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, 29th 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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x
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Accelerated Filer
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¨
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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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•
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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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•
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the need to provide sufficient capital to our operating businesses;
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•
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the impact of covenants in the indenture governing our 7.875% Senior Notes due 2019 (the “7.875% Notes”), the covenants in the indenture governing our 7.750% Notes due 2022 (the “7.750% Notes”), the continuing covenants contained in the certificate of designation governing our Series A Participating Convertible Preferred Stock (the “Certificate 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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•
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our ability to incur new debt and refinance our existing indebtedness;
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•
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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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•
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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 covenants and applicable laws, including 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 any of them 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 the value of our assets;
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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 claims or litigation 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 current and future acquired businesses 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 its 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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the impact of expenses resulting from the implementation of new business strategies, divestitures or current and proposed restructuring activities;
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Spectrum Brands’ inability to successfully integrate and operate new acquisitions;
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the unanticipated loss of key members of Spectrum Brands’ senior management;
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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; and
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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 accuracy of FGL and Front Street’s assumptions and estimates;
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the accuracy of FGL and Front Street’s assumptions regarding the fair value and future performance of their investments;
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FGL and its insurance subsidiaries’ abilities to maintain or improve their financial strength ratings;
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FGL and Front Street’s and their 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 and Front Street’s abilities to manage their businesses 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 and Front Street’s insurance subsidiaries to make cash distributions to FGL or Front Street, as applicable (including dividends or payments on surplus notes FGL’s 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 and Front Street;
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the availability of credit or other financings and the impact of equity and credit market volatility and disruptions on FGL and Front Street’s abilities to obtain capital and the value and liquidity of their 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 or Front Street being the target or subject of, and FGL’s or Front Street’s ability to defend itself against, litigation (including class action litigation) and enforcement investigations or regulatory scrutiny;
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the performance of third parties, including distributors, technology service providers, providers of outsourced services and FGL’s third-party asset managers;
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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 and Front Street’s insurance subsidiaries to grow;
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the impact on FGL’s or Front Street’s business of new accounting rules or changes to existing accounting rules;
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the risk that FGL’s or Front Street’s risk management policies and procedures could leave FGL or Front Street 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 and Front Street’s abilities to sell their products, their abilities to access capital resources and the costs associated therewith, the fair value of their investments, which could result in impairments (including other-than-temporary impairments), and certain liabilities, an increase in lapse rates and decrease in the profitability of policies;
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FGL’s ability to protect its intellectual property;
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difficulties arising from FGL and Front Street’s outsourcing relationships;
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the impact on FGL and Front Street of man-made catastrophes, pandemics, computer viruses, network security breaches and malicious and terrorist acts;
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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 and Front Street, which may prevent FGL from capitalizing on business opportunities;
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the ability of FGL’s and Front Street’s and their subsidiaries’ abilities to generate sufficient cash to service all of their obligations;
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the ability of FGL’s and Front Street’s subsidiaries to pay dividends;
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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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FGL’s and Front Street’s abilities to compete in highly-competitive industries and FGL’s ability to maintain competitive unit costs; and
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the ability of Front Street to find opportunities with desired returns in primary markets, the failure of which could cause Front Street to turn to opportunities with more risk, such as foreign markets or other product markets, such as long-term care.
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their respective abilities, as applicable, to recover amounts that are contractually owed to them by their borrowers;
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their respective abilities to continue to find attractive business opportunities;
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their respective abilities to address a number of issues to implement their strategies, grow their businesses and effectively manage their growth;
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the impact on these businesses resulting from deterioration in economic conditions;
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their respective abilities to compete with traditional competitors and new market entrants; and
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their respective abilities 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.
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fluctuations in oil, natural gas liquids and natural gas prices sold by Compass;
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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 Compass' actual oil and natural gas sales;
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Compass’ ability to operate successfully as an independent business following the expiration of its transition services agreement with EXCO;
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Compass’ ability to replace natural gas marketing services upon the expiration of the current arrangements with EXCO;
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the impact of Compass' substantial indebtedness on its business, financial condition and results of operations;
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Compass’ 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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Compass’ 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 Compass will be unable to identify or complete, or complete on economically attractive terms, the acquisition of additional properties;
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Compass' ability to successfully operate in a highly regulated and litigious environment, including exposure to operating hazards and uninsured risks;
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Compass' 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 Compass’ gathering and transportation pipelines.
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consumer batteries, including alkaline and zinc carbon batteries, rechargeable batteries and chargers, hearing aid batteries, other specialty batteries and portable lighting products;
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small appliances, including small kitchen appliances and home product appliances;
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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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2014
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2013
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2012
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Hardware and home improvement products
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26
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%
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21
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%
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—
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%
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Consumer batteries
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22
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%
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23
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%
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29
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%
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Small appliances
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16
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%
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18
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%
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24
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%
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Pet supplies
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14
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%
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15
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%
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19
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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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10
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%
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12
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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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6
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%
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8
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%
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Electric shaving and grooming products
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6
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%
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7
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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 Sales 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 sales with the market. FGL will continue to pursue opportunities to increase shelf space in the IMO market.
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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.
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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 and eventually reaching its customers directly. 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, that 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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$24.3
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$188.3
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$2,101.8
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$633.1
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$147
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Fixed and Fixed-Index Annuities Account Value
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Percent of Total
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Weighted Average Surrender Charge
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(Dollars in millions)
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SURRENDER CHARGE EXPIRATION BY YEAR:
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Out of Surrender Charge
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$
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1,738.3
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13.7
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%
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—
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%
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2014
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174.0
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1.4
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%
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4.4
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%
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2015-2016
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1,780.0
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14.1
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%
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4.7
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%
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2017-2018
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|
2,774.5
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21.9
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%
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8.1
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%
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Thereafter
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6,176.3
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48.9
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%
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12.1
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%
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$
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12,643.1
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|
|
100.0
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%
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|
September 30, 2014
|
|
September 30, 2013
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|
September 30, 2012
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(dollars in millions)
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Deposits on
Annuity
Policies
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GAAP
Reserves
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Deposits on
Annuity
Policies
|
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GAAP
Reserves
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Deposits on
Annuity Policies |
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GAAP Reserves |
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Products
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|
|
|
|
|
|
|
||||||||||||
|
Fixed Indexed Annuities
|
|
$
|
1,451.4
|
|
|
$
|
10,766.6
|
|
|
$
|
983.1
|
|
|
$
|
9,985.9
|
|
|
$
|
1,614.2
|
|
|
$
|
9,893.2
|
|
|
Fixed Rate Annuities
|
|
707.9
|
|
|
3,192.3
|
|
|
38.0
|
|
|
2,708.2
|
|
|
64.5
|
|
|
2,964.2
|
|
||||||
|
Single Premium Immediate Annuities
|
|
9.7
|
|
|
3,201.6
|
|
|
7.3
|
|
|
3,491.6
|
|
|
7.8
|
|
|
3,583.1
|
|
||||||
|
Total
|
|
$
|
2,169.0
|
|
|
$
|
17,160.5
|
|
|
$
|
1,028.4
|
|
|
$
|
16,185.7
|
|
|
$
|
1,686.5
|
|
|
$
|
16,440.5
|
|
|
•
|
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.
|
|
|
|
RBC Ratio
|
|
|
As of:
|
|
|
|
|
December 31, 2013
|
|
423
|
%
|
|
December 31, 2012
|
|
406
|
%
|
|
December 31, 2011
|
|
371
|
%
|
|
•
|
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 advisers;
|
|
•
|
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 FGL to reallocate 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’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.
Compass intends to opportunistically acquire oil and natural gas reserves from a variety of sources, focusing on assets and companies that own mature properties with long-lived, predictable production profiles, modest capital requirements to maintain production and with exploitation upside for value creation through low risk and low cost drilling and recompletion opportunities.
|
|
•
|
Maintain a stable production profile.
Compass intends to pursue economic development of its proved undeveloped drilling inventory, low risk recompletion inventory and to perform cost-reducing and production-enhancing operations to maintain its production on a cost effective basis.
|
|
•
|
Commodity Hedging.
Compass intends to use oil and natural gas derivatives and financial risk management instruments to manage its exposure to commodity prices. Management of Compass believes that these oil and natural gas derivative contracts may allow Compass to mitigate the impact of price fluctuations and achieve a more predictable cash flow from Compass’ operations.
|
|
|
|
As of September 30,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
Oil (Mbbls)
|
|
|
|
|
||||
|
Developed
|
|
3,356
|
|
|
3,107
|
|
||
|
Undeveloped
|
|
334
|
|
|
317
|
|
||
|
Total
|
|
3,690
|
|
|
3,424
|
|
||
|
Natural Gas Liquids (Mbbls) (1)
|
|
|
|
|
||||
|
Developed
|
|
5,145
|
|
|
4,799
|
|
||
|
Undeveloped
|
|
1,075
|
|
|
931
|
|
||
|
Total
|
|
6,220
|
|
|
5,730
|
|
||
|
Natural Gas (Mmcf)
|
|
|
|
|
||||
|
Developed
|
|
304,628
|
|
|
317,748
|
|
||
|
Undeveloped
|
|
4,812
|
|
|
4,670
|
|
||
|
Total
|
|
309,440
|
|
|
322,418
|
|
||
|
Natural Gas Equivalent Reserves (Mmcfe)
|
|
|
|
|
||||
|
Developed
|
|
355,634
|
|
|
365,184
|
|
||
|
Undeveloped
|
|
13,266
|
|
|
12,158
|
|
||
|
Total
|
|
368,900
|
|
|
377,342
|
|
||
|
PV-10 (in millions) (1)
|
|
|
|
|
||||
|
Developed
|
|
$
|
407.5
|
|
|
$
|
318.8
|
|
|
Undeveloped
|
|
3.7
|
|
|
4.3
|
|
||
|
Total
|
|
411.2
|
|
|
323.1
|
|
||
|
Standardized Measure (in millions) (2)
|
|
345.8
|
|
|
302.3
|
|
||
|
(1)
|
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. The prices for NGLs were computed using the average of realized prices for the trailing 12 months.
|
|
|
|
Average spot prices
|
||||||||||
|
|
|
Natural gas (per Mmbtu)
|
|
Oil (per Bbl)
|
|
Natural gas liquid (per Bbl)
|
||||||
|
September 30, 2014
|
|
$
|
4.24
|
|
|
$
|
99.08
|
|
|
$
|
43.58
|
|
|
September 30, 2013
|
|
3.60
|
|
|
95.04
|
|
|
38.64
|
|
|||
|
(2)
|
Compass believes that PV-10, while not a financial measure in accordance with U.S. GAAP, is an important financial measure used by investors and independent oil and natural gas producers for evaluating the relative significance of oil and natural gas properties and acquisitions due to tax characteristics, which can differ significantly, among comparable companies. The Standardized Measure is calculated in accordance with the Financial Accounting Standards Board (“FASB”), Accounting Standards Codification 932, Extractive Activities, Oil and Gas (“ASC 932”). The amount of estimated future plugging and abandonment costs, the PV-10 of these costs and the Standardized Measure were determined by us. We do not designate our derivative financial instruments as hedges and accordingly, do not include the impact of derivative financial instruments when computing the Standardized Measure.
|
|
|
|
As of September 30,
|
||||||
|
(in millions)
|
|
2014
|
|
2013
|
||||
|
PV-10
|
|
$
|
411.2
|
|
|
$
|
323.1
|
|
|
Future income taxes
|
|
(136.2
|
)
|
|
(39.3
|
)
|
||
|
Discount of future income taxes at 10% per annum
|
|
70.8
|
|
|
18.4
|
|
||
|
Standardized Measure
|
|
$
|
345.8
|
|
|
$
|
302.3
|
|
|
|
Oil (Mbbls)
|
|
Natural gas (Mmcf)
|
|
Natural gas liquids (Mbbls)
|
|
Equivalent natural gas (Mmcfe)
|
||||
|
Proved Developed Reserves
|
3,356
|
|
|
304,628
|
|
|
5,145
|
|
|
355,634
|
|
|
Proved Undeveloped Reserves
|
334
|
|
|
4,812
|
|
|
1,075
|
|
|
13,266
|
|
|
Total Proved Reserves
|
3,690
|
|
|
309,440
|
|
|
6,220
|
|
|
368,900
|
|
|
The changes in reserves for the year are as follows:
|
|
|
|
|
|
|
|
||||
|
September 30, 2013
|
3,424
|
|
|
322,418
|
|
|
5,730
|
|
|
377,342
|
|
|
Purchase of reserves in place
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Discoveries and extensions
|
112
|
|
|
839
|
|
|
173
|
|
|
2,549
|
|
|
Revisions of previous estimates:
|
|
|
|
|
|
|
|
||||
|
Reclassification to unproved reserves (1)
|
(71
|
)
|
|
(520
|
)
|
|
(115
|
)
|
|
(1,636
|
)
|
|
Changes in price
|
233
|
|
|
20,815
|
|
|
496
|
|
|
25,189
|
|
|
Other factors
|
406
|
|
|
(13,230
|
)
|
|
457
|
|
|
(8,052
|
)
|
|
Sales of reserves in place
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Production
|
(414
|
)
|
|
(20,882
|
)
|
|
(521
|
)
|
|
(26,492
|
)
|
|
September 30, 2014
|
3,690
|
|
|
309,440
|
|
|
6,220
|
|
|
368,900
|
|
|
(1)
|
Represents Proved Undeveloped Reserves reclassified to unproved pursuant to the five year development rule established by the SEC. While these locations previously qualified as Proved Undeveloped Reserves as they directly offset a proved location, Compass’ planned capital programs do not support development at this time.
|
|
|
Mmcfe
|
|
|
Proved Undeveloped Reserves at September 30, 2013
|
12,157
|
|
|
Purchase of Proved Undeveloped Reserves in place
|
—
|
|
|
New discoveries and extensions (1)
|
1,623
|
|
|
Proved Undeveloped Reserves transferred to developed (2)
|
(1,427
|
)
|
|
Proved Undeveloped Reserves transferred to unproved (3)
|
(1,636
|
)
|
|
Other Revisions of previous estimates of Proved Undeveloped Reserves (4)
|
2,549
|
|
|
Proved Undeveloped Reserves at September 30, 2014
|
13,266
|
|
|
(1)
|
All of the discoveries and extensions of Proved Undeveloped Reserves during the period occurred in the Permian region.
|
|
(2)
|
All of the Proved Undeveloped Reserves transferred to Proved Developed Reserves in fiscal 2014 were in the Permian region. Capital costs incurred to convert Proved Undeveloped Reserves to Proved Developed Reserves were $2.9 million.
|
|
(3)
|
Represents Proved Undeveloped Reserves reclassified to unproved pursuant to the five year development rule established by the SEC. While these locations qualify as Proved Undeveloped Reserves as they directly offset a proved location, Compass’ planned capital programs do not support development at this time.
|
|
(4)
|
The net upward revisions are primarily due to scheduling and changes in prices and costs resulting from increased oil and natural gas average prices.
|
|
($ in millions, except for volumes and unit sales prices)
|
|
Fiscal 2014
|
|
Period From Inception to September 30, 2013
|
||||
|
Oil
|
|
|
|
|
||||
|
Revenue
|
|
$
|
38.1
|
|
|
$
|
26.8
|
|
|
Production sold (Mbbls)
|
|
414
|
|
|
283
|
|
||
|
Average sales price (per Bbl)
|
|
$
|
91.92
|
|
|
$
|
94.63
|
|
|
Natural Gas Liquids
|
|
|
|
|
||||
|
Revenue
|
|
$
|
22.7
|
|
|
$
|
11.4
|
|
|
Production sold (Mbbls)
|
|
521
|
|
|
300
|
|
||
|
Average sales price (per Bbl)
|
|
$
|
43.49
|
|
|
$
|
38.11
|
|
|
Natural Gas
|
|
|
|
|
||||
|
Revenue
|
|
$
|
86.3
|
|
|
$
|
52.0
|
|
|
Production sold (Mmcf)
|
|
20,882
|
|
|
14,570
|
|
||
|
Average sales price (per Mcf)
|
|
$
|
4.13
|
|
|
$
|
3.57
|
|
|
Cost and Expenses
|
|
|
|
|
||||
|
Average production cost per Mcfe (excluding severance and ad valorem taxes)
|
|
$
|
1.63
|
|
|
$
|
1.50
|
|
|
General and administrative expenses per Mcfe
|
|
0.31
|
|
|
0.26
|
|
||
|
Depletion per Mcfe
|
|
1.45
|
|
|
1.67
|
|
||
|
|
|
Year Ended September 30, 2014
|
|
Period From Inception to September 30, 2013
|
||||
|
Permian Area:
|
|
|
|
|
||||
|
Oil production sold (Mbbls)
|
|
316
|
|
|
217
|
|
||
|
NGL production sold (Mbbls)
|
|
379
|
|
|
224
|
|
||
|
Natural gas production (Mmcf)
|
|
1,681
|
|
|
1,120
|
|
||
|
Average price Oil (per Bbl)
|
|
$
|
90.14
|
|
|
$
|
93.89
|
|
|
Average price NGL (per Bbl)
|
|
41.49
|
|
|
36.41
|
|
||
|
Average price Natural gas (per Mcf)
|
|
3.95
|
|
|
3.31
|
|
||
|
Average price per Mcfe
|
|
8.69
|
|
|
8.57
|
|
||
|
Average production cost per Mcfe (excluding severance and ad valorem taxes)
|
|
1.75
|
|
|
1.71
|
|
||
|
Vernon Area:
|
|
|
|
|
||||
|
Oil production sold (Mbbls)
|
|
3
|
|
|
2
|
|
||
|
Natural gas production (Mmcf)
|
|
10,670
|
|
|
7,482
|
|
||
|
Average price Oil (per Bbl)
|
|
$
|
98.49
|
|
|
$
|
95.15
|
|
|
Average price Natural gas (per Mcf)
|
|
4.01
|
|
|
3.56
|
|
||
|
Average price per Mcfe
|
|
4.03
|
|
|
3.58
|
|
||
|
Average production cost per Mcfe (excluding severance and ad valorem taxes)
|
|
1.23
|
|
|
1.03
|
|
||
|
Holly Field:
|
|
|
|
|
||||
|
Oil production sold (Mbbls)
|
|
15
|
|
|
10
|
|
||
|
NGL production sold (Mbbls)
|
|
103
|
|
|
75
|
|
||
|
Natural gas production (Mmcf)
|
|
4,789
|
|
|
3,178
|
|
||
|
Average price Oil (per Bbl)
|
|
$
|
98.36
|
|
|
$
|
96.06
|
|
|
Average price NGL (per Bbl)
|
|
52.29
|
|
|
43.52
|
|
||
|
Average price Natural gas (per Mcf)
|
|
4.11
|
|
|
3.41
|
|
||
|
Average price per Mcfe
|
|
4.83
|
|
|
4.09
|
|
||
|
Average production cost per Mcfe (excluding severance and ad valorem taxes)
|
|
1.75
|
|
|
1.64
|
|
||
|
|
|
At September 30, 2014
|
||||||||||||||||
|
|
|
Gross wells (1)
|
|
Net wells
|
||||||||||||||
|
Areas
|
|
Oil
|
|
Natural gas
|
|
Total
|
|
Oil
|
|
Natural gas
|
|
Total
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
East Texas/North Louisiana
|
|
54
|
|
|
937
|
|
|
991
|
|
|
38.3
|
|
|
580.3
|
|
|
618.6
|
|
|
Permian and other
|
|
398
|
|
|
50
|
|
|
448
|
|
|
280.0
|
|
|
35.8
|
|
|
315.8
|
|
|
Total
|
|
452
|
|
|
987
|
|
|
1,439
|
|
|
318.3
|
|
|
616.1
|
|
|
934.4
|
|
|
(1)
|
As of
September 30, 2014
, Compass held an interest in 1 gross well with multiple completions.
|
|
|
|
Development wells
|
||||||||||||||||
|
|
|
Gross
|
|
Net
|
||||||||||||||
|
|
|
Productive
|
|
Dry
|
|
Total
|
|
Productive
|
|
Dry
|
|
Total
|
||||||
|
Year Ended September 30, 2014
|
|
7
|
|
|
3
|
|
|
10
|
|
|
5.1
|
|
|
2.2
|
|
|
7.3
|
|
|
Period from inception to September 30, 2013
|
|
15
|
|
|
1
|
|
|
16.0
|
|
|
9.9
|
|
|
0.7
|
|
|
10.6
|
|
|
|
|
At September 30, 2014
|
||||||||||
|
|
|
Developed
|
|
Undeveloped
|
||||||||
|
Area
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
||||
|
East Texas/North Louisiana
|
|
139,317
|
|
|
91,886
|
|
|
5,869
|
|
|
2,837
|
|
|
Permian and other
|
|
26,678
|
|
|
18,781
|
|
|
1,030
|
|
|
664
|
|
|
Total
|
|
165,995
|
|
|
110,667
|
|
|
6,899
|
|
|
3,501
|
|
|
•
|
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 our notes;
|
|
•
|
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 carry-forwards (if any); and cause a “change in control” under the Indentures or Certificate of Designation.
|
|
•
|
the authority of our board of directors to issue, without stockholder approval, up to 10,000,000 shares of our preferred stock with such terms as our board of directors may determine;
|
|
•
|
special meetings of our stockholders may be called only by the Chairman of our board of directors 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 of directors, 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 of directors, or for proposing matters that can be acted on by stockholders at stockholder meetings;
|
|
•
|
the absence of cumulative voting rights;
|
|
•
|
subject to any special rights of the holders of our preferred stock may have 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 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;
|
|
•
|
Technological advancements, product improvements or effective advertising campaigns by competitors may weaken consumer demand for Spectrum Brands’ products;
|
|
•
|
Consumer purchasing behavior may shift to distribution channels, including to online retailers, where Spectrum Brands and its customers do not have a strong presence;
|
|
•
|
Consumer preferences may change to lower margin products or products other than those Spectrum Brands markets; and
|
|
•
|
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 war, terrorist attacks, pandemics, 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; 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 and other countries that have adopted similar regulations.
|
|
•
|
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 and economic instability in the countries in which its suppliers are located, as a result of war, terrorist attacks, pandemics, natural disasters or otherwise;
|
|
•
|
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.
|
|
•
|
adversely affecting relationships with distributors, IMOs and sales agents, which could result in reduction of sales;
|
|
•
|
increasing the number or amount of policy lapses or surrenders and withdrawals of funds;
|
|
•
|
requiring a reduction in prices for FGL’s insurance products and services in order to remain competitive;
|
|
•
|
adversely affecting FGL’s ability to obtain reinsurance at a reasonable price, on reasonable terms, or at all; and
|
|
•
|
requiring FGL to collateralize reserves, balances or obligations under reinsurance and derivatives agreements.
|
|
•
|
the amount of statutory income or losses generated by their insurance subsidiaries (which itself is sensitive to equity market and credit market conditions);
|
|
•
|
the amount of additional capital their insurance subsidiaries must hold to support business growth;
|
|
•
|
changes in reserve requirements applicable to their insurance subsidiaries;
|
|
•
|
their ability to access capital markets to provide reserve relief;
|
|
•
|
changes in equity market levels;
|
|
•
|
the value of certain fixed-income and equity securities in their investment portfolios;
|
|
•
|
changes in the credit ratings of investments held in their portfolios;
|
|
•
|
the value of certain derivative instruments;
|
|
•
|
changes in interest rates;
|
|
•
|
credit market volatility;
|
|
•
|
changes in consumer behavior; and
|
|
•
|
changes to the RBC formulas and interpretation of the NAIC instructions with respect to RBC calculation methodologies.
|
|
•
|
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 advisers;
|
|
•
|
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 or Front Street at a competitive disadvantage relative to its competition or other financial services entities;
|
|
•
|
changing the competitive landscape of the financial services sector and/or the insurance industry;
|
|
•
|
making it more expensive for FGL or Front Street to conduct their businesses;
|
|
•
|
requiring FGL or Front Street to reallocate significant company resources to government affairs;
|
|
•
|
increasing FGL’s or Front Street’s legal and compliance-related activities and the costs associated therewith; and
|
|
•
|
otherwise have a material adverse effect on the overall business climate, as well as FGL’s or Front Street’s financial condition or results of operations.
|
|
•
|
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;
|
|
•
|
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.
|
|
•
|
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)
|
|
Battery Manufacturing
|
|
Portage, Wisconsin
(1)
|
|
Battery Manufacturing
|
|
Dischingen, Germany
(2)
|
|
Battery Manufacturing
|
|
Washington, UK
(2)
|
|
Battery Manufacturing & Distribution
|
|
Guatemala City, Guatemala
(1)
|
|
Battery Manufacturing
|
|
Jaboatao, Brazil
(1)
|
|
Battery Manufacturing
|
|
Dixon, Illinois
(2)
|
|
Distribution
|
|
Ellwangen-Neunheim, Germany
(2)
|
|
Distribution
|
|
Redlands, California
(2)
|
|
Distribution
|
|
Manchester, England
(1)
|
|
Distribution
|
|
Wolverhampton, England
(1)(2)
|
|
Distribution
|
|
|
|
|
|
Hardware & Home Improvement
|
|
|
|
Brockville, Canada
(2)
|
|
Distribution
|
|
Charlotte, North Carolina
(2)
|
|
Distribution
|
|
Cobourg, Canada
(1)
|
|
Distribution
|
|
Denison, Texas
(1)(2)
|
|
Manufacturing & Distribution
|
|
Fort Mill, South Carolina
(2)
|
|
Manufacturing
|
|
Mexicali, Mexico
(2)
|
|
Manufacturing
|
|
Mira Loma, California
(2)
|
|
Distribution
|
|
Monterrey, Mexico
(1)
|
|
Manufacturing & Distribution
|
|
Nogales, Mexico
(1)
|
|
Manufacturing
|
|
Shenzhen, China
|
|
Distribution
|
|
Chia-Yi, Taiwan
(2)
|
|
Manufacturing
|
|
Subic Bay, Philippines
(1)
|
|
Manufacturing
|
|
Xiamen, China
(2)
|
|
Manufacturing
|
|
Xiaolan, China
(2)
|
|
Manufacturing
|
|
|
|
|
|
Global Pet Supplies
|
|
|
|
Noblesville, Indiana
(1)
|
|
Manufacturing
|
|
Bridgeton, Missouri
(2)
|
|
Manufacturing
|
|
Blacksburg, Virginia
(1)
|
|
Manufacturing
|
|
Melle, Germany
(1)
|
|
Manufacturing
|
|
Melle, Germany
(2)
|
|
Distribution
|
|
Edwardsville, Illinois
(2)
|
|
Distribution
|
|
Phnom Penh, Cambodia
(2)
|
|
Manufacturing
|
|
Daleville, Virginia
(2)
|
|
Distribution
|
|
|
|
|
|
Home and Garden Business
|
|
|
|
St. Louis, Missouri
(2)
|
|
Manufacturing
|
|
Edwardsville, Illinois
(3)
|
|
Distribution
|
|
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, 2014
|
|
|
|
|
||||
|
First Quarter
|
|
$
|
12.00
|
|
|
$
|
9.90
|
|
|
Second Quarter
|
|
13.07
|
|
|
11.09
|
|
||
|
Third Quarter
|
|
13.11
|
|
|
11.43
|
|
||
|
Fourth Quarter
|
|
13.24
|
|
|
11.71
|
|
||
|
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
|
|
||
|
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
|
|
13,061
|
|
|
$
|
5.90
|
|
|
11,557
|
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
|
13,061
|
|
|
$
|
5.90
|
|
|
11,557
|
|
|
Period
|
|
Total Number of Shares Purchased (in thousands)
|
|
Weighted-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, 2014 through July 31, 2014
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
87.9
|
|
|
August 1, 2014 through August 31, 2014
|
|
2,600.0
|
|
|
12.65
|
|
|
2,600.0
|
|
|
55.0
|
|
||
|
September 1, 2014 through September 30, 2014
|
|
1,596.5
|
|
|
12.84
|
|
|
1,596.5
|
|
|
34.4
|
|
||
|
|
|
4,196.5
|
|
|
|
|
4,196.5
|
|
|
|
||||
|
(1)
|
On August 8, 2013, we announced that our board of directors had authorized a share repurchase program of up to $50 million shares of our common stock, subject to certain restrictions and provisions. In Fiscal 2013, we repurchased a total of 1.7 million shares under the program, at an aggregate purchase price of $12.3 million.
|
|
(2)
|
On May 8, 2014, our board of directors authorized us to enter into a new repurchase program, which replaced our prior share repurchase program. The new share repurchase program authorized us to repurchase up to $100 million shares of our common stock, subject to certain restrictions and provisions. As of September 30, 2014, we have repurchased a total of
4.2 million
shares of our common stock, at an aggregate repurchase price of
$65.6 million
under this program. This program does not have an expiration date, but may be suspended, discontinued, modified and/or reinstated at any time and without prior notice.
|
|
Item 6.
|
Selected Financial Data
|
|
|
|
Year ended September 30,
|
||||||||||||||||||
|
|
|
2014
|
|
2013
(1)
|
|
2012
|
|
2011
(2)
|
|
2010
(3)
|
||||||||||
|
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Revenues
|
|
$
|
5,963.0
|
|
|
$
|
5,543.4
|
|
|
$
|
4,480.7
|
|
|
$
|
3,477.8
|
|
|
$
|
2,567.0
|
|
|
Operating income
(4)(5)
|
|
569.5
|
|
|
737.4
|
|
|
409.5
|
|
|
163.7
|
|
|
160.5
|
|
|||||
|
Income (loss) from continuing operations
|
|
101.7
|
|
|
(69.0
|
)
|
|
110.7
|
|
|
7.4
|
|
|
(195.5
|
)
|
|||||
|
(Loss) from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.7
|
)
|
|||||
|
Net income (loss)
(6)
|
|
101.7
|
|
|
(69.0
|
)
|
|
110.7
|
|
|
7.4
|
|
|
(198.2
|
)
|
|||||
|
Net (loss) income attributable to common and participating preferred stockholders
(6)
|
|
(83.9
|
)
|
|
(94.2
|
)
|
|
29.9
|
|
|
22.2
|
|
|
(151.9
|
)
|
|||||
|
Restructuring and related charges —
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Cost of goods sold
(7)
|
|
3.7
|
|
|
10.0
|
|
|
9.8
|
|
|
7.8
|
|
|
7.1
|
|
|||||
|
Selling, general and administrative expenses
(7)
|
|
19.2
|
|
|
24.0
|
|
|
9.8
|
|
|
20.8
|
|
|
17.0
|
|
|||||
|
Interest expense
(8)
|
|
(321.9
|
)
|
|
(511.9
|
)
|
|
(251.0
|
)
|
|
(249.3
|
)
|
|
(277.0
|
)
|
|||||
|
(Loss) gain from the change in the fair value of the equity conversion feature of preferred stock
|
|
(12.7
|
)
|
|
(101.6
|
)
|
|
(156.6
|
)
|
|
27.9
|
|
|
—
|
|
|||||
|
Bargain purchase gain from business acquisition
|
|
—
|
|
|
—
|
|
|
—
|
|
|
158.3
|
|
|
—
|
|
|||||
|
Gain on contingent purchase price reduction
|
|
0.5
|
|
|
—
|
|
|
41.0
|
|
|
—
|
|
|
—
|
|
|||||
|
Reorganization items expense
(9)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.6
|
)
|
|||||
|
Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net (loss) income per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Basic
|
|
$
|
(0.51
|
)
|
|
$
|
(0.67
|
)
|
|
$
|
0.15
|
|
|
$
|
0.11
|
|
|
$
|
(1.15
|
)
|
|
Diluted
(10)
|
|
(0.51
|
)
|
|
(0.67
|
)
|
|
0.15
|
|
|
0.09
|
|
|
(1.15
|
)
|
|||||
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Basic
|
|
162.9
|
|
|
139.9
|
|
|
139.4
|
|
|
139.2
|
|
|
132.4
|
|
|||||
|
Diluted
(10)
|
|
162.9
|
|
|
139.9
|
|
|
139.8
|
|
|
158.4
|
|
|
132.4
|
|
|||||
|
Cash Flow and Related Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net cash provided by operating activities
|
|
$
|
607.9
|
|
|
$
|
522.3
|
|
|
$
|
622.5
|
|
|
$
|
155.5
|
|
|
$
|
51.2
|
|
|
Capital expenditures
(11)
|
|
98.2
|
|
|
100.1
|
|
|
53.5
|
|
|
38.2
|
|
|
40.4
|
|
|||||
|
Depreciation and amortization
|
|
302.6
|
|
|
358.7
|
|
|
268.3
|
|
|
95.5
|
|
|
100.7
|
|
|||||
|
Balance Sheet Data (at year end):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Cash and cash equivalents
|
|
$
|
1,319.2
|
|
|
$
|
1,899.7
|
|
|
$
|
1,470.7
|
|
|
$
|
1,137.4
|
|
|
$
|
256.8
|
|
|
Total assets
|
|
30,100.2
|
|
|
27,908.8
|
|
|
25,200.5
|
|
|
23,590.9
|
|
|
4,016.2
|
|
|||||
|
Total long-term debt, net of current portion
|
|
5,061.1
|
|
|
4,793.2
|
|
|
2,150.6
|
|
|
2,127.7
|
|
|
1,723.1
|
|
|||||
|
Total debt
|
|
5,157.8
|
|
|
4,896.1
|
|
|
2,167.0
|
|
|
2,143.8
|
|
|
1,743.8
|
|
|||||
|
Total stockholders’ equity
|
|
2,257.0
|
|
|
1,133.5
|
|
|
1,177.6
|
|
|
895.4
|
|
|
701.7
|
|
|||||
|
(1)
|
Fiscal 2013
includes the results of the Hardware & Home Improvement business’ operations since December 30, 2013, and the results of Compass’ operations since its inception on February 14, 2013. The Hardware & Home Improvement business 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. Compass 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 &Home Improvement business acquisition and the acquisition of Compass.
|
|
(2)
|
The year ended September 30, 2011 (“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 business combination of SBI and Russell Hobbs that created Spectrum Brands (the “SB/RH Merger”) and the acquisition of FGH.
|
|
(3)
|
The year ended September 30, 2010 (“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, Compass 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, Compass assessed the properties for potential impairment due to an other than temporary trend that would negatively impact the fair value. Compass 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, Compass 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 in Fiscal 2011.
|
|
(6)
|
Fiscal 2014
income tax expense of
$111.5 million
includes a non-cash
benefit
of approximately
$47.4 million
resulting from
a decrease
in the valuation allowance against certain net deferred tax assets.
