•
|
FGH’s internal projections of taxable income estimated in future periods reflect a continuation of this trend;
|
|
•
|
FGH has projected that the reversal of taxable temporary timing differences will unwind in the twenty-year projection period;
|
|
•
|
FGH has refined tax planning strategies to utilize capital loss carryforwards by selling assets with acquisition date built-in gains;
|
|
•
|
FGH has a history of utilizing all significant tax attributes before they expire; and
|
|
•
|
FGH’s inventory of limited attributes has been significantly reduced as a result of a tax planning transaction that required amending certain tax returns.
|
|
•
|
Tax rules limit the ability to use carryforwards in future years;
|
|
•
|
There is a brief carryback/carryforward period for life insurance company capital losses (i.e. 3-year carryback/ 5-year carryforward period.)
|
|
|
Amount
|
||
|
Unrecognized tax benefits at September 30, 2010
|
$
|
13.2
|
|
|
Gross increase — tax positions in prior period
|
1.6
|
|
|
|
Gross decrease — tax positions in prior period
|
(0.8
|
)
|
|
|
Gross increase — tax positions in current period
|
0.6
|
|
|
|
Settlements
|
(1.9
|
)
|
|
|
Lapse of statutes of limitations
|
(3.7
|
)
|
|
|
Unrecognized tax benefits at September 30, 2011
|
9.0
|
|
|
|
Gross increase — tax positions in prior period
|
0.7
|
|
|
|
Gross decrease — tax positions in prior period
|
(1.3
|
)
|
|
|
Gross increase — tax positions in current period
|
0.8
|
|
|
|
Settlements
|
(1.7
|
)
|
|
|
Lapse of statutes of limitations
|
(1.6
|
)
|
|
|
Unrecognized tax benefits at September 30, 2012
|
5.9
|
|
|
|
Gross increase — tax positions in prior period
|
9.1
|
|
|
|
Gross decrease — tax positions in prior period
|
(0.3
|
)
|
|
|
Gross increase — tax positions in current period
|
0.5
|
|
|
|
Settlements
|
(0.1
|
)
|
|
|
Lapse of statutes of limitations
|
(1.3
|
)
|
|
|
Unrecognized tax benefits at September 30, 2013
|
$
|
13.8
|
|
|
|
|
Year ended September 30,
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
2013
|
|
2012
|
|
2011
|
|
Charges Since Inception
|
|
Expected Future Charges
|
|
Total Projected Costs
|
|
Expected Completion Date
|
||||||||||||
|
Initiatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Global Expense Rationalization
|
|
$
|
11.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11.3
|
|
|
$
|
4.2
|
|
|
$
|
15.5
|
|
|
September 30, 2015
|
|
Global Cost Reduction
|
|
16.4
|
|
|
18.7
|
|
|
25.5
|
|
|
99.4
|
|
|
3.0
|
|
|
102.4
|
|
|
January 31, 2015
|
||||||
|
Other
|
|
6.3
|
|
|
0.9
|
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
$
|
34.0
|
|
|
$
|
19.6
|
|
|
$
|
28.6
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Classification:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Consumer products cost of goods sold
|
|
$
|
10.0
|
|
|
$
|
9.8
|
|
|
$
|
7.8
|
|
|
|
|
|
|
|
|
|
||||||
|
Selling, acquisition, operating and general expenses
|
|
24.0
|
|
|
9.8
|
|
|
20.8
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
$
|
34.0
|
|
|
$
|
19.6
|
|
|
$
|
28.6
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
Year ended September 30,
|
||||||||||
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
Costs included in cost of goods sold:
|
|
|
|
|
|
|
||||||
|
Global Expense Rationalization Initiatives:
|
|
|
|
|
|
|
||||||
|
Termination benefits
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Other associated benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Global Cost Reduction Initiatives:
|
|
|
|
|
|
|
||||||
|
Termination benefits
|
|
0.2
|
|
|
2.9
|
|
|
1.7
|
|
|||
|
Other associated benefits
|
|
3.3
|
|
|
6.9
|
|
|
5.9
|
|
|||
|
HHI Business and other restructuring initiatives:
|
|
|
|
|
|
|
||||||
|
Termination benefits
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|||
|
Other associated benefits
|
|
6.3
|
|
|
—
|
|
|
0.2
|
|
|||
|
Total included in cost of goods sold
|
|
10.0
|
|
|
9.8
|
|
|
7.8
|
|
|||
|
Costs included in selling, acquisition, operating and general expenses:
|
|
|
|
|
|
|
||||||
|
Global Expense Rationalization Initiatives:
|
|
|
|
|
|
|
||||||
|
Termination benefits
|
|
10.3
|
|
|
—
|
|
|
—
|
|
|||
|
Other associated benefits
|
|
1.1
|
|
|
—
|
|
|
—
|
|
|||
|
Global Cost Reduction Initiatives:
|
|
|
|
|
|
|
||||||
|
Termination benefits
|
|
6.3
|
|
|
3.1
|
|
|
10.2
|
|
|||
|
Other associated benefits
|
|
6.4
|
|
|
5.8
|
|
|
7.8
|
|
|||
|
HHI Business and other restructuring initiatives:
|
|
|
|
|
|
|
||||||
|
Termination benefits
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|||
|
Other associated benefits
|
|
(0.1
|
)
|
|
0.9
|
|
|
1.9
|
|
|||
|
Total included in selling, acquisition, operating and general expenses:
|
|
24.0
|
|
|
9.8
|
|
|
20.8
|
|
|||
|
Total restructuring and related charges
|
|
$
|
34.0
|
|
|
$
|
19.6
|
|
|
$
|
28.6
|
|
|
|
Accrual Balance at September 30, 2012
|
|
Provisions
|
|
Cash Expenditures
|
|
Non-Cash Items
|
|
Accrual Balance at September 30, 2013
|
|
Expensed as Incurred (a)
|
||||||||||||
|
Global Expense Rationalization Initiatives:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Termination benefits
|
$
|
—
|
|
|
$
|
9.0
|
|
|
$
|
(2.1
|
)
|
|
$
|
0.4
|
|
|
$
|
7.3
|
|
|
$
|
1.3
|
|
|
Other costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
||||||
|
|
—
|
|
|
9.0
|
|
|
(2.1
|
)
|
|
0.4
|
|
|
7.3
|
|
|
2.3
|
|
||||||
|
Global Cost Reduction Initiatives:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Termination benefits
|
3.3
|
|
|
5.3
|
|
|
(3.7
|
)
|
|
$
|
—
|
|
|
4.9
|
|
|
1.3
|
|
|||||
|
Other costs
|
1.1
|
|
|
0.5
|
|
|
(1.2
|
)
|
|
—
|
|
|
0.4
|
|
|
9.3
|
|
||||||
|
|
4.4
|
|
|
5.8
|
|
|
(4.9
|
)
|
|
—
|
|
|
5.3
|
|
|
10.6
|
|
||||||
|
Other initiatives
|
2.2
|
|
|
6.0
|
|
|
(0.5
|
)
|
|
(3.6
|
)
|
|
4.1
|
|
|
0.3
|
|
||||||
|
|
$
|
6.6
|
|
|
$
|
20.8
|
|
|
$
|
(7.5
|
)
|
|
$
|
(3.2
|
)
|
|
$
|
16.7
|
|
|
$
|
13.2
|
|
|
(a)
|
Consists of amounts not impacting the accrual for restructuring and related charges.