Fiscal 2013
income tax expense of
187.3 million
includes a non-cash
charge
of approximately
151.8 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
$139.6 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.
|
|
(7)
|
See
Note 22
, Restructuring and Related Charges, of Notes to Consolidated Financial Statements included elsewhere in this report for further discussion.
|
|
(8)
|
Fiscal
2014
,
2013
,
2012
, 2011 and 2010 interest expense includes charges totaling $9.2 million, $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 $0.0 million, $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 $9.2 million, $28.9 million, $5.3 million, $31.9 million and $65.7 million, respectively.
|
|
(9)
|
Reorganization items (expense) income directly relates to SBI’s voluntary reorganization under Chapter 11 of the Bankruptcy Code that commenced in February 2009 and concluded in August 2009.
|
|
(10)
|
For
Fiscal 2014
, there were
38.0 million
weighted-average shares issuable upon the conversion of the Series A Participating Convertible Preferred Stock (“Series A Preferred Shares") and the Series A-2 Participating Convertible Preferred Stock (“Series A-2 Preferred Shares", together with the Series A Preferred Shares, the "Preferred Stock"), and
2.6 million
and
1.3 million
weighted-average shares of HGI’s common stock, respectively, of the unvested restricted stock and stock units and stock options that were excluded from the calculation of “diluted net loss per common share attributable to controlling interest” because the as-converted effect of the Preferred Stock, unvested restricted stock and stock units, and stock options would have been anti-dilutive for
Fiscal 2014
. Also excluded from the calculation were
3.0 million
shares of HGI common stock issuable upon the exercise of warrants awarded in
Fiscal 2014
because the exercise price of
$13.125
per share was above the average stock price for the year. 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 conversion effect of preferred stock would be antidilutive. For Fiscal 2011, diluted weighted average common shares outstanding reflect the dilutive effect of preferred stock of 19.1 million shares and stock options of 0.1 million shares. For other periods presented, diluted average shares outstanding does not reflect any effect of preferred stock, which was not issued until Fiscal 2011, nor does it assume the exercise of common stock equivalents as the impact would be antidilutive. See
Note 23
, Earnings Per Share, of Notes to Consolidated Financial Statements included elsewhere in this report for further details regarding the calculation of net income (loss) per common share.
|
|
(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 2013, Spectrum Brands amended a senior secured term loan, issuing two tranches maturing September 4, 2019, which provide for borrowings in aggregate principal amounts of
$215.0 million
and
€225.0 million
. The proceeds from the amendment were used to refinance a portion of the term loan which was scheduled to mature December 17, 2019 and had an aggregate amount outstanding of
$513.3 million
prior to refinancing.
|
|
•
|
In January 2014, Spectrum Brands completed the
$35.8 million
acquisition of The Liquid Fence Company, Inc. ("Liquid Fence"), a producer of animal repellents.
|
|
•
|
In December 2013, FGL announced an initial public offering of
9,750 thousand
shares of common stock at a price to the public of
$17
per share. The shares began trading on the New York Stock Exchange on December 13, 2013 under the ticker symbol "FGL". FGL also granted the underwriters an option to purchase an additional
1,463 thousand
shares of common stock that was subsequently exercised. HGI was not a selling shareholder in the offering. Subsequent to the offering HGI held
47,000 thousand
shares of FGL's outstanding common stock, representing an
80.4%
interest.
|
|
•
|
In December 2013, Front Street Re (Cayman) Ltd. ("Front Street Cayman"), a wholly-owned indirect subsidiary of HGI, closed a reinsurance treaty with Bankers Life Insurance Company. Under the terms of the treaty, Bankers Life Insurance Company ceded approximately
$153.0 million
of its annuity business to Front Street Cayman, on a funds withheld basis.
|
|
•
|
In August 2014, Fidelity & Guaranty Life Holdings, Inc. (“FGH”), a wholly owned subsidiary of FGL, as borrower, and FGL as guarantor, entered into a three-year
$150.0 million
unsecured revolving credit facility.
|
|
•
|
Salus originated
$597.3 million
of new asset-based loan commitments in
Fiscal 2014
. Salus, together with its affiliated co-lenders FGL and Front Street, had
$811.6 million
of loans outstanding as of
September 30, 2014
, net of allowance for credit losses of
$7.2 million
.
|
|
•
|
On April 3, 2014, EIC an investment manager specializing in direct lending to companies in the global energy and infrastructure sectors, and a subsidiary of FIAM, announced its launch.
|
|
•
|
In May 2014, FIAM acquired a
17%
and controlling interest in CorAmerica, a commercial real estate investment firm.
|
|
•
|
Subsequent to a one year exemption to Rule 4-10(c)(4) of Regulation S-X granted by the SEC expiring, our Energy segment recorded impairments to its oil and natural gas properties of
$81.0 million
during the second fiscal 2014 quarter, based on the ceiling test limitation under full cost method of accounting. The impairments primarily resulted from differences in the oil and natural gas prices utilized in the purchase price allocation at the acquisition date of Compass (amongst other things, market prices based on NYMEX futures) and the prices used in the ceiling test calculation (based on the simple average spot price for the trailing twelve month period). Compass did not recognize any further impairment under the ceiling test to its proved oil and natural gas properties for
Fiscal 2014
.
|
|
•
|
In January 2014, the Company issued $200.0 million aggregate principal amount of
7.75%
senior unsecured notes due 2022 (the "7.75% Notes"). The 7.75% Notes were priced at par plus accrued interest from January 15, 2014.
|
|
•
|
In May 2014, HGI exercised its option to convert all but one of its issued and outstanding Series A Participating Convertible Preferred Stock (“Series A Preferred Shares") and all of its issued and outstanding Series A-2 Participating Convertible Preferred Stock (“Series A-2 Preferred Shares", together with the Series A Preferred Shares, the "Preferred Stock") into common stock of the Company. The Company issued an aggregate of 59,133,819 shares of common stock pursuant to the conversion option, in exchange for 279,999 shares of Series A Preferred Shares, and 94,985 shares of Series A-2 Preferred
|
|
•
|
Also in May 2014, HGI commenced, and successfully completed, an offer (the “Exchange Offer”) to exchange $320.6 million of its outstanding Senior Secured Notes for $350.0 million aggregate principal amount of new 7.750% Senior Notes due 2022 ("Additional 7.75% Notes”). Concurrent with the Exchange Offer, HGI solicited the holders of its 7.875% Senior Secured Notes due 2019 (the “Senior Secured Notes”) to amend (the “Proposed Amendments”) the indenture governing the Senior Secured Notes (the “Secured Indenture”) to provide the Company with, among other things, greater flexibility to repurchase or redeem its outstanding common stock.
|
|
•
|
In May 2014, HGI acquired a controlling interest in FOH, a retailer of women's apparel and related products under its proprietary Frederick's of Hollywood® brand.
|
|
•
|
In May 2014, the Company's Board of Directors authorized an increase in the amount approved for repurchase under our stock repurchase program to an aggregate of
$100.0
of common stock. Under the stock repurchase program we repurchased
5,197 thousand
shares of our outstanding common stock during Fiscal 2014, for an aggregate purchase price of
$65.6 million
, or an average of
$12.62
per share.
|
|
•
|
In September 2014, HGI issued additional
$200.0 million
aggregate principal amount of
7.75%
senior unsecured notes due 2022 at par (the “September 2014 Notes”), plus accrued interest from July 15, 2014.
|
|
•
|
Diluted net
loss
attributable to common and participating preferred stockholders
decreased
$10.3 million
to
$83.9 million
, or
$0.51
diluted per common share attributable to controlling interest (
$0.51
basic) in
Fiscal 2014
, compared to diluted net
loss
attributable to common and participating preferred stockholders of
$94.2 million
, or
$0.67
diluted per common share attributable to controlling interest (
$0.67
basic), in
Fiscal 2013
.
|
|
•
|
We ended the year with corporate cash and investments of approximately
$516.6 million
(primarily held at HGI and HGI Funding, LLC).
|
|
•
|
Our Consumer Products segment’s operating profit for
Fiscal 2014
increased
$130.7 million
, or
37.2%
, to
$481.9 million
from
$351.2 million
for
Fiscal 2013
. Our Consumer Products segment’s adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”)
increased
by
$47.3 million
, or
7.0%
, to
$724.4 million
versus
Fiscal 2013
primarily due to higher sales of hardware and home improvement products, home and garden control products, and consumer batteries. Adjusted EBITDA represented
16.4%
of sales as compared to
15.8%
in
Fiscal 2013
. See Non-GAAP measures below for more details.
|
|
•
|
Our Insurance segment’s operating profit for
Fiscal 2014
decreased
$238.1 million
, to
$284.8 million
from an operating income of
$522.9 million
for the
Fiscal 2013
. Our Insurance segment’s adjusted operating income (“Insurance AOI”)
increased
by
$0.3 million
, or
0.2%
, to
$154.5 million
versus
Fiscal 2013
, primarily as a result of higher net investment income recognized during Fiscal 2014 being offset in most part by the non-recurrence of favorable assumption changes, mortality experience and valuation allowance releases recognized in Fiscal 2013. See Non-GAAP measures below for more details.
|
|
•
|
Our Energy segment’s operating loss for
Fiscal 2014
was
$53.7 million
, primarily as the result of the
$81.0 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 2014
was
$63.3 million
. For
Fiscal 2014
, the Energy segment's production was
414
Mbbl of oil,
521
Mbbl of natural gas liquids and
20,882
Mmcf of natural gas.
|
|
•
|
The Asset Management segment's operating
income
for
Fiscal 2014
decreased
$9.7 million
from
Fiscal 2013
to
$0.7 million
, resulting from an increase in salary and benefit expenses resulting from the addition of employees, transaction, integration and start-up expenses related to new businesses and acquisitions, and and to a lesser extent, increased overhead cost due to growth in the businesses.
|
|
•
|
Through the
year ended September 30, 2014
, we received dividends of approximately
$118.0 million
from FGL, Spectrum Brands, HGI Energy, Salus, Front Street and Five Island (
$52.2 million
,
$35.5 million
,
$17.1 million
,
$7.2 million
,
$5.0 million
and
$1.0 million
, respectively). The FGL dividend of
$52.2 million
includes a special dividend of $43.0 million paid out of the proceeds received from FGL’s initial public offering in December 2013. Dividends received from HGI Energy are before giving effect to affiliate note interest payments of
$9.0 million
made by HGI on behalf of HGI Energy.
|
|
|
Fiscal
|
|
Increase / (Decrease)
|
||||||||||||||||
|
|
2014
|
|
2013
|
|
2012
|
|
2014 compared to 2013
|
|
2013 compared to 2012
|
||||||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Consumer Products
|
$
|
4,429.1
|
|
|
$
|
4,085.6
|
|
|
$
|
3,252.4
|
|
|
$
|
343.5
|
|
|
$
|
833.2
|
|
|
Insurance
|
1,349.7
|
|
|
1,348.4
|
|
|
1,221.8
|
|
|
1.3
|
|
|
126.6
|
|
|||||
|
Energy
|
147.0
|
|
|
90.2
|
|
|
—
|
|
|
56.8
|
|
|
90.2
|
|
|||||
|
Asset Management
|
34.2
|
|
|
28.9
|
|
|
8.6
|
|
|
5.3
|
|
|
20.3
|
|
|||||
|
Intersegment elimination
|
(17.1
|
)
|
|
(9.7
|
)
|
|
(2.1
|
)
|
|
(7.4
|
)
|
|
(7.6
|
)
|
|||||
|
Consolidated segment revenues
|
5,942.9
|
|
|
5,543.4
|
|
|
4,480.7
|
|
|
399.5
|
|
|
1,062.7
|
|
|||||
|
Corporate and Other
|
20.1
|
|
|
—
|
|
|
—
|
|
|
20.1
|
|
|
—
|
|
|||||
|
Total revenues
|
$
|
5,963.0
|
|
|
$
|
5,543.4
|
|
|
$
|
4,480.7
|
|
|
$
|
419.6
|
|
|
$
|
1,062.7
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Operating income (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Consumer Products
|
$
|
481.9
|
|
|
$
|
351.2
|
|
|
$
|
301.8
|
|
|
$
|
130.7
|
|
|
$
|
49.4
|
|
|
Insurance
|
284.8
|
|
|
522.9
|
|
|
159.9
|
|
|
(238.1
|
)
|
|
363.0
|
|
|||||
|
Energy
|
(53.7
|
)
|
|
(45.2
|
)
|
|
—
|
|
|
(8.5
|
)
|
|
(45.2
|
)
|
|||||
|
Asset Management
|
0.7
|
|
|
10.4
|
|
|
2.5
|
|
|
(9.7
|
)
|
|
7.9
|
|
|||||
|
Intersegment elimination
|
(17.7
|
)
|
|
(10.9
|
)
|
|
(2.1
|
)
|
|
(6.8
|
)
|
|
(8.8
|
)
|
|||||
|
Total segments
|
696.0
|
|
|
828.4
|
|
|
462.1
|
|
|
(132.4
|
)
|
|
366.3
|
|
|||||
|
Corporate and Other
|
(126.5
|
)
|
|
(91.0
|
)
|
|
(52.6
|
)
|
|
(35.5
|
)
|
|
(38.4
|
)
|
|||||
|
Consolidated operating income
|
569.5
|
|
|
737.4
|
|
|
409.5
|
|
|
(167.9
|
)
|
|
327.9
|
|
|||||
|
Interest expense
|
(321.9
|
)
|
|
(511.9
|
)
|
|
(251.0
|
)
|
|
190.0
|
|
|
(260.9
|
)
|
|||||
|
Loss from the change in the fair value of the equity conversion feature of preferred stock
|
(12.7
|
)
|
|
(101.6
|
)
|
|
(156.6
|
)
|
|
88.9
|
|
|
55.0
|
|
|||||
|
Gain on contingent purchase price reduction
|
0.5
|
|
|
—
|
|
|
41.0
|
|
|
0.5
|
|
|
(41.0
|
)
|
|||||
|
Other expense, net
|
(22.2
|
)
|
|
(5.6
|
)
|
|
(17.5
|
)
|
|
(16.6
|
)
|
|
11.9
|
|
|||||
|
Consolidated income (loss) from continuing operations before income taxes
|
213.2
|
|
|
118.3
|
|
|
25.4
|
|
|
94.9
|
|
|
92.9
|
|
|||||
|
Income tax expense (benefit)
|
111.5
|
|
|
187.3
|
|
|
(85.3
|
)
|
|
(75.8
|
)
|
|
272.6
|
|
|||||
|
Net income (loss)
|
101.7
|
|
|
(69.0
|
)
|
|
110.7
|
|
|
170.7
|
|
|
(179.7
|
)
|
|||||
|
Less: Net income (loss) attributable to noncontrolling interest
|
112.0
|
|
|
(23.2
|
)
|
|
21.2
|
|
|
135.2
|
|
|
(44.4
|
)
|
|||||
|
Net (loss) income attributable to controlling interest
|
(10.3
|
)
|
|
(45.8
|
)
|
|
89.5
|
|
|
35.5
|
|
|
(135.3
|
)
|
|||||
|
Less: Preferred stock dividends, accretion and loss on conversion
|
73.6
|
|
|
48.4
|
|
|
59.6
|
|
|
25.2
|
|
|
(11.2
|
)
|
|||||
|
Net (loss) income attributable to common and participating preferred stockholders
|
$
|
(83.9
|
)
|
|
$
|
(94.2
|
)
|
|
$
|
29.9
|
|
|
$
|
10.3
|
|
|
$
|
(124.1
|
)
|
|
|
|
Fiscal
|
|
Increase / (Decrease)
|
||||||||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
|
2014 compared to 2013
|
|
2013 compared to 2012
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net consumer and other product sales
|
|
$
|
4,429.1
|
|
|
$
|
4,085.6
|
|
|
$
|
3,252.4
|
|
|
$
|
343.5
|
|
|
$
|
833.2
|
|
|
Cost of consumer products and other goods sold
|
|
2,860.3
|
|
|
2,695.3
|
|
|
2,136.8
|
|
|
165.0
|
|
|
558.5
|
|
|||||
|
Consumer products gross profit
|
|
1,568.8
|
|
|
1,390.3
|
|
|
1,115.6
|
|
|
178.5
|
|
|
274.7
|
|
|||||
|
Selling, acquisition, operating and general expenses
|
|
1,005.2
|
|
|
961.3
|
|
|
750.1
|
|
|
43.9
|
|
|
211.2
|
|
|||||
|
Amortization of intangibles
|
|
81.7
|
|
|
77.8
|
|
|
63.7
|
|
|
3.9
|
|
|
14.1
|
|
|||||
|
Operating income (loss) - Consumer Products segment
|
|
$
|
481.9
|
|
|
$
|
351.2
|
|
|
$
|
301.8
|
|
|
$
|
130.7
|
|
|
$
|
49.4
|
|
|
|
|
Fiscal
|
|
Increase (Decrease)
|
||||||||||||||||
|
Product line net sales
|
|
2014
|
|
2013
|
|
2012
|
|
2014 compared to 2013
|
|
2013 compared to 2012
|
||||||||||
|
Hardware and home improvement products
|
|
$
|
1,166.0
|
|
|
$
|
869.6
|
|
|
$
|
—
|
|
|
$
|
296.4
|
|
|
$
|
869.6
|
|
|
Consumer batteries
|
|
957.8
|
|
|
931.7
|
|
|
948.6
|
|
|
26.1
|
|
|
(16.9
|
)
|
|||||
|
Small appliances
|
|
730.8
|
|
|
740.3
|
|
|
771.6
|
|
|
(9.5
|
)
|
|
(31.3
|
)
|
|||||
|
Pet supplies
|
|
600.5
|
|
|
621.8
|
|
|
615.5
|
|
|
(21.3
|
)
|
|
6.3
|
|
|||||
|
Home and garden control products
|
|
431.9
|
|
|
390.5
|
|
|
387.0
|
|
|
41.4
|
|
|
3.5
|
|
|||||
|
Electric shaving and grooming products
|
|
278.3
|
|
|
276.8
|
|
|
279.5
|
|
|
1.5
|
|
|
(2.7
|
)
|
|||||
|
Electric personal care products
|
|
263.8
|
|
|
254.9
|
|
|
250.2
|
|
|
8.9
|
|
|
4.7
|
|
|||||
|
Total net sales to external customers
|
|
$
|
4,429.1
|
|
|
$
|
4,085.6
|
|
|
$
|
3,252.4
|
|
|
$
|
343.5
|
|
|
$
|
833.2
|
|
|
|
Fiscal
|
|
Increase / (Decrease)
|
||||||||||||||||
|
|
2014
|
|
2013
|
|
2012
|
|
2014 compared to 2013
|
|
2013 compared to 2012
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Insurance premiums
|
$
|
56.6
|
|
|
$
|
58.8
|
|
|
$
|
55.3
|
|
|
$
|
(2.2
|
)
|
|
$
|
3.5
|
|
|
Net investment income
|
824.5
|
|
|
715.5
|
|
|
716.2
|
|
|
109.0
|
|
|
(0.7
|
)
|
|||||
|
Net investment gains
|
395.9
|
|
|
511.6
|
|
|
410.0
|
|
|
(115.7
|
)
|
|
101.6
|
|
|||||
|
Insurance and investment product fees and other
|
72.7
|
|
|
62.5
|
|
|
40.3
|
|
|
10.2
|
|
|
22.2
|
|
|||||
|
Total Insurance segment revenues
|
1,349.7
|
|
|
1,348.4
|
|
|
1,221.8
|
|
|
1.3
|
|
|
126.6
|
|
|||||
|
Benefits and other changes in policy reserves
|
852.7
|
|
|
531.8
|
|
|
777.4
|
|
|
320.9
|
|
|
(245.6
|
)
|
|||||
|
Acquisition, operating and general expenses, net of deferrals
|
114.7
|
|
|
111.4
|
|
|
123.9
|
|
|
3.3
|
|
|
(12.5
|
)
|
|||||
|
Amortization of intangibles
|
97.5
|
|
|
182.3
|
|
|
160.6
|
|
|
(84.8
|
)
|
|
21.7
|
|
|||||
|
Total Insurance segment operating costs and expenses
|
1,064.9
|
|
|
825.5
|
|
|
1,061.9
|
|
|
239.4
|
|
|
(236.4
|
)
|
|||||
|
Operating income - Insurance segment
|
$
|
284.8
|
|
|
$
|
522.9
|
|
|
$
|
159.9
|
|
|
$
|
(238.1
|
)
|
|
$
|
363.0
|
|
|
|
Fiscal
|
|||||||
|
|
2014
|
|
2013
|
|
2012
|
|||
|
Average yield on invested assets
|
4.7
|
%
|
|
4.2
|
%
|
|
4.5
|
%
|
|
Less: Interest credited and option cost
|
2.9
|
%
|
|
3.0
|
%
|
|
3.3
|
%
|
|
Net investment spread
|
1.8
|
%
|
|
1.2
|
%
|
|
1.2
|
%
|
|
|
Fiscal
|
|
Increase / (Decrease)
|
||||||||||||||||
|
|
2014
|
|
2013
|
|
2012
|
|
2014 compared to 2013
|
|
2013 compared to 2012
|
||||||||||
|
Call options:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Gain (loss) on option expiration
|
$
|
208.4
|
|
|
$
|
131.2
|
|
|
$
|
(53.0
|
)
|
|
$
|
77.2
|
|
|
$
|
184.2
|
|
|
Change in unrealized gain
|
37.6
|
|
|
20.4
|
|
|
153.0
|
|
|
17.2
|
|
|
(132.6
|
)
|
|||||
|
Futures contracts:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Gain on futures contracts expiration
|
25.4
|
|
|
17.4
|
|
|
42.6
|
|
|
8.0
|
|
|
(25.2
|
)
|
|||||
|
Change in unrealized gain
|
0.1
|
|
|
0.1
|
|
|
3.4
|
|
|
—
|
|
|
(3.3
|
)
|
|||||
|
|
$
|
271.5
|
|
|
$
|
169.1
|
|
|
$
|
146.0
|
|
|
$
|
102.4
|
|
|
$
|
23.1
|
|
|
|
|
Fiscal
|
|||||||
|
|
|
2014
|
|
2013
|
|
2012
|
|||
|
S&P 500 Index:
|
|
|
|
|
|
|
|||
|
Point-to-point strategy
|
|
4.8
|
%
|
|
5.3
|
%
|
|
2.7
|
%
|
|
Monthly average strategy
|
|
5.0
|
%
|
|
5.0
|
%
|
|
1.8
|
%
|
|
Monthly point-to-point strategy
|
|
6.8
|
%
|
|
4.6
|
%
|
|
0.5
|
%
|
|
3 Year high water mark
|
|
22.2
|
%
|
|
23.3
|
%
|
|
17.5
|
%
|
|
|
Fiscal
|
|
Increase / (Decrease)
|
||||||||||||||||
|
|
2014
|
|
2013
|
|
2012
|
|
2014 compared to 2013
|
|
2013 compared to 2012
|
||||||||||
|
FIA market value option liability
|
$
|
56.9
|
|
|
$
|
12.2
|
|
|
$
|
177.9
|
|
|
$
|
44.7
|
|
|
$
|
(165.7
|
)
|
|
FIA present value future credits & guarantee liability change
|
(20.2
|
)
|
|
(215.6
|
)
|
|
7.0
|
|
|
195.4
|
|
|
(222.6
|
)
|
|||||
|
Index credits, interest credited & bonuses
|
649.4
|
|
|
572.7
|
|
|
382.4
|
|
|
76.7
|
|
|
190.3
|
|
|||||
|
Annuity Payments
|
209.1
|
|
|
225.2
|
|
|
241.7
|
|
|
(16.1
|
)
|
|
(16.5
|
)
|
|||||
|
Other policy benefits and reserve movements
|
(42.5
|
)
|
|
(62.7
|
)
|
|
(31.6
|
)
|
|
20.2
|
|
|
(31.1
|
)
|
|||||
|
Total benefits and other changes in policy reserves
|
$
|
852.7
|
|
|
$
|
531.8
|
|
|
$
|
777.4
|
|
|
$
|
320.9
|
|
|
$
|
(245.6
|
)
|
|
|
Fiscal 2014
|
|
For the period from inception to September 30, 2013
|
|
Increase / (Decrease)
|
||||||
|
Oil and natural gas revenues
|
$
|
147.0
|
|
|
$
|
90.2
|
|
|
$
|
56.8
|
|
|
Oil and natural gas direct operating costs
|
69.6
|
|
|
44.0
|
|
|
25.6
|
|
|||
|
Oil and natural gas operating margin
|
77.4
|
|
|
46.2
|
|
|
31.2
|
|
|||
|
Acquisition, operating and general expenses, net of deferrals
|
50.1
|
|
|
37.1
|
|
|
13.0
|
|
|||
|
Impairment of oil and natural gas properties
|
81.0
|
|
|
54.3
|
|
|
26.7
|
|
|||
|
Operating loss - Energy segment
|
$
|
(53.7
|
)
|
|
$
|
(45.2
|
)
|
|
$
|
(8.5
|
)
|
|
(dollars in millions, except per unit prices)
|
|
Fiscal 2014
|
|
For the period from inception to September 30, 2013
|
|
Increase / (Decrease)
|
||||||
|
Production:
|
|
|
|
|
|
|
||||||
|
Oil (Mbbls)
|
|
414
|
|
|
283
|
|
|
131
|
|
|||
|
Natural gas liquids (Mbbls)
|
|
521
|
|
|
300
|
|
|
221
|
|
|||
|
Natural gas (Mmcf)
|
|
20,882
|
|
|
14,570
|
|
|
6,312
|
|
|||
|
Total production (Mmcfe) (1)
|
|
26,492
|
|
|
18,068
|
|
|
8,424
|
|
|||
|
Average daily production (Mmcfe)
|
|
73
|
|
|
79
|
|
|
(6
|
)
|
|||
|
Revenues before derivative financial instrument activities:
|
||||||||||||
|
Oil
|
|
$
|
38.0
|
|
|
$
|
26.8
|
|
|
$
|
11.2
|
|
|
Natural gas liquids
|
|
22.7
|
|
|
11.4
|
|
|
11.3
|
|
|||
|
Natural gas
|
|
86.3
|
|
|
52.0
|
|
|
34.3
|
|
|||
|
Total revenues
|
|
$
|
147.0
|
|
|
$
|
90.2
|
|
|
$
|
56.8
|
|
|
Oil and natural gas derivative financial instruments:
|
||||||||||||
|
Loss on derivative financial instruments
|
|
$
|
(6.6
|
)
|
|
$
|
(1.3
|
)
|
|
$
|
(5.3
|
)
|
|
Average sales price (before cash settlements of derivative financial instruments):
|
||||||||||||
|
Oil (per Bbl)
|
|
$
|
91.92
|
|
|
$
|
94.63
|
|
|
$
|
(2.71
|
)
|
|
Natural gas liquids (per Bbl)
|
|
43.49
|
|
|
38.11
|
|
|
5.38
|
|
|||
|
Natural gas (per Mcf)
|
|
4.13
|
|
|
3.57
|
|
|
0.56
|
|
|||
|
Natural gas equivalent (per Mcfe)
|
|
5.55
|
|
|
4.99
|
|
|
0.56
|
|
|||
|
Costs and expenses (per Mcfe):
|
|
|
|
|
|
|
||||||
|
Oil and natural gas operating costs
|
|
$
|
1.63
|
|
|
$
|
1.50
|
|
|
$
|
0.13
|
|
|
Production and ad valorem taxes
|
|
0.50
|
|
|
0.55
|
|
|
(0.05
|
)
|
|||
|
Gathering and transportation
|
|
0.50
|
|
|
0.39
|
|
|
0.11
|
|
|||
|
Depletion
|
|
1.45
|
|
|
1.67
|
|
|
(0.22
|
)
|
|||
|
Depreciation and amortization
|
|
0.06
|
|
|
0.05
|
|
|
0.01
|
|
|||
|
Interest expense
|
|
0.63
|
|
|
0.57
|
|
|
0.06
|
|
|||
|
General and administrative
|
|
0.31
|
|
|
0.27
|
|
|
0.04
|
|
|||
|
(1)
|
Mmcfe is calculated by converting one barrel of oil or natural gas liquids into six Mcf of natural gas.
|
|
|
Fiscal
|
|
Increase/(Decrease)
|
||||||||||||||||
|
|
2014
|
|
2013
|
|
2012
|
|
2014 compared to 2013
|
|
2013 compared to 2012
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Asset Management segment revenues
|
$
|
34.2
|
|
|
$
|
28.9
|
|
|
$
|
8.6
|
|
|
$
|
5.3
|
|
|
$
|
20.3
|
|
|
Asset Management segment operating costs and expenses
|
33.5
|
|
|
18.5
|
|
|
6.1
|
|
|
15.0
|
|
|
12.4
|
|
|||||
|
Operating income - Asset Management segment
|
$
|
0.7
|
|
|
$
|
10.4
|
|
|
$
|
2.5
|
|
|
$
|
(9.7
|
)
|
|
$
|
7.9
|
|
|
|
Fiscal
|
|
Increase / (Decrease)
|
||||||||||||||||
|
|
2014
|
|
2013
|
|
2012
|
|
2014 compared to 2013
|
|
2013 compared to 2012
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net consumer and other product sales
|
$
|
20.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20.1
|
|
|
$
|
—
|
|
|
Cost of consumer products and other goods sold
|
15.3
|
|
|
—
|
|
|
—
|
|
|
15.3
|
|
|
—
|
|
|||||
|
Corporate and Other gross profit
|
4.8
|
|
|
—
|
|
|
—
|
|
|
4.8
|
|
|
—
|
|
|||||
|
Selling, acquisition, operating and general expenses
|
131.3
|
|
|
91.0
|
|
|
52.6
|
|
|
40.3
|
|
|
38.4
|
|
|||||
|
Operating loss - Corporate and Other segment
|
$
|
(126.5
|
)
|
|
$
|
(91.0
|
)
|
|
$
|
(52.6
|
)
|
|
$
|
(35.5
|
)
|
|
$
|
(38.4
|
)
|
|
|
|
Fiscal
|
||||||||||
|
Reconciliation to reported net income (loss):
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Reported net income (loss) - Consumer Products segment
|
|
$
|
214.5
|
|
|
$
|
(55.3
|
)
|
|
$
|
48.6
|
|
|
Add back:
|
|
|
|
|
|
|
||||||
|
Interest expense
|
|
202.1
|
|
|
375.6
|
|
|
191.9
|
|
|||
|
Income tax expense
|
|
59.0
|
|
|
27.4
|
|
|
60.4
|
|
|||
|
HHI Business inventory fair value adjustment
|
|
—
|
|
|
31.0
|
|
|
—
|
|
|||
|
Pre-acquisition earnings of HHI Business
|
|
—
|
|
|
30.3
|
|
|
183.1
|
|
|||
|
Restructuring and related charges
|
|
22.9
|
|
|
34.0
|
|
|
19.6
|
|
|||
|
Acquisition and integration related charges
|
|
20.1
|
|
|
48.4
|
|
|
31.1
|
|
|||
|
Venezuela devaluation
|
|
—
|
|
|
2.0
|
|
|
—
|
|
|||
|
Other
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|||
|
Adjusted EBIT - Consumer Products segment
|
|
519.9
|
|
|
493.4
|
|
|
534.7
|
|
|||
|
Depreciation and amortization, net of accelerated depreciation
|
|
|
|
|
|
|
||||||
|
Depreciation of properties
|
|
76.0
|
|
|
62.0
|
|
|
40.8
|
|
|||
|
Amortization of intangibles
|
|
81.7
|
|
|
77.8
|
|
|
63.7
|
|
|||
|
Stock-based compensation
|
|
46.8
|
|
|
43.9
|
|
|
29.2
|
|
|||
|
Adjusted EBITDA - Consumer Products segment
|
|
$
|
724.4
|
|
|
$
|
677.1
|
|
|
$
|
668.4
|
|
|
|
|
Fiscal
|
||||||||||
|
Reconciliation to reported net income :
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Reported net income - Insurance segment:
|
|
$
|
202.3
|
|
|
$
|
350.2
|
|
|
$
|
344.2
|
|
|
Effect of investment gains, net of offsets
|
|
(54.5
|
)
|
|
(161.2
|
)
|
|
(86.1
|
)
|
|||
|
Effect of change in FIA embedded derivative discount rate, net of offsets
|
|
5.7
|
|
|
(34.8
|
)
|
|
12.1
|
|
|||
|
Effects of transaction-related reinsurance, net of offsets
|
|
—
|
|
|
—
|
|
|
7.7
|
|
|||
|
Effect of class action litigation reserves, net of offsets
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|||
|
Adjusted operating income - Insurance segment
|
|
$
|
154.5
|
|
|
$
|
154.2
|
|
|
$
|
277.9
|
|
|
|
|
Fiscal 2014
|
|
Period from inception to September 30, 2013
|
||||
|
Reconciliation to reported net loss:
|
|
|
||||||
|
Reported net loss - Energy segment
|
|
$
|
(76.9
|
)
|
|
$
|
(56.8
|
)
|
|
Interest expense
|
|
16.7
|
|
|
10.3
|
|
||
|
Depreciation, amortization and depletion
|
|
39.9
|
|
|
31.0
|
|
||
|
EBITDA - Energy segment
|
|
(20.3
|
)
|
|
(15.5
|
)
|
||
|
Accretion of discount on asset retirement obligations
|
|
2.0
|
|
|
1.2
|
|
||
|
Non-cash write down of oil and natural gas properties
|
|
81.0
|
|
|
54.3
|
|
||
|
Non-recurring other operating items
|
|
0.2
|
|
|
0.1
|
|
||
|
Loss on derivative financial instruments
|
|
6.6
|
|
|
1.3
|
|
||
|
Cash settlements on derivative financial instruments
|
|
(6.2
|
)
|
|
(1.8
|
)
|
||
|
Adjusted EBITDA - Energy segment
|
|
$
|
63.3
|
|
|
$
|
39.6
|
|
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||
|
Asset Class
|
|
Fair Value
|
|
Percent
|
|
Fair Value
|
|
Percent
|
||||||
|
Asset-backed securities
|
|
$
|
1,792.9
|
|
|
9.3
|
%
|
|
$
|
1,523.1
|
|
|
9.3
|
%
|
|
Commercial mortgage-backed securities
|
|
636.9
|
|
|
3.3
|
%
|
|
454.4
|
|
|
2.8
|
%
|
||
|
Corporates
|
|
9,795.8
|
|
|
50.9
|
%
|
|
9,418.3
|
|
|
57.2
|
%
|
||
|
Equities
(a)
|
|
768.1
|
|
|
4.0
|
%
|
|
352.5
|
|
|
2.1
|
%
|
||
|
Hybrids
|
|
1,316.1
|
|
|
6.9
|
%
|
|
428.8
|
|
|
2.6
|
%
|
||
|
Municipals
|
|
1,259.8
|
|
|
6.5
|
%
|
|
1,007.0
|
|
|
6.1
|
%
|
||
|
Agency residential mortgage-backed securities
|
|
107.3
|
|
|
0.6
|
%
|
|
98.6
|
|
|
0.6
|
%
|
||
|
Non-agency residential mortgage-backed securities
|
|
2,006.7
|
|
|
10.4
|
%
|
|
1,368.0
|
|
|
8.3
|
%
|
||
|
U.S. Government
|
|
296.0
|
|
|
1.5
|
%
|
|
1,001.8
|
|
|
6.1
|
%
|
||
|
Derivatives
|
|
296.3
|
|
|
1.5
|
%
|
|
221.8
|
|
|
1.3
|
%
|
||
|
Asset-based loans
|
|
811.6
|
|
|
4.2
|
%
|
|
560.4
|
|
|
3.4
|
%
|
||
|
Other (primarily policy loans and other invested assets)
|
|
165.0
|
|
|
0.9
|
%
|
|
31.2
|
|
|
0.2
|
%
|
||
|
Total investments
|
|
$
|
19,252.5
|
|
|
100.0
|
%
|
|
$
|
16,465.9
|
|
|
100.0
|
%
|
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||
|
Rating
|
|
Fair Value
|
|
Percent
|
|
Fair Value
|
|
Percent
|
||||||
|
AAA
|
|
$
|
1,568.1
|
|
|
9.1
|
%
|
|
$
|
1,737.9
|
|
|
11.4
|
%
|
|
AA
|
|
1,909.2
|
|
|
11.1
|
%
|
|
2,423.1
|
|
|
15.8
|
%
|
||
|
A
|
|
3,873.0
|
|
|
22.5
|
%
|
|
3,791.3
|
|
|
24.8
|
%
|
||
|
BBB
|
|
7,032.5
|
|
|
40.9
|
%
|
|
5,499.0
|
|
|
35.9
|
%
|
||
|
BB
(a)
|
|
759.6
|
|
|
4.4
|
%
|
|
442.2
|
|
|
2.9
|
%
|
||
|
B and below
(b)
|
|
2,069.1
|
|
|
12.0
|
%
|
|
1,406.5
|
|
|
9.2
|
%
|
||
|
Total
|
|
$
|
17,211.5
|
|
|
100.0
|
%
|
|
$
|
15,300.0
|
|
|
100.0
|
%
|
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||
|
Rating
|
|
Fair Value
|
|
Percent
|
|
Fair Value
|
|
Percent
|
||||||
|
AAA
|
|
$
|
92.4
|
|
|
8.8
|
%
|
|
$
|
101.8
|
|
|
9.6
|
%
|
|
AA
|
|
92.5
|
|
|
8.8
|
%
|
|
221.3
|
|
|
20.9
|
%
|
||
|
A
|
|
95.1
|
|
|
9.0
|
%
|
|
137.9
|
|
|
13.0
|
%
|
||
|
BBB
|
|
304.2
|
|
|
28.9
|
%
|
|
370.1
|
|
|
34.9
|
%
|
||
|
BB
|
|
86.1
|
|
|
8.2
|
%
|
|
72.3
|
|
|
6.8
|
%
|
||
|
B and below
|
|
382.0
|
|
|
36.3
|
%
|
|
156.9
|
|
|
14.8
|
%
|
||
|
Total
|
|
$
|
1,052.3
|
|
|
100.0
|
%
|
|
$
|
1,060.3
|
|
|
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, 2014
|
|
September 30, 2013
|
||||||||||||||||||
|
NAIC Designation
|
|
Amortized Cost
|
|
Fair Value
|
|
Percent of Total Fair Value
|
|
Amortized Cost
|
|
Fair Value
|
|
Percent of Total Fair Value
|
||||||||||
|
1
|
|
$
|
9,224.0
|
|
|
$
|
9,675.8
|
|
|
56.2
|
%
|
|
$
|
9,157.0
|
|
|
$
|
9,367.6
|
|
|
61.2
|
%
|
|
2
|
|
6,302.3
|
|
|
6,569.1
|
|
|
38.2
|
%
|
|
5,352.6
|
|
|
5,369.7
|
|
|
35.1
|
%
|
||||
|
3
|
|
523.3
|
|
|
549.4
|
|
|
3.2
|
%
|
|
379.5
|
|
|
389.4
|
|
|
2.6
|
%
|
||||
|
4
|
|
336.3
|
|
|
335.3
|
|
|
1.9
|
%
|
|
132.7
|
|
|
133.0
|
|
|
0.9
|
%
|
||||
|
5
|
|
82.8
|
|
|
81.9
|
|
|
0.5
|
%
|
|
34.4
|
|
|
34.3
|
|
|
0.2
|
%
|
||||
|
6
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
5.9
|
|
|
6.0
|
|
|
—
|
%
|
||||
|
|
|
$
|
16,468.7
|
|
|
$
|
17,211.5
|
|
|
100.0
|
%
|
|
$
|
15,062.1
|
|
|
$
|
15,300.0
|
|
|
100.0
|
%
|
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||||||||||
|
NAIC Designation
|
|
Amortized Cost
|
|
Fair Value
|
|
Percent of Total Fair Value
|
|
Amortized Cost
|
|
Fair Value
|
|
Percent of Total Fair Value
|
||||||||||
|
1
|
|
$
|
360.9
|
|
|
$
|
378.1
|
|
|
35.9
|
%
|
|
$
|
469.3
|
|
|
$
|
471.1
|
|
|
44.4
|
%
|
|
2
|
|
270.5
|
|
|
275.0
|
|
|
26.1
|
%
|
|
392.4
|
|
|
369.6
|
|
|
34.9
|
%
|
||||
|
3
|
|
47.7
|
|
|
47.8
|
|
|
4.6
|
%
|
|
61.0
|
|
|
62.6
|
|
|
5.9
|
%
|
||||
|
4
|
|
272.1
|
|
|
270.6
|
|
|
25.7
|
%
|
|
119.9
|
|
|
119.9
|
|
|
11.3
|
%
|
||||
|
5
|
|
81.4
|
|
|
80.8
|
|
|
7.7
|
%
|
|
30.8
|
|
|
31.1
|
|
|
2.9
|
%
|
||||
|
6
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
5.9
|
|
|
6.0
|
|
|
0.6
|
%
|
||||
|
|
|
$
|
1,032.6
|
|
|
$
|
1,052.3
|
|
|
100.0
|
%
|
|
$
|
1,079.3
|
|
|
$
|
1,060.3
|
|
|
100.0
|
%
|
|
Top 10 Industry Concentration
|
|
September 30, 2014
|
|
Percent of Total Fair Value of Fixed Maturities
|
|||
|
Banking
|
|
$
|
2,240.3
|
|
|
13.0
|
%
|
|
ABS Other
|
|
1,755.9
|
|
|
10.2
|
%
|
|
|
Municipal
|
|
1,313.3
|
|
|
7.6
|
%
|
|
|
Life
|
|
1,086.7
|
|
|
6.3
|
%
|
|
|
Electric
|
|
958.8
|
|
|
5.6
|
%
|
|
|
Commercial MBS
|
|
836.1
|
|
|
4.9
|
%
|
|
|
P&C
|
|
832.1
|
|
|
4.8
|
%
|
|
|
Whole Loan CMO Other
|
|
806.5
|
|
|
4.7
|
%
|
|
|
Other Financial Inst
|
|
726.1
|
|
|
4.2
|
%
|
|
|
Pipelines
|
|
561.2
|
|
|
3.3
|
%
|
|
|
Total
|
|
$
|
11,117.0
|
|
|
64.6
|
%
|
|
Top 10 Industry Concentration
|
|
September 30, 2013
|
|
Percent of Total Fair Value of Fixed Maturities
|
||
|
Banking
|
|
1,892.1
|
|
|
12.4
|
%
|
|
ABS Other
|
|
1,436.3
|
|
|
9.4
|
%
|
|
Municipal
|
|
1,023.5
|
|
|
6.7
|
%
|
|
Electric
|
|
856.3
|
|
|
5.6
|
%
|
|
Life
|
|
826.5
|
|
|
5.4
|
%
|
|
P&C
|
|
691.1
|
|
|
4.5
|
%
|
|
Other Financial Inst
|
|
683.7
|
|
|
4.5
|
%
|
|
Whole Loan CMO Other
|
|
626.3
|
|
|
4.1
|
%
|
|
Commercial MBS
|
|
572.4
|
|
|
3.7
|
%
|
|
REITS
|
|
503.5
|
|
|
3.3
|
%
|
|
Total
|
|
9,111.7
|
|
|
59.6
|
%
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||||||||||||||||||
|
NAIC Designation
|
|
NRSRO
|
|
Percent of Total Fair Value
|
|
NAIC Designation
|
|
NRSRO
|
|
Percent of Total Fair Value
|
||||||||||||||||||
|
1
|
|
97.6
|
%
|
|
AAA
|
|
5.8
|
%
|
|
2008
|
|
0.4
|
%
|
|
1
|
|
92.5
|
%
|
|
AAA
|
|
4.8
|
%
|
|
2007
|
|
21.8
|
%
|
|
2
|
|
1.4
|
%
|
|
AA
|
|
0.9
|
%
|
|
2007
|
|
19.0
|
%
|
|
2
|
|
6.0
|
%
|
|
AA
|
|
2.3
|
%
|
|
2006
|
|
23.9
|
%
|
|
3
|
|
0.8
|
%
|
|
A
|
|
6.2
|
%
|
|
2006
|
|
33.8
|
%
|
|
3
|
|
0.7
|
%
|
|
A
|
|
8.7
|
%
|
|
2005 and prior
|
|
54.3
|
%
|
|
4
|
|
0.2
|
%
|
|
BBB
|
|
3.0
|
%
|
|
2005 and prior
|
|
46.8
|
%
|
|
4
|
|
0.5
|
%
|
|
BBB
|
|
3.9
|
%
|
|
|
|
100.0
|
%
|
|
5
|
|
—
|
%
|
|
BB and below
|
|
84.1
|
%
|
|
|
|
100.0
|
%
|
|
5
|
|
0.3
|
%
|
|
BB and below
|
|
80.3
|
%
|
|
|
|
|
|
|
6
|
|
—
|
%
|
|
|
|
100.0
|
%
|
|
|
|
|
|
6
|
|
—
|
%
|
|
|
|
100.0
|
%
|
|
|
|
|
||
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||
|
Asset Class
|
|
Fair Value
|
|
Percent
|
|
Fair Value
|
|
Percent
|
||||||
|
Collateralized Loan Obligations
|
|
$
|
1,628.2
|
|
|
90.8
|
%
|
|
$
|
1,328.0
|
|
|
87.2
|
%
|
|
Other
|
|
141.1
|
|
|
7.9
|
%
|
|
107.3
|
|
|
7.0
|
%
|
||
|
Car loans
|
|
18.0
|
|
|
1.0
|
%
|
|
11.7
|
|
|
0.8
|
%
|
||
|
Home Equity
|
|
2.6
|
|
|
0.1
|
%
|
|
68.1
|
|
|
4.5
|
%
|
||
|
Utility
|
|
3.0
|
|
|
0.2
|
%
|
|
8.0
|
|
|
0.5
|
%
|
||
|
Total asset-backed securities
|
|
$
|
1,792.9
|
|
|
100.0
|
%
|
|
$
|
1,523.1
|
|
|
100.0
|
%
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||||||||||||||||||
|
|
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
|
6
|
|
|
$
|
120.4
|
|
|
$
|
(1.4
|
)
|
|
$
|
119.0
|
|
|
18
|
|
|
$
|
758.9
|
|
|
$
|
(4.0
|
)
|
|
$
|
754.9
|
|
|
United States Government sponsored agencies
|
19
|
|
|
24.8
|
|
|
(0.1
|
)
|
|
24.7
|
|
|
17
|
|
|
10.1
|
|
|
(0.2
|
)
|
|
9.9
|
|
||||||
|
United States municipalities, states and territories
|
41
|
|
|
271.2
|
|
|
(6.3
|
)
|
|
264.9
|
|
|
71
|
|
|
518.5
|
|
|
(40.8
|
)
|
|
477.7
|
|
||||||
|
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Finance, insurance and real estate
|
89
|
|
|
675.6
|
|
|
(13.3
|
)
|
|
662.3
|
|
|
170
|
|
|
1,867.9
|
|
|
(84.2
|
)
|
|
1,783.7
|
|
||||||
|
Manufacturing, construction and mining
|
39
|
|
|
352.5
|
|
|
(14.0
|
)
|
|
338.5
|
|
|
48
|
|
|
537.1
|
|
|
(36.0
|
)
|
|
501.1
|
|
||||||
|
Utilities and related sectors
|
55
|
|
|
386.0
|
|
|
(9.0
|
)
|
|
377.0
|
|
|
73
|
|
|
546.8
|
|
|
(19.2
|
)
|
|
527.6
|
|
||||||
|
Wholesale/retail trade
|
31
|
|
|
250.8
|
|
|
(4.2
|
)
|
|
246.6
|
|
|
45
|
|
|
362.9
|
|
|
(13.6
|
)
|
|
349.3
|
|
||||||
|
Services, media and other
|
42
|
|
|
328.4
|
|
|
(8.4
|
)
|
|
320.0
|
|
|
50
|
|
|
513.7
|
|
|
(32.1
|
)
|
|
481.6
|
|
||||||
|
Hybrid securities
|
41
|
|
|
563.4
|
|
|
(15.2
|
)
|
|
548.2
|
|
|
6
|
|
|
55.3
|
|
|
(3.3
|
)
|
|
52.0
|
|
||||||
|
Non-agency residential mortgage-backed securities
|
83
|
|
|
462.4
|
|
|
(11.0
|
)
|
|
451.4
|
|
|
85
|
|
|
408.5
|
|
|
(13.4
|
)
|
|
395.1
|
|
||||||
|
Commercial mortgage-backed securities
|
24
|
|
|
162.7
|
|
|
(2.0
|
)
|
|
160.7
|
|
|
10
|
|
|
33.0
|
|
|
(1.6
|
)
|
|
31.4
|
|
||||||
|
Asset-backed securities
|
134
|
|
|
1,132.8
|
|
|
(18.8
|
)
|
|
1,114.0
|
|
|
56
|
|
|
416.0
|
|
|
(5.2
|
)
|
|
410.8
|
|
||||||
|
Equity securities
|
25
|
|
|
240.4
|
|
|
(5.1
|
)
|
|
235.3
|
|
|
17
|
|
|
161.1
|
|
|
(10.3
|
)
|
|
150.8
|
|
||||||
|
|
629
|
|
|
$
|
4,971.4
|
|
|
$
|
(108.8
|
)
|
|
$
|
4,862.6
|
|
|
666
|
|
|
$
|
6,189.8
|
|
|
$
|
(263.9
|
)
|
|
$
|
5,925.9
|
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||||||||||||||||||
|
|
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
|
)
|
|
Twelve months or greater
|
2
|
|
|
0.7
|
|
|
0.1
|
|
|
(0.6
|
)
|
|
1
|
|
|
0.6
|
|
|
—
|
|
|
(0.6
|
)
|
||||||
|
Total investment grade
|
2
|
|
|
0.7
|
|
|
0.1
|
|
|
(0.6
|
)
|
|
10
|
|
|
78.9
|
|
|
60.9
|
|
|
(18.0
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Below investment grade:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Less than six months
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Six months or more and less than twelve months
|
1
|
|
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Twelve months or greater
|
4
|
|
|
0.4
|
|
|
—
|
|
|
(0.4
|
)
|
|
2
|
|
|
0.4
|
|
|
—
|
|
|
(0.4
|
)
|
||||||
|
Total below investment grade
|
5
|
|
|
0.5
|
|
|
0.1
|
|
|
(0.4
|
)
|
|
4
|
|
|
0.4
|
|
|
—
|
|
|
(0.4
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Total
|
7
|
|
|
$
|
1.2
|
|
|
$
|
0.2
|
|
|
$
|
(1.0
|
)
|
|
14
|
|
|
$
|
79.3
|
|
|
$
|
60.9
|
|
|
$
|
(18.4
|
)
|
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||||||||||
|
|
|
Amortized Cost
|
|
Fair Value
|
|
Percent of Total Fair Value (a)
|
|
Amortized Cost
|
|
Fair Value
|
|
Percent of Total Fair Value (a)
|
||||||||||
|
Region:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Non-U.S. North America
|
|
$
|
49.6
|
|
|
$
|
51.0
|
|
|
0.3
|
%
|
|
$
|
20.0
|
|
|
$
|
19.9
|
|
|
0.1
|
%
|
|
Caribbean
|
|
53.8
|
|
|
55.4
|
|
|
0.3
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
||||
|
Other
|
|
8.3
|
|
|
8.4
|
|
|
0.1
|
%
|
|
8.4
|
|
|
8.4
|
|
|
0.1
|
%
|
||||
|
Total
|
|
$
|
111.7
|
|
|
$
|
114.8
|
|
|
0.7
|
%
|
|
$
|
28.4
|
|
|
$
|
28.3
|
|
|
0.2
|
%
|
|
|
|
HGI’s Proportionate Interest
|
|
Compass
|
||||
|
|
|
September 30,
2014 |
|
September 30,
2014 |
||||
|
Borrowings under the Compass Credit Agreement
|
|
$
|
243.2
|
|
|
$
|
327.0
|
|
|
Less: Cash
|
|
13.9
|
|
|
18.7
|
|
||
|
Net debt
|
|
$
|
229.3
|
|
|
$
|
308.3
|
|
|
Borrowing base
|
|
$
|
297.5
|
|
|
$
|
400.0
|
|
|
Unused borrowing base (1)
|
|
54.0
|
|
|
72.5
|
|
||
|
Unused borrowing base plus cash (1)
|
|
67.9
|
|
|
91.2
|
|
||
|
|
|
Fiscal
|
|
From Inception to the Period Ended September 30,
|
||||
|
|
|
2014
|
|
2013
|
||||
|
Capital expenditures:
|
|
|
|
|
||||
|
Development capital
|
|
$
|
15.4
|
|
|
$
|
15.9
|
|
|
Gas gathering and water pipelines
|
|
0.1
|
|
|
0.1
|
|
||
|
Lease acquisitions and seismic
|
|
0.2
|
|
|
—
|
|
||
|
Corporate and other
|
|
3.4
|
|
|
2.1
|
|
||
|
Total
|
|
$
|
19.1
|
|
|
$
|
18.1
|
|
|
HGI’s Proportionate 74.4% Share
|
|
$
|
14.2
|
|
|
$
|
13.5
|
|
|
|
Fiscal
|
|
From Inception to the Period Ended September 30,
|
||||
|
Average realized pricing:
|
2014
|
|
2013
|
||||
|
Natural gas equivalent per Mcfe
|
$
|
5.55
|
|
|
$
|
4.99
|
|
|
Cash settlements on derivative financial instruments, per Mcfe
|
(0.23
|
)
|
|
(0.10
|
)
|
||
|
Net price per Mcfe, including derivative financial instruments
|
$
|
5.32
|
|
|
$
|
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 2014
|
|
4,106
|
|
|
4.15
|
|
|
68.0
|
|
|
91.87
|
|
|
2015
|
|
2,715
|
|
|
3.98
|
|
|
186.0
|
|
|
94.98
|
|
|
|
|
Fiscal
|
|
Increase / (Decrease)
|
||||||||||||||||
|
Cash provided by (used in):
|
|
2014
|
|
2013
|
|
2012
|
|
2014 compared to 2013
|
|
2013 compared to 2012
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Operating activities
|
|
$
|
607.9
|
|
|
$
|
522.3
|
|
|
$
|
622.5
|
|
|
$
|
85.6
|
|
|
$
|
(100.2
|
)
|
|
Investing activities
|
|
(1,920.6
|
)
|
|
(2,010.8
|
)
|
|
(185.6
|
)
|
|
90.2
|
|
|
(1,825.2
|
)
|
|||||
|
Financing activities
|
|
740.4
|
|
|
1,922.0
|
|
|
(102.7
|
)
|
|
(1,181.6
|
)
|
|
2,024.7
|
|
|||||
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(8.2
|
)
|
|
(4.5
|
)
|
|
(0.9
|
)
|
|
(3.7
|
)
|
|
(3.6
|
)
|
|||||
|
Net (decrease) increase in cash and cash equivalents
|
|
$
|
(580.5
|
)
|
|
$
|
429.0
|
|
|
$
|
333.3
|
|
|
$
|
(1,009.5
|
)
|
|
$
|
95.7
|
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
|
Total
|
|
2015
|
|
2016 to 2017
|
|
2018 to 2019
|
|
After 2019
|
||||||||||
|
Annuity and universal life products
(a)
|
|
$
|
21,199.9
|
|
|
$
|
1,992.6
|
|
|
$
|
4,173.4
|
|
|
$
|
3,460.1
|
|
|
$
|
11,573.8
|
|
|
Debt, excluding capital lease obligations
(b)
|
|
5,099.8
|
|
|
90.7
|
|
|
627.1
|
|
|
1,716.6
|
|
|
2,665.4
|
|
|||||
|
Interest payments, excluding capital lease obligations
(b)
|
|
1,762.6
|
|
|
294.1
|
|
|
576.3
|
|
|
527.8
|
|
|
364.4
|
|
|||||
|
Capital lease obligations
(c)
|
|
144.0
|
|
|
13.0
|
|
|
26.0
|
|
|
18.0
|
|
|
87.0
|
|
|||||
|
Operating lease obligations
(d)
|
|
210.0
|
|
|
49.2
|
|
|
79.7
|
|
|
43.8
|
|
|
37.3
|
|
|||||
|
Employee benefit obligations
(e)
|
|
136.5
|
|
|
13.8
|
|
|
24.2
|
|
|
26.4
|
|
|
72.1
|
|
|||||
|
Letters of credit
(f)
|
|
56.9
|
|
|
41.1
|
|
|
15.0
|
|
|
0.8
|
|
|
—
|
|
|||||
|
Unfunded asset-based lending commitments
(g)
|
|
154.5
|
|
|
53.5
|
|
|
79.5
|
|
|
21.5
|
|
|
—
|
|
|||||
|
Other liabilities
(h)
|
|
0.4
|
|
|
0.3
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|||||
|
Total contractual obligations
|
|
$
|
28,764.6
|
|
|
$
|
2,548.3
|
|
|
$
|
5,601.3
|
|
|
$
|
5,815.0
|
|
|
$
|
14,800.0
|
|
|
(a)
|
Consists of projected payments through the year 2030 that the Insurance segment 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 15
,
Debt
, 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 24
,
Commitments and Contingencies
, 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 2024 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 18
,
Employee Benefit Plans
, to our Consolidated Financial Statements.
|
|
(f)
|
Consists 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, 2014
, our
Consolidated Balance Sheets
includes
$12.6 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
|
|||||||
|
Fiscal Quarter Ended
|
|
2014
|
|
2013
|
|
2012
|
|||
|
December
|
|
25
|
%
|
|
21
|
%
|
|
26
|
%
|
|
March
|
|
23
|
%
|
|
24
|
%
|
|
23
|
%
|
|
June
|
|
25
|
%
|
|
27
|
%
|
|
25
|
%
|
|
September
|
|
27
|
%
|
|
28
|
%
|
|
26
|
%
|
|
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
|
Fixed maturity securities and equity securities available-for-sale:
|
|
|
|
|
|
|
|
|
||||||||
|
Priced via third party pricing services
|
|
$
|
174.8
|
|
|
$
|
16,687.0
|
|
|
$
|
—
|
|
|
$
|
16,861.8
|
|
|
Priced via independent broker quotations
|
|
—
|
|
|
—
|
|
|
1,011.3
|
|
|
1,011.3
|
|
||||
|
Priced via other methods
|
|
—
|
|
|
—
|
|
|
2.0
|
|
|
2.0
|
|
||||
|
Total
|
|
174.8
|
|
|
16,687.0
|
|
|
1,013.3
|
|
|
17,875.1
|
|
||||
|
Available-for-sale embedded derivative:
|
|
|
|
|
|
|
|
|
||||||||
|
Priced via other methods
|
|
—
|
|
|
—
|
|
|
11.2
|
|
|
11.2
|
|
||||
|
Total
|
|
$
|
174.8
|
|
|
$
|
16,687.0
|
|
|
$
|
1,024.5
|
|
|
$
|
17,886.3
|
|
|
% of total
|
|
1.0
|
%
|
|
93.3
|
%
|
|
5.7
|
%
|
|
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. FGL uses a combination of actual and industry experience when setting and updating our policyholder behavior assumptions and such assumptions require considerable judgment.
|
|
|
|
As of September 30, 2014
|
||
|
A change to the long-term interest rate assumption of - 50 basis points
|
|
$
|
(56.5
|
)
|
|
A change to the long-term interest assumption of +50 basis points
|
|
44.6
|
|
|
|
An assumed 10% increase in surrender rate
|
|
(2.5
|
)
|
|
|
•
|
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.
|
|
|
|
Direct
|
|
Reinsurance
Recoverable |
|
Net
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Fixed indexed annuities
|
|
$
|
10,766.6
|
|
|
$
|
—
|
|
|
$
|
10,766.6
|
|
|
Fixed rate annuities
|
|
3,343.4
|
|
|
(76.0
|
)
|
|
3,267.4
|
|
|||
|
Immediate annuities
|
|
3,201.7
|
|
|
(137.1
|
)
|
|
3,064.6
|
|
|||
|
Universal life
|
|
1,256.1
|
|
|
(1,069.4
|
)
|
|
186.7
|
|
|||
|
Traditional life
|
|
1,551.2
|
|
|
(1,115.1
|
)
|
|
436.1
|
|
|||
|
Total
|
|
$
|
20,119.0
|
|
|
$
|
(2,397.6
|
)
|
|
$
|
17,721.4
|
|
|
•
|
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
|
|
•
|
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 FGL to finance its operations, support capital requirements and provide funds to pay dividends to stockholders.
|
|
•
|
The timing and amount of withdrawals and prepayments in FGL’s asset portfolio;
|
|
•
|
FGL’s derivative portfolio;
|
|
•
|
Death benefits and other claims payable under the terms of FGL’s insurance products;
|
|
•
|
Lapses and surrenders in FGL’s insurance products;
|
|
•
|
Minimum interest guarantees in FGL’s insurance products; and
|
|
•
|
Book value guarantees in FGL’s insurance products.
|
|
|
|
|
|
Financial Strength Rating
|
||||||
|
Parent Company/Principal Reinsurers
|
|
Reinsurance Recoverable
|
|
AM Best
|
|
S&P
|
|
Moody's
|
||
|
Wilton Reinsurance
|
|
$
|
1,508.8
|
|
|
A
|
|
Not Rated
|
|
Not Rated
|
|
Security Life of Denver
|
|
171.8
|
|
|
A
|
|
A-
|
|
A3
|
|
|
Scottish Re
|
|
139.1
|
|
|
Not Rated
|
|
Not Rated
|
|
Not Rated
|
|
|
London Life
|
|
109.8
|
|
|
A
|
|
Not Rated
|
|
Not Rated
|
|
|
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 Exhibit
|
|
|
|
|
|
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
|
|
First Supplemental Indenture, dated as of May 23, 2014, to the Indenture dated as of December 24, 2012, by and between Harbinger Group Inc. and Wells Fargo Bank, National Association, as trustee (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed May 23, 2014 (File No. 1-4219)).
|
|
|
|
|
|
4.3
|
|
Security and Pledge Agreement, dated as of January 7, 2011, by and between Harbinger Group Inc. and Wells Fargo Bank, National Association (incorporated herein by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-4 filed January 28, 2011, as amended (File No. 333-171924)).
|
|
|
|
|
|
4.4
|
|
Collateral Trust Agreement, dated as of January 7, 2011, by and between Harbinger Group Inc. and Wells Fargo Bank, National Association (incorporated herein by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-4 filed January 28, 2011, as amended (File No. 333-171924)).
|
|
|
|
|
|
4.5
|
|
Indenture governing the 7.750% Senior Notes due 2022, dated as of January 21, 2014, by and between Harbinger Group Inc. and Wells Fargo Bank, National Association, as trustee (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed January 21, 2014 (File No. 1-4219)).
|
|
|
|
|
|
4.6
|
|
Registration Rights Agreement, dated as of September 11, 2014, by and between Harbinger Group Inc. and the initial purchasers named therein (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed September 11, 2014 (File No. 1-4219)).
|
|
|
|
|
|
4.7
|
|
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)).
|
|
|
|
|
|
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)).
|
|
|
|
|
|
Exhibit
No.
|
|
Description of Exhibit
|
|
10.1
|
|
Stockholder Agreement, dated as of February 9, 2010, by and among Harbinger Group Inc. (as successor to Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situation Fund, L.P. and 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)).
|
|
|
|
|
|
10.2
|
|
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)).
|
|
|
|
|
|
10.3
|
|
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., Global Opportunities Breakaway Ltd. and their permitted transferees (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)).
|
|
|
|
|
|
10.4
|
|
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)).
|
|
|
|
|
|
10.5
|
|
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)).
|
|
|
|
|
|
10.6
|
|
Letter Agreement, dated March 18, 2014, by and between Harbinger Group Inc. and Leucadia National Corporation (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 18, 2014 (File No. 1-4219)).
|
|
|
|
|
|
10.7
|
|
Registration Rights Acknowledgement, dated March 18, 2014, by and among Harbinger Group Inc., Leucadia National Corporation, Harbinger Capital Partners Master Fund I, Ltd., Global Opportunities Breakaway Ltd. and Harbinger Capital Partners Special Situations Fund, L.P. (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed March 18, 2014 (File No. 1-4219)).
|
|
|
|
|
|
10.8
|
|
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)).
|
|
|
|
|
|
10.9
|
|
Letter Agreement, dated April 6, 2011, between OM Group (UK) Limited and Harbinger OM, LLC; and 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)).
|
|
|
|
|
|
10.10
|
|
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 Amendment No. 1 to Fidelity & Guaranty Life’s Registration Statement on Form S-1 filed October 17, 2013 (File No. 333-190880).
|
|
|
|
|
|
10.11
|
|
Registration Rights Agreement, dated as of December 18, 2013, by and between Fidelity & Guaranty Life and Harbinger Group, Inc. (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed February 7, 2014 (File No: 1-4219)).
|
|
|
|
|
|
10.12†
|
|
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)).
|
|
|
|
|
|
10.13†
|
|
Employment Agreement, dated February 11, 2014, by and between Omar Asali and Harbinger Group Inc. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed February 14, 2014 (File No. 1-4219)).
|
|
|
|
|
|
10.14†
|
|
Employment Agreement, dated February 11, 2014, by and between David Maura and Harbinger Group Inc. (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed February 14, 2014 (File No. 1-4219)).
|
|
|
|
|
|
Exhibit
No.
|
|
Description of Exhibit
|
|
10.15†
|
|
Employment Agreement, dated February 11, 2014, by and between Thomas Williams and Harbinger Group Inc. (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed February 14, 2014 (File No. 1-4219)).
|
|
|
|
|
|
10.16†
|
|
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)).
|
|
|
|
|
|
10.17†
|
|
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)).
|
|
|
|
|
|
10.18†
|
|
Severance Agreement and Release, effective as of June 13, 2014, by and between Harbinger Group Inc. and Michael Kuritzkes (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed August 8, 2014 (File No: 1-4219)).
|
|
|
|
|
|
10.19†
|
|
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)).
|
|
|
|
|
|
10.20†
|
|
First Amendment to Harbinger Group Inc. 2011 Omnibus Equity Award Plan, (incorporated herein by reference to Annex A to the Company’s Definitive Proxy Statement on Schedule 14A filed April 29, 2014 (File No. 1-4219)).
|
|
|
|
|
|
10.21*†
|
|
Harbinger Group Inc. 2011 Omnibus Equity Award Plan Forms of Restricted Stock Award Agreement (Non-Employee Directors), Restricted Stock Unit Agreement, Stock Award Agreement, Employee Nonqualified Option Award Agreement and Restricted Stock Award Agreement (Employees).
|
|
|
|
|
|
10.22†
|
|
The Harbinger Group Inc. 2014 Warrant Plan (incorporated herein by reference to Annex B to the Company’s Definitive Proxy Statement on Schedule 14A filed April 29, 2014 (File No. 1-4219)).
|
|
|
|
|
|
10.23†
|
|
Common Stock Purchase Warrant Agreement, dated March 10, 2014, by and between Harbinger Group Inc. and Philip Falcone (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed August 8, 2014 (File No: 1-4219)).
|
|
|
|
|
|
10.24
|
|
Services Agreement, dated November 14, 2012, 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)).
|
|
|
|
|
|
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, 2014 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.
|
|
*
|
Filed herewith.
|
|
**
|
Furnished herewith.
|
|
|
|
HARBINGER GROUP INC.