|
|
|
Year ended September 30,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
Net (loss) income attributable to common and participating preferred stockholders
|
$
|
(94.2
|
)
|
|
$
|
29.9
|
|
|
$
|
22.2
|
|
|
|
|
|
|
|
|
||||||
|
Participating shares at end of period:
|
|
|
|
|
|
||||||
|
Common shares outstanding
|
138,876
|
|
|
139,357
|
|
|
139,346
|
|
|||
|
Preferred shares (as-converted basis)
|
61,987
|
|
|
62,839
|
|
|
60,989
|
|
|||
|
Total
|
200,863
|
|
|
202,196
|
|
|
200,335
|
|
|||
|
|
|
|
|
|
|
||||||
|
Percentage of (loss) income allocated to:
|
|
|
|
|
|
||||||
|
Common shares
|
100.0
|
%
|
|
68.9
|
%
|
|
69.6
|
%
|
|||
|
Preferred shares (a)
|
—
|
%
|
|
31.1
|
%
|
|
30.4
|
%
|
|||
|
|
|
|
|
|
|
||||||
|
Net (loss) income attributable to common shares - basic
|
$
|
(94.2
|
)
|
|
$
|
20.6
|
|
|
$
|
15.4
|
|
|
|
|
|
|
|
|
||||||
|
Dilutive adjustments to (loss) income attributable to common shares from assumed conversion of preferred shares, net of tax:
|
|
|
|
|
|
||||||
|
Income allocated to preferred shares in basic calculation
|
—
|
|
|
—
|
|
|
6.8
|
|
|||
|
Reversal of preferred stock dividends and accretion
|
—
|
|
|
—
|
|
|
19.8
|
|
|||
|
Reversal of income related to fair value of preferred stock conversion feature
|
—
|
|
|
—
|
|
|
(27.9
|
)
|
|||
|
Net adjustment
|
—
|
|
|
—
|
|
|
(1.3
|
)
|
|||
|
|
|
|
|
|
|
||||||
|
Net (loss) income attributable to common shares - diluted
|
$
|
(94.2
|
)
|
|
$
|
20.6
|
|
|
$
|
14.1
|
|
|
|
|
|
|
|
|
||||||
|
Weighted-average common shares outstanding - basic
|
139,856
|
|
|
139,356
|
|
|
139,233
|
|
|||
|
Dilutive effect of preferred stock
|
—
|
|
|
—
|
|
|
19,064
|
|
|||
|
Dilutive effect of unvested restricted stock and restricted stock units
|
—
|
|
|
381
|
|
|
—
|
|
|||
|
Dilutive effect of stock options
|
—
|
|
|
81
|
|
|
87
|
|
|||
|
Weighted-average shares outstanding - diluted
|
139,856
|
|
|
139,818
|
|
|
158,384
|
|
|||
|
|
|
|
|
|
|
||||||
|
Net (loss) income per common share attributable to controlling interest:
|
|
|
|
|
|
||||||
|
Basic
|
$
|
(0.67
|
)
|
|
$
|
0.15
|
|
|
$
|
0.11
|
|
|
Diluted
|
$
|
(0.67
|
)
|
|
$
|
0.15
|
|
|
$
|
0.09
|
|
|
(a)
|
Losses are not allocated to the convertible participating preferred shares since they have no contractual obligation to share in such losses.
|
|
|
Future Minimum
Rental Commitments
|
||
|
Fiscal Year
|
|
||
|
2014
|
$
|
41.1
|
|
|
2015
|
35.1
|
|
|
|
2016
|
29.6
|
|
|
|
2017
|
25.0
|
|
|
|
2018
|
16.1
|
|
|
|
Thereafter
|
38.4
|
|
|
|
Total minimum lease payments
|
$
|
185.3
|
|
|
|
|
Subsidiary (state of domicile)(a)
|
||||||
|
|
|
FGL Insurance (MD)
|
|
FGL NY Insurance (NY)
|
||||
|
Statutory Net Income (Loss):
|
|
|
|
|
||||
|
Fiscal year ended September 30, 2013 (Unaudited)
|
|
$
|
36.2
|
|
|
$
|
3.1
|
|
|
Fiscal year ended September 30, 2012 (Unaudited)
|
|
145.2
|
|
|
0.7
|
|
||
|
Period April 6, 2011 to September 30, 2011 (Unaudited)
|
|
38.2
|
|
|
4.9
|
|
||
|
Period January 1, 2011 to April 5, 2011 (Unaudited)
|
|
15.3
|
|
|
(0.5
|
)
|
||
|
Year ended December 31, 2012
|
|
102.2
|
|
|
1.0
|
|
||
|
Year ended December 31, 2011
|
|
110.3
|
|
|
4.5
|
|
||
|
|
|
|
|
|
||||
|
Statutory Capital and Surplus:
|
|
|
|
|
||||
|
September 30, 2013 (Unaudited)
|
|
$
|
1,064.3
|
|
|
$
|
62.2
|
|
|
September 30, 2012 (Unaudited)
|
|
861.6
|
|
|
45.3
|
|
||
|
December 31, 2012
|
|
900.5
|
|
|
41.1
|
|
||
|
December 31, 2011
|
|
846.4
|
|
|
44.7
|
|
||
|
(in millions, except per unit amounts)
|
|
Amount
|
||
|
Period from inception to September 30, 2013:
|
|
|
||
|
Proved property acquisition costs
|
|
$
|
569.5
|
|
|
Unproved property acquisition costs
|
|
53.9
|
|
|
|
Total property acquisition costs
|
|
623.4
|
|
|
|
Development
|
|
11.8
|
|
|
|
Exploration costs
|
|
—
|
|
|
|
Lease acquisitions and other
|
|
—
|
|
|
|
Capitalized asset retirement costs
|
|
0.1
|
|
|
|
Depreciation, depletion and amortization per Boe
|
|
$
|
10.30
|
|
|
Depreciation, depletion and amortization per Mcfe
|
|
$
|
1.72
|
|
|
|
|
Oil
(Mbbls)
|
|
Natural
Gas
(Mmcf)
|
|
Natural Gas Liquids (Mbbls)
|
|
Natural Gas Equivalent (Mmcfe)
|
||||
|
Inception
|
|
3,747
|
|
|
268,447
|
|
|
6,113
|
|
|
327,607
|
|
|
Purchase of reserves in place (1)
|
|
193
|
|
|
63,145
|
|
|
1,240
|
|
|
71,743
|
|
|
Discoveries and extensions (2)
|
|
188
|
|
|
4,416
|
|
|
753
|
|
|
10,062
|
|
|
Revisions of previous estimates:
|
|
|
|
|
|
|
|
|
||||
|
Changes in price
|
|
(125
|
)
|
|
13,116
|
|
|
(135
|
)
|
|
11,556
|
|
|
Other factors (3)
|
|
(296
|
)
|
|
(12,136
|
)
|
|
(1,941
|
)
|
|
(25,558
|
)
|
|
Sales of reserves in place
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Production
|
|
(283
|
)
|
|
(14,570
|
)
|
|
(300
|
)
|
|
(18,068
|
)
|
|
September 30, 2013
|
|
3,424
|
|
|
322,418
|
|
|
5,730
|
|
|
377,342
|
|
|
(1)
|
Purchases of reserves in place include the initial contribution of conventional assets from EXCO as of February 14, 2013, and the acquisition of shallow Cotton Valley assets from an affiliate of BG Group as of March 5, 2013.
|
|
(2)
|
New discoveries and extensions were a result of the EXCO/HGI JV’s development in the Permian basin.
|
|
(3)
|
Revisions of previous estimates due to other factors were primarily due to downward adjustments in the Permian basin of
18.1
Bcfe as a result of recent performance and modifications to the EXCO/HGI JV’s development plans which extended the development beyond a five-year horizon. In addition, revisions of previous estimates due to other factors in the East Texas/North Louisiana region were
7.5
Bcfe primarily due to recent performance.