(Registrant)
|
|
|
|
|
|
|
|
Dated:
|
November 21, 2014
|
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 21, 2014
|
|
|
|
|
|
|
|
/s/ THOMAS A. WILLIAMS
Thomas A. Williams
|
|
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
|
November 21, 2014
|
|
|
|
|
|
|
|
/s/ MICHAEL J. SENA
Michael J. Sena
|
|
Chief Accounting Officer
(Principal Accounting Officer)
|
|
November 21, 2014
|
|
|
|
|
|
|
|
/s/ OMAR M. ASALI
Omar M. Asali
|
|
President and Director
|
|
November 21, 2014
|
|
|
|
|
|
|
|
/s/ FRANK IANNA
Frank Ianna
|
|
Director
|
|
November 21, 2014
|
|
|
|
|
|
|
|
/s/ KEITH M. HLADEK
Keith M. Hladek
|
|
Director
|
|
November 21, 2014
|
|
|
|
|
|
|
|
/s/ GERALD LUTERMAN
Gerald Luterman
|
|
Director
|
|
November 21, 2014
|
|
|
|
|
|
|
|
/s/ DAVID M. MAURA
David M. Maura
|
|
Director
|
|
November 21, 2014
|
|
|
|
|
|
|
|
/s/ EUGENE I. DAVIS
Eugene I. Davis
|
|
Director
|
|
November 21, 2014
|
|
|
|
|
|
|
|
/s/ JOSEPH S. STEINBERG
Joseph S. Steinberg
|
|
Director
|
|
November 21, 2014
|
|
|
|
|
|
|
|
/s/ ANDREW WHITTAKER
Andrew Whittaker
|
|
Director
|
|
November 21, 2014
|
|
(11) Inventories
, net
|
|
|
|
September 30,
|
||||||
|
|
2014
|
|
2013
|
||||
|
ASSETS
|
|
|
|
||||
|
Investments (Note 5):
|
|
|
|
||||
|
Fixed maturities
|
$
|
17,211.5
|
|
|
$
|
15,300.0
|
|
|
Equity securities
|
768.1
|
|
|
352.5
|
|
||
|
Derivatives
|
296.3
|
|
|
221.8
|
|
||
|
Asset-based loans
|
811.6
|
|
|
560.4
|
|
||
|
Other invested assets
|
165.0
|
|
|
31.2
|
|
||
|
Total investments
|
19,252.5
|
|
|
16,465.9
|
|
||
|
Cash and cash equivalents
|
1,319.2
|
|
|
1,899.7
|
|
||
|
Receivables, net (Note 10)
|
585.1
|
|
|
611.3
|
|
||
|
Inventories, net (Note 11)
|
635.2
|
|
|
632.9
|
|
||
|
Accrued investment income
|
184.9
|
|
|
161.2
|
|
||
|
Reinsurance recoverable (Note 19)
|
2,397.6
|
|
|
2,363.7
|
|
||
|
Deferred tax assets (Note 21)
|
186.7
|
|
|
293.4
|
|
||
|
Properties, including oil and natural gas properties, net (Note 12)
|
908.6
|
|
|
993.3
|
|
||
|
Goodwill (Note 13)
|
1,524.8
|
|
|
1,476.7
|
|
||
|
Intangibles, including DAC and VOBA, net (Note 13)
|
2,683.7
|
|
|
2,729.1
|
|
||
|
Other assets
|
421.9
|
|
|
281.6
|
|
||
|
Total assets
|
$
|
30,100.2
|
|
|
$
|
27,908.8
|
|
|
|
|
|
|
||||
|
LIABILITIES AND EQUITY
|
|
|
|
||||
|
|
|
|
|
||||
|
Insurance reserves:
|
|
|
|
||||
|
Contractholder funds
|
$
|
16,463.5
|
|
|
$
|
15,248.2
|
|
|
Future policy benefits
|
3,655.5
|
|
|
3,556.8
|
|
||
|
Liability for policy and contract claims
|
58.1
|
|
|
51.5
|
|
||
|
Funds withheld from reinsurers
|
38.0
|
|
|
39.4
|
|
||
|
Total insurance reserves
|
20,215.1
|
|
|
18,895.9
|
|
||
|
Debt (Note 15)
|
5,157.8
|
|
|
4,896.1
|
|
||
|
Accounts payable and other current liabilities (Note 14)
|
1,033.0
|
|
|
1,012.7
|
|
||
|
Equity conversion feature of preferred stock (Note 6 and Note 16)
|
—
|
|
|
330.8
|
|
||
|
Employee benefit obligations (Note 18)
|
86.2
|
|
|
99.6
|
|
||
|
Deferred tax liabilities (Note 21)
|
533.3
|
|
|
492.8
|
|
||
|
Other liabilities
|
817.8
|
|
|
718.0
|
|
||
|
Total liabilities
|
27,843.2
|
|
|
26,445.9
|
|
||
|
|
|
|
|
||||
|
Commitments and contingencies (Note 24)
|
|
|
|
||||
|
|
|
|
|
||||
|
Temporary equity (Note 16) :
|
|
|
|
||||
|
Redeemable preferred stock, $0.01 par; 10,000.0 thousand preferred shares authorized; 1 share and 394.2
thousand shares outstanding with aggregate liquidation preference of $0 and $617.1 at September 30, 2014 and 2013, respectively, and other temporary equity.
|
—
|
|
|
329.4
|
|
||
|
|
|
|
|
||||
|
Harbinger Group Inc. stockholders' equity:
|
|
|
|
||||
|
Common stock, $0.01 par; 500,000.0 thousand shares authorized; 202,295.6 thousand and 142,381.1 thousand shares issued and outstanding at September 30, 2014 and 2013, respectively.
|
2.0
|
|
|
1.4
|
|
||
|
Additional paid-in capital
|
1,472.3
|
|
|
828.0
|
|
||
|
Accumulated deficit
|
(276.3
|
)
|
|
(192.4
|
)
|
||
|
Accumulated other comprehensive income
|
243.6
|
|
|
87.7
|
|
||
|
Total Harbinger Group Inc. stockholders' equity
|
1,441.6
|
|
|
724.7
|
|
||
|
Noncontrolling interest
|
815.4
|
|
|
408.8
|
|
||
|
Total permanent equity
|
2,257.0
|
|
|
1,133.5
|
|
||
|
Total liabilities and equity
|
$
|
30,100.2
|
|
|
$
|
27,908.8
|
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Revenues:
|
|
|
|
|
|
|
||||||
|
Net consumer and other product sales
|
|
$
|
4,449.2
|
|
|
$
|
4,085.6
|
|
|
$
|
3,252.4
|
|
|
Oil and natural gas
|
|
147.0
|
|
|
90.2
|
|
|
—
|
|
|||
|
Insurance premiums
|
|
56.6
|
|
|
58.8
|
|
|
55.3
|
|
|||
|
Net investment income
|
|
842.2
|
|
|
734.7
|
|
|
722.7
|
|
|||
|
Net investment gains
|
|
395.3
|
|
|
511.6
|
|
|
410.0
|
|
|||
|
Insurance and investment product fees and other
|
|
72.7
|
|
|
62.5
|
|
|
40.3
|
|
|||
|
Total revenues
|
|
5,963.0
|
|
|
5,543.4
|
|
|
4,480.7
|
|
|||
|
Operating costs and expenses:
|
|
|
|
|
|
|
||||||
|
Cost of consumer products and other goods sold
|
|
2,875.6
|
|
|
2,695.3
|
|
|
2,136.8
|
|
|||
|
Oil and natural gas direct operating costs
|
|
69.6
|
|
|
44.0
|
|
|
—
|
|
|||
|
Benefits and other changes in policy reserves
|
|
852.7
|
|
|
531.8
|
|
|
777.4
|
|
|||
|
Selling, acquisition, operating and general expenses
|
|
1,335.4
|
|
|
1,220.5
|
|
|
932.7
|
|
|||
|
Impairment of oil and natural gas properties
|
|
81.0
|
|
|
54.3
|
|
|
—
|
|
|||
|
Amortization of intangibles
|
|
179.2
|
|
|
260.1
|
|
|
224.3
|
|
|||
|
Total operating costs and expenses
|
|
5,393.5
|
|
|
4,806.0
|
|
|
4,071.2
|
|
|||
|
Operating income
|
|
569.5
|
|
|
737.4
|
|
|
409.5
|
|
|||
|
Interest expense
|
|
(321.9
|
)
|
|
(511.9
|
)
|
|
(251.0
|
)
|
|||
|
Loss from the change in the fair value of the equity conversion feature of preferred stock
|
|
(12.7
|
)
|
|
(101.6
|
)
|
|
(156.6
|
)
|
|||
|
Gain on contingent purchase price reduction
|
|
0.5
|
|
|
—
|
|
|
41.0
|
|
|||
|
Other expense, net
|
|
(22.2
|
)
|
|
(5.6
|
)
|
|
(17.5
|
)
|
|||
|
Income from continuing operations before income taxes
|
|
213.2
|
|
|
118.3
|
|
|
25.4
|
|
|||
|
Income tax expense (benefit)
|
|
111.5
|
|
|
187.3
|
|
|
(85.3
|
)
|
|||
|
Net income (loss)
|
|
101.7
|
|
|
(69.0
|
)
|
|
110.7
|
|
|||
|
Less: Net income (loss) attributable to noncontrolling interest
|
|
112.0
|
|
|
(23.2
|
)
|
|
21.2
|
|
|||
|
Net (loss) income attributable to controlling interest
|
|
(10.3
|
)
|
|
(45.8
|
)
|
|
89.5
|
|
|||
|
Less: Preferred stock dividends, accretion and loss on conversion
|
|
73.6
|
|
|
48.4
|
|
|
59.6
|
|
|||
|
Net (loss) income attributable to common and participating preferred stockholders
|
|
$
|
(83.9
|
)
|
|
$
|
(94.2
|
)
|
|
$
|
29.9
|
|
|
|
|
|
|
|
|
|
||||||
|
Net (loss) income per common share attributable to controlling interest:
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Basic
|
|
$
|
(0.51
|
)
|
|
$
|
(0.67
|
)
|
|
$
|
0.15
|
|
|
Diluted
|
|
$
|
(0.51
|
)
|
|
$
|
(0.67
|
)
|
|
$
|
0.15
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
|
|
|
|
|
|
||||||
|
Net income (loss)
|
$
|
101.7
|
|
|
$
|
(69.0
|
)
|
|
$
|
110.7
|
|
|
|
|
|
|
|
|
||||||
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
|
Foreign currency translation losses
|
(32.5
|
)
|
|
(6.6
|
)
|
|
(8.6
|
)
|
|||
|
Net unrealized gain (loss) on derivative instruments
|
|
|
|
|
|
||||||
|
Changes in derivative instruments before reclassification adjustment
|
13.1
|
|
|
(2.0
|
)
|
|
(1.8
|
)
|
|||
|
Net reclassification adjustment for losses (gains) included in net income
|
2.6
|
|
|
(0.9
|
)
|
|
3.1
|
|
|||
|
Changes in derivative instruments after reclassification adjustment
|
15.7
|
|
|
(2.9
|
)
|
|
1.3
|
|
|||
|
Changes in deferred income tax asset/liability
|
(4.2
|
)
|
|
(0.2
|
)
|
|
(0.7
|
)
|
|||
|
Deferred tax valuation allowance adjustments
|
—
|
|
|
0.6
|
|
|
0.9
|
|
|||
|
Net unrealized gain (loss) on derivative instruments
|
11.5
|
|
|
(2.5
|
)
|
|
1.5
|
|
|||
|
Actuarial adjustments to pension plans
|
|
|
|
|
|
||||||
|
Changes in actuarial adjustments before reclassification adjustment
|
(8.7
|
)
|
|
9.6
|
|
|
(15.4
|
)
|
|||
|
Net reclassification adjustment for losses included in cost of goods sold
|
0.6
|
|
|
1.6
|
|
|
0.9
|
|
|||
|
Net reclassification adjustment for gains included in selling and general and administrative expenses
|
0.8
|
|
|
(0.2
|
)
|
|
—
|
|
|||
|
Changes in actuarial adjustments to pension plans
|
(7.3
|
)
|
|
11.0
|
|
|
(14.5
|
)
|
|||
|
Changes in deferred income tax asset/liability
|
2.2
|
|
|
(5.1
|
)
|
|
3.6
|
|
|||
|
Deferred tax valuation allowance adjustments
|
(0.6
|
)
|
|
(0.1
|
)
|
|
(0.8
|
)
|
|||
|
Net actuarial adjustments to pension plans
|
(5.7
|
)
|
|
5.8
|
|
|
(11.7
|
)
|
|||
|
Unrealized investment gains (losses):
|
|
|
|
|
|
||||||
|
Changes in unrealized investment gains (losses) before reclassification adjustment
|
627.5
|
|
|
(490.5
|
)
|
|
906.5
|
|
|||
|
Net reclassification adjustment for gains included in net income
|
(101.0
|
)
|
|
(333.4
|
)
|
|
(263.9
|
)
|
|||
|
Changes in unrealized investment gains (losses) after reclassification adjustment
|
526.5
|
|
|
(823.9
|
)
|
|
642.6
|
|
|||
|
Adjustments to intangible assets
|
(156.8
|
)
|
|
327.3
|
|
|
(218.5
|
)
|
|||
|
Changes in deferred income tax asset/liability
|
(129.0
|
)
|
|
173.1
|
|
|
(148.5
|
)
|
|||
|
Net unrealized gain (loss) on investments
|
240.7
|
|
|
(323.5
|
)
|
|
275.6
|
|
|||
|
Non-credit related other-than-temporary impairment:
|
|
|
|
|
|
||||||
|
Changes in non-credit related other-than-temporary impairment
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|||
|
Adjustments to intangible assets
|
—
|
|
|
—
|
|
|
0.6
|
|
|||
|
Changes in deferred income tax asset/liability
|
—
|
|
|
—
|
|
|
0.3
|
|
|||
|
Net non-credit related other than-temporary impairment
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|||
|
Net change to derive comprehensive income (loss) for the period
|
214.0
|
|
|
(326.8
|
)
|
|
256.2
|
|
|||
|
Comprehensive income (loss)
|
315.7
|
|
|
(395.8
|
)
|
|
366.9
|
|
|||
|
Less: Comprehensive income (loss) attributable to the noncontrolling interest:
|
|
|
|
|
|
||||||
|
Net income (loss)
|
112.0
|
|
|
(23.2
|
)
|
|
21.2
|
|
|||
|
Other comprehensive income (loss)
|
32.6
|
|
|
(2.2
|
)
|
|
(8.6
|
)
|
|||
|
|
144.6
|
|
|
(25.4
|
)
|
|
12.6
|
|
|||
|
Comprehensive income (loss) attributable to the controlling interest
|
$
|
171.1
|
|
|
$
|
(370.4
|
)
|
|
$
|
354.3
|
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income
|
|
Total Stockholders’ Equity
|
|
Noncontrolling Interest
|
|
Total Permanent Equity
|
|||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|||||||||||||||||||||
|
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 NCI
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(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 gains, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(323.5
|
)
|
|
(323.5
|
)
|
|
—
|
|
|
(323.5
|
)
|
|||||||
|
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
|
)
|
|||||||
|
Purchases of subsidiary stock
|
—
|
|
|
—
|
|
|
(58.8
|
)
|
|
—
|
|
|
(0.9
|
)
|
|
(59.7
|
)
|
|
(17.4
|
)
|
|
(77.1
|
)
|
|||||||
|
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
|
|
|||||||
|
NCI in acquired subsidiary
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43.0
|
|
|
43.0
|
|
|||||||
|
Dividend paid by subsidiary to NCI
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(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
|
|
|||||||
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
(10.3
|
)
|
|
—
|
|
|
(10.3
|
)
|
|
112.0
|
|
|
101.7
|
|
|||||||
|
Unrealized investment losses, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
197.7
|
|
|
197.7
|
|
|
43.0
|
|
|
240.7
|
|
|||||||
|
Other unrealized losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.8
|
|
|
6.8
|
|
|
4.7
|
|
|
11.5
|
|
|||||||
|
Actuarial adjustments to pension plans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.0
|
)
|
|
(4.0
|
)
|
|
(1.7
|
)
|
|
(5.7
|
)
|
|||||||
|
Translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19.1
|
)
|
|
(19.1
|
)
|
|
(13.4
|
)
|
|
(32.5
|
)
|
|||||||
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
171.1
|
|
|
144.6
|
|
|
315.7
|
|
||||||||||||
|
Repurchase of common stock
|
(5.2
|
)
|
|
(0.1
|
)
|
|
(65.5
|
)
|
|
—
|
|
|
—
|
|
|
(65.6
|
)
|
|
—
|
|
|
(65.6
|
)
|
|||||||
|
Proceeds from initial public offering of subsidiary shares
|
—
|
|
|
—
|
|
|
(58.5
|
)
|
|
—
|
|
|
(25.5
|
)
|
|
(84.0
|
)
|
|
256.6
|
|
|
172.6
|
|
|||||||
|
Purchases of subsidiary stock
|
—
|
|
|
—
|
|
|
(11.1
|
)
|
|
—
|
|
|
—
|
|
|
(11.1
|
)
|
|
2.8
|
|
|
(8.3
|
)
|
|||||||
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
2.8
|
|
|
—
|
|
|
—
|
|
|
2.8
|
|
|
—
|
|
|
2.8
|
|
|||||||
|
Stock compensation
|
3.2
|
|
|
0.1
|
|
|
72.3
|
|
|
—
|
|
|
—
|
|
|
72.4
|
|
|
20.6
|
|
|
93.0
|
|
|||||||
|
Restricted stock surrendered for tax withholding
|
(0.1
|
)
|
|
—
|
|
|
(21.1
|
)
|
|
—
|
|
|
—
|
|
|
(21.1
|
)
|
|
(10.4
|
)
|
|
(31.5
|
)
|
|||||||
|
Preferred stock dividends, accretion and loss on conversion
|
—
|
|
|
—
|
|
|
—
|
|
|
(73.6
|
)
|
|
—
|
|
|
(73.6
|
)
|
|
—
|
|
|
(73.6
|
)
|
|||||||
|
Conversion of preferred stock
|
62.0
|
|
|
0.6
|
|
|
725.4
|
|
|
—
|
|
|
—
|
|
|
726.0
|
|
|
—
|
|
|
726.0
|
|
|||||||
|
NCI in acquired subsidiary
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20.7
|
|
|
20.7
|
|
|||||||
|
Dividend paid by subsidiary to NCI
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28.3
|
)
|
|
(28.3
|
)
|
|||||||
|
Balances at September 30, 2014
|
202.3
|
|
|
$
|
2.0
|
|
|
$
|
1,472.3
|
|
|
$
|
(276.3
|
)
|
|
$
|
243.6
|
|
|
$
|
1,441.6
|
|
|
$
|
815.4
|
|
|
$
|
2,257.0
|
|
|
HARBINGER GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
|
|||||||||||
|
|
Year ended September 30,
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
|
|
|
|
|
|
||||||
|
Cash flows from operating activities:
|
|
|
|
|
|
||||||
|
Net income (loss)
|
$
|
101.7
|
|
|
$
|
(69.0
|
)
|
|
$
|
110.7
|
|
|
Adjustments to reconcile net income (loss) to operating cash flows:
|
|
|
|
|
|
||||||
|
Depreciation of properties
|
123.4
|
|
|
98.6
|
|
|
44.0
|
|
|||
|
Amortization of intangibles
|
179.2
|
|
|
260.1
|
|
|
224.3
|
|
|||
|
Impairment of oil and natural gas properties
|
81.0
|
|
|
54.3
|
|
|
—
|
|
|||
|
Stock compensation
|
91.1
|
|
|
61.5
|
|
|
31.2
|
|
|||
|
Amortization of debt issuance costs
|
21.0
|
|
|
18.1
|
|
|
12.8
|
|
|||
|
Amortization of debt discount
|
4.6
|
|
|
3.0
|
|
|
1.3
|
|
|||
|
Write-off of debt issuance costs on retired debt
|
6.4
|
|
|
32.4
|
|
|
2.9
|
|
|||
|
Write-off of debt discount on retired debt
|
2.8
|
|
|
(3.1
|
)
|
|
(0.5
|
)
|
|||
|
Deferred income taxes
|
(5.5
|
)
|
|
170.7
|
|
|
(197.4
|
)
|
|||
|
Gain on contingent purchase price reduction
|
(0.5
|
)
|
|
—
|
|
|
(41.0
|
)
|
|||
|
Cost of trading securities acquired for resale
|
—
|
|
|
—
|
|
|
(643.8
|
)
|
|||
|
Proceeds from trading securities sold
|
—
|
|
|
—
|
|
|
766.1
|
|
|||
|
Interest credited/index credits to contractholder account balances
|
711.6
|
|
|
375.0
|
|
|
586.8
|
|
|||
|
Collateral received (paid)
|
63.5
|
|
|
72.0
|
|
|
49.3
|
|
|||
|
Amortization of fixed maturity discounts and premiums
|
(43.0
|
)
|
|
16.7
|
|
|
86.9
|
|
|||
|
Net recognized (gains) losses on investments and derivatives
|
(365.5
|
)
|
|
(411.8
|
)
|
|
(231.9
|
)
|
|||
|
Charges assessed to contractholders for mortality and administration
|
(45.8
|
)
|
|
(31.5
|
)
|
|
(14.9
|
)
|
|||
|
Deferred policy acquisition costs
|
(239.0
|
)
|
|
(147.4
|
)
|
|
(194.9
|
)
|
|||
|
Cash transferred to reinsurer
|
—
|
|
|
—
|
|
|
(176.8
|
)
|
|||
|
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
|
9.2
|
|
|
—
|
|
|
5.2
|
|
|||
|
Changes in operating assets and liabilities:
|
(88.3
|
)
|
|
(8.3
|
)
|
|
202.2
|
|
|||
|
Net change in cash due to operating activities
|
607.9
|
|
|
522.3
|
|
|
622.5
|
|
|||
|
|
|
|
|
|
|
||||||
|
Cash flows from investing activities:
|
|
|
|
|
|
||||||
|
Proceeds from investments sold, matured or repaid
|
5,609.2
|
|
|
9,432.2
|
|
|
6,206.7
|
|
|||
|
Cost of investments acquired
|
(7,221.4
|
)
|
|
(8,940.8
|
)
|
|
(5,972.7
|
)
|
|||
|
Acquisitions, net of cash acquired
|
(27.2
|
)
|
|
(2,014.8
|
)
|
|
(185.1
|
)
|
|||
|
Asset-based loans originated, net
|
(190.6
|
)
|
|
(386.6
|
)
|
|
(181.5
|
)
|
|||
|
Capital expenditures
|
(98.2
|
)
|
|
(100.1
|
)
|
|
(53.5
|
)
|
|||
|
Proceeds from sales of assets
|
9.4
|
|
|
—
|
|
|
—
|
|
|||
|
Other investing activities, net
|
(1.8
|
)
|
|
(0.7
|
)
|
|
0.5
|
|
|||
|
Net change in cash due to investing activities
|
(1,920.6
|
)
|
|
(2,010.8
|
)
|
|
(185.6
|
)
|
|||
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
|
Cash flows from financing activities:
|
|
|
|
|
|
||||||
|
Proceeds from issuance of new debt
|
$
|
941.6
|
|
|
$
|
4,444.0
|
|
|
$
|
517.0
|
|
|
Repayment of debt, including tender and call premiums
|
(770.9
|
)
|
|
(1,608.5
|
)
|
|
(524.6
|
)
|
|||
|
Revolving credit facility activity
|
(27.5
|
)
|
|
(299.9
|
)
|
|
0.4
|
|
|||
|
Debt issuance costs
|
(19.3
|
)
|
|
(100.4
|
)
|
|
(11.2
|
)
|
|||
|
Purchases of subsidiary stock, net
|
(9.3
|
)
|
|
(77.1
|
)
|
|
(85.0
|
)
|
|||
|
Contractholder account deposits
|
2,387.9
|
|
|
1,361.8
|
|
|
2,040.5
|
|
|||
|
Contractholder account withdrawals
|
(1,783.5
|
)
|
|
(1,712.5
|
)
|
|
(1,979.6
|
)
|
|||
|
Dividend paid by subsidiary to noncontrolling interest
|
(28.3
|
)
|
|
(17.4
|
)
|
|
(23.6
|
)
|
|||
|
Dividends paid on preferred stock
|
(28.6
|
)
|
|
(33.4
|
)
|
|
(31.7
|
)
|
|||
|
Share based award tax withholding payments
|
(31.5
|
)
|
|
(22.3
|
)
|
|
(3.9
|
)
|
|||
|
Common stock repurchased
|
(65.6
|
)
|
|
(12.3
|
)
|
|
—
|
|
|||
|
Proceeds from initial public offering of subsidiary shares, less costs of issuance
|
172.6
|
|
|
—
|
|
|
—
|
|
|||
|
Other financing activities, net
|
2.8
|
|
|
—
|
|
|
(1.0
|
)
|
|||
|
Net change in cash due to financing activities
|
740.4
|
|
|
1,922.0
|
|
|
(102.7
|
)
|
|||
|
Effect of exchange rate changes on cash and cash equivalents
|
(8.2
|
)
|
|
(4.5
|
)
|
|
(0.9
|
)
|
|||
|
Net change in cash and cash equivalents
|
(580.5
|
)
|
|
429.0
|
|
|
333.3
|
|
|||
|
Cash and cash equivalents at beginning of period
|
1,899.7
|
|
|
1,470.7
|
|
|
1,137.4
|
|
|||
|
Cash and cash equivalents at end of period
|
$
|
1,319.2
|
|
|
$
|
1,899.7
|
|
|
$
|
1,470.7
|
|
|
|
|
|
|
|
|
||||||
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
|
Cash paid for interest
|
$
|
305.2
|
|
|
$
|
450.4
|
|
|
$
|
238.6
|
|
|
Cash paid for taxes, net
|
114.6
|
|
|
53.4
|
|
|
47.2
|
|
|||
|
•
|
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.
|
|
•
|
The Company does not expect full recovery of its amortized cost based on the estimate of cash flows expected to be collected;
|
|
•
|
The Company intends to sell a security; or
|
|
•
|
It is more likely than not that the Company 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.
|
|
|
HHI Business Preliminary Valuation
|
|
TLM Taiwan 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
|
|
•
|
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.
|
|
|
EXCO's Contributed Assets
February 14, 2013 |
|
BG Cotton Valley Assets
March 5, 2013 |
||||||||||||
|
|
Compass
|
|
HGI's Proportionate Interest
|
|
Compass
|
|
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
|
|
|
|
|
Fiscal
|
||||||
|
|
|
2013
|
|
2012
|
||||
|
|
|
|
|
|
||||
|
Revenues:
|
|
|
|
|
||||
|
Reported revenues
|
|
$
|
5,543.4
|
|
|
$
|
4,480.7
|
|
|
HHI adjustment
|
|
191.8
|
|
|
973.6
|
|
||
|
Compass adjustment
|
|
53.7
|
|
|
149.3
|
|
||
|
Pro forma revenues
|
|
$
|
5,788.9
|
|
|
$
|
5,603.6
|
|
|
|
|
|
|
|
||||
|
Net (loss) income:
|
|
|
|
|
||||
|
Reported net (loss) income
|
|
$
|
(69.0
|
)
|
|
$
|
110.7
|
|
|
HHI adjustment
|
|
4.9
|
|
|
76.1
|
|
||
|
Compass adjustment
|
|
(0.4
|
)
|
|
(6.8
|
)
|
||
|
Pro forma net (loss) income
|
|
$
|
(64.5
|
)
|
|
$
|
180.0
|
|
|
|
|
|
|
|
||||
|
Basic net (loss) income per common share attributable to controlling interest:
|
|
|
|
|
||||
|
Reported net (loss) income per common share
|
|
$
|
(0.67
|
)
|
|
$
|
0.15
|
|
|
HHI adjustment
|
|
0.04
|
|
|
0.55
|
|
||
|
Compass adjustment
|
|
—
|
|
|
(0.05
|
)
|
||
|
Pro forma net (loss) income per common share
|
|
$
|
(0.63
|
)
|
|
$
|
0.65
|
|
|
|
|
|
|
|
||||
|
Diluted net (loss) income per common share attributable to controlling interest:
|
|
|
|
|
||||
|
Reported diluted net (loss) income per common share
|
|
$
|
(0.67
|
)
|
|
$
|
0.15
|
|
|
HHI adjustment
|
|
0.04
|
|
|
0.54
|
|
||
|
Compass adjustment
|
|
—
|
|
|
(0.05
|
)
|
||
|
Pro forma diluted net (loss) income per common share
|
|
$
|
(0.63
|
)
|
|
$
|
0.64
|
|
|
|
|
November 8,
2012 |
||
|
Negotiated sales price
|
|
$
|
50.0
|
|
|
Preliminary working capital adjustment
|
|
(0.4
|
)
|
|
|
Final working capital adjustment
|
|
0.1
|
|
|
|
Final purchase price
|
|
$
|
49.7
|
|
|
|
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
$39.1
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.
|
|
|
|
January 2, 2014
|
||
|
Cash paid to seller at close
|
|
$
|
24.8
|
|
|
Promissory note due to seller
|
|
9.5
|
|
|
|
Contingent liability
|
|
1.5
|
|
|
|
Preliminary purchase price
|
|
$
|
35.8
|
|
|
|
|
January 2, 2014
|
||
|
Cash
|
|
$
|
—
|
|
|
Accounts receivable
|
|
1.2
|
|
|
|
Inventories
|
|
2.2
|
|
|
|
Property, plant and equipment, net
|
|
0.1
|
|
|
|
Intangible assets
|
|
26.9
|
|
|
|
Total assets acquired
|
|
30.4
|
|
|
|
Total liabilities assumed
|
|
1.6
|
|
|
|
Total identifiable net assets less goodwill
|
|
28.8
|
|
|
|
Goodwill
|
|
7.0
|
|
|
|
Total identifiable net assets
|
|
$
|
35.8
|
|
|
•
|
Spectrum Brands valued the technology assets related to formulas and processes, using the income approach, specifically the excess earnings method. Under this method, the asset value was determined by estimating the earnings attributable to the technology assets, adjusted for contributory asset charges. In estimating the fair value of the technology, net sales and associated earnings were forecasted and adjusted for a technical obsolescence factor to isolate the forecasted sales and earnings attributable to the acquired technology assets. The forecasted technology earnings were discounted to present value to arrive at the concluded fair value. Spectrum Brands anticipates using the technology asset over a useful life of
17 years
which is generally determined by assessing the time period in which substantially all of the discounted cash flows are expected to be generated. The technology asset was valued at approximately
$20.5
under this approach.
|
|
•
|
Spectrum Brands valued an indefinite-lived trade name 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 Liquid Fence, 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. Trade name and trademarks were valued at
$5.1
under this approach.
|
|
•
|
Spectrum Brands valued customer relationships using the distributor approach. Under this method, the asset value was determined by estimating the hypothetical earnings before interest and taxes ("EBIT") that a comparable distributor would earn, further adjusted for contributory asset charges. In determining the fair value of the customer relationships, the distributor approach values the intangible asset at the present value of the incremental after-tax cash flows. The customer relationships were valued at
$1.3
under this approach and will be amortized over
15 years
.
|
|
•
|
Spectrum Brands valued a contingent liability related to additional payments that may be made to the selling company. This liability was calculated based on the probability weighted present value of expected payments. This contingent liability is based on the achievement of specific revenue milestones through both January 31, 2015 and January 31, 2016. The contingent liability was valued at
$1.5
under this approach.
|
|
|
|
May 30, 2014
|
||
|
Fair value of previously held equity interest (Series B preferred stock)
|
|
$
|
12.0
|
|
|
Series A preferred stock purchase
|
|
1.5
|
|
|
|
Preliminary purchase price
|
|
$
|
13.5
|
|
|
|
|
Preliminary Valuation
|
||
|
|
|
May 30, 2014
|
||
|
Cash
|
|
$
|
0.8
|
|
|
Accounts receivable
|
|
0.7
|
|
|
|
Inventories
|
|
12.4
|
|
|
|
Property, plant and equipment, net
|
|
1.2
|
|
|
|
Intangible assets
|
|
41.7
|
|
|
|
Other Assets
|
|
2.8
|
|
|
|
Total assets acquired
|
|
59.6
|
|
|
|
Total liabilities assumed
|
|
81.7
|
|
|
|
Total identifiable net assets
|
|
(22.1
|
)
|
|
|
Non-controlling interest
|
|
(8.3
|
)
|
|
|
Goodwill
|
|
43.9
|
|
|
|
Total identifiable net assets
|
|
$
|
13.5
|
|
|
•
|
The Company 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
|
|
•
|
An adjustment of
$8.0
was recorded to deferred taxes for the preliminary fair value adjustments made in accounting for the purchase.
|
|
•
|
The Company recorded a liability associated with unfavorable leases of
$1.3
and an asset associated with favorable leases for
$0.4
based on lease market rates at the time of the acquisition. Favorable and unfavorable lease assets and liabilities will be amortized over their expected lives which approximates the period of time that the favorable or unfavorable lease terms will be in effect.