|
|
|
|
Oil
(Mbbls)
|
|
Natural
Gas
(Mmcf)
|
|
Natural Gas Liquids (Mbbls)
|
|
Mmcfe
|
||||
|
Proved developed:
|
|
|
|
|
|
|
|
|
||||
|
September 30, 2013
|
|
3,107
|
|
|
317,748
|
|
|
4,799
|
|
|
365,185
|
|
|
Proved undeveloped:
|
|
|
|
|
|
|
|
|
||||
|
September 30, 2013
|
|
317
|
|
|
4,670
|
|
|
931
|
|
|
12,157
|
|
|
|
|
Amount
|
||
|
September 30, 2013
|
|
|
||
|
Future cash inflows
|
|
$
|
1,638.5
|
|
|
Future production costs
|
|
923.7
|
|
|
|
Future development costs
|
|
156.0
|
|
|
|
Future income taxes
|
|
39.3
|
|
|
|
Future net cash flows
|
|
519.5
|
|
|
|
Discount of future net cash flows at 10% per annum
|
|
217.2
|
|
|
|
Standardized measure of discounted future net cash flows
|
|
$
|
302.3
|
|
|
|
|
Amount
|
||
|
Period from inception to September 30, 2013:
|
|
|
||
|
Sales and transfers of oil and natural gas produced
|
|
$
|
(46.2
|
)
|
|
Net changes in prices and production costs
|
|
39.2
|
|
|
|
Extensions and discoveries, net of future development and production costs
|
|
8.1
|
|
|
|
Development costs during the period
|
|
7.4
|
|
|
|
Changes in estimated future development costs
|
|
20.2
|
|
|
|
Revisions of previous quantity estimates
|
|
(50.2
|
)
|
|
|
Sales of reserves in place
|
|
—
|
|
|
|
Purchase of reserves in place
|
|
300.6
|
|
|
|
Accretion of discount before income taxes
|
|
16.1
|
|
|
|
Changes in timing and other
|
|
27.9
|
|
|
|
Net change in income taxes
|
|
(20.8
|
)
|
|
|
Net change
|
|
$
|
302.3
|
|
|
|
|
Amount
|
||
|
Period from inception to September 30, 2013:
|
|
|
||
|
Property acquisition costs
|
|
$
|
35.7
|
|
|
Exploration and development
|
|
—
|
|
|
|
Capitalized interest
|
|
0.8
|
|
|
|
Total
|
|
$
|
36.5
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
Revenues:
|
|
|
|
|
|
||||||
|
Consumer Products
|
$
|
4,085.6
|
|
|
$
|
3,252.4
|
|
|
$
|
3,186.9
|
|
|
Insurance
|
1,348.4
|
|
|
1,221.8
|
|
|
290.8
|
|
|||
|
Energy
|
90.2
|
|
|
—
|
|
|
—
|
|
|||
|
Financial Services
|
28.9
|
|
|
8.6
|
|
|
—
|
|
|||
|
Intersegment elimination
|
(9.7
|
)
|
|
(2.1
|
)
|
|
—
|
|
|||
|
Consolidated revenues
|
$
|
5,543.4
|
|
|
$
|
4,480.7
|
|
|
$
|
3,477.7
|
|
|
|
|
|
|
|
|
||||||
|
Depreciation and amortization
|
|
|
|
|
|
||||||
|
Consumer Products
|
$
|
139.8
|
|
|
$
|
104.5
|
|
|
$
|
104.7
|
|
|
Insurance
|
186.3
|
|
|
163.5
|
|
|
(9.4
|
)
|
|||
|
Energy
|
32.2
|
|
|
—
|
|
|
—
|
|
|||
|
Financial Services
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|||
|
Total segments
|
358.4
|
|
|
268.1
|
|
|
95.3
|
|
|||
|
Corporate
|
0.2
|
|
|
0.1
|
|
|
0.2
|
|
|||
|
Consolidated depreciation and amortization
|
$
|
358.6
|
|
|
$
|
268.2
|
|
|
$
|
95.5
|
|
|
|
|
|
|
|
|
||||||
|
Operating income (loss):
|
|
|
|
|
|
||||||
|
Consumer Products
|
$
|
351.2
|
|
|
$
|
301.8
|
|
|
$
|
227.9
|
|
|
Insurance
|
522.9
|
|
|
159.9
|
|
|
(41.5
|
)
|
|||
|
Energy
|
(45.2
|
)
|
|
—
|
|
|
—
|
|
|||
|
Financial Services
|
10.4
|
|
|
2.5
|
|
|
—
|
|
|||
|
Intersegment elimination
|
(10.9
|
)
|
|
(2.1
|
)
|
|
—
|
|
|||
|
Total segments
|
828.4
|
|
|
462.1
|
|
|
186.4
|
|
|||
|
Corporate and eliminations
|
(91.0
|
)
|
|
(52.6
|
)
|
|
(22.7
|
)
|
|||
|
Consolidated operating income
|
737.4
|
|
|
409.5
|
|
|
163.7
|
|
|||
|
Interest expense
|
(511.9
|
)
|
|
(251.0
|
)
|
|
(249.3
|
)
|
|||
|
(Loss) gain from the change in the fair value of the equity conversion feature of preferred stock
|
(101.6
|
)
|
|
(156.6
|
)
|
|
27.9
|
|
|||
|
Bargain purchase gain from business acquisition
|
—
|
|
|
—
|
|
|
158.3
|
|
|||
|
Gain on contingent purchase price reduction
|
—
|
|
|
41.0
|
|
|
—
|
|
|||
|
Other expense, net
|
(5.6
|
)
|
|
(17.5
|
)
|
|
(42.7
|
)
|
|||
|
Consolidated income from continuing operations before income taxes
|
$
|
118.3
|
|
|
$
|
25.4
|
|
|
$
|
57.9
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
Capital expenditures:
|
|
|
|
|
|
||||||
|
Consumer Products
|
$
|
81.9
|
|
|
$
|
46.8
|
|
|
$
|
36.2
|
|
|
Insurance
|
4.1
|
|
|
6.2
|
|
|
1.7
|
|
|||
|
Energy
|
13.4
|
|
|
—
|
|
|
—
|
|
|||
|
Financial Services
|
0.3
|
|
|
0.5
|
|
|
—
|
|
|||
|
Total segments
|
99.7
|
|
|
53.5
|
|
|
37.9
|
|
|||
|
Corporate
|
0.4
|
|
|
—
|
|
|
0.3
|
|
|||
|
Consolidated capital expenditures
|
$
|
100.1
|
|
|
$
|
53.5
|
|
|
$
|
38.2
|
|
|
Total assets:
|
September 30,
2013 |
|
September 30,
2012 |
||||
|
Consumer Products
|
$
|
5,626.7
|
|
|
$
|
3,751.6
|
|
|
Insurance
|
21,183.1
|
|
|
20,990.3
|
|
||
|
Energy
|
617.6
|
|
|
—
|
|
||
|
Financial Services
|
572.2
|
|
|
195.1
|
|
||
|
Intersegment elimination
|
(461.4
|
)
|
|
(182.1
|
)
|
||
|
Total segments
|
27,538.2
|
|
|
24,754.9
|
|
||
|
Corporate assets
|
370.6
|
|
|
445.5
|
|
||
|
Consolidated total assets
|
$
|
27,908.8
|
|
|
$
|
25,200.4
|
|
|
Total long-lived assets:
|
September 30,
2013 |
|
September 30,
2012 |
||||
|
Consumer Products
|
$
|
4,143.8
|
|
|
$
|
2,690.2
|
|
|
Insurance
|
572.9
|
|
|
280.4
|
|
||
|
Energy
|
576.8
|
|
|
—
|
|
||
|
Financial Services
|
0.7
|
|
|
0.5
|
|
||
|
Total segments
|
5,294.2
|
|
|
2,971.1
|
|
||
|
Corporate assets
|
28.4
|
|
|
15.4
|
|
||
|
Consolidated total long-lived assets
|
$
|
5,322.6
|
|
|
$
|
2,986.5
|
|
|
|
Year ended September 30,
|
||||||||||
|
Net change in cash due to operating activities
|
2013
|
|
2012
|
|
2011
|
||||||
|
Consumer Products
|
$
|
256.5
|
|
|
$
|
258.7
|
|
|
$
|
229.9
|
|
|
Insurance
|
336.2
|
|
|
300.0
|
|
|
(25.4
|
)
|
|||
|
Energy
|
37.2
|
|
|
—
|
|
|
—
|
|
|||
|
Financial Services
|
11.7
|
|
|
13.7
|
|
|
—
|
|
|||
|
Net change in cash due to segment operating activities
|
641.6
|
|
|
572.4
|
|
|
204.5
|
|
|||
|
Net change in cash due to corporate operating activities
|
(119.3
|
)
|
|
50.1
|
|
|
(49.0
|
)
|
|||
|
Consolidated change in cash due to operating activities
|
$
|
522.3
|
|
|
$
|
622.5
|
|
|
$
|
155.5
|
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
United States
|
|
$
|
2,411.4
|
|
|
$
|
1,772.1
|
|
|
$
|
1,780.1
|
|
|
Outside the United States
|
|
1,674.2
|
|
|
1,480.3
|
|
|
1,406.8
|
|
|||
|
Consolidated net consumer product sales to external customers
|
|
$
|
4,085.6
|
|
|
$
|
3,252.4
|
|
|
$
|
3,186.9
|
|
|
|
|
September 30, 2013
|
|
September 30, 2012
|
||||
|
United States
|
|
$
|
4,397.4
|
|
|
$
|
2,284.9
|
|
|
Outside the United States
|
|
925.2
|
|
|
701.6
|
|
||
|