|
|
|
Fiscal
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
SB/RH Merger
|
|
|
|
|
|
||||||
|
Integration costs
|
$
|
2.4
|
|
|
$
|
3.5
|
|
|
$
|
10.2
|
|
|
Employee termination charges
|
—
|
|
|
0.2
|
|
|
3.9
|
|
|||
|
Legal and professional fees
|
—
|
|
|
—
|
|
|
1.5
|
|
|||
|
|
2.4
|
|
|
3.7
|
|
|
15.6
|
|
|||
|
HHI Business
|
|
|
|
|
|
||||||
|
Legal and professional fees
|
2.2
|
|
|
27.7
|
|
|
—
|
|
|||
|
Integration costs
|
8.7
|
|
|
8.9
|
|
|
—
|
|
|||
|
Employee termination charges
|
0.2
|
|
|
0.3
|
|
|
—
|
|
|||
|
|
11.1
|
|
|
36.9
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
|
Compass
|
0.8
|
|
|
9.2
|
|
|
—
|
|
|||
|
CorAmerica
|
1.1
|
|
|
—
|
|
|
—
|
|
|||
|
Frederick's of Hollywood
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
|
Liquid Fence
|
3.5
|
|
|
—
|
|
|
—
|
|
|||
|
FURminator
|
0.1
|
|
|
2.3
|
|
|
7.9
|
|
|||
|
BlackFlag
|
—
|
|
|
0.2
|
|
|
3.4
|
|
|||
|
Shaser
|
0.9
|
|
|
4.8
|
|
|
—
|
|
|||
|
Other
|
4.4
|
|
|
5.3
|
|
|
7.9
|
|
|||
|
Total acquisition and integration related charges
|
$
|
24.4
|
|
|
$
|
62.4
|
|
|
$
|
34.8
|
|
|
|
September 30, 2014
|
||||||||||||||||||
|
|
Cost or Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Carrying Value
|
||||||||||
|
Fixed-maturity securities, available-for sale
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Asset-backed securities
|
$
|
1,800.8
|
|
|
$
|
10.9
|
|
|
$
|
(18.8
|
)
|
|
$
|
1,792.9
|
|
|
$
|
1,792.9
|
|
|
Commercial mortgage-backed securities
|
617.6
|
|
|
21.3
|
|
|
(2.0
|
)
|
|
636.9
|
|
|
636.9
|
|
|||||
|
Corporates
|
9,345.5
|
|
|
499.2
|
|
|
(48.9
|
)
|
|
9,795.8
|
|
|
9,795.8
|
|
|||||
|
Hybrids
|
1,279.1
|
|
|
52.2
|
|
|
(15.2
|
)
|
|
1,316.1
|
|
|
1,316.1
|
|
|||||
|
Municipals
|
1,149.9
|
|
|
116.2
|
|
|
(6.3
|
)
|
|
1,259.8
|
|
|
1,259.8
|
|
|||||
|
Agency residential mortgage-backed securities
|
104.3
|
|
|
3.1
|
|
|
(0.1
|
)
|
|
107.3
|
|
|
107.3
|
|
|||||
|
Non-agency residential mortgage-backed securities
|
1,880.5
|
|
|
137.2
|
|
|
(11.0
|
)
|
|
2,006.7
|
|
|
2,006.7
|
|
|||||
|
U.S. Government
|
291.0
|
|
|
6.4
|
|
|
(1.4
|
)
|
|
296.0
|
|
|
296.0
|
|
|||||
|
Total fixed-maturity securities
|
16,468.7
|
|
|
846.5
|
|
|
(103.7
|
)
|
|
17,211.5
|
|
|
17,211.5
|
|
|||||
|
Equity securities
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Available-for-sale
|
645.7
|
|
|
23.0
|
|
|
(5.1
|
)
|
|
663.6
|
|
|
663.6
|
|
|||||
|
Held for trading
|
141.2
|
|
|
8.2
|
|
|
(44.9
|
)
|
|
104.5
|
|
|
104.5
|
|
|||||
|
Total equity securities
|
786.9
|
|
|
31.2
|
|
|
(50.0
|
)
|
|
768.1
|
|
|
768.1
|
|
|||||
|
Derivatives
|
177.7
|
|
|
123.3
|
|
|
(4.7
|
)
|
|
296.3
|
|
|
296.3
|
|
|||||
|
Asset-based loans
|
811.6
|
|
|
—
|
|
|
—
|
|
|
811.6
|
|
|
811.6
|
|
|||||
|
Other invested assets
|
164.9
|
|
|
0.1
|
|
|
—
|
|
|
165.0
|
|
|
165.0
|
|
|||||
|
Total investments
|
$
|
18,409.8
|
|
|
$
|
1,001.1
|
|
|
$
|
(158.4
|
)
|
|
$
|
19,252.5
|
|
|
$
|
19,252.5
|
|
|
|
September 30, 2013
|
||||||||||||||||||
|
|
Cost or Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
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-maturity securities
|
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
|
31.2
|
|
|
—
|
|
|
—
|
|
|
31.2
|
|
|
31.2
|
|
|||||
|
Total investments
|
$
|
16,190.1
|
|
|
$
|
587.3
|
|
|
$
|
(311.5
|
)
|
|
$
|
16,465.9
|
|
|
$
|
16,465.9
|
|
|
|
September 30, 2014
|
||||||
|
|
Amortized Cost
|
|
Fair Value
|
||||
|
Corporate, Non-structured Hybrids, Municipal and U.S. Government securities:
|
|
|
|
||||
|
Due in one year or less
|
$
|
370.0
|
|
|
$
|
372.8
|
|
|
Due after one year through five years
|
2,297.6
|
|
|
2,360.2
|
|
||
|
Due after five years through ten years
|
3,128.9
|
|
|
3,232.7
|
|
||
|
Due after ten years
|
5,794.5
|
|
|
6,230.0
|
|
||
|
Subtotal
|
11,591.0
|
|
|
12,195.7
|
|
||
|
Other securities which provide for periodic payments:
|
|
|
|
||||
|
Asset-backed securities
|
1,800.8
|
|
|
1,792.9
|
|
||
|
Commercial mortgage-backed securities
|
617.6
|
|
|
636.9
|
|
||
|
Structured hybrids
|
474.5
|
|
|
472.0
|
|
||
|
Agency residential mortgage-backed securities
|
104.3
|
|
|
107.3
|
|
||
|
Non-agency residential mortgage-backed securities
|
1,880.5
|
|
|
2,006.7
|
|
||
|
Total fixed maturity available-for-sale securities
|
$
|
16,468.7
|
|
|
$
|
17,211.5
|
|
|
|
September 30, 2014
|
||||||||||||||||||||||
|
|
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
|
$
|
825.8
|
|
|
$
|
(11.8
|
)
|
|
$
|
288.2
|
|
|
$
|
(7.0
|
)
|
|
$
|
1,114.0
|
|
|
$
|
(18.8
|
)
|
|
Commercial mortgage-backed securities
|
160.3
|
|
|
(0.9
|
)
|
|
0.4
|
|
|
(1.1
|
)
|
|
160.7
|
|
|
(2.0
|
)
|
||||||
|
Corporates
|
816.6
|
|
|
(16.3
|
)
|
|
1,127.8
|
|
|
(32.6
|
)
|
|
1,944.4
|
|
|
(48.9
|
)
|
||||||
|
Equities
|
180.4
|
|
|
(2.2
|
)
|
|
54.9
|
|
|
(2.9
|
)
|
|
235.3
|
|
|
(5.1
|
)
|
||||||
|
Hybrids
|
258.2
|
|
|
(2.3
|
)
|
|
290.0
|
|
|
(12.9
|
)
|
|
548.2
|
|
|
(15.2
|
)
|
||||||
|
Municipals
|
—
|
|
|
—
|
|
|
264.9
|
|
|
(6.3
|
)
|
|
264.9
|
|
|
(6.3
|
)
|
||||||
|
Agency residential mortgage-backed securities
|
24.1
|
|
|
(0.1
|
)
|
|
0.6
|
|
|
—
|
|
|
24.7
|
|
|
(0.1
|
)
|
||||||
|
Non-agency residential mortgage-backed securities
|
274.4
|
|
|
(5.7
|
)
|
|
177.0
|
|
|
(5.3
|
)
|
|
451.4
|
|
|
(11.0
|
)
|
||||||
|
U.S. Government
|
37.3
|
|
|
(0.1
|
)
|
|
81.7
|
|
|
(1.3
|
)
|
|
119.0
|
|
|
(1.4
|
)
|
||||||
|
Total available-for-sale securities
|
$
|
2,577.1
|
|
|
$
|
(39.4
|
)
|
|
$
|
2,285.5
|
|
|
$
|
(69.4
|
)
|
|
$
|
4,862.6
|
|
|
$
|
(108.8
|
)
|
|
Total number of available-for-sale securities in an unrealized loss position
|
|
|
319
|
|
|
|
|
310
|
|
|
|
|
629
|
|
|||||||||
|
|
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
|
|
|||||||||
|
|
Fiscal
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Beginning balance
|
$
|
2.7
|
|
|
$
|
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
|
|
|||
|
Ending balance
|
$
|
2.7
|
|
|
$
|
2.7
|
|
|
$
|
2.7
|
|
|
|
Fiscal
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Other-than-temporary impairments recognized in net income:
|
|
|
|
|
|
||||||
|
Corporates
|
$
|
—
|
|
|
$
|
1.2
|
|
|
$
|
4.1
|
|
|
Municipals
|
0.3
|
|
|
—
|
|
|
—
|
|
|||
|
Non-agency residential mortgage-backed securities
|
0.1
|
|
|
1.2
|
|
|
7.5
|
|
|||
|
Hybrids
|
—
|
|
|
—
|
|
|
9.7
|
|
|||
|
Other invested assets
|
0.3
|
|
|
0.5
|
|
|
1.5
|
|
|||
|
Total other-than-temporary impairments
|
$
|
0.7
|
|
|
$
|
2.9
|
|
|
$
|
22.8
|
|
|
|
September 30,
|
||||||
|
|
2014
|
|
2013
|
||||
|
Asset-based loans, net of deferred fees, by major industry:
|
|
|
|
||||
|
Electronics
|
$
|
245.4
|
|
|
$
|
—
|
|
|
Apparel
|
191.6
|
|
|
252.9
|
|
||
|
Jewelry
|
100.1
|
|
|
125.8
|
|
||
|
Home Furnishings
|
71.7
|
|
|
—
|
|
||
|
Manufacturing
|
56.9
|
|
|
34.3
|
|
||
|
Transportation
|
44.3
|
|
|
85.7
|
|
||
|
Sporting Goods
|
13.9
|
|
|
25.1
|
|
||
|
Other
|
94.9
|
|
|
41.8
|
|
||
|
Total asset-based loans
|
818.8
|
|
|
565.6
|
|
||
|
Less: Allowance for loan losses
|
7.2
|
|
|
5.2
|
|
||
|
Total asset-based loans, net
|
$
|
811.6
|
|
|
$
|
560.4
|
|
|
|
Fiscal
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Allowance for credit losses:
|
|
|
|
|
|
||||||
|
Balance at beginning of year
|
$
|
5.2
|
|
|
$
|
1.4
|
|
|
$
|
—
|
|
|
Provision for credit losses
|
2.0
|
|
|
3.8
|
|
|
1.4
|
|
|||
|
Balance at end of year
|
$
|
7.2
|
|
|
$
|
5.2
|
|
|
$
|
1.4
|
|
|
|
Internal Risk Rating
|
||||||||||||||||||
|
|
Pass
|
|
Special Mention
|
|
Substandard
|
|
Doubtful
|
|
Total
|
||||||||||
|
September 30, 2014
|
$
|
195.3
|
|
|
$
|
372.7
|
|
|
$
|
250.8
|
|
|
$
|
—
|
|
|
$
|
818.8
|
|
|
September 30, 2013
|
$
|
306.9
|
|
|
$
|
36.7
|
|
|
$
|
222.0
|
|
|
$
|
—
|
|
|
$
|
565.6
|
|
|
|
Fiscal
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Fixed maturity available-for-sale securities
|
$
|
787.4
|
|
|
$
|
686.2
|
|
|
$
|
707.1
|
|
|
Equity available-for-sale securities
|
22.8
|
|
|
14.8
|
|
|
14.0
|
|
|||
|
Policy loans
|
0.7
|
|
|
0.8
|
|
|
0.7
|
|
|||
|
Invested cash and short-term investments
|
0.3
|
|
|
1.4
|
|
|
4.9
|
|
|||
|
Asset-based loans
|
41.5
|
|
|
35.4
|
|
|
8.6
|
|
|||
|
Other investments
|
7.1
|
|
|
12.9
|
|
|
(0.9
|
)
|
|||
|
Gross investment income
|
859.8
|
|
|
751.5
|
|
|
734.4
|
|
|||
|
External investment expense
|
(17.6
|
)
|
|
(16.8
|
)
|
|
(11.7
|
)
|
|||
|
Net investment income
|
$
|
842.2
|
|
|
$
|
734.7
|
|
|
$
|
722.7
|
|
|
|
Fiscal
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Net realized gains before other-than-temporary impairments
|
$
|
101.9
|
|
|
$
|
332.9
|
|
|
$
|
287.2
|
|
|
Gross other-than-temporary impairments
|
(0.6
|
)
|
|
(2.9
|
)
|
|
(24.3
|
)
|
|||
|
Non-credit portion of other-than-temporary impairments included in other comprehensive income
|
—
|
|
|
—
|
|
|
1.5
|
|
|||
|
Net realized gains on fixed maturity available-for-sale securities
|
101.3
|
|
|
330.0
|
|
|
264.4
|
|
|||
|
Realized gains on equity securities
|
13.5
|
|
|
12.6
|
|
|
0.9
|
|
|||
|
Net realized gains on securities
|
114.8
|
|
|
342.6
|
|
|
265.3
|
|
|||
|
Realized gains (losses) on certain derivative instruments
|
233.8
|
|
|
148.6
|
|
|
(10.3
|
)
|
|||
|
Unrealized gains on certain derivative instruments
|
37.7
|
|
|
20.5
|
|
|
156.3
|
|
|||
|
Change in fair value of other embedded derivatives
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|||
|
Change in fair value of derivatives
|
271.4
|
|
|
169.1
|
|
|
146.0
|
|
|||
|
Realized gains (losses) on other invested assets
|
9.1
|
|
|
(0.1
|
)
|
|
(1.3
|
)
|
|||
|
Net investment gains
|
$
|
395.3
|
|
|
$
|
511.6
|
|
|
$
|
410.0
|
|
|
|
Fiscal
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Proceeds from investments sold, matured or repaid:
|
|
|
|
|
|
||||||
|
Available-for-sale
|
$
|
5,084.1
|
|
|
$
|
8,986.9
|
|
|
$
|
5,833.4
|
|
|
Held-to-maturity
|
—
|
|
|
—
|
|
|
109.6
|
|
|||
|
Trading (acquired for holding)
|
54.9
|
|
|
92.9
|
|
|
106.1
|
|
|||
|
Derivatives and other
|
470.2
|
|
|
352.4
|
|
|
157.6
|
|
|||
|
|
$
|
5,609.2
|
|
|
$
|
9,432.2
|
|
|
$
|
6,206.7
|
|
|
Cost of investments acquired:
|
|
|
|
|
|
||||||
|
Available-for-sale
|
$
|
(6,741.2
|
)
|
|
$
|
(8,757.5
|
)
|
|
$
|
(5,640.1
|
)
|
|
Held-to-maturity
|
—
|
|
|
—
|
|
|
(68.7
|
)
|
|||
|
Trading (acquired for holding)
|
(99.7
|
)
|
|
(20.8
|
)
|
|
(122.3
|
)
|
|||
|
Derivatives and other
|
(380.5
|
)
|
|
(162.5
|
)
|
|
(141.6
|
)
|
|||
|
|
$
|
(7,221.4
|
)
|
|
$
|
(8,940.8
|
)
|
|
$
|
(5,972.7
|
)
|
|
|
|
|
|
September 30,
|
||||||
|
Asset Derivatives
|
|
Classification
|
|
2014
|
|
2013
|
||||
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
||||
|
Interest rate contracts
|
|
Other assets
|
|
$
|
0.6
|
|
|
$
|
—
|
|
|
Commodity swap and option agreements
|
|
Receivables, net
|
|
1.3
|
|
|
0.4
|
|
||
|
Foreign exchange contracts
|
|
Other assets
|
|
0.3
|
|
|
—
|
|
||
|
Foreign exchange contracts
|
|
Receivables, net
|
|
12.0
|
|
|
1.7
|
|
||
|
Total asset derivatives designated as hedging instruments
|
|
|
|
14.2
|
|
|
2.1
|
|
||
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
||||
|
Commodity contracts
|
|
Receivables, net
|
|
1.9
|
|
|
3.7
|
|
||
|
Call options
|
|
Derivatives
|
|
296.3
|
|
|
221.8
|
|
||
|
Other embedded derivatives
|
|
Other invested assets
|
|
11.2
|
|
|
—
|
|
||
|
Foreign exchange contracts
|
|
Receivables, net
|
|
0.5
|
|
|
0.1
|
|
||
|
Total asset derivatives
|
|
|
|
$
|
324.1
|
|
|
$
|
227.7
|
|
|
|
|
|
|
September 30,
|
||||||
|
Liability Derivatives
|
|
Classification
|
|
2014
|
|
2013
|
||||
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
||||
|
Interest rate contracts
|
|
Accounts payable and other current liabilities
|
|
$
|
1.8
|
|
|
$
|
—
|
|
|
Commodity contracts
|
|
Accounts payable and other current liabilities
|
|
0.1
|
|
|
0.5
|
|
||
|
Foreign exchange forward agreements
|
|
Accounts payable and other current liabilities
|
|
—
|
|
|
4.6
|
|
||
|
Foreign exchange contracts
|
|
Other liabilities
|
|
—
|
|
|
0.1
|
|
||
|
Total liability derivatives designated as hedging instruments
|
|
|
|
1.9
|
|
|
5.2
|
|
||
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
||||
|
Commodity contracts
|
|
Other liabilities
|
|
0.3
|
|
|
1.9
|
|
||
|
FIA embedded derivative
|
|
Contractholder funds
|
|
1,908.1
|
|
|
1,544.4
|
|
||
|
Futures contracts
|
|
Other liabilities
|
|
0.5
|
|
|
1.0
|
|
||
|
Foreign exchange forward contracts
|
|
Accounts payable and other current liabilities
|
|
0.1
|
|
|
5.3
|
|
||
|
Equity conversion feature of preferred stock
|
|
Equity conversion feature of preferred stock
|
|
—
|
|
|
330.8
|
|
||
|
Total liability derivatives
|
|
|
|
$
|
1,910.9
|
|
|
$
|
1,888.6
|
|
|
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
|
||||||||||||||||||||||||||||||
|
Fiscal
|
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
|
2012
|
|
|
||||||||||||||||||
|
Interest rate contracts
|
|
$
|
(1.6
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.9
|
)
|
|
$
|
—
|
|
|
$
|
(0.9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Consumer products cost of goods sold
|
|
Commodity contracts
|
|
1.9
|
|
|
(2.6
|
)
|
|
1.6
|
|
|
0.7
|
|
|
(0.6
|
)
|
|
(1.1
|
)
|
|
—
|
|
|
—
|
|
|
0.1
|
|
(a)
|
Interest expense
|
|||||||||
|
Foreign exchange contracts
|
|
0.1
|
|
|
0.9
|
|
|
0.1
|
|
|
0.2
|
|
|
0.9
|
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Net consumer products sales
|
|||||||||
|
Foreign exchange contracts
|
|
12.7
|
|
|
(0.3
|
)
|
|
(3.5
|
)
|
|
(2.6
|
)
|
|
0.6
|
|
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Consumer products cost of goods sold
|
|||||||||
|
Total
|
|
$
|
13.1
|
|
|
$
|
(2.0
|
)
|
|
$
|
(1.8
|
)
|
|
$
|
(2.6
|
)
|
|
$
|
0.9
|
|
|
$
|
(3.1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
|
|
(a)
|
Reclassified from AOCI associated with the prepayment of portions of Spectrum Brands’ senior credit facility (see
Note 15
, Debt).
|
|
Classification
|
|
Derivatives Not Designated as Hedging Instruments
|
|
Amounts Recognized in Income on Derivatives
|
||||||||||
|
|
|
|
|
Fiscal
|
||||||||||
|
|
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
||||||
|
Net investment gains
|
|
Call options
|
|
$
|
246.0
|
|
|
$
|
151.6
|
|
|
$
|
100.0
|
|
|
|
|
Futures contracts
|
|
25.5
|
|
|
17.5
|
|
|
46.0
|
|
|||
|
|
|
Change in fair value of other embedded derivatives
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|||
|
Net investment income
|
|
Available-for-sale embedded derivatives
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
||||||
|
Cost of consumer products and other goods sold
|
|
Commodity contracts
|
|
$
|
(0.1
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
Benefits and other changes in policy reserves
|
|
FIA embedded derivatives
|
|
363.7
|
|
|
(6.4
|
)
|
|
154.5
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
|
Other income and expense:
|
|
|
|
|
|
|
|
|
||||||
|
Loss from the change in the fair value of the equity conversion feature of preferred stock
|
|
Equity conversion feature of preferred stock
|
|
$
|
(12.7
|
)
|
|
$
|
(101.6
|
)
|
|
$
|
(156.6
|
)
|
|
Other expense, net
|
|
Oil and natural gas commodity contracts
|
|
(6.6
|
)
|
|
(1.3
|
)
|
|
—
|
|
|||
|
|
|
Foreign exchange contracts
|
|
3.1
|
|
|
(3.6
|
)
|
|
5.9
|
|
|||
|
(in millions, except volumes and prices)
|
|
Volume Mmmbtus/Mbbls
|
|
Weighted average strike price per Mmbtu/Bbl
|
|
September 30,
2014 |
|||||
|
Natural gas:
|
|
|
|
|
|
|
|||||
|
Swaps:
|
|
|
|
|
|
|
|||||
|
Remainder of 2014
|
|
4,106
|
|
|
$
|
4.15
|
|
|
$
|
0.2
|
|
|
2015
|
|
2,715
|
|
|
3.98
|
|
|
(0.1
|
)
|
||
|
Total natural gas
|
|
6,821
|
|
|
|
|
$
|
0.1
|
|
||
|
Oil:
|
|
|
|
|
|
|
|||||
|
Swaps:
|
|
|
|
|
|
|
|||||
|
Remainder of 2014
|
|
68
|
|
|
$
|
91.87
|
|
|
$
|
0.1
|
|
|
2015
|
|
186
|
|
|
94.98
|
|
|
1.4
|
|
||
|
Total oil
|
|
254
|
|
|
|
|
$
|
1.5
|
|
||
|
Total oil and natural gas derivatives
|
|
|
|
|
|
$
|
1.6
|
|
|||
|
|
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||||||||||||||||||||
|
Counterparty
|
|
Credit Rating
(Fitch/Moody’s/S&P) (a)
|
|
Notional
Amount
|
|
Fair Value
|
|
Collateral
|
|
Net Credit Risk
|
|
Notional
Amount
|
|
Fair Value
|
|
Collateral
|
|
Net Credit Risk
|
||||||||||||||||
|
Merrill Lynch
|
|
A/*/A
|
|
$
|
2,239.9
|
|
|
$
|
92.7
|
|
|
$
|
52.5
|
|
|
$
|
40.2
|
|
|
$
|
2,037.8
|
|
|
$
|
70.7
|
|
|
$
|
—
|
|
|
$
|
70.7
|
|
|
Deutsche Bank
|
|
A+/A3/A
|
|
2,810.0
|
|
|
108.0
|
|
|
72.5
|
|
|
35.5
|
|
|
1,620.4
|
|
|
51.7
|
|
|
23.0
|
|
|
28.7
|
|
||||||||
|
Morgan Stanley
|
|
*/A3/A
|
|
2,294.7
|
|
|
85.0
|
|
|
63.0
|
|
|
22.0
|
|
|
2,264.1
|
|
|
75.7
|
|
|
49.0
|
|
|
26.7
|
|
||||||||
|
Royal Bank of Scotland
|
|
A-/*/A-
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
364.3
|
|
|
20.3
|
|
|
—
|
|
|
20.3
|
|
||||||||
|
Barclay's Bank
|
|
A/A2/A-
|
|
258.0
|
|
|
10.6
|
|
|
—
|
|
|
10.6
|
|
|
120.8
|
|
|
3.4
|
|
|
—
|
|
|
3.4
|
|
||||||||
|
|
|
|
|
$
|
7,602.6
|
|
|
$
|
296.3
|
|
|
$
|
188.0
|
|
|
$
|
108.3
|
|
|
$
|
6,407.4
|
|
|
$
|
221.8
|
|
|
$
|
72.0
|
|
|
$
|
149.8
|
|
|
|
|
September 30,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
Maximum loss exposure
|
|
$
|
455.9
|
|
|
$
|
337.8
|
|
|
|
|
|
|
|
||||
|
Asset-based loans receivable
|
|
$
|
455.9
|
|
|
$
|
337.8
|
|
|
Cash and other assets
|
|
35.5
|
|
|
156.7
|
|
||
|
Total assets of consolidated VIE
|
|
$
|
491.4
|
|
|
$
|
494.5
|
|
|
|
|
|
|
|
||||
|
Long-term debt
|
|
$
|
484.0
|
|
|
$
|
485.0
|
|
|
Other liabilities
|
|
6.7
|
|
|
2.9
|
|
||
|
Total liabilities of consolidated VIE
|
|
$
|
490.7
|
|
|
$
|
487.9
|
|
|
|
|
September 30,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
Assets
|
|
|
|
|
||||
|
Total current assets
|
|
$
|
50.1
|
|
|
$
|
54.4
|
|
|
Oil and natural gas properties, net
|
|
599.4
|
|
|
741.5
|
|
||
|
Other assets
|
|
29.0
|
|
|
32.7
|
|
||
|
Total assets
|
|
$
|
678.5
|
|
|
$
|
828.6
|
|
|
|
|
|
|
|
||||
|
Liabilities and members’ equity
|
|
|
|
|
||||
|
Total current liabilities
|
|
$
|
42.9
|
|
|
$
|
44.9
|
|
|
Total long-term liabilities
|
|
362.9
|
|
|
397.3
|
|
||
|
Total members’ equity
|
|
272.7
|
|
|
386.4
|
|
||
|
Total liabilities and members’ equity
|
|
$
|
678.5
|
|
|
$
|
828.6
|
|
|
|
|
Year ended September 30, 2014
|
|
Inception to Period Ended September 30, 2013
|
||||
|
Revenues
|
|
$
|
197.5
|
|
|
$
|
121.1
|
|
|
Costs and Expenses
|
|
|
|
|
||||
|
Oil and natural gas direct operating costs
|
|
93.5
|
|
|
59.0
|
|
||
|
Selling, acquisition, operating and general expenses
|
|
67.2
|
|
|
49.5
|
|
||
|
Impairment of proved oil and natural gas properties
|
|
109.0
|
|
|
72.8
|
|
||
|
Total costs and expenses
|
|
269.7
|
|
|
181.3
|
|
||
|
Operating loss
|
|
(72.2
|
)
|
|
(60.2
|
)
|
||
|
Other expense, net
|
|
(19.0
|
)
|
|
(8.0
|
)
|
||
|
Net loss
|
|
$
|
(91.2
|
)
|
|
$
|
(68.2
|
)
|
|
|
September 30, 2014
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair Value
|
||||||||
|
Assets
|
|
|
|
|
|
|
|
||||||||
|
Contingent purchase price reduction receivable
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
41.5
|
|
|
$
|
41.5
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
||||||||
|
Interest rate contracts
|
—
|
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
||||
|
Commodity swap and option agreements
|
—
|
|
|
3.2
|
|
|
—
|
|
|
3.2
|
|
||||
|
Foreign exchange contracts
|
—
|
|
|
12.8
|
|
|
—
|
|
|
12.8
|
|
||||
|
Call options and futures contracts
|
—
|
|
|
296.3
|
|
|
—
|
|
|
296.3
|
|
||||
|
Fixed maturity securities, available-for-sale:
|
|
|
|
|
|
|
|
||||||||
|
Asset-backed securities
|
—
|
|
|
1,755.9
|
|
|
37.0
|
|
|
1,792.9
|
|
||||
|
Commercial mortgage-backed securities
|
—
|
|
|
553.8
|
|
|
83.1
|
|
|
636.9
|
|
||||
|
Corporates
|
—
|
|
|
8,945.8
|
|
|
850.0
|
|
|
9,795.8
|
|
||||
|
Hybrids
|
—
|
|
|
1,316.1
|
|
|
—
|
|
|
1,316.1
|
|
||||
|
Municipals
|
—
|
|
|
1,222.6
|
|
|
37.2
|
|
|
1,259.8
|
|
||||
|
Agency residential mortgage-backed securities
|
—
|
|
|
107.3
|
|
|
—
|
|
|
107.3
|
|
||||
|
Non-agency residential mortgage-backed securities
|
—
|
|
|
2,006.7
|
|
|
—
|
|
|
2,006.7
|
|
||||
|
U.S. Government
|
115.6
|
|
|
180.4
|
|
|
—
|
|
|
296.0
|
|
||||
|
Equity securities:
|
|
|
|
|
|
|
|
||||||||
|
Available-for-sale
|
59.2
|
|
|
598.4
|
|
|
6.0
|
|
|
663.6
|
|
||||
|
Trading
|
104.5
|
|
|
—
|
|
|
—
|
|
|
104.5
|
|
||||
|
Other invested assets
|
—
|
|
|
2.1
|
|
|
11.2
|
|
|
13.3
|
|
||||
|
Funds withheld receivable
|
—
|
|
|
154.4
|
|
|
—
|
|
|
154.4
|
|
||||
|
Total financial assets
|
$
|
279.3
|
|
|
$
|
17,156.4
|
|
|
$
|
1,066.0
|
|
|
$
|
18,501.7
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
|
Derivatives:
|
|
|
|
|
|
|
|
||||||||
|
FIA embedded derivatives, included in contractholder funds
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,908.1
|
|
|
$
|
1,908.1
|
|
|
Front Street future policyholder benefit liability
|
—
|
|
|
—
|
|
|
151.3
|
|
|
151.3
|
|
||||
|
Foreign exchange forward agreements and contracts
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
||||
|
Commodity contracts
|
—
|
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
||||
|
Futures contracts
|
—
|
|
|
0.5
|
|
|
—
|
|
|
0.5
|
|
||||
|
Interest rate contracts
|
—
|
|
|
1.8
|
|
|
—
|
|
|
1.8
|
|
||||
|
Total financial liabilities
|
$
|
—
|
|
|
$
|
2.8
|
|
|
$
|
2,059.4
|
|
|
$
|
2,062.2
|
|
|
|
September 30, 2013
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair Value
|
||||||||
|
Assets
|
|
|
|
|
|
|
|
||||||||
|
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
|
—
|
|
|
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
|
$
|
861.7
|
|
|
$
|
14,536.0
|
|
|
$
|
523.5
|
|
|
$
|
15,921.2
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
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 and contracts
|
—
|
|
|
10.0
|
|
|
—
|
|
|
10.0
|
|
||||
|
Commodity contracts
|
—
|
|
|
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
|
|
|
|
|
|
|
|
|
Fair Value at
|
|
Range (Weighted average)
|
||||||||
|
Assets
|
|
Valuation Technique
|
|
Unobservable Input(s)
|
|
September 30,
2014 |
|
September 30,
2013 |
|
September 30,
2014 |
|
September 30, 2013
|
||||
|
Contingent purchase price reduction receivable
|
|
Discounted cash flow
|
|
Probability of collection
|
|
$
|
41.5
|
|
|
$
|
41.0
|
|
|
88% - 96% (92%)
|
|
88% - 96% (92%)
|
|
|
|
|
|
Expected term
|
|
|
|
|
|
4.5 months
|
|
9 months
|
||||
|
|
|
|
|
Discount rate
|
|
|
|
|
|
1%
|
|
1%
|
||||
|
|
|
|
|
Credit insurance risk premium
|
|
|
|
|
|
12%
|
|
11%
|
||||
|
Asset-backed securities
|
|
Broker-quoted
|
|
Offered quotes
|
|
37.0
|
|
|
5.0
|
|
|
100% - 109%
(101%)
|
|
103%
|
||
|
Commercial mortgage-backed securities
|
|
Broker-quoted
|
|
Offered quotes
|
|
83.1
|
|
|
5.7
|
|
|
105% - 121% (118%)
|
|
96%
|
||
|
Corporates
|
|
Broker-quoted
|
|
Offered quotes
|
|
848.0
|
|
|
404.5
|
|
|
62% - 120% (100%)
|
|
0% - 113% (90%)
|
||
|
Corporates
|
|
Matrix pricing
|
|
Quoted prices
|
|
2.0
|
|
|
56.6
|
|
|
142%
|
|
90% - 131% (97%)
|
||
|
Municipal
|
|
Broker-quoted
|
|
Offered quotes
|
|
37.2
|
|
|
—
|
|
|
107%
|
|
—
|
||
|
Equity
|
|
Broker-quoted
|
|
Offered quotes
|
|
6.0
|
|
|
—
|
|
|
100%
|
|
—
|
||
|
|
|
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%
|
||||
|
Other invested assets
|
|
Black Scholes model
|
|
Net asset value of Anchor Path fund
|
|
11.2
|
|
|
—
|
|
|
100%
|
|
—
|
||
|
Total
|
|
|
|
|
|
$
|
1,066.0
|
|
|
$
|
523.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
FIA embedded derivatives, included in contractholder funds
|
|
Discounted cash flow
|
|
Market value of option
|
|
$
|
1,908.1
|
|
|
$
|
1,544.4
|
|
|
0% - 50% (3%)
|
|
0% - 38% (4%)
|
|
|
|
|
|
SWAP rates
|
|
|
|
|
|
2% - 3% (2%)
|
|
2% - 3% (2%)
|
||||
|
|
|
|
|
Mortality multiplier
|
|
|
|
|
|
80%
|
|
80%
|
||||
|
|
|
|
|
Surrender rates
|
|
|
|
|
|
0.50% - 75% (7%)
|
|
0.50% - 75% (7%)
|
||||
|
|
|
|
|
Non-performance risk spread
|
|
|
|
|
|
0.25%
|
|
0.25%
|
||||
|
Front Street future policyholder benefit liability
|
|
Discounted cash flow
|
|
Non-performance risk spread
|
|
151.3
|
|
|
—
|
|
|
0.50% - 1.50%
|
|
—
|
||
|
|
|
|
|
Risk margin to reflect uncertainty
|
|
|
|
|
|
0.50%
|
|
—
|
||||
|
Equity conversion feature of preferred stock
|
|
Monte Carlo simulation / Option model
|
|
Annualized volatility of equity
|
|
—
|
|
|
330.8
|
|
|
—
|
|
42%
|
||
|
|
|
|
|
Discount yield
|
|
|
|
|
|
—
|
|
11%
|
||||
|
|
|
|
|
Non-cash accretion rate
|
|
|
|
|
|
—
|
|
0%
|
||||
|
|
|
|
|
Calibration adjustment
|
|
|
|
|
|
—
|
|
0% - 1.0% (0.3%)
|
||||
|
Total
|
|
|
|
|
|
$
|
2,059.4
|
|
|
$
|
1,875.2
|
|
|
|
|
|
|
|
Fiscal 2014
|
||||||||||||||||||||||||||||||
|
|
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
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
41.5
|
|
|
Fixed maturity securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Asset-backed securities
|
5.0
|
|
|
—
|
|
|
(0.3
|
)
|
|
36.1
|
|
|
—
|
|
|
—
|
|
|
(3.8
|
)
|
|
37.0
|
|
||||||||
|
Commercial mortgage-backed securities
|
5.7
|
|
|
—
|
|
|
—
|
|
|
83.7
|
|
|
(0.3
|
)
|
|
—
|
|
|
(6.0
|
)
|
|
83.1
|
|
||||||||
|
Corporates
|
461.1
|
|
|
—
|
|
|
19.1
|
|
|
398.1
|
|
|
(11.8
|
)
|
|
(2.4
|
)
|
|
(14.1
|
)
|
|
850.0
|
|
||||||||
|
Municipals
|
—
|
|
|
—
|
|
|
2.2
|
|
|
35.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37.2
|
|
||||||||
|
Equity securities - trading
|
10.7
|
|
|
1.3
|
|
|
—
|
|
|
1.5
|
|
|
—
|
|
|
(13.5
|
)
|
|
—
|
|
|
—
|
|
||||||||
|
Equity securities - available-for-sale
|
—
|
|
|
—
|
|
|
1.2
|
|
|
4.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.0
|
|
||||||||
|
Other invested assets
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
11.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.2
|
|
||||||||
|
Total assets at fair value
|
$
|
523.5
|
|
|
$
|
1.7
|
|
|
$
|
22.2
|
|
|
$
|
570.5
|
|
|
$
|
(12.1
|
)
|
|
$
|
(15.9
|
)
|
|
$
|
(23.9
|
)
|
|
$
|
1,066.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
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
|
$
|
1,544.4
|
|
|
$
|
363.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,908.1
|
|
|
Front Street future policyholder benefit liability
|
—
|
|
|
7.0
|
|
|
—
|
|
|
150.6
|
|
|
—
|
|
|
(6.3
|
)
|
|
—
|
|
|
151.3
|
|
||||||||
|
Equity conversion feature of preferred stock
|
330.8
|
|
|
12.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(343.5
|
)
|
|
—
|
|
|
—
|
|
||||||||
|
Total liabilities at fair value
|
$
|
1,875.2
|
|
|
$
|
383.4
|
|
|
$
|
—
|
|
|
$
|
150.6
|
|
|
$
|
—
|
|
|
$
|
(349.8
|
)
|
|
$
|
—
|
|
|
$
|
2,059.4
|
|
|
(a)
|
The net transfers in and out of Level 3 during
Fiscal 2014
were exclusively to or from Level 2.
|
|
|
Fiscal 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
Fiscal 2013
was exclusively to or from Level 2.
|
|
|
Fiscal 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
Fiscal 2012
was exclusively to or from Level 2.
|
|
|
September 30, 2014
|
||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Estimated Fair Value
|
|
Carrying Amount
|
||||||||||
|
Assets (a)
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Cash and cash equivalents
|
$
|
1,319.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,319.2
|
|
|
$
|
1,319.2
|
|
|
Other invested assets
|
—
|
|
|
—
|
|
|
151.7
|
|
|
151.7
|
|
|
151.7
|
|
|||||
|
Asset-based loans
|
—
|
|
|
—
|
|
|
811.6
|
|
|
811.6
|
|
|
811.6
|
|
|||||
|
Total financial assets
|
$
|
1,319.2
|
|
|
$
|
—
|
|
|
$
|
963.3
|
|
|
$
|
2,282.5
|
|
|
$
|
2,282.5
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Liabilities (a)
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total debt (b)
|
$
|
—
|
|
|
$
|
5,308.5
|
|
|
$
|
—
|
|
|
$
|
5,308.5
|
|
|
$
|
5,157.8
|
|
|
Investment contracts, included in contractholder funds
|
—
|
|
|
—
|
|
|
13,108.8
|
|
|
13,108.8
|
|
|
14,555.4
|
|
|||||
|
Total financial liabilities
|
$
|
—
|
|
|
$
|
5,308.5
|
|
|
$
|
13,108.8
|
|
|
$
|
18,417.3
|
|
|
$
|
19,713.2
|
|
|
|
September 30, 2013
|
||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Estimated Fair Value
|
|
Carrying Amount
|
||||||||||
|
Assets (a)
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Cash and cash equivalents
|
$
|
1,899.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,899.7
|
|
|
$
|
1,899.7
|
|
|
Other invested assets
|
—
|
|
|
—
|
|
|
31.2
|
|
|
31.2
|
|
|
31.2
|
|
|||||
|
Asset-based loans
|
—
|
|
|
—
|
|
|
560.4
|
|
|
560.4
|
|
|
560.4
|
|
|||||
|
Total financial assets
|
$
|
1,899.7
|
|
|
$
|
—
|
|
|
$
|
591.6
|
|
|
$
|
2,491.3
|
|
|
$
|
2,491.3
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Liabilities (a)
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total debt (b)
|
$
|
—
|
|
|
$
|
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
|
|
|
(a)
|
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.
|
|
(b)
|
The fair values of debt set forth above are generally based on quoted or observed market prices.
|
|
|
September 30,
|
||||||
|
|
2014
|
|
2013
|
||||
|
Trade accounts receivable
|
|
|
|
||||
|
Consumer products
|
$
|
487.7
|
|
|
$
|
518.7
|
|
|
Oil and natural gas
|
20.3
|
|
|
16.7
|
|
||
|
Other
|
0.6
|
|
|
—
|
|
||
|
Total trade accounts receivable
|
508.6
|
|
|
535.4
|
|
||
|
Less: Allowance for doubtful trade accounts receivable
|
48.6
|
|
|
37.4
|
|
||
|
Total trade accounts receivable, net
|
460.0
|
|
|
498.0
|
|
||
|
Contingent purchase price reduction receivable (Note 24)
|
41.5
|
|
|
41.0
|
|
||
|
Other receivables
|
83.6
|
|
|
72.3
|
|
||
|
Total receivables, net
|
$
|
585.1
|
|
|
$
|
611.3
|
|
|
Period
|
|
Balance at Beginning of
Period
|
|
Charged to
Costs and
Expenses
|
|
Deductions
|
|
Other
Adjustments
|
|
Balance at
End of Period
|
||||||||||
|
Fiscal 2014
|
|
$
|
37.4
|
|
|
$
|
7.4
|
|
|
$
|
(2.4
|
)
|
|
$
|
6.2
|
|
|
$
|
48.6
|
|
|
Fiscal 2013
|
|
21.9
|
|
|
15.5
|
|
|
—
|
|
|
—
|
|
|
37.4
|
|
|||||
|
Fiscal 2012
|
|
14.1
|
|
|
7.8
|
|
|
—
|
|
|
—
|
|
|
21.9
|
|
|||||
|
|
September 30,
|
||||||
|
|
2014
|
|
2013
|
||||
|
Raw materials
|
$
|
104.1
|
|
|
$
|
97.3
|
|
|
Work-in-process
|
35.3
|
|
|
40.6
|
|
||
|
Finished goods
|
495.8
|
|
|
495.0
|
|
||
|
Total inventories, net
|
$
|
635.2
|
|
|
$
|
632.9
|
|
|
|
September 30,
|
||||||
|
|
2014
|
|
2013
|
||||
|
Oil and natural gas properties (full cost accounting method)
|
|
|
|
||||
|
Unproved oil and natural gas properties and development costs not being amortized
|
$
|
20.2
|
|
|
$
|
36.4
|
|
|
Proved developed and undeveloped oil and natural gas properties
|
493.9
|
|
|
546.0
|
|
||
|
Less: Accumulated depletion
|
(68.4
|
)
|
|
(30.1
|
)
|
||
|
Total oil and natural gas properties, net
|
445.7
|
|
|
552.3
|
|
||
|
Other properties
|
|
|
|
||||
|
Land, buildings and improvements
|
166.9
|
|
|
169.8
|
|
||
|
Gas gathering assets
|
21.1
|
|
|
21.1
|
|
||
|
Machinery, equipment and other
|
496.3
|
|
|
420.6
|
|
||
|
Capitalized leases
|
99.3
|
|
|
67.7
|
|
||
|
Construction in progress
|
32.3
|
|
|
46.8
|
|
||
|
Total other properties, at cost
|
815.9
|
|
|
726.0
|
|
||
|
Less: Accumulated depreciation
|
353.0
|
|
|
285.0
|
|
||
|
Total other properties, net
|
462.9
|
|
|
441.0
|
|
||
|
Total properties, including oil and natural gas properties, net
|
$
|
908.6
|
|
|
$
|
993.3
|
|
|
|
|
|
Intangible Assets
|
||||||||||||||||||||
|
|
Goodwill
|
|
Indefinite Lived
|
|
Definite Lived
|
|
VOBA
|
|
DAC
|
|
Total
|
||||||||||||
|
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
|
|
||||||
|
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 September 30, 2013
|
1,476.7
|
|
|
1,178.1
|
|
|
985.1
|
|
|
225.3
|
|
|
340.6
|
|
|
2,729.1
|
|
||||||
|
Acquisitions (Note 4)
|
65.8
|
|
|
46.7
|
|
|
23.5
|
|
|
—
|
|
|
—
|
|
|
70.2
|
|
||||||
|
Deferrals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
239.0
|
|
|
239.0
|
|
||||||
|
Less: Components of amortization -
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Periodic amortization
|
—
|
|
|
—
|
|
|
(81.7
|
)
|
|
(92.4
|
)
|
|
(58.0
|
)
|
|
(232.1
|
)
|
||||||
|
Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
15.0
|
|
|
13.6
|
|
|
28.6
|
|
||||||
|
Unlocking
|
—
|
|
|
—
|
|
|
—
|
|
|
21.6
|
|
|
2.7
|
|
|
24.3
|
|
||||||
|
Adjustment for unrealized investment (gains), net
|
—
|
|
|
—
|
|
|
—
|
|
|
(82.7
|
)
|
|
(74.1
|
)
|
|
(156.8
|
)
|
||||||
|
Effect of translation
|
(17.7
|
)
|
|
(8.9
|
)
|
|
(9.7
|
)
|
|
—
|
|
|
—
|
|
|
(18.6
|
)
|
||||||
|
Balance at September 30, 2014
|
$
|
1,524.8
|
|
|
$
|
1,215.9
|
|
|
$
|
917.2
|
|
|
$
|
86.8
|
|
|
$
|
463.8
|
|
|
$
|
2,683.7
|
|
|
|
September 30, 2014
|
|
September 30, 2013
|
|
|
||||||||||||||||||||
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
|
|
Amortizable Life
|
||||||||||||
|
Customer relationships
|
$
|
877.1
|
|
|
$
|
(204.6
|
)
|
|
$
|
672.5
|
|
|
$
|
885.9
|
|
|
$
|
(160.8
|
)
|
|
$
|
725.1
|
|
|
15 to 20 years
|
|
Trade names
|
171.1
|
|
|
(61.0
|
)
|
|
110.1
|
|
|
171.6
|
|
|
(44.7
|
)
|
|
126.9
|
|
|
1 to 12 years
|
||||||
|
Technology assets
|
192.2
|
|
|
(57.6
|
)
|
|
134.6
|
|
|
172.1
|
|
|
(39.0
|
)
|
|
133.1
|
|
|
4 to 17 years
|
||||||
|
|
$
|
1,240.4
|
|
|
$
|
(323.2
|
)
|
|
$
|
917.2
|
|
|
$
|
1,229.6
|
|
|
$
|
(244.5
|
)
|
|
$
|
985.1
|
|
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Customer relationships
|
$
|
46.7
|
|
|
$
|
44.9
|
|
|
$
|
40.2
|
|
|
Trade names
|
16.4
|
|
|
16.6
|
|
|
14.4
|
|
|||
|
Technology assets
|
18.6
|
|
|
16.3
|
|
|
9.1
|
|
|||
|
|
$
|
81.7
|
|
|
$
|
77.8
|
|
|
$
|
63.7
|
|
|
|
|
Estimated Amortization Expense
|
||
|
Fiscal Year
|
|
VOBA
|
||
|
2015
|
|
$
|
42.8
|
|
|
2016
|
|
38.4
|
|
|
|
2017
|
|
31.2
|
|
|
|
2018
|
|
25.0
|
|
|
|
2019
|
|
25.5
|
|
|
|
2020 and thereafter
|
|
88.1
|
|
|
|
|
September 30,
|
||||||
|
|
2014
|
|
2013
|
||||
|
Accounts payable
|
$
|
535.7
|
|
|
$
|
530.3
|
|
|
Accrued expenses and other
|
215.8
|
|
|
206.1
|
|
||
|
Wages and benefits
|
157.5
|
|
|
134.2
|
|
||
|
Accrued interest
|
57.9
|
|
|
53.4
|
|
||
|
Income taxes payable
|
39.9
|
|
|
48.9
|
|
||
|
Oil and natural gas revenues and royalties payable
|
14.4
|
|
|
14.9
|
|
||
|
Restructuring and related charges
|
11.8
|
|
|
16.7
|
|
||
|
Accrued dividends on Preferred Stock
|
—
|
|
|
8.2
|
|
||
|
Total accounts payable and other current liabilities
|
$
|
1,033.0
|
|
|
$
|
1,012.7
|
|
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||
|
|
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
||||||
|
HGI:
|
|
|
|
|
|
|
|
|
||||||
|
7.875% Senior Secured Notes, due July 15, 2019
|
|
$
|
604.4
|
|
|
7.9
|
%
|
|
$
|
925.0
|
|
|
7.9
|
%
|
|
7.75% Senior Unsecured Notes, due January 15, 2022
|
|
750.0
|
|
|
7.8
|
%
|
|
—
|
|
|
—
|
%
|
||
|
Spectrum Brands:
|
|
|
|
|
|
|
|
|
||||||
|
CAD Term Loan, due December 17, 2019
|
|
34.2
|
|
|
5.1
|
%
|
|
81.4
|
|
|
5.1
|
%
|
||
|
Term Loan, due September 4, 2017 (Tranche A)
|
|
648.4
|
|
|
3.0
|
%
|
|
850.0
|
|
|
3.0
|
%
|
||
|
Term Loan, due September 4, 2019 (Tranche C)
|
|
509.9
|
|
|
3.6
|
%
|
|
300.0
|
|
|
3.6
|
%
|
||
|
Term Loan, due December 17, 2019 (Tranche B)
|
|
—
|
|
|
—
|
%
|
|
513.3
|
|
|
4.6
|
%
|
||
|
Euro Term Loan, due September 4, 2019
|
|
283.3
|
|
|
3.8
|
%
|
|
—
|
|
|
—
|
%
|
||
|
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
|
%
|
|
520.0
|
|
|
6.4
|
%
|
||
|
6.625% Senior Notes, due November 15, 2022
|
|
570.0
|
|
|
6.6
|
%
|
|
570.0
|
|
|
6.6
|
%
|
||
|
ABL Facility, expiring May 24, 2017
|
|
—
|
|
|
2.5
|
%
|
|
—
|
|
|
5.7
|
%
|
||
|
Other notes and obligations
|
|
36.6
|
|
|
8.8
|
%
|
|
28.5
|
|
|
8.5
|
%
|
||
|
Capitalized lease obligations
|
|
94.7
|
|
|
6.1
|
%
|
|
67.4
|
|
|
6.2
|
%
|
||
|
FGH
|
|
|
|
|
|
|
|
|
||||||
|
6.375% Senior Notes, due April 1, 2021
|
|
300.0
|
|
|
6.4
|
%
|
|
300.0
|
|
|
6.4
|
%
|
||
|
Compass
|
|
|
|
|
|
|
|
|
||||||
|
Compass Credit Agreement, due February 14, 2018
|
|
243.2
|
|
|
2.7
|
%
|
|
271.2
|
|
|
2.7
|
%
|
||
|
Salus
|
|
|
|
|
|
|
|
|
||||||
|
Unaffiliated long-term debt of consolidated variable-interest entity
|
|
193.0
|
|
|
6.7
|
%
|
|
182.9
|
|
|
6.6
|
%
|
||
|
Secured borrowings under non-qualifying loan participations
|
|
106.8
|
|
|
10.8
|
%
|
|
—
|
|
|
—
|
%
|
||
|
Total
|
|
5,194.5
|
|
|
|
|
4,909.7
|
|
|
|
||||
|
Original issuance (discounts) premiums on debt, net
|
|
(36.7
|
)
|
|
|
|
(13.6
|
)
|
|
|
||||
|
Total debt
|
|
5,157.8
|
|
|
|
|
4,896.1
|
|
|
|
||||
|
Less current maturities
|
|
96.7
|
|
|
|
|
102.9
|
|
|
|
||||
|
Non-current portion of debt
|
|
$
|
5,061.1
|
|
|
|
|
$
|
4,793.2
|
|
|
|
||
|
Fiscal Year
|
|
Scheduled Maturities
|
||||||
|
|
|
HGI - Parent Only
|
|
Consolidated
|
||||
|
2015
|
|
$
|
—
|
|
|
$
|
97.4
|
|
|
2016
|
|
—
|
|
|
77.6
|
|
||
|
2017
|
|
—
|
|
|
563.7
|
|
||
|
2018
|
|
—
|
|
|
256.3
|
|
||
|
2019
|
|
604.4
|
|
|
1,470.9
|
|
||
|
Thereafter
|
|
750.0
|
|
|
2,728.6
|
|
||
|
|
|
$
|
1,354.4
|
|
|
$
|
5,194.5
|
|
|
•
|
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 Compass’ 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.
|
|
|
|
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, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Gross amounts (after reclassification adjustments)
|
|
$
|
762.2
|
|
|
$
|
(1.0
|
)
|
|
$
|
13.1
|
|
|
$
|
(36.2
|
)
|
|
$
|
(42.8
|
)
|
|
$
|
695.3
|
|
|
Intangible assets adjustments
|
|
(220.0
|
)
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(219.6
|
)
|
||||||
|
Tax effects
|
|
(190.1
|
)
|
|
0.2
|
|
|
(3.9
|
)
|
|
0.8
|
|
|
3.5
|
|
|
(189.5
|
)
|
||||||
|
Noncontrolling interest
|
|
(68.5
|
)
|
|
—
|
|
|
(3.8
|
)
|
|
13.6
|
|
|
16.1
|
|
|
(42.6
|
)
|
||||||
|
|
|
$
|
283.6
|
|
|
$
|
(0.4
|
)
|
|
$
|
5.4
|
|
|
$
|
(21.8
|
)
|
|
$
|
(23.2
|
)
|
|
$
|
243.6
|
|
|
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
|
|
|
|
|
Shares repurchased
|
|
Weighted-Average Price per Share
|
|
Amount Repurchased
|
|||||
|
Cumulative balance at September 30, 2014
|
|
5,197
|
|
|
$
|
12.62
|
|
|
$
|
65.6
|
|
|
|
|
Pension and Deferred
Compensation Benefits
|
|
Other Benefits
|
||||||||||||
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
Change in benefit obligation
|
|
|
|
|
|
|
|
|
||||||||
|
Benefit obligation, beginning of year
|
|
$
|
274.5
|
|
|
$
|
260.7
|
|
|
$
|
0.4
|
|
|
$
|
0.6
|
|
|
Liabilities assumed through acquisitions
|
|
—
|
|
|
14.7
|
|
|
—
|
|
|
—
|
|
||||
|
Service cost
|
|
3.5
|
|
|
3.0
|
|
|
—
|
|
|
—
|
|
||||
|
Interest cost
|
|
11.2
|
|
|
10.6
|
|
|
—
|
|
|
—
|
|
||||
|
Actuarial loss (gain)
|
|
15.3
|
|
|
1.1
|
|
|
—
|
|
|
(0.1
|
)
|
||||
|
Participant contributions
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
||||
|
Curtailments
|
|
—
|
|
|
(1.5
|
)
|
|
—
|
|
|
(0.1
|
)
|
||||
|
Benefits paid
|
|
(11.5
|
)
|
|
(17.4
|
)
|
|
—
|
|
|
—
|
|
||||
|
Foreign currency exchange rate changes
|
|
(5.9
|
)
|
|
3.2
|
|
|
—
|
|
|
—
|
|
||||
|
Benefit obligation, end of year
|
|
$
|
287.1
|
|
|
$
|
274.5
|
|
|
$
|
0.4
|
|
|
$
|
0.4
|
|
|
Change in plan assets
|
|
|
|
|
|
|
|
|
||||||||
|
Fair value of plan assets, beginning of year
|
|
$
|
190.8
|
|
|
$
|
168.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Assets acquired through acquisitions
|
|
—
|
|
|
6.7
|
|
|
—
|
|
|
—
|
|
||||
|
Actual return on plan assets
|
|
13.8
|
|
|
18.3
|
|
|
—
|
|
|
—
|
|
||||
|
Employer contributions
|
|
13.8
|
|
|
12.9
|
|
|
—
|
|
|
—
|
|
||||
|
Employee contributions
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
||||
|
Benefits paid
|
|
(11.5
|
)
|
|
(17.4
|
)
|
|
—
|
|
|
—
|
|
||||
|
Foreign currency exchange rate changes
|
|
(2.4
|
)
|
|
1.6
|
|
|
—
|
|
|
—
|
|
||||
|
Fair value of plan assets, end of year
|
|
$
|
204.5
|
|
|
$
|
190.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Accrued Benefit Cost / Funded Status
|
|
$
|
(82.6
|
)
|
|
$
|
(83.7
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
(0.4
|
)
|
|
Range of assumptions:
|
|
|
|
|
|
|
|
|
||||||||
|
Discount rate
|
|
2.0% to 13.5%
|
|
|
1.8% to 13.0%
|
|
|
4.7
|
%
|
|
4.7
|
%
|
||||
|
Expected return on plan assets
|
|
2.0% to 7.5%
|
|
|
3.6% 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
|
||||||||||||||||||||
|
|
|
Fiscal
|
|
Fiscal
|
||||||||||||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
|
2012
|
||||||||||||
|
Components of net periodic cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Service cost
|
|
$
|
3.5
|
|
|
$
|
3.4
|
|
|
$
|
2.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Interest cost
|
|
11.2
|
|
|
10.6
|
|
|
11.4
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
||||||
|
Expected return on assets
|
|
(11.0
|
)
|
|
(9.7
|
)
|
|
(9.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Amortization of prior service cost
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Curtailment gain
|
|
(0.1
|
)
|
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Recognized net actuarial loss(gain)
|
|
1.5
|
|
|
2.1
|
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
||||||
|
Net periodic cost
|
|
$
|
5.1
|
|
|
$
|
5.6
|
|
|
$
|
5.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Weighted Average Allocation
|
|||||||
|
|
|
Target
|
|
Actual
|
|||||
|
|
|
2014
|
|
2014
|
|
2013
|
|||
|
Asset Category
|
|
|
|
|
|
|
|||
|
Equity securities
|
|
0-60%
|
|
|
27
|
%
|
|
52
|
%
|
|
Fixed income securities
|
|
0-40%
|
|
|
28
|
%
|
|
19
|
%
|
|
Other
|
|
0-100%
|
|
|
45
|
%
|
|
29
|
%
|
|
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
Fiscal Year
|
|
Future Benefit Payments
|
||
|
2015
|
|
$
|
13.8
|
|
|
2016
|
|
12.0
|
|
|
|
2017
|
|
12.2
|
|
|
|
2018
|
|
12.7
|
|
|
|
2019
|
|
13.7
|
|
|
|
2020 to 2024
|
|
72.1
|
|
|
|
|
|
September 30, 2014
|
||||||||||||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
Defined Benefit Plan Assets:
|
|
|
|
|
|
|
|
|
||||||||
|
Equity Securities
|
|
|
|
|
|
|
|
|
||||||||
|
U.S. equity securities
|
|
$
|
19.9
|
|
|
$
|
14.3
|
|
|
$
|
—
|
|
|
$
|
34.2
|
|
|
Foreign equity securities
|
|
11.1
|
|
|
9.7
|
|
|
—
|
|
|
20.8
|
|
||||
|
Debt Securities
|
|
|
|
|
|
|
|
|
||||||||
|
U.S. bonds
|
|
4.0
|
|
|
20.6
|
|
|
—
|
|
|
24.6
|
|
||||
|
Foreign bonds
|
|
3.1
|
|
|
20.5
|
|
|
—
|
|
|
23.6
|
|
||||
|
Foreign government bonds
|
|
—
|
|
|
8.6
|
|
|
—
|
|
|
8.6
|
|
||||
|
Real estate
|
|
1.2
|
|
|
5.9
|
|
|
—
|
|
|
7.1
|
|
||||
|
Life insurance contracts
|
|
—
|
|
|
37.7
|
|
|
—
|
|
|
37.7
|
|
||||
|
Other
|
|
—
|
|
|
39.7
|
|
|
—
|
|
|
39.7
|
|
||||
|
Foreign cash & cash equivalents
|
|
6.4
|
|
|
1.8
|
|
|
—
|
|
|
8.2
|
|
||||
|
Total defined benefit plan assets
|
|
$
|
45.7
|
|
|
$
|
158.8
|
|
|
$
|
—
|
|
|
$
|
204.5
|
|
|
|
|
September 30, 2013
|
||||||||||||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
Defined Benefit Plan Assets:
|
|
|
|
|
|
|
|
|
||||||||
|
Equity Securities
|
|
|
|
|
|
|
|
|
||||||||
|
U.S. equity securities
|
|
$
|
18.5
|
|
|
$
|
24.5
|
|
|
$
|
—
|
|
|
$
|
43.0
|
|
|
Foreign equity securities
|
|
10.8
|
|
|
39.1
|
|
|
—
|
|
|
49.9
|
|
||||
|
Debt Securities
|
|
|
|
|
|
|
|
|
|
|||||||
|
U.S. bonds
|
|
2.3
|
|
|
19.7
|
|
|
—
|
|
|
22.0
|
|
||||
|
Foreign bonds
|
|
—
|
|
|
10.7
|
|
|
—
|
|
|
10.7
|
|
||||
|
Foreign government bonds
|
|
—
|
|
|
8.0
|
|
|
—
|
|
|
8.0
|
|
||||
|
Real estate
|
|
1.2
|
|
|
5.4
|
|
|
—
|
|
|
6.6
|
|
||||
|
Life insurance contracts
|
|
—
|
|
|
37.7
|
|
|
—
|
|
|
37.7
|
|
||||
|
Other
|
|
—
|
|
|
1.0
|
|
|
—
|
|
|
1.0
|
|
||||
|
Foreign cash & cash equivalents
|
|
6.6
|
|
|
5.3
|
|
|
—
|
|
|
11.9
|
|
||||
|
Total defined benefit plan assets
|
|
$
|
39.4
|
|
|
$
|
151.4
|
|
|
$
|
—
|
|
|
$
|
190.8
|
|
|
|
Fiscal
|
||||||||||||||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||||||||||||||
|
|
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
|
$
|
266.8
|
|
|
$
|
1,103.3
|
|
|
$
|
279.2
|
|
|
$
|
776.5
|
|
|
$
|
298.0
|
|
|
$
|
1,033.4
|
|
|
Assumed
|
35.9
|
|
|
33.0
|
|
|
32.8
|
|
|
23.3
|
|
|
47.2
|
|
|
34.9
|
|
||||||
|
Ceded
|
(246.1
|
)
|
|
(283.6
|
)
|
|
(253.2
|
)
|
|
(268.0
|
)
|
|
(289.9
|
)
|
|
(290.9
|
)
|
||||||
|
Net
|
$
|
56.6
|
|
|
$
|
852.7
|
|
|
$
|
58.8
|
|
|
$
|
531.8
|
|
|
$
|
55.3
|
|
|
$
|
777.4
|
|
|
|
|
HGI
|
|
FGH
|
|
FGL
|
|||||||||||||||||||||||
|
Stock Option Awards
|
|
Options
|
|
Weighted Average Exercise Price
|
|
Weighted
Average Grant
Date Fair Value
|
|
Options
|
|
Weighted Average Exercise Price
|
|
Options
|
|
Weighted Average Exercise Price
|
|
Weighted
Average Grant Date Fair Value |
|||||||||||||
|
Stock options outstanding at September 30, 2013
|
|
3,954
|
|
|
$
|
6.52
|
|
|
$
|
2.55
|
|
|
335
|
|
|
$
|
44.23
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Granted
|
|
1,356
|
|
|
11.75
|
|
|
4.91
|
|
|
—
|
|
|
—
|
|
|
249
|
|
|
17.00
|
|
|
3.76
|
|
|||||
|
Exercised
|
|
(526
|
)
|
|
5.27
|
|
|
1.92
|
|
|
(105
|
)
|
|
39.86
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Forfeited or expired
|
|
(160
|
)
|
|
8.14
|
|
|
3.27
|
|
|
(5
|
)
|
|
47.30
|
|
|
(7
|
)
|
|
17.00
|
|
|
5.26
|
|
|||||
|
Stock options outstanding at September 30, 2014
|
|
4,624
|
|
|
8.14
|
|
|
3.28
|
|
|
225
|
|
|
46.19
|
|
|
242
|
|
|
17.00
|
|
|
3.72
|
|
|||||
|
Stock options vested and exercisable at September 30, 2014
|
|
1,448
|
|
|
7.45
|
|
|
2.96
|
|
|
99
|
|
|
46.68
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Stock options outstanding and expected to vest
|
|
3,176
|
|
|
8.46
|
|
|
3.43
|
|
|
122
|
|
|
46.15
|
|
|
231
|
|
|
—
|
|
|
3.64
|
|
|||||
|
|
|
HGI
|
|
FGL
|
||||||||||
|
Restricted Stock Awards
|
|
Shares
|
|
Weighted
Average Grant
Date Fair Value
|
|
Shares
|
|
Weighted
Average Grant Date Fair Value |
||||||
|
Restricted stock outstanding at September 30, 2013
|
|
3,456
|
|
|
$
|
7.72
|
|
|
—
|
|
|
$
|
—
|
|
|
Granted
|
|
3,325
|
|
|
12.00
|
|
|
179
|
|
|
18.25
|
|
||
|
Exercised / Released
|
|
(1,154
|
)
|
|
10.18
|
|
|
—
|
|
|
—
|
|
||
|
Forfeited
|
|
(197
|
)
|
|
9.57
|
|
|
(7
|
)
|
|
19.98
|
|
||
|
Restricted stock outstanding at September 30, 2014
|
|
5,430
|
|
|
9.76
|
|
|
172
|
|
|
18.18
|
|
||
|
Restricted stock outstanding and expected to vest
|
|
5,418
|
|
|
9.75
|
|
|
159
|
|
|
18.03
|
|
||
|
|
|
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, 2013
|
|
22
|
|
|
$
|
4.61
|
|
|
1,118
|
|
|
$
|
39.11
|
|
|
46
|
|
|
$
|
49.60
|
|
|
Granted
|
|
7
|
|
|
11.84
|
|
|
669
|
|
|
75.50
|
|
|
—
|
|
|
—
|
|
|||
|
Exercised / Released
|
|
(22
|
)
|
|
4.61
|
|
|
(954
|
)
|
|
39.69
|
|
|
(18
|
)
|
|
49.53
|
|
|||
|
Forfeited
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
69.33
|
|
|
(2
|
)
|
|
49.45
|
|
|||
|
Restricted stock units outstanding at September 30, 2014
|
|
7
|
|
|
11.84
|
|
|
827
|
|
|
67.66
|
|
|
26
|
|
|
49.55
|
|
|||
|
Restricted stock units vested and exercisable at September 30, 2014
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
||||
|
Restricted stock units outstanding and expected to vest
|
|
7
|
|
|
11.84
|
|
|
827
|
|
|
67.66
|
|
|
25
|
|
|
49.55
|
|
|||
|
|
|
FGL
|
|||||
|
Performance Restricted Stock Units
|
|
Units
|
|
Weighted
Average Grant
Date Fair Value
|
|||
|
Performance restricted stock units outstanding at September 30, 2013
|
|
—
|
|
|
$
|
—
|
|
|
Granted
|
|
578
|
|
|
17.37
|
|
|
|
Performance restricted stock units outstanding at September 30, 2014
|
|
578
|
|
|
17.37
|
|
|
|
Performance restricted stock units expected to vest
|
|
578
|
|
|
17.37
|
|
|
|
|
|
HGI
|
|||||||||
|
Warrants
|
|
Units
|
|
Weighted Average Exercise Price
|
|
Weighted
Average Grant
Date Fair Value
|
|||||
|
Warrants outstanding at September 30, 2013
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Granted
|
|
3,000
|
|
|
13.13
|
|
|
3.22
|
|
||
|
Warrants outstanding at September 30, 2014
|
|
3,000
|
|
|
13.13
|
|
|
3.22
|
|
||
|
Warrants vested and exercisable at September 30, 2014
|
|
600
|
|
|
13.13
|
|
|
3.22
|
|
||
|
Warrants outstanding and expected to vest
|
|
2,400
|
|
|
13.13
|
|
|
3.22
|
|
||
|
|
2014
|
|
2013
|
|
2012
|
|
Risk-free interest rate
|
1.37% to 1.70%
|
|
0.84% to 1.86%
|
|
0.97% to 1.19%
|
|
Assumed dividend yield
|
—%
|
|
—%
|
|
—%
|
|
Expected option term
|
5.0 to 5.9 years
|
|
5.3 to 6.2 years
|
|
6 years
|
|
Volatility
|
37.8% to 39.8%
|
|
41.9% to 44.0%
|
|
33.0% to 35.5%
|
|
|
2014
|
|
2013
|
|
2012
|
|
Risk-free interest rate
|
1.40% to 1.41%
|
|
0.8%
|
|
0.8%
|
|
Assumed dividend yield
|
1.30% to 1.50%
|
|
6%
|
|
10%
|
|
Expected option term
|
4.5 years
|
|
4.5 years
|
|
4.5 years
|
|
Volatility
|
25%
|
|
27%
|
|
35%
|
|
|
|
Shares
|
|
Weighted average grant date fair value per share
|
|||
|
Non-vested awards at September 30, 2013
|
|
102
|
|
|
$
|
10.00
|
|
|
Granted
|
|
323
|
|
|
7.90
|
|
|
|
Vested
|
|
(137
|
)
|
|
7.88
|
|
|
|
Terminated
|
|
(18
|
)
|
|
8.44
|
|
|
|
Non-vested awards at September 30, 2014
|
|
270
|
|
|
$
|
8.67
|
|
|
|
|
Fiscal
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Income from continuing operations before income taxes:
|
|
|
|
|
|
|
||||||
|
United States
|
|
$
|
9.2
|
|
|
$
|
(78.9
|
)
|
|
$
|
(146.5
|
)
|
|
Outside the United States
|
|
204.0
|
|
|
197.2
|
|
|
171.9
|
|
|||
|
Total income from continuing operations before taxes
|
|
$
|
213.2
|
|
|
$
|
118.3
|
|
|
$
|
25.4
|
|
|
|
|
Fiscal
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Current:
|
|
|
|
|
|
|
||||||
|
Federal
|
|
$
|
64.2
|
|
|
$
|
(32.5
|
)
|
|
$
|
74.4
|
|
|
Foreign
|
|
46.6
|
|
|
47.7
|
|
|
38.1
|
|
|||
|
State
|
|
6.2
|
|
|
1.4
|
|
|
(0.4
|
)
|
|||
|
Total current
|
|
117.0
|
|
|
16.6
|
|
|
112.1
|
|
|||
|
Deferred:
|
|
|
|
|
|
|
||||||
|
Federal
|
|
12.4
|
|
|
169.0
|
|
|
(199.2
|
)
|
|||
|
Foreign
|
|
(8.3
|
)
|
|
2.1
|
|
|
5.2
|
|
|||
|
State
|
|
(9.6
|
)
|
|
(0.4
|
)
|
|
(3.4
|
)
|
|||
|
Total deferred
|
|
(5.5
|
)
|
|
170.7
|
|
|
(197.4
|
)
|
|||
|
Income tax expense (benefit)
|
|
$
|
111.5
|
|
|
$
|
187.3
|
|
|
$
|
(85.3
|
)
|
|
|
|
Fiscal
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Expected income tax expense at Federal statutory rate
|
|
$
|
74.6
|
|
|
$
|
41.4
|
|
|
$