Consolidated long-lived assets
|
|
$
|
5,322.6
|
|
|
$
|
2,986.5
|
|
|
September 30, 2013
|
|
Consumer Products
|
|
Insurance
|
|
Energy
|
|
Financial Services
|
|
Corporate and Other
|
|
Eliminations
|
|
Total
|
||||||||||||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Investments
|
|
$
|
—
|
|
|
$
|
16,282.3
|
|
|
$
|
—
|
|
|
$
|
389.3
|
|
|
$
|
42.3
|
|
|
$
|
(248.0
|
)
|
|
$
|
16,465.9
|
|
|
Investments in subsidiaries and affiliates
|
|
—
|
|
|
62.0
|
|
|
—
|
|
|
—
|
|
|
2,012.9
|
|
|
(2,074.9
|
)
|
|
—
|
|
|||||||
|
Affiliated loans and receivables
|
|
—
|
|
|
150.1
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
|
(151.0
|
)
|
|
—
|
|
|||||||
|
Cash and cash equivalents
|
|
207.3
|
|
|
1,248.3
|
|
|
18.7
|
|
|
166.5
|
|
|
258.9
|
|
|
—
|
|
|
1,899.7
|
|
|||||||
|
Receivables, net
|
|
546.9
|
|
|
—
|
|
|
22.2
|
|
|
1.2
|
|
|
41.0
|
|
|
—
|
|
|
611.3
|
|
|||||||
|
Inventories, net
|
|
632.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
632.9
|
|
|||||||
|
Accrued investment income
|
|
—
|
|
|
159.3
|
|
|
—
|
|
|
2.3
|
|
|
—
|
|
|
(0.4
|
)
|
|
161.2
|
|
|||||||
|
Reinsurance recoverable
|
|
—
|
|
|
2,363.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,363.7
|
|
|||||||
|
Deferred tax assets
|
|
33.0
|
|
|
260.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
293.4
|
|
|||||||
|
Properties, including oil and natural gas properties, net
|
|
412.5
|
|
|
7.0
|
|
|
572.6
|
|
|
0.7
|
|
|
0.5
|
|
|
—
|
|
|
993.3
|
|
|||||||
|
Goodwill
|
|
1,476.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,476.7
|
|
|||||||
|
Intangibles, including DAC and VOBA, net
|
|
2,163.2
|
|
|
565.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,729.1
|
|
|||||||
|
Other assets
|
|
154.2
|
|
|
84.1
|
|
|
4.1
|
|
|
11.3
|
|
|
27.9
|
|
|
—
|
|
|
281.6
|
|
|||||||
|
Total assets
|
|
$
|
5,626.7
|
|
|
$
|
21,183.1
|
|
|
$
|
617.6
|
|
|
$
|
572.2
|
|
|
$
|
2,383.5
|
|
|
$
|
(2,474.3
|
)
|
|
$
|
27,908.8
|
|
|
Liabilities and Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Insurance reserves
|
|
$
|
—
|
|
|
$
|
18,895.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18,895.9
|
|
|
Debt
|
|
3,218.9
|
|
|
300.0
|
|
|
271.2
|
|
|
181.8
|
|
|
924.2
|
|
|
—
|
|
|
4,896.1
|
|
|||||||
|
Accounts payable and other current liabilities
|
|
849.4
|
|
|
52.9
|
|
|
32.8
|
|
|
6.3
|
|
|
71.3
|
|
|
—
|
|
|
1,012.7
|
|
|||||||
|
Equity conversion feature of preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
330.8
|
|
|
—
|
|
|
330.8
|
|
|||||||
|
Employee benefit obligations
|
|
96.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.0
|
|
|
—
|
|
|
99.6
|
|
|||||||
|
Deferred tax liabilities
|
|
492.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
492.8
|
|
|||||||
|
Other liabilities
|
|
28.9
|
|
|
640.2
|
|
|
25.4
|
|
|
23.3
|
|
|
0.2
|
|
|
—
|
|
|
718.0
|
|
|||||||
|
Affiliated debt and payables
|
|
—
|
|
|
0.8
|
|
|
102.2
|
|
|
293.3
|
|
|
—
|
|
|
(396.3
|
)
|
|
—
|
|
|||||||
|
Total liabilities
|
|
4,686.6
|
|
|
19,889.8
|
|
|
431.6
|
|
|
504.7
|
|
|
1,329.5
|
|
|
(396.3
|
)
|
|
26,445.9
|
|
|||||||
|
Temporary equity
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
329.3
|
|
|
—
|
|
|
329.4
|
|
|||||||
|
Total stockholders’ equity
|
|
531.0
|
|
|
1,293.3
|
|
|
185.9
|
|
|
67.8
|
|
|
724.7
|
|
|
(2,078.0
|
)
|
|
724.7
|
|
|||||||
|
Noncontrolling interests
|
|
409.1
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|
408.8
|
|
|||||||
|
Total permanent equity
|
|
940.1
|
|
|
1,293.3
|
|
|
185.9
|
|
|
67.5
|
|
|
724.7
|
|
|
(2,078.0
|
)
|
|
1,133.5
|
|
|||||||
|
Total liabilities and equity
|
|
$
|
5,626.7
|
|
|
$
|
21,183.1
|
|
|
$
|
617.6
|
|
|
$
|
572.2
|
|
|
$
|
2,383.5
|
|
|
$
|
(2,474.3
|
)
|
|
$
|
27,908.8
|
|
|
September 30, 2012
|
|
Consumer Products
|
|
Insurance
|
|
Energy
|
|
Financial Services
|
|
Corporate and Other
|
|
Eliminations
|
|
Total
|
||||||||||||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Investments
|
|
$
|
—
|
|
|
$
|
16,556.7
|
|
|
$
|
—
|
|
|
$
|
180.1
|
|
|
$
|
181.6
|
|
|
$
|
—
|
|
|
$
|
16,918.4
|
|
|
Investment in subsidiaries and affiliates
|
|
—
|
|
|
32.0
|
|
|
—
|
|
|
—
|
|
|
1,858.2
|
|
|
(1,890.2
|
)
|
|
—
|
|
|||||||
|
Affiliated loans and receivables
|
|
—
|
|
|
150.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(150.1
|
)
|
|
—
|
|
|||||||
|
Cash and cash equivalents
|
|
158.0
|
|
|
1,054.6
|
|
|
—
|
|
|
12.4
|
|
|
245.7
|
|
|
—
|
|
|
1,470.7
|
|
|||||||
|
Receivables, net
|
|
373.4
|
|
|
41.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
414.4
|
|
|||||||
|
Inventories, net
|
|
452.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
452.6
|
|
|||||||
|
Accrued investment income
|
|
—
|
|
|
191.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
191.6
|
|
|||||||
|
Reinsurance recoverable
|
|
—
|
|
|
2,363.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,363.1
|
|
|||||||
|
Deferred tax assets
|
|
28.2
|
|
|
279.6
|
|
|
—
|
|
|
—
|
|
|
4.9
|
|
|
—
|
|
|
312.7
|
|
|||||||
|
Properties, including oil and natural gas properties, net
|
|
214.0
|
|
|
6.9
|
|
|
—
|
|
|
0.4
|
|
|
0.3
|
|
|
—
|
|
|
221.6
|
|
|||||||
|
Goodwill
|
|
694.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
694.2
|
|
|||||||
|
Intangibles, including DAC and VOBA, net
|
|
1,715.0
|
|
|
273.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,988.5
|
|
|||||||
|
Other assets
|
|
116.2
|
|
|
41.2
|
|
|
—
|
|
|
2.2
|
|
|
13.0
|
|
|
—
|
|
|
172.6
|
|
|||||||
|
Total assets
|
|
$
|
3,751.6
|
|
|
$
|
20,990.3
|
|
|
$
|
—
|
|
|
$
|
195.1
|
|
|
$
|
2,303.7
|
|
|
$
|
(2,040.3
|
)
|
|
$
|
25,200.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Liabilities and Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Insurance reserves
|
|
$
|
—
|
|
|
$
|
19,051.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,051.0
|
|
|
Debt
|
|
1,669.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
497.7
|
|
|
—
|
|
|
2,167.0
|
|
|||||||
|
Accounts payable and other current liabilities
|
|
594.2
|
|
|
93.2
|
|
|
—
|
|
|
—
|
|
|
66.8
|
|
|
—
|
|
|
754.2
|
|
|||||||
|
Equity conversion feature of preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
232.0
|
|
|
—
|
|
|
232.0
|
|
|||||||
|
Employee benefit obligations
|
|
90.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.1
|
|