|
8.9
|
|
|
Valuation allowance for deferred tax assets
|
|
(47.4
|
)
|
|
151.8
|
|
|
(139.6
|
)
|
|||
|
Preferred stock equity conversion feature
|
|
4.4
|
|
|
35.6
|
|
|
54.8
|
|
|||
|
Residual tax on foreign earnings
|
|
90.9
|
|
|
(7.0
|
)
|
|
29.8
|
|
|||
|
Foreign rate differential
|
|
(23.1
|
)
|
|
(18.8
|
)
|
|
(14.1
|
)
|
|||
|
Foreign tax law changes
|
|
(7.7
|
)
|
|
—
|
|
|
—
|
|
|||
|
Gain on contingent purchase price reduction
|
|
—
|
|
|
—
|
|
|
(14.3
|
)
|
|||
|
Permanent items
|
|
6.5
|
|
|
5.7
|
|
|
9.5
|
|
|||
|
Non-deductible stock based compensation
|
|
1.4
|
|
|
1.7
|
|
|
—
|
|
|||
|
Exempt foreign income
|
|
(5.7
|
)
|
|
(5.9
|
)
|
|
(5.8
|
)
|
|||
|
Unrecognized tax benefits
|
|
2.2
|
|
|
4.1
|
|
|
(4.4
|
)
|
|||
|
State and local income taxes
|
|
0.8
|
|
|
(32.2
|
)
|
|
(8.5
|
)
|
|||
|
Dividends received deduction
|
|
—
|
|
|
1.4
|
|
|
(0.9
|
)
|
|||
|
Inflationary adjustments
|
|
(0.5
|
)
|
|
(0.2
|
)
|
|
(0.8
|
)
|
|||
|
Capitalized transaction costs
|
|
1.0
|
|
|
5.6
|
|
|
0.3
|
|
|||
|
Other
|
|
14.1
|
|
|
4.1
|
|
|
(0.2
|
)
|
|||
|
Reported income tax expense (benefit)
|
|
$
|
111.5
|
|
|
$
|
187.3
|
|
|
$
|
(85.3
|
)
|
|
Effective tax rate
|
|
52.3
|
%
|
|
158.3
|
%
|
|
(335.9
|
)%
|
|||
|
|
|
September 30,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
Current deferred tax assets:
|
|
|
|
|
||||
|
Employee benefits
|
|
$
|
22.9
|
|
|
$
|
15.4
|
|
|
Restructuring
|
|
6.3
|
|
|
7.1
|
|
||
|
Inventories and receivables
|
|
25.6
|
|
|
24.3
|
|
||
|
Employee compensation
|
|
6.4
|
|
|
5.4
|
|
||
|
Marketing and promotional accruals
|
|
16.0
|
|
|
14.1
|
|
||
|
Capitalized transaction costs
|
|
—
|
|
|
0.1
|
|
||
|
Unrealized losses on mark-to-market securities
|
|
14.7
|
|
|
12.6
|
|
||
|
Other
|
|
17.2
|
|
|
23.9
|
|
||
|
Valuation allowance
|
|
(66.1
|
)
|
|
(55.0
|
)
|
||
|
Total current deferred tax assets
|
|
43.0
|
|
|
47.9
|
|
||
|
Current deferred tax liabilities:
|
|
|
|
|
||||
|
Inventories and receivables
|
|
(0.7
|
)
|
|
(2.7
|
)
|
||
|
Unrealized gains
|
|
(1.2
|
)
|
|
(0.4
|
)
|
||
|
Other
|
|
(6.0
|
)
|
|
(11.7
|
)
|
||
|
Total current deferred tax liabilities
|
|
(7.9
|
)
|
|
(14.8
|
)
|
||
|
Noncurrent deferred tax assets:
|
|
|
|
|
||||
|
Employee benefits
|
|
$
|
61.4
|
|
|
$
|
49.5
|
|
|
Restructuring and purchase accounting
|
|
0.7
|
|
|
0.3
|
|
||
|
Net operating loss, credit and capital loss carryforwards
|
|
930.6
|
|
|
1,029.5
|
|
||
|
Prepaid royalty
|
|
6.6
|
|
|
7.0
|
|
||
|
Properties
|
|
9.0
|
|
|
9.7
|
|
||
|
Capitalized transaction costs
|
|
0.6
|
|
|
0.6
|
|
||
|
Unrealized losses on mark-to-market securities
|
|
0.3
|
|
|
2.1
|
|
||
|
Long-term debt
|
|
—
|
|
|
0.7
|
|
||
|
Intangibles
|
|
8.5
|
|
|
3.9
|
|
||
|
Deferred acquisition costs
|
|
0.4
|
|
|
0.4
|
|
||
|
Insurance reserves and claim related adjustments
|
|
483.8
|
|
|
477.7
|
|
||
|
Outside basis differences on partnership interests
|
|
43.8
|
|
|
21.3
|
|
||
|
Other
|
|
76.6
|
|
|
32.8
|
|
||
|
Valuation allowance
|
|
(712.4
|
)
|
|
(762.2
|
)
|
||
|
Total noncurrent deferred tax assets
|
|
909.9
|
|
|
873.3
|
|
||
|
Noncurrent deferred tax liabilities:
|
|
|
|
|
||||
|
Properties
|
|
(22.6
|
)
|
|
(27.5
|
)
|
||
|
Unrealized gains
|
|
(20.0
|
)
|
|
(13.1
|
)
|
||
|
Intangibles
|
|
(744.1
|
)
|
|
(735.5
|
)
|
||
|
Value of business acquired
|
|
(20.8
|
)
|
|
(67.3
|
)
|
||
|
Deferred acquisition costs
|
|
(104.2
|
)
|
|
(63.7
|
)
|
||
|
Tax on unremitted foreign earnings
|
|
(2.6
|
)
|
|
(18.6
|
)
|
||
|
Investments
|
|
(338.3
|
)
|
|
(156.5
|
)
|
||
|
Funds withheld receivables
|
|
(9.7
|
)
|
|
—
|
|
||
|
Long-term debt
|
|
(10.0
|
)
|
|
—
|
|
||
|
Other
|
|
(19.3
|
)
|
|
(23.4
|
)
|
||
|
Total noncurrent deferred tax liabilities
|
|
(1,291.6
|
)
|
|
(1,105.6
|
)
|
||
|
Total gross deferred tax assets
|
|
$
|
952.9
|
|
|
$
|
921.2
|
|
|
Total gross deferred tax liabilities
|
|
$
|
(1,299.5
|
)
|
|
$
|
(1,120.4
|
)
|
|
|
Amount
|
||
|
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
|
|
|
|
Gross increase — tax positions in prior period
|
2.7
|
|
|
|
Gross decrease — tax positions in prior period
|
(1.4
|
)
|
|
|
Gross increase — tax positions in current period
|
0.8
|
|
|
|
Settlements
|
(2.5
|
)
|
|
|
Lapse of statutes of limitations
|
(0.8
|
)
|
|
|
Unrecognized tax benefits at September 30, 2014
|
$
|
12.6
|
|
|
|
|
Fiscal
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Initiatives:
|
|
2014
|
|
2013
|
|
2012
|
|
Charges Since Inception
|
|
Expected Future Charges
|
|
Total Projected Costs
|
|
Expected Completion Date
|
||||||||||||
|
Global Expense Rationalization
|
|
$
|
13.4
|
|
|
$
|
11.3
|
|
|
$
|
—
|
|
|
$
|
24.7
|
|
|
$
|
21.8
|
|
|
$
|
46.5
|
|
|
September 30, 2015
|
|
HHI Business Rationalization initiatives
|
|
4.5
|
|
|
—
|
|
|
—
|
|
|
4.5
|
|
|
4.5
|
|
|
9.0
|
|
|
September 30, 2016
|
||||||
|
Global Cost Reduction
|
|
1.3
|
|
|
16.4
|
|
|
18.7
|
|
|
100.7
|
|
|
4.4
|
|
|
105.1
|
|
|
January 31, 2015
|
||||||
|
Other (a)
|
|
3.7
|
|
|
6.3
|
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
$
|
22.9
|
|
|
$
|
34.0
|
|
|
$
|
19.6
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Classification:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Cost of consumer products and other goods sold
|
|
$
|
3.7
|
|
|
$
|
10.0
|
|
|
$
|
9.8
|
|
|
|
|
|
|
|
|
|
||||||
|
Selling, acquisition, operating and general expenses
|
|
19.2
|
|
|
24.0
|
|
|
9.8
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
$
|
22.9
|
|
|
$
|
34.0
|
|
|
$
|
19.6
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
Year ended September 30,
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Costs included in cost of goods sold:
|
|
|
|
|
|
|
||||||
|
Global Expense Rationalization Initiatives:
|
|
|
|
|
|
|
||||||
|
Termination benefits
|
|
$
|
1.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Global Cost Reduction Initiatives:
|
|
|
|
|
|
|
||||||
|
Termination benefits
|
|
—
|
|
|
0.2
|
|
|
2.9
|
|
|||
|
Other associated benefits
|
|
0.1
|
|
|
3.3
|
|
|
6.9
|
|
|||
|
HHI Business and other restructuring initiatives:
|
|
|
|
|
|
|
||||||
|
Termination benefits
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|||
|
Other associated benefits
|
|
2.6
|
|
|
6.3
|
|
|
—
|
|
|||
|
Total included in cost of goods sold
|
|
3.7
|
|
|
10.0
|
|
|
9.8
|
|
|||
|
Costs included in selling, acquisition, operating and general expenses:
|
|
|
|
|
|
|
||||||
|
Global Expense Rationalization Initiatives:
|
|
|
|
|
|
|
||||||
|
Termination benefits
|
|
5.5
|
|
|
10.3
|
|
|
—
|
|
|||
|
Other associated benefits
|
|
6.9
|
|
|
1.1
|
|
|
—
|
|
|||
|
Global Cost Reduction Initiatives:
|
|
|
|
|
|
|
||||||
|
Termination benefits
|
|
0.2
|
|
|
6.3
|
|
|
3.1
|
|
|||
|
Other associated benefits
|
|
1.0
|
|
|
6.4
|
|
|
5.8
|
|
|||
|
HHI Business and other restructuring initiatives:
|
|
|
|
|
|
|
||||||
|
Termination benefits
|
|
4.5
|
|
|
—
|
|
|
—
|
|
|||
|
Other associated benefits
|
|
1.1
|
|
|
(0.1
|
)
|
|
0.9
|
|
|||
|
Total included in selling, acquisition, operating and general expenses:
|
|
19.2
|
|
|
24.0
|
|
|
9.8
|
|
|||
|
Total restructuring and related charges
|
|
$
|
22.9
|
|
|
$
|
34.0
|
|
|
$
|
19.6
|
|
|
|
Accrual Balance at September 30, 2013
|
|
Provisions
|
|
Cash Expenditures
|
|
Non-Cash Items
|
|
Accrual Balance at September 30, 2014
|
|
Expensed as Incurred (a)
|
||||||||||||
|
Global Expense Rationalization Initiatives:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Termination benefits
|
$
|
7.3
|
|
|
$
|
3.5
|
|
|
$
|
(7.0
|
)
|
|
$
|
0.3
|
|
|
$
|
4.1
|
|
|
$
|
3.0
|
|
|
Other costs
|
—
|
|
|
1.5
|
|
|
—
|
|
|
(0.1
|
)
|
|
1.4
|
|
|
5.4
|
|
||||||
|
|
7.3
|
|
|
5.0
|
|
|
(7.0
|
)
|
|
0.2
|
|
|
5.5
|
|
|
8.4
|
|
||||||
|
Global Cost Reduction Initiatives:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Termination benefits
|
4.9
|
|
|
0.2
|
|
|
(3.5
|
)
|
|
(0.3
|
)
|
|
1.3
|
|
|
—
|
|
||||||
|
Other costs
|
0.4
|
|
|
—
|
|
|
(0.7
|
)
|
|
0.5
|
|
|
0.2
|
|
|
1.1
|
|
||||||
|
|
5.3
|
|
|
0.2
|
|
|
(4.2
|
)
|
|
0.2
|
|
|
1.5
|
|
|
1.1
|
|
||||||
|
HHI Business and other restructuring initiatives:
|
4.1
|
|
|
5.6
|
|
|
(4.3
|
)
|
|
(0.6
|
)
|
|
4.8
|
|
|
2.6
|
|
||||||
|
|
$
|
16.7
|
|
|
$
|
10.8
|
|
|
$
|
(15.5
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
11.8
|
|
|
$
|
12.1
|
|
|
(a)
|
Consists of amounts not impacting the accrual for restructuring and related charges.
|
|
|
Fiscal
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Net (loss) income attributable to common and participating preferred stockholders
|
$
|
(83.9
|
)
|
|
$
|
(94.2
|
)
|
|
$
|
29.9
|
|
|
|
|
|
|
|
|
||||||
|
Participating shares at end of period:
|
|
|
|
|
|
||||||
|
Common shares outstanding
|
196,878
|
|
|
138,876
|
|
|
139,357
|
|
|||
|
Preferred shares (as-converted basis)
|
—
|
|
|
61,987
|
|
|
62,839
|
|
|||
|
Total
|
196,878
|
|
|
200,863
|
|
|
202,196
|
|
|||
|
|
|
|
|
|
|
||||||
|
Percentage of income loss allocated to:
|
|
|
|
|
|
||||||
|
Common shares
|
100.0
|
%
|
|
100.0
|
%
|
|
68.9
|
%
|
|||
|
Preferred shares (a)
|
—
|
%
|
|
—
|
%
|
|
31.1
|
%
|
|||
|
|
|
|
|
|
|
||||||
|
Net (loss) income attributable to common shares - basic
|
$
|
(83.9
|
)
|
|
$
|
(94.2
|
)
|
|
$
|
20.6
|
|
|
|
|
|
|
|
|
||||||
|
Net (loss) income attributable to common shares - diluted
|
$
|
(83.9
|
)
|
|
$
|
(94.2
|
)
|
|
$
|
20.6
|
|
|
|
|
|
|
|
|
||||||
|
Weighted-average common shares outstanding - basic
|
162,941
|
|
|
139,856
|
|
|
139,356
|
|
|||
|
Dilutive effect of unvested restricted stock and restricted stock units
|
—
|
|
|
—
|
|
|
381
|
|
|||
|
Dilutive effect of stock options
|
—
|
|
|
—
|
|
|
81
|
|
|||
|
Weighted-average shares outstanding - diluted
|
162,941
|
|
|
139,856
|
|
|
139,818
|
|
|||
|
|
|
|
|
|
|
||||||
|
Net loss per common share attributable to controlling interest:
|
|
|
|
|
|
||||||
|
Basic
|
$
|
(0.51
|
)
|
|
$
|
(0.67
|
)
|
|
$
|
0.15
|
|
|
Diluted
|
$
|
(0.51
|
)
|
|
$
|
(0.67
|
)
|
|
$
|
0.15
|
|
|
(a)
|
Losses are not allocated to the convertible participating preferred shares since they have no contractual obligation to share in such losses.
|
|
Fiscal Year
|
|
Future Minimum
Rental Commitments
|
||
|
2015
|
|
$
|
49.2
|
|
|
2016
|
|
43.0
|
|
|
|
2017
|
|
36.7
|
|
|
|
2018
|
|
25.6
|
|
|
|
2019
|
|
18.2
|
|
|
|
Thereafter
|
|
37.3
|
|
|
|
Total minimum lease payments
|
|
$
|
210.0
|
|
|
|
|
Subsidiary (state of domicile)(a)
|
||||||
|
|
|
FGL Insurance (IA) (b)
|
|
FGL NY Insurance (NY)
|
||||
|
Statutory Net Income:
|
|
|
|
|
||||
|
Fiscal year ended September 30, 2014 (Unaudited)
|
|
$
|
180.3
|
|
|
$
|
2.7
|
|
|
Year ended December 31, 2013
|
|
118.2
|
|
|
1.3
|
|
||
|
Year ended December 31, 2012
|
|
102.2
|
|
|
1.0
|
|
||
|
|
|
|
|
|
||||
|
Statutory Capital and Surplus:
|
|
|
|
|
||||
|
September 30, 2014 (Unaudited)
|
|
$
|
1,134.4
|
|
|
$
|
64.1
|
|
|
December 31, 2013
|
|
1,108.3
|
|
|
61.9
|
|
||
|
December 31, 2012
|
|
900.5
|
|
|
41.1
|
|
||
|
|
|
Fiscal 2014
|
|
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
|
|
11.4
|
|
|
11.8
|
|
||
|
Lease acquisitions and other
|
|
0.2
|
|
|
—
|
|
||
|
Capitalized asset retirement costs
|
|
0.1
|
|
|
0.1
|
|
||
|
Depletion per Boe
|
|
$
|
8.68
|
|
|
$
|
10.00
|
|
|
Depletion per Mcfe
|
|
$
|
1.45
|
|
|
$
|
1.67
|
|
|
|
|
Oil
(Mbbls)
|
|
Natural
Gas
(Mmcf)
|
|
Natural Gas Liquids (Mbbls)
|
|
Natural Gas Equivalent (Mmcfe)
|
||||
|
Inception
|
|
|
|
|
|
|
|
|
||||
|
Purchase of reserves in place (1)
|
|
3,940
|
|
|
331,592
|
|
|
7,353
|
|
|
399,350
|
|
|
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
|
)
|
|
Production
|
|
(283
|
)
|
|
(14,570
|
)
|
|
(300
|
)
|
|
(18,068
|
)
|
|
September 30, 2013
|
|
3,424
|
|
|
322,418
|
|
|
5,730
|
|
|
377,342
|
|
|
Discoveries and extensions (2)
|
|
112
|
|
|
839
|
|
|
173
|
|
|
2,549
|
|
|
Revisions of previous estimates:
|
|
|
|
|
|
|
|
|
||||
|
Changes in price
|
|
233
|
|
|
20,815
|
|
|
496
|
|
|
25,189
|
|
|
Other factors (4)
|
|
335
|
|
|
(13,750
|
)
|
|
342
|
|
|
(9,688
|
)
|
|
Production
|
|
(414
|
)
|
|
(20,882
|
)
|
|
(521
|
)
|
|
(26,492
|
)
|
|
September 30, 2014
|
|
3,690
|
|
|
309,440
|
|
|
6,220
|
|
|
368,900
|
|
|
(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 Compass’ development in the Permian basin for both
Fiscal 2014
and the period from inception to September 30, 2013.
|
|
(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 Compass’ 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 performance.
|
|
(4)
|
Revisions of previous estimates due to other factors were primarily due to downward adjustments in the East Texas/North Louisiana region of
11.5
Bcfe primarily due to recent performance.
|
|
|
|
Oil
(Mbbls)
|
|
Natural
Gas
(Mmcf)
|
|
Natural Gas Liquids (Mbbls)
|
|
Mmcfe
|
||||
|
Proved developed:
|
|
|
|
|
|
|
|
|
||||
|
September 30, 2014
|
|
3,356
|
|
|
304,628
|
|
|
5,145
|
|
|
355,634
|
|
|
September 30, 2013
|
|
3,107
|
|
|
317,748
|
|
|
4,799
|
|
|
365,185
|
|
|
Proved undeveloped:
|
|
|
|
|
|
|
|
|
||||
|
September 30, 2014
|
|
334
|
|
|
4,812
|
|
|
1,075
|
|
|
13,266
|
|
|
September 30, 2013
|
|
317
|
|
|
4,670
|
|
|
931
|
|
|
12,157
|
|
|
|
|
September 30,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
Future cash inflows
|
|
$
|
1,895.2
|
|
|
$
|
1,638.5
|
|
|
Future production costs
|
|
914.9
|
|
|
923.7
|
|
||
|
Future development costs
|
|
164.4
|
|
|
156.0
|
|
||
|
Future income taxes
|
|
136.2
|
|
|
39.3
|
|
||
|
Future net cash flows
|
|
679.7
|
|
|
519.5
|
|
||
|
Discount of future net cash flows at 10% per annum
|
|
333.9
|
|
|
217.2
|
|
||
|
Standardized measure of discounted future net cash flows
|
|
$
|
345.8
|
|
|
$
|
302.3
|
|
|
|
|
Fiscal 2014
|
|
Period from inception to September 30, 2013
|
||||
|
Sales and transfers of oil and natural gas produced
|
|
$
|
(77.4
|
)
|
|
$
|
(46.2
|
)
|
|
Net changes in prices and production costs
|
|
141.8
|
|
|
39.2
|
|
||
|
Extensions and discoveries, net of future development and production costs
|
|
3.5
|
|
|
8.1
|
|
||
|
Development costs during the period
|
|
10.0
|
|
|
7.4
|
|
||
|
Changes in estimated future development costs
|
|
(12.0
|
)
|
|
20.2
|
|
||
|
Revisions of previous quantity estimates
|
|
24.2
|
|
|
(50.2
|
)
|
||
|
Purchase of reserves in place
|
|
—
|
|
|
300.6
|
|
||
|
Accretion of discount before income taxes
|
|
32.3
|
|
|
16.1
|
|
||
|
Changes in timing and other
|
|
(34.3
|
)
|
|
27.9
|
|
||
|
Net change in income taxes
|
|
(44.6
|
)
|
|
(20.8
|
)
|
||
|
Net change
|
|
$
|
43.5
|
|
|
$
|
302.3
|
|
|
|
|
Total
|
|
Fiscal 2014
|
|
Period from inception to September 30, 2013
|
||||||
|
Property acquisition costs
|
|
$
|
18.9
|
|
|
$
|
—
|
|
|
$
|
18.9
|
|
|
Capitalized interest
|
|
1.3
|
|
|
0.7
|
|
|
0.6
|
|
|||
|
Total
|
|
$
|
20.2
|
|
|
$
|
0.7
|
|
|
$
|
19.5
|
|
|
|
|
|
|
September 30, 2014
|
||||||||||
|
Issuer
|
|
Balance Sheet Classification
|
|
Asset carrying value
|
|
Accrued Investment Income
|
|
Total carrying value
|
||||||
|
Fortress
|
|
Fixed maturities
|
|
$
|
194.9
|
|
|
$
|
1.9
|
|
|
$
|
196.8
|
|
|
|
|
|
|
Fiscal
|
||
|
Issuer
|
|
Investment Income Classification
|
|
2014
|
||
|
Fortress
|
|
Net investment income
|
|
$
|
1.6
|
|
|
Leucadia
|
|
Net investment income
|
|
1.1
|
|
|
|
Jefferies
|
|
Net investment income
|
|
1.2
|
|
|
|
|
Fiscal
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Revenues:
|
|
|
|
|
|
||||||
|
Consumer Products
|
$
|
4,429.1
|
|
|
$
|
4,085.6
|
|
|
$
|
3,252.4
|
|
|
Insurance
|
1,349.7
|
|
|
1,348.4
|
|
|
1,221.8
|
|
|||
|
Energy
|
147.0
|
|
|
90.2
|
|
|
—
|
|
|||
|
Asset Management
|
34.2
|
|
|
28.9
|
|
|
8.6
|
|
|||
|
Intersegment elimination
|
(17.1
|
)
|
|
(9.7
|
)
|
|
(2.1
|
)
|
|||
|
Consolidated segment revenues
|
5,942.9
|
|
|
5,543.4
|
|
|
4,480.7
|
|
|||
|
Corporate and Other
|
20.1
|
|
|
—
|
|
|
—
|
|
|||
|
Total revenues
|
$
|
5,963.0
|
|
|
$
|
5,543.4
|
|
|
$
|
4,480.7
|
|
|
|
|
|
|
|
|
||||||
|
Depreciation and amortization
|
|
|
|
|
|
||||||
|
Consumer Products
|
$
|
157.7
|
|
|
$
|
139.8
|
|
|
$
|
104.5
|
|
|
Insurance
|
102.5
|
|
|
186.3
|
|
|
163.6
|
|
|||
|
Energy
|
41.8
|
|
|
32.2
|
|
|
—
|
|
|||
|
Asset Management
|
0.3
|
|
|
0.2
|
|
|
0.1
|
|
|||
|
Total segments
|
302.3
|
|
|
358.5
|
|
|
268.2
|
|
|||
|
Corporate
|
0.3
|
|
|
0.2
|
|
|
0.1
|
|
|||
|
Consolidated depreciation and amortization
|
$
|
302.6
|
|
|
$
|
358.7
|
|
|
$
|
268.3
|
|
|
|
|
|
|
|
|
||||||
|
Operating income (loss):
|
|
|
|
|
|
||||||
|
Consumer Products
|
$
|
481.9
|
|
|
$
|
351.2
|
|
|
$
|
301.8
|
|
|
Insurance
|
284.8
|
|
|
522.9
|
|
|
159.9
|
|
|||
|
Energy
|
(53.7
|
)
|
|
(45.2
|
)
|
|
—
|
|
|||
|
Asset Management
|
0.7
|
|
|
10.4
|
|
|
2.5
|
|
|||
|
Intersegment elimination
|
(17.7
|
)
|
|
(10.9
|
)
|
|
(2.1
|
)
|
|||
|
Total segments
|
696.0
|
|
|
828.4
|
|
|
462.1
|
|
|||
|
Corporate and eliminations
|
(126.5
|
)
|
|
(91.0
|
)
|
|
(52.6
|
)
|
|||
|
Consolidated operating income
|
569.5
|
|
|
737.4
|
|
|
409.5
|
|
|||
|
Interest expense
|
(321.9
|
)
|
|
(511.9
|
)
|
|
(251.0
|
)
|
|||
|
Loss from the change in the fair value of the equity conversion feature of preferred stock
|
(12.7
|
)
|
|
(101.6
|
)
|
|
(156.6
|
)
|
|||
|
Gain on contingent purchase price reduction
|
0.5
|
|
|
—
|
|
|
41.0
|
|
|||
|
Other expense, net
|
(22.2
|
)
|
|
(5.6
|
)
|
|
(17.5
|
)
|
|||
|
Consolidated income from continuing operations before income taxes
|
$
|
213.2
|
|
|
$
|
118.3
|
|
|
$
|
25.4
|
|
|
|
Fiscal
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Capital expenditures:
|
|
|
|
|
|
||||||
|
Consumer Products
|
$
|
73.4
|
|
|
$
|
81.9
|
|
|
$
|
46.8
|
|
|
Insurance
|
9.4
|
|
|
4.1
|
|
|
6.2
|
|
|||
|
Energy
|
13.4
|
|
|
13.4
|
|
|
—
|
|
|||
|
Asset Management
|
0.9
|
|
|
0.3
|
|
|
0.5
|
|
|||
|
Total segments
|
97.1
|
|
|
99.7
|
|
|
53.5
|
|
|||
|
Corporate
|
1.1
|
|
|
0.4
|
|
|
—
|
|
|||
|
Consolidated capital expenditures
|
$
|
98.2
|
|
|
$
|
100.1
|
|
|
$
|
53.5
|
|
|
|
September 30,
|
||||||
|
Total long-lived assets:
|
2014
|
|
2013
|
||||
|
Consumer Products
|
$
|
428.9
|
|
|
$
|
412.5
|
|
|
Insurance
|
11.4
|
|
|
7.0
|
|
||
|
Energy
|
464.4
|
|
|
572.6
|
|
||
|
Asset Management
|
1.4
|
|
|
0.7
|
|
||
|
Total segments
|
906.1
|
|
|
992.8
|
|
||
|
Corporate assets
|
2.5
|
|
|
0.5
|
|
||
|
Consolidated total long-lived assets
|
$
|
908.6
|
|
|
$
|
993.3
|
|
|
|
Fiscal
|
||||||||||
|
Net change in cash due to operating activities
|
2014
|
|
2013
|
|
2012
|
||||||
|
Consumer Products
|
$
|
432.7
|
|
|
$
|
256.5
|
|
|
$
|
258.7
|
|
|
Insurance
|
288.1
|
|
|
336.2
|
|
|
300.0
|
|
|||
|
Energy
|
44.3
|
|
|
37.2
|
|
|
—
|
|
|||
|
Asset Management
|
(4.9
|
)
|
|
11.7
|
|
|
13.7
|
|
|||
|
Net change in cash due to segment operating activities
|
760.2
|
|
|
641.6
|
|
|
572.4
|
|
|||
|
Net change in cash due to corporate operating activities
|
(152.3
|
)
|
|
(119.3
|
)
|
|
50.1
|
|
|||
|
Consolidated change in cash due to operating activities
|
$
|
607.9
|
|
|
$
|
522.3
|
|
|
$
|
622.5
|
|
|
|
|
Fiscal
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
United States
|
|
$
|
2,660.8
|
|
|
$
|
2,411.4
|
|
|
$
|
1,772.1
|
|
|
Outside the United States
|
|
1,788.4
|
|
|
1,674.2
|
|
|
1,480.3
|
|
|||
|
Consolidated net consumer and other product sales to external customers
|
|
$
|
4,449.2
|
|
|
$
|
4,085.6
|
|
|
$
|
3,252.4
|
|
|
|
|
September 30,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
United States
|
|
$
|
733.0
|
|
|
$
|
811.6
|
|
|
Outside the United States
|
|
175.6
|
|
|
181.7
|
|
||
|
Consolidated long-lived assets
|
|
$
|
908.6
|
|
|
$
|
993.3
|
|
|
September 30, 2014
|
|
Consumer Products
|
|
Insurance
|
|
Energy
|
|
Asset Management
|
|
Corporate and Other
|
|
Eliminations
|
|
Total
|
||||||||||||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Investments
|
|
$
|
—
|
|
|
$
|
18,820.7
|
|
|
$
|
—
|
|
|
$
|
584.6
|
|
|
$
|
93.7
|
|
|
$
|
(246.5
|
)
|
|
$
|
19,252.5
|
|
|
Investments in subsidiaries and affiliates
|
|
—
|
|
|
68.2
|
|
|
—
|
|
|
—
|
|
|
2,237.9
|
|
|
(2,306.1
|
)
|
|
—
|
|
|||||||
|
Affiliated loans and receivables
|
|
—
|
|
|
157.2
|
|
|
—
|
|
|
28.5
|
|
|
—
|
|
|
(185.7
|
)
|
|
—
|
|
|||||||
|
Cash and cash equivalents
|
|
194.6
|
|
|
633.8
|
|
|
14.2
|
|
|
53.5
|
|
|
423.1
|
|
|
—
|
|
|
1,319.2
|
|
|||||||
|
Receivables, net
|
|
515.3
|
|
|
2.1
|
|
|
23.7
|
|
|
0.9
|
|
|
43.1
|
|
|
—
|
|
|
585.1
|
|
|||||||
|
Inventories, net
|
|
624.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.7
|
|
|
—
|
|
|
635.2
|
|
|||||||
|
Accrued investment income
|
|
—
|
|
|
181.8
|
|
|
—
|
|
|
3.7
|
|
|
—
|
|
|
(0.6
|
)
|
|
184.9
|
|
|||||||
|
Reinsurance recoverable
|
|
—
|
|
|
2,397.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,397.6
|
|
|||||||
|
Deferred tax assets
|
|
46.7
|
|
|
139.0
|
|
|
—
|
|
|
—
|
|
|
1.1
|
|
|
(0.1
|
)
|
|
186.7
|
|
|||||||
|
Properties, including oil and natural gas properties, net
|
|
428.9
|
|
|
11.4
|
|
|
464.4
|
|
|
1.4
|
|
|
2.5
|
|
|
—
|
|
|
908.6
|
|
|||||||
|
Goodwill
|
|
1,469.6
|
|
|
—
|
|
|
—
|
|
|
10.7
|
|
|
44.5
|
|
|
—
|
|
|
1,524.8
|
|
|||||||
|
Intangibles, including DAC and VOBA, net
|
|
2,091.5
|
|
|
550.4
|
|
|
—
|
|
|
—
|
|
|
41.8
|
|
|
—
|
|
|
2,683.7
|
|
|||||||
|
Other assets
|
|
141.9
|
|
|
233.6
|
|
|
2.5
|
|
|
9.2
|
|
|
34.7
|
|
|
—
|
|
|
421.9
|
|
|||||||
|
Total assets
|
|
$
|
5,513.0
|
|
|
$
|
23,195.8
|
|
|
$
|
504.8
|
|
|
$
|
692.5
|
|
|
$
|
2,933.1
|
|
|
$
|
(2,739.0
|
)
|
|
$
|
30,100.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Liabilities and Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Insurance reserves
|
|
$
|
—
|
|
|
$
|
20,215.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,215.1
|
|
|
Debt
|
|
2,990.9
|
|
|
300.0
|
|
|
243.2
|
|
|
298.7
|
|
|
1,325.0
|
|
|
—
|
|
|
5,157.8
|
|
|||||||
|
Accounts payable and other current liabilities
|
|
816.2
|
|
|
71.9
|
|
|
31.3
|
|
|
8.5
|
|
|
104.6
|
|
|
0.5
|
|
|
1,033.0
|
|
|||||||
|
Employee benefit obligations
|
|
81.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.3
|
|
|
—
|
|
|
86.2
|
|
|||||||
|
Deferred tax liabilities
|
|
516.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17.2
|
|
|
0.1
|
|
|
533.3
|
|
|||||||
|
Other liabilities
|
|
21.2
|
|
|
748.9
|
|
|
27.3
|
|
|
19.3
|
|
|
1.1
|
|
|
—
|
|
|
817.8
|
|
|||||||
|
Affiliated debt and payables
|
|
—
|
|
|
7.8
|
|
|
102.3
|
|
|
286.5
|
|
|
34.8
|
|
|
(431.4
|
)
|
|
—
|
|
|||||||
|
Total liabilities
|
|
4,426.2
|
|
|
21,343.7
|
|
|
404.1
|
|
|
613.0
|
|
|
1,487.0
|
|
|
(430.8
|
)
|
|
27,843.2
|
|
|||||||
|
Temporary equity
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
Total stockholders’ equity
|
|
612.4
|
|
|
1,526.9
|
|
|
100.7
|
|
|
68.2
|
|
|
1,441.6
|
|
|
(2,308.2
|
)
|
|
1,441.6
|
|
|||||||
|
Noncontrolling interests
|
|
474.4
|
|
|
325.2
|
|
|
—
|
|
|
11.3
|
|
|
4.5
|
|
|
—
|
|
|
815.4
|
|
|||||||
|
Total permanent equity
|
|
1,086.8
|
|
|
1,852.1
|
|
|
100.7
|
|
|
79.5
|
|
|
1,446.1
|
|
|
(2,308.2
|
)
|
|
2,257.0
|
|
|||||||
|
Total liabilities and equity
|
|
$
|
5,513.0
|
|
|
$
|
23,195.8
|
|
|
$
|
504.8
|
|
|
$
|
692.5
|
|
|
$
|
2,933.1
|
|
|
$
|
(2,739.0
|
)
|
|
$
|
30,100.2
|
|
|