|
—
|
|
|
95.1
|
|
|||||||
|
Deferred tax liabilities
|
|
377.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.9
|
|
|
—
|
|
|
382.4
|
|
|||||||
|
Other liabilities
|
|
31.6
|
|
|
555.3
|
|
|
—
|
|
|
13.3
|
|
|
0.4
|
|
|
—
|
|
|
600.6
|
|
|||||||
|
Affiliated debt and payables
|
|
—
|
|
|
—
|
|
|
—
|
|
|
150.1
|
|
|
—
|
|
|
(150.1
|
)
|
|
—
|
|
|||||||
|
Total liabilities
|
|
2,762.6
|
|
|
19,699.5
|
|
|
—
|
|
|
163.4
|
|
|
806.9
|
|
|
(150.1
|
)
|
|
23,282.3
|
|
|||||||
|
Temporary equity
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
319.2
|
|
|
—
|
|
|
319.2
|
|
|||||||
|
Total stockholders’ equity
|
|
567.7
|
|
|
1,290.8
|
|
|
—
|
|
|
31.7
|
|
|
1,177.6
|
|
|
(1,890.2
|
)
|
|
1,177.6
|
|
|||||||
|
Noncontrolling interests
|
|
421.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
421.3
|
|
|||||||
|
Total permanent equity
|
|
989.0
|
|
|
1,290.8
|
|
|
—
|
|
|
31.7
|
|
|
1,177.6
|
|
|
(1,890.2
|
)
|
|
1,598.9
|
|
|||||||
|
Total liabilities and equity
|
|
$
|
3,751.6
|
|
|
$
|
20,990.3
|
|
|
$
|
—
|
|
|
$
|
195.1
|
|
|
$
|
2,303.7
|
|
|
$
|
(2,040.3
|
)
|
|
$
|
25,200.4
|
|
|
Year ended September 30, 2013
|
|
Consumer Products
|
|
Insurance
|
|
Energy
|
|
Financial Services
|
|
Corporate and Other
|
|
Eliminations
|
|
Total
|
||||||||||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Net consumer product sales
|
|
$
|
4,085.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,085.6
|
|
|
Oil and natural gas
|
|
—
|
|
|
—
|
|
|
90.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90.2
|
|
|||||||
|
Insurance premiums
|
|
—
|
|
|
58.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
58.8
|
|
|||||||
|
Net investment income
|
|
—
|
|
|
715.5
|
|
|
—
|
|
|
28.9
|
|
|
—
|
|
|
(9.7
|
)
|
|
734.7
|
|
|||||||
|
Net investment gains
|
|
—
|
|
|
511.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
511.6
|
|
|||||||
|
Insurance and investment product fees and other
|
|
—
|
|
|
62.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62.5
|
|
|||||||
|
Total revenues
|
|
4,085.6
|
|
|
1,348.4
|
|
|
90.2
|
|
|
28.9
|
|
|
—
|
|
|
(9.7
|
)
|
|
5,543.4
|
|
|||||||
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Consumer products cost of goods sold
|
|
2,695.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,695.3
|
|
|||||||
|
Oil and natural gas direct operating costs
|
|
—
|
|
|
—
|
|
|
44.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44.0
|
|
|||||||
|
Benefits and other changes in policy reserves
|
|
—
|
|
|
531.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
531.8
|
|
|||||||
|
Selling, acquisition, operating and general expenses
|
|
961.3
|
|
|
111.4
|
|
|
37.1
|
|
|
18.5
|
|
|
91.0
|
|
|
1.2
|
|
|
1,220.5
|
|
|||||||
|
Impairment of oil and gas properties
|
|
—
|
|
|
—
|
|
|
54.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54.3
|
|
|||||||
|
Amortization of intangibles
|
|
77.8
|
|
|
182.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
260.1
|
|
|||||||
|
Total operating costs and expenses
|
|
3,734.4
|
|
|
825.5
|
|
|
135.4
|
|
|
18.5
|
|
|
91.0
|
|
|
1.2
|
|
|
4,806.0
|
|
|||||||
|
Operating income (loss)
|
|
351.2
|
|
|
522.9
|
|
|
(45.2
|
)
|
|
10.4
|
|
|
(91.0
|
)
|
|
(10.9
|
)
|
|
737.4
|
|
|||||||
|
Equity in net income (losses) of subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
266.3
|
|
|
(266.3
|
)
|
|
—
|
|
|||||||
|
Interest expense
|
|
(375.6
|
)
|
|
(11.5
|
)
|
|
(4.7
|
)
|
|
—
|
|
|
(120.1
|
)
|
|
—
|
|
|
(511.9
|
)
|
|||||||
|
Affiliated interest expense
|
|
—
|
|
|
—
|
|
|
(5.6
|
)
|
|
(4.1
|
)
|
|
—
|
|
|
9.7
|
|
|
—
|
|
|||||||
|
(Loss) gain from the change in the fair value of the equity conversion feature of preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(101.6
|
)
|
|
—
|
|
|
(101.6
|
)
|
|||||||
|
Other expense, net
|
|
(3.5
|
)
|
|
(0.2
|
)
|
|
(1.3
|
)
|
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
|
(5.6
|
)
|
|||||||
|
(Loss) income from continuing operations before income taxes
|
|
(27.9
|
)
|
|
511.2
|
|
|
(56.8
|
)
|
|
6.3
|
|
|
(47.0
|
)
|
|
(267.5
|
)
|
|
118.3
|
|
|||||||
|
Income tax expense (benefit)
|
|
27.4
|
|
|
161.0
|
|
|
—
|
|
|
0.1
|
|
|
(1.2
|
)
|
|
—
|
|
|
187.3
|
|
|||||||
|
Net (loss) income
|
|
(55.3
|
)
|
|
350.2
|
|
|
(56.8
|
)
|
|
6.2
|
|
|
(45.8
|
)
|
|
(267.5
|
)
|
|
(69.0
|
)
|
|||||||
|
Less: Net (loss) income attributable to noncontrolling interest
|
|
(23.6
|
)
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
(23.2
|
)
|
|||||||
|
Net (loss) income attributable to controlling interest
|
|
(31.7
|
)
|
|
350.2
|
|
|
(56.8
|
)
|
|
5.8
|
|
|
(45.8
|
)
|
|
(267.5
|
)
|
|
(45.8
|
)
|
|||||||
|
Less: Preferred stock dividends and accretion
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48.4
|
|
|
—
|
|
|
48.4
|
|
|||||||
|
Net (loss) income attributable to common and participating preferred stockholders
|
|
$
|
(31.7
|
)
|
|
$
|
350.2
|
|
|
$
|
(56.8
|
)
|
|
$
|
5.8
|
|
|
$
|
(94.2
|
)
|
|
$
|
(267.5
|
)
|
|
$
|
(94.2
|
)
|
|
Year ended September 30, 2012
|
|
Consumer Products
|
|
Insurance
|
|
Energy
|
|
Financial Services
|
|
Corporate and Other
|
|
Eliminations
|
|
Total
|
||||||||||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Net consumer product sales
|
|
$
|
3,252.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,252.4
|
|
|
Insurance premiums
|
|
—
|
|
|
55.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55.3
|
|
|||||||
|
Net investment income
|
|
—
|
|
|
716.2
|
|
|
—
|
|
|
8.6
|
|
|
—
|
|
|
(2.1
|
)
|
|
722.7
|
|
|||||||
|
Net investment gains (losses)
|
|
—
|
|
|
410.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
410.0
|
|
|||||||
|
Insurance and investment product fees and other
|
|
—
|
|
|
40.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40.3
|
|
|||||||
|
Total revenues
|
|
3,252.4
|
|
|
1,221.8
|
|
|
—
|
|
|
8.6
|
|
|
—
|
|
|
(2.1
|
)
|
|
4,480.7
|
|
|||||||
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Consumer products cost of goods sold
|
|
2,136.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,136.8
|
|
|||||||
|
Benefits and other changes in policy reserves
|
|
—
|
|
|
777.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
777.4
|
|
|||||||
|
Selling, acquisition, operating and general expenses
|
|
750.1
|
|
|
123.9
|
|
|
—
|
|
|
6.1
|
|
|
52.6
|
|
|
—
|
|
|
932.7
|
|
|||||||
|
Amortization of intangibles
|
|
63.7
|
|
|
160.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
224.3
|
|
|||||||
|
Total operating costs and expenses
|
|
2,950.6
|
|
|
1,061.9
|
|
|
—
|
|
|
6.1
|
|
|
52.6
|
|
|
—
|
|
|
4,071.2
|
|
|||||||
|
Operating income
|
|
301.8
|
|
|
159.9
|
|
|
—
|
|
|
2.5
|
|
|
(52.6
|
)
|
|
(2.1
|
)
|
|
409.5
|
|
|||||||
|
Equity in net income of subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
372.0
|
|
|
(372.0
|
)
|
|
—
|
|
|||||||
|
Interest expense
|
|
(191.9
|
)
|
|
(2.5
|
)
|
|
—
|
|
|
—
|
|
|
(56.6
|
)
|
|
—
|
|
|
(251.0
|
)
|
|||||||
|
Affiliated interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
—
|
|
|
2.1
|
|
|
—
|
|
|||||||
|
Loss from the change in the fair value of the equity conversion feature of preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(156.6
|
)
|
|
—
|
|
|
(156.6
|
)
|
|||||||
|
Gain on contingent purchase price reduction
|
|
—
|
|
|
41.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41.0
|
|
|||||||
|
Other (expense) income, net
|
|
(0.9
|
)
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
(16.7
|
)
|
|
—
|
|
|
(17.5
|
)
|
|||||||
|
Income (loss) from continuing operations before income taxes
|
|
109.0
|
|
|
198.5
|
|
|
—
|
|
|
0.4
|
|
|
89.5
|
|
|
(372.0
|
)
|
|
25.4
|
|
|||||||
|
Income tax expense (benefit)
|
|
60.4
|
|
|
(145.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(85.3
|
)
|
|||||||
|
Net income
|
|
48.6
|
|
|
344.2
|
|
|
—
|
|
|
0.4
|
|
|
89.5
|
|
|
(372.0
|
)
|
|
110.7
|
|
|||||||
|
Less: Net income attributable to noncontrolling interest
|
|
21.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21.2
|
|
|||||||
|
Net income attributable to controlling interest
|
|
27.4
|
|
|
344.2
|
|
|
—
|
|
|
0.4
|
|
|
89.5
|
|
|
(372.0
|
)
|
|
89.5
|
|
|||||||
|
Less: Preferred stock dividends and accretion
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59.6
|
|
|
—
|
|
|
59.6
|
|
|||||||
|
Net income attributable to common and participating preferred stockholders
|
|
$
|
27.4
|
|
|
$
|
344.2
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
$
|
29.9
|
|
|
$
|
(372.0
|
)
|
|
$
|
29.9
|
|
|
Year ended September 30, 2011
|
|
Consumer Products
|
|
Insurance
|
|
Energy
|
|
Financial Services
|
|
Corporate and Other
|
|
Eliminations
|
|
Total
|
||||||||||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Net consumer product sales
|
|
$
|
3,186.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,186.9
|
|
|
Insurance premiums
|
|
—
|
|
|
39.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39.0
|
|
|||||||
|
Net investment income
|
|
—
|
|
|
369.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
369.8
|
|
|||||||
|
Net investment gains (losses)
|
|
—
|
|
|
(166.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(166.9
|
)
|
|||||||
|
Insurance and investment product fees and other
|
|
—
|
|
|
48.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48.9
|
|
|||||||
|
Total revenues
|
|
3,186.9
|
|
|
290.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,477.7
|
|
|||||||
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Consumer products cost of goods sold
|
|
2,058.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,058.0
|
|
|||||||
|
Benefits and other changes in policy reserves
|
|
—
|
|
|
247.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
247.6
|
|
|||||||
|
Selling, acquisition, operating and general expenses
|
|
843.3
|
|
|
95.8
|
|
|
—
|
|
|
—
|
|
|
22.7
|
|
|
—
|
|
|
961.8
|
|
|||||||
|
Amortization of intangibles
|
|
57.7
|
|
|
(11.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46.6
|
|
|||||||
|
Total operating costs and expenses
|
|
2,959.0
|
|
|
332.3
|
|
|
—
|
|
|
—
|
|
|
22.7
|
|
|
—
|
|
|
3,314.0
|
|
|||||||
|
Operating income (loss)
|
|
227.9
|
|
|
(41.5
|
)
|
|
—
|
|
|
—
|
|
|
(22.7
|
)
|
|
—
|
|
|
163.7
|
|
|||||||
|
Equity in net income (losses) of subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
116.1
|
|
|
(116.1
|
)
|
|
—
|
|
|||||||
|
Interest expense
|
|
(208.4
|
)
|
|
(1.9
|
)
|
|
—
|
|
|
—
|
|
|
(39.0
|
)
|
|
—
|
|
|
(249.3
|
)
|
|||||||
|
Affiliated interest income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
Gain from the change in the fair value of the equity conversion feature of preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27.9
|
|
|
—
|
|
|
27.9
|
|
|||||||
|
Bargain purchase gain from business acquisition
|
|
—
|
|
|
158.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
158.3
|
|
|||||||
|
Other expense, net
|
|
(2.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40.3
|
)
|
|
—
|
|
|
(42.7
|
)
|
|||||||
|
Income from continuing operations before income taxes
|
|
17.1
|
|
|
114.9
|
|
|
—
|
|
|
—
|
|
|
42.0
|
|
|
(116.1
|
)
|
|
57.9
|
|
|||||||
|
Income tax expense (benefit)
|
|
92.3
|
|
|
(41.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50.6
|
|
|||||||
|
Net (loss) income
|
|
(75.2
|
)
|
|
156.6
|
|
|
—
|
|
|
—
|
|
|
42.0
|
|
|
(116.1
|
)
|
|
7.3
|
|
|||||||
|
Less: Net loss attributable to noncontrolling interest
|
|
(34.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34.7
|
)
|
|||||||
|
Net (loss) income attributable to controlling interest
|
|
(40.5
|
)
|
|
156.6
|
|
|
—
|
|
|
—
|
|
|
42.0
|
|
|
(116.1
|
)
|
|
42.0
|
|
|||||||
|
Less: Preferred stock dividends and accretion
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19.8
|
|
|
—
|
|
|
19.8
|
|
|||||||
|
Net (loss) income attributable to common and participating preferred stockholders
|
|
$
|
(40.5
|
)
|
|
$
|
156.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22.2
|
|
|
$
|
(116.1
|
)
|
|
$
|
22.2
|
|
|
|
|
Quarter Ended
|
||||||||||||||
|
|
|
September 30,
2013 |
|
June 30,
2013 |
|
March 31,
2013 |
|
December 30,
2012 |
||||||||
|
Net consumer product sales
|
|
$
|
1,137.8
|
|
|
$
|
1,089.8
|
|
|
$
|
987.7
|
|
|
$
|
870.3
|
|
|
Total revenues
|
|
1,498.6
|
|
|
1,410.6
|
|
|
1,411.9
|
|
|
1,222.3
|
|
||||
|
Gross profit
|
|
396.5
|
|
|
382.8
|
|
|
322.8
|
|
|
288.2
|
|
||||
|
Operating income
|
|
205.4
|
|
|
182.6
|
|
|
134.0
|
|
|
215.4
|
|
||||
|
Net (loss) income attributable to common and participating preferred stockholders
|
|
(202.3
|
)
|
|
91.6
|
|
|
(45.5
|
)
|
|
62.0
|
|
||||
|
Net (loss) income per common share attributable to controlling interest:
|
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
|
(1.45
|
)
|
|
0.45
|
|
|
(0.33
|
)
|
|
0.31
|
|
||||
|
Diluted
|
|
(1.45
|
)
|
|
0.25
|
|
|
(0.33
|
)
|
|
0.03
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Quarter Ended
|
||||||||||||||
|
|
|
September 30,
2012 |
|
July 1,
2012 |
|
April 1,
2012 |
|
January 1,
2012 |
||||||||
|
Net consumer product sales
|
|
$
|
832.6
|
|
|
$
|
824.8
|
|
|
$
|
746.2
|
|
|
$
|
848.8
|
|
|
Total revenues
|
|
1,196.9
|
|
|
1,012.2
|
|
|
1,105.6
|
|
|
1,166.0
|
|
||||
|
Gross profit
|
|
279.9
|
|
|
291.7
|
|
|
260.0
|
|
|
284.0
|
|
||||
|
Operating income
|
|
120.3
|
|
|
81.4
|
|
|
96.0
|
|
|
111.8
|
|
||||
|
Net income (loss) attributable to common and participating preferred stockholders
|
|
159.1
|
|
|
(149.1
|
)
|
|
(3.9
|
)
|
|
23.8
|
|
||||
|
Net income (loss) per common share attributable to controlling interest:
|
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
|
0.79
|
|
|
(1.07
|
)
|
|
(0.02
|
)
|
|
0.12
|
|
||||
|
Diluted
|
|
0.78
|
|
|
(1.07
|
)
|
|
(0.02
|
)
|
|
0.06
|
|
||||
|
|
|
Amortized Cost
(a)
|
|
Fair Value
|
|
Amount at which
shown in the balance
sheet
|
||||||
|
Fixed maturities:
|
|
|
|
|
|
|
||||||
|
Bonds:
|
|
|
|
|
|
|
||||||
|
United States Government and government agencies and authorities
|
|
$
|
1,095.0
|
|
|
$
|
1,100.4
|
|
|
$
|
1,100.4
|
|
|
States, municipalities and political subdivisions
|
|
1,014.8
|
|
|
1,023.5
|
|
|
1,023.5
|
|
|||
|
Foreign governments
|
|
20.0
|
|
|
19.7
|
|
|
19.7
|
|
|||
|
Public utilities
|
|
1,586.9
|
|
|
1,634.8
|
|
|
1,634.8
|
|
|||
|
Convertibles and bonds with warrants attached
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
All other corporate bonds
|
|
11,345.4
|
|
|
11,521.6
|
|
|
11,521.6
|
|
|||
|
Redeemable preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Total fixed maturities
|
|
15,062.1
|
|
|
15,300.0
|
|
|
15,300.0
|
|
|||
|
Equity securities:
|
|
|
|
|
|
|
||||||
|
Common stocks:
|
|
|
|
|
|
|
||||||
|
Public utilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Banks, trust, and insurance companies
|
|
143.2
|
|
|
130.4
|
|
|
130.4
|
|
|||
|
Industrial, miscellaneous and all other
|
|
69.5
|
|
|
40.8
|
|
|
40.8
|
|
|||
|
Nonredeemable preferred stock
|
|
182.0
|
|
|
181.3
|
|
|
181.3
|
|
|||
|
Total equity securities
|
|
394.7
|
|
|
352.5
|
|
|
352.5
|
|
|||
|
Derivative investments
|
|
141.7
|
|
|
221.8
|
|
|
221.8
|
|
|||
|
Asset-based loans
|
|
560.4
|
|
|
560.4
|
|
|
560.4
|
|
|||
|
Policy loans
|
|
20.5
|
|
|
20.5
|
|
|
20.5
|
|
|||
|
Other long-term investments
|
|
10.7
|
|
|
10.7
|
|
|
10.7
|
|
|||
|
Total investments
|
|
$
|
16,190.1
|
|
|
$
|
16,465.9
|
|
|
$
|
16,465.9
|
|
|
(a)
|
Represents (i) original cost reduced by repayments and other-than-temporary impairments and adjusted for amortization of premiums and accrual of discounts for fixed maturity securities, (ii) original cost reduced by other-than-temporary impairments for equity securities, (iii) original cost for derivative investments, and (iv) unpaid principal balance reduced by an allowance for credit losses for asset-based loans.
|
|
|
|
September 30,
2013 |
|
September 30,
2012 |
||||
|
ASSETS
|
||||||||
|
Cash and cash equivalents
|
|
$
|
256.9
|
|
|
$
|
235.8
|
|
|
Short-term investments
|
|
—
|
|
|
34.0
|
|
||
|
Receivables, net
|
|
41.0
|
|
|
|
|||
|
Prepaid expenses and other current assets
|
|
3.3
|
|
|
6.4
|
|
||
|
Total current assets
|
|
301.2
|
|
|
276.2
|
|
||
|
Investments in consolidated subsidiaries
|
|
2,049.0
|
|
|
2,001.8
|
|
||
|
Advances to consolidated subsidiaries
|
|
9.5
|
|
|
9.4
|
|
||
|
Properties, net
|
|
0.5
|
|
|
0.3
|
|
||
|
Deferred charges and other assets
|
|
23.1
|
|
|
11.6
|
|
||
|
Total assets
|
|
$
|
2,383.3
|
|
|
$
|
2,299.3
|
|
|
LIABILITIES AND EQUITY
|
||||||||
|
Accounts payable
|
|
$
|
1.4
|
|
|
$
|
0.8
|
|
|
Accrued and other current liabilities
|
|
69.6
|
|
|
61.7
|
|
||
|
Total current liabilities
|
|
71.0
|
|
|
62.5
|
|
||
|
Long-term debt
|
|
924.2
|
|
|
497.7
|
|
||
|
Equity conversion feature of preferred stock
|
|
330.8
|
|
|
232.0
|
|
||
|
Employee benefit obligations
|
|
3.0
|
|
|
5.1
|
|
||
|
Deferred income taxes
|
|
—
|
|
|
4.9
|
|
||
|
Other liabilities
|
|
0.3
|
|
|
0.3
|
|
||
|
Total liabilities
|
|
1,329.3
|
|
|
802.5
|
|
||
|
Temporary equity:
|
|
|
|
|
||||
|
Redeemable preferred stock
|
|
329.3
|
|
|
319.2
|
|
||
|
Stockholders’ equity:
|
|
|
|
|
||||
|
Common stock
|
|
1.4
|
|
|
1.4
|
|
||
|
Additional paid-in capital
|
|
828.0
|
|
|
861.2
|
|
||
|
Accumulated deficit
|
|
(192.4
|
)
|
|
(98.2
|
)
|
||
|
Accumulated other comprehensive income
|
|
87.7
|
|
|
413.2
|
|
||
|
Total stockholders’ equity
|
|
724.7
|
|
|
1,177.6
|
|
||
|
Total liabilities and equity
|
|
$
|
2,383.3
|
|
|
$
|
2,299.3
|
|
|
|
|
Year ended
|
||||||||||
|
|
|
September 30, 2013
|
|
September 30, 2012
|
|
September 30, 2011
|
||||||
|
Revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Cost of revenues
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Gross profit
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Operating expenses:
|
|
|
|
|
|
|
||||||
|
General and administrative
|
|
77.4
|
|
|
48.4
|
|
|
13.9
|
|
|||
|
Acquisition related charges
|
|
12.7
|
|
|
3.7
|
|
|
8.7
|
|
|||
|
Total operating expenses
|
|
90.1
|
|
|
52.1
|
|
|
22.6
|
|
|||
|
Operating loss
|
|
(90.1
|
)
|
|
(52.1
|
)
|
|
(22.6
|
)
|
|||
|
Other income (expense):
|
|
|
|
|
|
|
||||||
|
Equity in net income of subsidiaries
|
|
263.7
|
|
|
354.6
|
|
|
75.0
|
|
|||
|
Interest expense
|
|
(120.1
|
)
|
|
(56.6
|
)
|
|
(39.0
|
)
|
|||
|
(Loss) gain from the change in the fair value of the equity conversion feature of preferred stock
|
|
(101.6
|
)
|
|
(156.6
|
)
|
|
27.9
|
|
|||
|
Other, net
|
|
1.1
|
|
|
0.2
|
|
|
0.7
|
|
|||
|
(Loss) income before income taxes
|
|
(47.0
|
)
|
|
89.5
|
|
|
42.0
|
|
|||
|
Income tax (benefit) expense
|
|
(1.2
|
)
|
|
—
|
|
|
—
|
|
|||
|
Net (loss) income
|
|
(45.8
|
)
|
|
89.5
|
|
|
42.0
|
|
|||
|
Less: Preferred stock dividends and accretion
|
|
48.4
|
|
|
59.6
|
|
|
19.8
|
|
|||
|
Net (loss) income attributable to common and participating preferred stockholders
|
|
$
|
(94.2
|
)
|
|
$
|
29.9
|
|
|
$
|
22.2
|
|
|
|
|
Year ended
|
||||||||||
|
|
|
September 30,
2013 |
|
September 30,
2012 |
|
September 30,
2011 |
||||||
|
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
|
Net (loss) income
|
|
$
|
(45.8
|
)
|
|
$
|
89.5
|
|
|
$
|
42.0
|
|
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
|
|
||||||
|
Depreciation of properties
|
|
0.2
|
|
|
0.1
|
|
|
0.1
|
|
|||
|
Stock-based compensation
|
|
11.7
|
|
|
1.9
|
|
|
0.1
|
|
|||
|
Amortization of debt issuance costs
|
|
2.7
|
|
|
2.9
|
|
|
1.8
|
|
|||
|
Amortization of debt discount
|
|
0.5
|
|
|
0.6
|
|
|
0.6
|
|
|||
|
Write-off of debt issuance costs on retired debt
|
|
10.8
|
|
|
—
|
|
|
—
|
|
|||
|
Write-off of debt discount on retired debt
|
|
2.1
|
|
|
—
|
|
|
—
|
|
|||
|
Deferred income taxes
|
|
—
|
|
|
3.6
|
|
|
0.4
|
|
|||
|
Equity in net income of subsidiaries
|
|
(263.7
|
)
|
|
(354.6
|
)
|
|
(75.0
|
)
|
|||
|
Dividends from subsidiaries
|
|
127.1
|
|
|
69.5
|
|
|
20.0
|
|
|||
|
Loss gain from the change in the fair value of the equity conversion feature of preferred stock
|
|
101.6
|
|
|
156.6
|
|
|
(27.9
|
)
|
|||
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
|
Prepaid expenses and other current assets
|
|
—
|
|
|
(4.6
|
)
|
|
0.1
|
|
|||
|
Accounts payable and accrued and other current liabilities
|
|
51.4
|
|
|
27.0
|
|
|
15.7
|
|
|||
|
Other operating
|
|
11.6
|
|
|
(1.7
|
)
|
|
1.8
|
|
|||
|
Net change in cash due to operating activities
|
|
10.2
|
|
|
(9.2
|
)
|
|
(20.3
|
)
|
|||
|
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
|
Proceeds from investments sold, matured or repaid
|
|
34.0
|
|
|
108.9
|
|
|
101.0
|
|
|||
|
Cost of investments acquired
|
|
—
|
|
|
(68.0
|
)
|
|
(121.9
|
)
|
|||
|
Capital contributions to consolidated subsidiaries
|
|
(454.4
|
)
|
|
(36.3
|
)
|
|
(727.2
|
)
|
|||
|
Return of capital from subsidiary
|
|
126.8
|
|
|
88.0
|
|
|
—
|
|
|||
|
Repayments from (advances to) consolidated subsidiaries
|
|
—
|
|
|
49.3
|
|
|
(49.3
|
)
|
|||
|
Capital expenditures
|
|
(0.4
|
)
|
|
—
|
|
|
(0.3
|
)
|
|||
|
Net change in cash due to investing activities
|
|
(294.0
|
)
|
|
141.9
|
|
|
(797.7
|
)
|
|||
|
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
|
Dividends paid on preferred stock
|
|
(33.4
|
)
|
|
(31.7
|
)
|
|
—
|
|
|||
|
Proceeds from senior secured notes
|
|
923.9
|
|
|
—
|
|
|
498.4
|
|
|||
|
Repayment of senior secured notes, including tender / call premium
|
|
(545.9
|
)
|
|
—
|
|
|
—
|
|
|||
|
Proceeds from preferred stock issuance, net of issuance costs
|
|
—
|
|
|
—
|
|
|
385.9
|
|
|||
|
Debt issuance costs
|
|
(25.1
|
)
|
|
—
|
|
|
(16.2
|
)
|
|||
|
Common stock repurchased
|
|
(12.3
|
)
|
|
—
|
|
|
—
|
|
|||
|
Share based award tax withholding payments
|
|
(2.3
|
)
|
|
—
|
|
|
—
|
|
|||
|
Other financing activities
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|||
|
Net change in cash due to financing activities
|
|
304.9
|
|
|
(31.7
|
)
|
|
868.5
|
|
|||
|
Net increase in cash and cash equivalents
|
|
21.1
|
|
|
101.0
|
|
|
50.5
|
|
|||
|
Cash and cash equivalents at beginning of period
|
|
235.8
|
|
|
134.8
|
|
|
84.3
|
|
|||
|
Cash and cash equivalents at end of period
|
|
$
|
256.9
|
|
|
$
|
235.8
|
|
|
$
|
134.8
|
|
|
|
|
As of or for the year ended
September 30,
|
||||||||||
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
Life Insurance (single segment):
|
|
|
|
|
|
|
||||||
|
Deferred acquisition costs
|
|
$
|
340.6
|
|
|
$
|
169.2
|
|
|
$
|
38.1
|
|
|
Future policy benefits, losses, claims and loss expenses
|
|
3,556.8
|
|
|
3,614.8
|
|
|
3,598.2
|
|
|||
|
Other policy claims and benefits payable
|
|
51.5
|
|
|
91.1
|
|
|
56.7
|
|
|||
|
Premium revenue
|
|
58.8
|
|
|
55.3
|
|
|
39.0
|
|
|||
|
Net investment income
|
|
715.5
|
|
|
716.2
|
|
|
369.8
|
|
|||
|
Benefits, claims, losses and settlement expenses
|
|
(531.8
|
)
|
|
(777.4
|
)
|
|
(247.6
|
)
|
|||
|
Amortization of deferred acquisition costs
|
|
(45.3
|
)
|
|
(15.2
|
)
|
|
(0.9
|
)
|
|||
|
Other operating expenses
|
|
(111.4
|
)
|
|
(123.9
|
)
|
|
(95.8
|
)
|
|||
|
For the year ended September 30, 2013
|
|
Gross Amount
|
|
Ceded to other
companies
|
|
Assumed from
other companies
|
|
Net Amount
|
|
Percentage
of amount
assumed to net
|
|||||||||
|
Life insurance in force
|
|
$
|
2,596.7
|
|
|
$
|
(1,965.4
|
)
|
|
$
|
17.3
|
|
|
$
|
648.6
|
|
|
2.67
|
%
|
|
Premiums and other considerations:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Traditional life insurance premiums
|
|
$
|
279.2
|
|
|
$
|
(253.2
|
)
|
|
$
|
32.8
|
|
|
$
|
58.8
|
|
|
55.78
|
%
|
|
Annuity product charges
|
|
135.5
|
|
|
(75.0
|
)
|
|
—
|
|
|
60.5
|
|
|
—
|
%
|
||||
|
Total premiums and other considerations
|
|
$
|
414.7
|
|
|
$
|
(328.2
|
)
|
|
$
|
32.8
|
|
|
$
|
119.3
|
|
|
27.49
|
%
|
|
For the year ended September 30, 2012
|
|
Gross Amount
|
|
Ceded to other
companies
|
|
Assumed from
other companies
|
|
Net Amount
|
|
Percentage
of amount
assumed to net
|
|||||||||
|
Life insurance in force
|
|
$
|
2,436.3
|
|
|
$
|
(1,929.0
|
)
|
|
$
|
22.8
|
|
|
$
|
530.1
|
|
|
4.30
|
%
|
|
Premiums and other considerations:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Traditional life insurance premiums
|
|
$
|
298.0
|
|
|
$
|
(289.9
|
)
|
|
$
|
47.2
|
|
|
$
|
55.3
|
|
|
85.35
|
%
|
|
Annuity product charges
|
|
117.9
|
|
|
(79.6
|
)
|
|
—
|
|
|
38.3
|
|
|
—
|
%
|
||||
|
Total premiums and other considerations
|
|
$
|
415.9
|
|
|
$
|
(369.5
|
)
|
|
$
|
47.2
|
|
|
$
|
93.6
|
|
|
50.43
|
%
|
|
For the year ended September 30, 2011
|
|
Gross Amount
|
|
Ceded to other
companies
|
|
Assumed from
other companies
|
|
Net Amount
|
|
Percentage
of amount
assumed to net
|
|||||||||
|
Life insurance in force
|
|
$
|
2,256.7
|
|
|
$
|
(1,180.4
|
)
|
|
$
|
22.6
|
|
|
$
|
1,098.9
|
|
|
2.06
|
%
|
|
Premiums and other considerations:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Traditional life insurance premiums
|
|
$
|
157.8
|
|
|
$
|
(141.6
|
)
|
|
$
|
22.8
|
|
|
$
|
39.0
|
|
|
58.46
|
%
|
|
Annuity product charges
|
|
68.5
|
|
|
(18.8
|
)
|
|
—
|
|
|
49.7
|
|
|
—
|
%
|
||||
|
Total premiums and other considerations
|
|
$
|
226.3
|
|
|
$
|
(160.4
|
)
|
|
$
|
22.8
|
|
|
$
|
88.7
|
|
|
25.70
|
%
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|