September 30, 2013
|
|
Consumer Products
|
|
Insurance
|
|
Energy
|
|
Asset Management
|
|
Corporate and Other
|
|
Eliminations
|
|
Total
|
||||||||||||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Investments
|
|
$
|
—
|
|
|
$
|
16,282.3
|
|
|
$
|
—
|
|
|
$
|
389.3
|
|
|
$
|
42.3
|
|
|
$
|
(248.0
|
)
|
|
$
|
16,465.9
|
|
|
Investment 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
|
|
|
Year ended September 30, 2014
|
|
Consumer Products
|
|
Insurance
|
|
Energy
|
|
Asset Management
|
|
Corporate and Other
|
|
Eliminations
|
|
Total
|
||||||||||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Net consumer and other product sales
|
|
$
|
4,429.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20.1
|
|
|
$
|
—
|
|
|
$
|
4,449.2
|
|
|
Oil and natural gas
|
|
—
|
|
|
—
|
|
|
147.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
147.0
|
|
|||||||
|
Insurance premiums
|
|
—
|
|
|
56.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56.6
|
|
|||||||
|
Net investment income
|
|
—
|
|
|
824.5
|
|
|
—
|
|
|
34.2
|
|
|
—
|
|
|
(16.5
|
)
|
|
842.2
|
|
|||||||
|
Net investment gains
|
|
—
|
|
|
395.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|
395.3
|
|
|||||||
|
Insurance and investment product fees and other
|
|
—
|
|
|
72.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
72.7
|
|
|||||||
|
Total revenues
|
|
4,429.1
|
|
|
1,349.7
|
|
|
147.0
|
|
|
34.2
|
|
|
20.1
|
|
|
(17.1
|
)
|
|
5,963.0
|
|
|||||||
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Cost of consumer products and other goods sold
|
|
2,860.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15.3
|
|
|
—
|
|
|
2,875.6
|
|
|||||||
|
Oil and natural gas direct operating costs
|
|
—
|
|
|
—
|
|
|
69.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69.6
|
|
|||||||
|
Benefits and other changes in policy reserves
|
|
—
|
|
|
852.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
852.7
|
|
|||||||
|
Selling, acquisition, operating and general expenses
|
|
1,005.2
|
|
|
114.7
|
|
|
50.1
|
|
|
33.5
|
|
|
131.3
|
|
|
0.6
|
|
|
1,335.4
|
|
|||||||
|
Impairment of oil and gas properties
|
|
—
|
|
|
—
|
|
|
81.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
81.0
|
|
|||||||
|
Amortization of intangibles
|
|
81.7
|
|
|
97.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
179.2
|
|
|||||||
|
Total operating costs and expenses
|
|
3,947.2
|
|
|
1,064.9
|
|
|
200.7
|
|
|
33.5
|
|
|
146.6
|
|
|
0.6
|
|
|
5,393.5
|
|
|||||||
|
Operating income (loss)
|
|
481.9
|
|
|
284.8
|
|
|
(53.7
|
)
|
|
0.7
|
|
|
(126.5
|
)
|
|
(17.7
|
)
|
|
569.5
|
|
|||||||
|
Equity in net income (losses) of subsidiaries
|
|
—
|
|
|
(6.0
|
)
|
|
—
|
|
|
—
|
|
|
221.4
|
|
|
(215.4
|
)
|
|
—
|
|
|||||||
|
Interest expense
|
|
(202.1
|
)
|
|
(22.5
|
)
|
|
(7.7
|
)
|
|
—
|
|
|
(89.6
|
)
|
|
—
|
|
|
(321.9
|
)
|
|||||||
|
Affiliated interest expense
|
|
—
|
|
|
—
|
|
|
(9.0
|
)
|
|
(6.0
|
)
|
|
(1.5
|
)
|
|
16.5
|
|
|
—
|
|
|||||||
|
Loss from the change in the fair value of the equity conversion feature of preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12.7
|
)
|
|
—
|
|
|
(12.7
|
)
|
|||||||
|
Gain on contingent purchase price reduction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
0.5
|
|
|||||||
|
Other expense, net
|
|
(6.3
|
)
|
|
—
|
|
|
(6.5
|
)
|
|
(1.2
|
)
|
|
(4.7
|
)
|
|
(3.5
|
)
|
|
(22.2
|
)
|
|||||||
|
Income (loss) from continuing operations before income taxes
|
|
273.5
|
|
|
256.3
|
|
|
(76.9
|
)
|
|
(6.5
|
)
|
|
(13.1
|
)
|
|
(220.1
|
)
|
|
213.2
|
|
|||||||
|
Income tax expense (benefit)
|
|
59.0
|
|
|
54.0
|
|
|
—
|
|
|
(0.1
|
)
|
|
0.9
|
|
|
(2.3
|
)
|
|
111.5
|
|
|||||||
|
Net income (loss)
|
|
214.5
|
|
|
202.3
|
|
|
(76.9
|
)
|
|
(6.4
|
)
|
|
(14.0
|
)
|
|
(217.8
|
)
|
|
101.7
|
|
|||||||
|
Less: Net income (loss) attributable to noncontrolling interest
|
|
88.9
|
|
|
27.2
|
|
|
—
|
|
|
(0.4
|
)
|
|
(3.7
|
)
|
|
—
|
|
|
112.0
|
|
|||||||
|
Net (loss) income attributable to controlling interest
|
|
125.6
|
|
|
175.1
|
|
|
(76.9
|
)
|
|
(6.0
|
)
|
|
(10.3
|
)
|
|
(217.8
|
)
|
|
(10.3
|
)
|
|||||||
|
Less: Preferred stock dividends, accretion and loss on conversion
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
73.6
|
|
|
—
|
|
|
73.6
|
|
|||||||
|
Net (loss) income attributable to common and participating preferred stockholders
|
|
$
|
125.6
|
|
|
$
|
175.1
|
|
|
$
|
(76.9
|
)
|
|
$
|
(6.0
|
)
|
|
$
|
(83.9
|
)
|
|
$
|
(217.8
|
)
|
|
$
|
(83.9
|
)
|
|
Year ended September 30, 2013
|
|
Consumer Products
|
|
Insurance
|
|
Energy
|
|
Asset Management
|
|
Corporate and Other
|
|
Eliminations
|
|
Total
|
||||||||||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Net consumer and other 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Cost of consumer products and other 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 natural 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 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 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
|
)
|
|||||||
|
Income (loss) 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, accretion and loss on conversion
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
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
|
|
Asset Management
|
|
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 (loss)
|
|
301.8
|
|
|
159.9
|
|
|
—
|
|
|
2.5
|
|
|
(52.6
|
)
|
|
(2.1
|
)
|
|
409.5
|
|
|||||||
|
Equity in net income (losses) of subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
372.0
|
|
|
(372.0
|
)
|
|
—
|
|
|||||||
|
Interest expense
|
|
(191.9
|
)
|
|
(2.5
|
)
|
|
—
|
|
|
—
|
|
|
(56.6
|
)
|
|
—
|
|
|
(251.0
|
)
|
|||||||
|
Affiliated interest income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
—
|
|
|
2.1
|
|
|
—
|
|
|||||||
|
Gain 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, net
|
|
(0.9
|
)
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
(16.7
|
)
|
|
—
|
|
|
(17.5
|
)
|
|||||||
|
Income 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 and loss on conversion
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
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
|
|
|
|
|
Quarter Ended
|
||||||||||
|
|
|
September 30,
2014 |
|
June 30,
2014 |
|
March 31,
2014 |
|
December 31,
2013 |
||||
|
Total revenues
|
|
1,512.4
|
|
|
1,599.4
|
|
|
1,341.2
|
|
|
1,510.0
|
|
|
Operating income
|
|
144.9
|
|
|
229.1
|
|
|
16.2
|
|
|
179.3
|
|
|
Net (loss) income attributable to common and participating preferred stockholders
|
|
(6.3
|
)
|
|
49.0
|
|
|
(87.6
|
)
|
|
(39.0
|
)
|
|
Net (loss) income per common share attributable to controlling interest:
|
|
|
|
|
|
|
|
|
||||
|
Basic
|
|
(0.03
|
)
|
|
0.28
|
|
|
(0.63
|
)
|
|
(0.28
|
)
|
|
Diluted
|
|
(0.03
|
)
|
|
0.28
|
|
|
(0.63
|
)
|
|
(0.28
|
)
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
Quarter Ended
|
||||||||||
|
|
|
September 30,
2013 |
|
June 30,
2013 |
|
March 31,
2013 |
|
December 30,
2012 |
||||
|
Total revenues
|
|
1,498.6
|
|
|
1,410.6
|
|
|
1,411.9
|
|
|
1,222.3
|
|
|
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
|
|
|
|
|
Amortized Cost
(a)
|
|
Fair Value
|
|
Amount at which
shown in the balance
sheet
|
||||||
|
Fixed maturities:
|
|
|
|
|
|
|
||||||
|
Bonds:
|
|
|
|
|
|
|
||||||
|
United States Government and government agencies and authorities
|
|
$
|
395.3
|
|
|
$
|
403.3
|
|
|
$
|
403.3
|
|
|
States, municipalities and political subdivisions
|
|
1,149.9
|
|
|
1,259.8
|
|
|
1,259.8
|
|
|||
|
Foreign governments
|
|
13.1
|
|
|
12.9
|
|
|
12.9
|
|
|||
|
Public utilities
|
|
1,822.2
|
|
|
1,922.4
|
|
|
1,922.4
|
|
|||
|
All other corporate bonds
|
|
12,968.2
|
|
|
13,492.4
|
|
|
13,492.4
|
|
|||
|
Redeemable preferred stock
|
|
120.0
|
|
|
120.7
|
|
|
120.7
|
|
|||
|
Total fixed maturities
|
|
16,468.7
|
|
|
17,211.5
|
|
|
17,211.5
|
|
|||
|
Equity securities:
|
|
|
|
|
|
|
||||||
|
Common stocks:
|
|
|
|
|
|
|
||||||
|
Banks, trust, and insurance companies
|
|
98.4
|
|
|
85.4
|
|
|
85.4
|
|
|||
|
Industrial, miscellaneous and all other
|
|
141.2
|
|
|
104.5
|
|
|
104.5
|
|
|||
|
Nonredeemable preferred stock
|
|
547.3
|
|
|
578.2
|
|
|
578.2
|
|
|||
|
Total equity securities
|
|
786.9
|
|
|
768.1
|
|
|
768.1
|
|
|||
|
Derivative investments
|
|
177.7
|
|
|
296.3
|
|
|
296.3
|
|
|||
|
Asset-based loans
|
|
811.6
|
|
|
811.6
|
|
|
811.6
|
|
|||
|
Policy loans
|
|
10.6
|
|
|
10.6
|
|
|
10.6
|
|
|||
|
Other invested assets
|
|
154.3
|
|
|
154.4
|
|
|
154.4
|
|
|||
|
Total investments
|
|
$
|
18,409.8
|
|
|
$
|
19,252.5
|
|
|
$
|
19,252.5
|
|
|
(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,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
ASSETS
|
||||||||
|
Cash and cash equivalents
|
|
$
|
420.0
|
|
|
$
|
256.9
|
|
|
Receivables, net
|
|
42.5
|
|
|
41.0
|
|
||
|
Prepaid expenses and other current assets
|
|
—
|
|
|
3.3
|
|
||
|
Total current assets
|
|
462.5
|
|
|
301.2
|
|
||
|
Investments in consolidated subsidiaries
|
|
2,357.4
|
|
|
2,049.0
|
|
||
|
Advances to consolidated subsidiaries
|
|
9.6
|
|
|
9.5
|
|
||
|
Properties, net
|
|
0.6
|
|
|
0.5
|
|
||
|
Deferred charges and other assets
|
|
31.6
|
|
|
23.1
|
|
||
|
Total assets
|
|
$
|
2,861.7
|
|
|
$
|
2,383.3
|
|
|
LIABILITIES AND EQUITY
|
||||||||
|
Accounts payable
|
|
$
|
3.0
|
|
|
$
|
1.4
|
|
|
Accrued and other current liabilities
|
|
86.7
|
|
|
69.6
|
|
||
|
Total current liabilities
|
|
89.7
|
|
|
71.0
|
|
||
|
Long-term debt
|
|
1,325.0
|
|
|
924.2
|
|
||
|
Equity conversion feature of preferred stock
|
|
—
|
|
|
330.8
|
|
||
|
Employee benefit obligations
|
|
4.3
|
|
|
3.0
|
|
||
|
Other liabilities
|
|
1.1
|
|
|
0.3
|
|
||
|
Total liabilities
|
|
1,420.1
|
|
|
1,329.3
|
|
||
|
Temporary equity:
|
|
|
|
|
||||
|
Redeemable preferred stock
|
|
—
|
|
|
329.3
|
|
||
|
Stockholders’ equity:
|
|
|
|
|
||||
|
Common stock
|
|
2.0
|
|
|
1.4
|
|
||
|
Additional paid-in capital
|
|
1,472.3
|
|
|
828.0
|
|
||
|
Accumulated deficit
|
|
(276.3
|
)
|
|
(192.4
|
)
|
||
|
Accumulated other comprehensive income
|
|
243.6
|
|
|
87.7
|
|
||
|
Total stockholders’ equity
|
|
1,441.6
|
|
|
724.7
|
|
||
|
Total liabilities and equity
|
|
$
|
2,861.7
|
|
|
$
|
2,383.3
|
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Cost of revenues
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Gross profit
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Operating expenses:
|
|
|
|
|
|
|
||||||
|
General and administrative
|
|
111.1
|
|
|
77.4
|
|
|
48.4
|
|
|||
|
Acquisition related charges
|
|
4.2
|
|
|
12.7
|
|
|
3.7
|
|
|||
|
Total operating expenses
|
|
115.3
|
|
|
90.1
|
|
|
52.1
|
|
|||
|
Operating loss
|
|
(115.3
|
)
|
|
(90.1
|
)
|
|
(52.1
|
)
|
|||
|
Other income (expense):
|
|
|
|
|
|
|
||||||
|
Equity in net income of subsidiaries
|
|
207.7
|
|
|
263.7
|
|
|
354.6
|
|
|||
|
Interest expense
|
|
(89.7
|
)
|
|
(120.1
|
)
|
|
(56.6
|
)
|
|||
|
Loss from the change in the fair value of the equity conversion feature of preferred stock
|
|
(12.7
|
)
|
|
(101.6
|
)
|
|
(156.6
|
)
|
|||
|
Gain on contingent purchase price reduction
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|||
|
Other, net
|
|
0.1
|
|
|
1.1
|
|
|
0.2
|
|
|||
|
(Loss) income before income taxes
|
|
(9.4
|
)
|
|
(47.0
|
)
|
|
89.5
|
|
|||
|
Income tax expense (benefit)
|
|
0.9
|
|
|
(1.2
|
)
|
|
—
|
|
|||
|
Net (loss) income
|
|
(10.3
|
)
|
|
(45.8
|
)
|
|
89.5
|
|
|||
|
Less: Preferred stock dividends and accretion and loss on conversion
|
|
73.6
|
|
|
48.4
|
|
|
59.6
|
|
|||
|
Net (loss) income attributable to common and participating preferred stockholders
|
|
$
|
(83.9
|
)
|
|
$
|
(94.2
|
)
|
|
$
|
29.9
|
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
|
Net (loss) income
|
|
$
|
(10.3
|
)
|
|
$
|
(45.8
|
)
|
|
$
|
89.5
|
|
|
Adjustments to reconcile net (loss) income to net cash used in operating activities:
|
|
|
|
|
|
|
||||||
|
Depreciation of properties
|
|
0.2
|
|
|
0.2
|
|
|
0.1
|
|
|||
|
Stock-based compensation
|
|
27.0
|
|
|
11.7
|
|
|
1.9
|
|
|||
|
Amortization of debt issuance costs
|
|
3.5
|
|
|
2.7
|
|
|
2.9
|
|
|||
|
Amortization of debt discount
|
|
1.5
|
|
|
0.5
|
|
|
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
|
|
|||
|
Equity in net income of subsidiaries
|
|
(207.7
|
)
|
|
(263.7
|
)
|
|
(354.6
|
)
|
|||
|
Dividends from subsidiaries
|
|
118.0
|
|
|
127.1
|
|
|
69.5
|
|
|||
|
Loss from the change in the fair value of the equity conversion feature of preferred stock
|
|
12.7
|
|
|
101.6
|
|
|
156.6
|
|
|||
|
Gain on contingent purchase price reduction
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|||
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
|
Prepaid expenses and other current assets
|
|
—
|
|
|
—
|
|
|
(4.6
|
)
|
|||
|
Accounts payable and accrued and other current liabilities
|
|
43.5
|
|
|
51.4
|
|
|
27.0
|
|
|||
|
Other operating
|
|
(0.7
|
)
|
|
11.6
|
|
|
(1.7
|
)
|
|||
|
Net change in cash due to operating activities
|
|
(12.8
|
)
|
|
10.2
|
|
|
(9.2
|
)
|
|||
|
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
|
Proceeds from investments sold, matured or repaid
|
|
—
|
|
|
34.0
|
|
|
108.9
|
|
|||
|
Cost of investments acquired
|
|
—
|
|
|
—
|
|
|
(68.0
|
)
|
|||
|
Capital contributions to consolidated subsidiaries
|
|
(115.5
|
)
|
|
(454.4
|
)
|
|
(36.3
|
)
|
|||
|
Return of capital from subsidiary
|
|
—
|
|
|
126.8
|
|
|
88.0
|
|
|||
|
Repayments from (advances to) consolidated subsidiaries
|
|
—
|
|
|
—
|
|
|
49.3
|
|
|||
|
Capital expenditures
|
|
(0.3
|
)
|
|
(0.4
|
)
|
|
—
|
|
|||
|
Net change in cash due to investing activities
|
|
(115.8
|
)
|
|
(294.0
|
)
|
|
141.9
|
|
|||
|
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
|
Dividends paid on preferred stock
|
|
(28.6
|
)
|
|
(33.4
|
)
|
|
(31.7
|
)
|
|||
|
Proceeds from senior secured notes
|
|
400.0
|
|
|
923.9
|
|
|
—
|
|
|||
|
Repayment of senior secured notes, including tender / call premium
|
|
—
|
|
|
(545.9
|
)
|
|
—
|
|
|||
|
Debt issuance costs
|
|
(10.4
|
)
|
|
(25.1
|
)
|
|
—
|
|
|||
|
Common stock repurchased
|
|
(65.6
|
)
|
|
(12.3
|
)
|
|
—
|
|
|||
|
Share based award tax withholding payments
|
|
(6.5
|
)
|
|
(2.3
|
)
|
|
—
|
|
|||
|
Other financing activities
|
|
2.8
|
|
|
—
|
|
|
—
|
|
|||
|
Net change in cash due to financing activities
|
|
291.7
|
|
|
304.9
|
|
|
(31.7
|
)
|
|||
|
Net increase in cash and cash equivalents
|
|
163.1
|
|
|
21.1
|
|
|
101.0
|
|
|||
|
Cash and cash equivalents at beginning of period
|
|
256.9
|
|
|
235.8
|
|
|
134.8
|
|
|||
|
Cash and cash equivalents at end of period
|
|
$
|
420.0
|
|
|
$
|
256.9
|
|
|
$
|
235.8
|
|
|
|
|
As of or for the year ended
September 30,
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Life Insurance (single segment):
|
|
|
|
|
|
|
||||||
|
Deferred acquisition costs
|
|
$
|
463.8
|
|
|
$
|
340.6
|
|
|
$
|
169.2
|
|
|
Future policy benefits, losses, claims and loss expenses
|
|
3,655.5
|
|
|
3,556.8
|
|
|
3,614.8
|
|
|||
|
Other policy claims and benefits payable
|
|
58.1
|
|
|
51.5
|
|
|
91.1
|
|
|||
|
Premium revenue
|
|
56.6
|
|
|
58.8
|
|
|
55.3
|
|
|||
|
Net investment income
|
|
824.5
|
|
|
715.5
|
|
|
716.2
|
|
|||
|
Benefits, claims, losses and settlement expenses
|
|
(852.7
|
)
|
|
(531.8
|
)
|
|
(777.4
|
)
|
|||
|
Amortization of deferred acquisition costs
|
|
(41.7
|
)
|
|
(45.3
|
)
|
|
(15.2
|
)
|
|||
|
Other operating expenses
|
|
(114.7
|
)
|
|
(111.4
|
)
|
|
(123.9
|
)
|
|||
|
For the year ended September 30, 2014
|
|
Gross Amount
|
|
Ceded to other
companies
|
|
Assumed from
other companies
|
|
Net Amount
|
|
Percentage
of amount
assumed to net
|
|||||||||
|
Life insurance in force
|
|
$
|
2,785.6
|
|
|
$
|
(2,014.3
|
)
|
|
$
|
16.4
|
|
|
$
|
787.7
|
|
|
2.1
|
%
|
|
Premiums and other considerations:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Traditional life insurance premiums
|
|
$
|
266.8
|
|
|
$
|
(246.1
|
)
|
|
$
|
35.9
|
|
|
$
|
56.6
|
|
|
63.4
|
%
|
|
Annuity product charges
|
|
142.5
|
|
|
(71.4
|
)
|
|
—
|
|
|
71.1
|
|
|
—
|
%
|
||||
|
Total premiums and other considerations
|
|
$
|
409.3
|
|
|
$
|
(317.5
|
)
|
|
$
|
35.9
|
|
|
$
|
127.7
|
|
|
28.1
|
%
|
|
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
|
|
|
2.7
|
%
|
|
Premiums and other considerations:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Traditional life insurance premiums
|
|
$
|
279.2
|
|
|
$
|
(253.2
|
)
|
|
$
|
32.8
|
|
|
$
|
58.8
|
|
|
55.8
|
%
|
|
Annuity product charges
|
|
135.5
|
|
|
(75.0
|
)
|
|
—
|
|
|
60.5
|
|
|
—
|
%
|
||||
|
Total premiums and other considerations
|
|
$
|
414.7
|
|
|
$
|
(328.2
|
)
|
|
$
|
32.8
|
|
|
$
|
119.3
|
|
|
27.5
|
%
|
|
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
|
|
|
4.3
|
%
|
|
Premiums and other considerations:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Traditional life insurance premiums
|
|
$
|
298.0
|
|
|
$
|
(289.9
|
)
|
|
$
|
47.2
|
|
|
$
|
55.3
|
|
|
85.4
|
%
|
|
Annuity product charges
|
|
117.9
|
|
|
(79.6
|
)
|
|
—
|
|
|
38.3
|
|
|
—
|
%
|
||||
|
Total premiums and other considerations
|
|
$
|
415.9
|
|
|
$
|
(369.5
|
)
|
|
$
|
47.2
|
|
|
$
|
93.6
|
|
|
50.4
|
%
|
|
|
|
|
|
Page
|
|
Reports of Independent Registered Public Accounting Firm
|
|
|
Consolidated Statements of Financial Position
|
|
|
Consolidated Statements of Operations
|
|
|
Consolidated Statements of Comprehensive Income (Loss)
|
|
|
Consolidated Statements of Shareholders’ Equity
|
|
|
Consolidated Statements of Cash Flows
|
|
|
Notes to Consolidated Financial Statements
|
|
|
Schedule II Valuation and Qualifying Accounts
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||
|
Assets
|
|
|
|
|
|
|
||
|
Current assets:
|
|
|
|
|
|
|
||
|
Cash and cash equivalents
|
|
$
|
194,633
|
|
|
$
|
207,257
|
|
|
Receivables:
|
|
|
|
|
|
|
||
|
Trade accounts receivable, net of allowances $48,641 and $37,376, respectively
|
|
|
439,038
|
|
|
|
481,313
|
|
|
Other
|
|
|
76,236
|
|
|
|
65,620
|
|
|
Inventories
|
|
|
624,535
|
|
|
|
632,923
|
|
|
Deferred income taxes
|
|
|
36,708
|
|
|
|
32,959
|
|
|
Prepaid expenses and other
|
|
|
63,476
|
|
|
|
62,833
|
|
|
Total current assets
|
|
|
1,434,626
|
|
|
|
1,482,905
|
|
|
Property, plant and equipment, net
|
|
|
428,877
|
|
|
|
412,551
|
|
|
Deferred charges and other
|
|
|
37,279
|
|
|
|
26,050
|
|
|
Goodwill
|
|
|
1,469,561
|
|
|
|
1,476,672
|
|
|
Intangible assets, net
|
|
|
2,091,539
|
|
|
|
2,163,166
|
|
|
Debt issuance costs
|
|
|
51,147
|
|
|
|
65,329
|
|
|
Total assets
|
|
$
|
5,513,029
|
|
|
$
|
5,626,673
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
||
|
Current liabilities:
|
|
|
|
|
|
|
||
|
Current maturities of long-term debt
|
|
$
|
96,736
|
|
|
$
|
102,921
|
|
|
Accounts payable
|
|
|
519,733
|
|
|
|
525,519
|
|
|
Accrued liabilities:
|
|
|
|
|
|
|
||
|
Wages and benefits
|
|
|
88,064
|
|
|
|
82,056
|
|
|
Income taxes payable
|
|
|
18,544
|
|
|
|
32,613
|
|
|
Accrued interest
|
|
|
35,429
|
|
|
|
36,731
|
|
|
Other
|
|
|
157,198
|
|
|
|
172,530
|
|
|
Total current liabilities
|
|
|
915,704
|
|
|
|
952,370
|
|
|
Long-term debt, net of current maturities
|
|
|
2,894,137
|
|
|
|
3,115,942
|
|
|
Employee benefit obligations, net of current portion
|
|
|
81,964
|
|
|
|
96,612
|
|
|
Deferred income taxes
|
|
|
513,204
|
|
|
|
492,774
|
|
|
Other
|
|
|
21,190
|
|
|
|
28,879
|
|
|
Total liabilities
|
|
|
4,426,199
|
|
|
|
4,686,577
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
||
|
Shareholders' equity:
|
|
|
|
|
|
|
||
|
Common stock, $.01 par value, authorized 200,000 shares; issued 54,154 and 53,579 shares, respectively; outstanding 52,713 and 52,210 shares
|
|
|
542
|
|
|
|
535
|
|
|
Additional paid-in capital
|
|
|
1,433,413
|
|
|
|
1,410,738
|
|
|
Accumulated deficit
|
|
|
(283,141
|
)
|
|
|
(435,911
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(63,074
|
)
|
|
|
(38,521
|
)
|
|
|
|
|
1,087,740
|
|
|
|
936,841
|
|
|
Less treasury stock, at cost, 1,441 and 1,369 shares, respectively
|
|
|
(44,338
|
)
|
|
|
(39,820
|
)
|
|
Total shareholders' equity
|
|
|
1,043,402
|
|
|
|
897,021
|
|
|
Noncontrolling interest
|
|
|
43,428
|
|
|
|
43,075
|
|
|
Total equity
|
|
|
1,086,830
|
|
|
|
940,096
|
|
|
Total liabilities and equity
|
|
$
|
5,513,029
|
|
|
$
|
5,626,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Net sales
|
|
$
|
4,429,109
|
|
|
$
|
4,085,581
|
|
|
$
|
3,252,435
|
|
|
Cost of goods sold
|
|
|
2,856,527
|
|
|
|
2,685,285
|
|
|
|
2,126,922
|
|
|
Restructuring and related charges
|
|
|
3,713
|
|
|
|
9,984
|
|
|
|
9,835
|
|
|
Gross profit
|
|
|
1,568,869
|
|
|
|
1,390,312
|
|
|
|
1,115,678
|
|
|
Selling
|
|
|
678,152
|
|
|
|
636,958
|
|
|
|
521,191
|
|
|
General and administrative
|
|
|
321,645
|
|
|
|
286,370
|
|
|
|
218,832
|
|
|
Research and development
|
|
|
47,855
|
|
|
|
43,334
|
|
|
|
33,087
|
|
|
Acquisition and integration related charges
|
|
|
20,102
|
|
|
|
48,445
|
|
|
|
31,066
|
|
|
Restructuring and related charges
|
|
|
19,182
|
|
|
|
24,028
|
|
|
|
9,756
|
|
|
Total operating expenses
|
|
|
1,086,936
|
|
|
|
1,039,135
|
|
|
|
813,932
|
|
|
Operating income
|
|
|
481,933
|
|
|
|
351,177
|
|
|
|
301,746
|
|
|
Interest expense
|
|
|
202,118
|
|
|
|
375,625
|
|
|
|
191,911
|
|
|
Other expense, net
|
|
|
6,286
|
|
|
|
3,506
|
|
|
|
878
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
273,529
|
|
|
|
(27,954
|
)
|
|
|
108,957
|
|
|
Income tax expense
|
|
|
59,023
|
|
|
|
27,359
|
|
|
|
60,385
|
|
|
Net income (loss)
|
|
|
214,506
|
|
|
|
(55,313
|
)
|
|
|
48,572
|
|
|
Less: Net income (loss) attributable to non-controlling interest
|
|
|
414
|
|
|
|
(67
|
)
|
|
|
—
|
|
|
Net income (loss) attributable to controlling interest
|
|
$
|
214,092
|
|
|
$
|
(55,246
|
)
|
|
$
|
48,572
|
|
|
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|||
|
Weighted average shares of common stock outstanding
|
|
|
52,634
|
|
|
|
52,034
|
|
|
|
51,608
|
|
|
Net income (loss) per share attributable to controlling interest
|
|
$
|
4.07
|
|
|
$
|
(1.06
|
)
|
|
$
|
0.94
|
|
|
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|||
|
Weighted average shares and equivalents outstanding
|
|
|
53,261
|
|
|
|
52,034
|
|
|
|
53,309
|
|
|
Net income (loss) per share attributable to controlling interest
|
|
$
|
4.02
|
|
|
$
|
(1.06
|
)
|
|
$
|
0.91
|
|
|
Cash dividends declared per common share
|
|
$
|
1.15
|
|
|
$
|
0.75
|
|
|
$
|
1.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Net income (loss)
|
|
$
|
214,506
|
|
|
$
|
(55,313
|
)
|
|
$
|
48,572
|
|
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
|
|
|||
|
Foreign currency translation loss
|
|
|
(32,528
|
)
|
|
|
(6,622
|
)
|
|
|
(8,602
|
)
|
|
Unrealized gain (loss) on derivative hedging instruments
|
|
|
11,531
|
|
|
|
(2,509
|
)
|
|
|
1,545
|
|
|
Defined benefit pension gain (loss)
|
|
|
(3,617
|
)
|
|
|
4,248
|
|
|
|
(11,932
|
)
|
|
Other comprehensive loss, net of tax
|
|
|
(24,614
|
)
|
|
|
(4,883
|
)
|
|
|
(18,989
|
)
|
|
Comprehensive income (loss)
|
|
|
189,892
|
|
|
|
(60,196
|
)
|
|
|
29,583
|
|
|
Less: Comprehensive income attributable to non-controlling interest
|
|
|
436
|
|
|
|
136
|
|
|
|
—
|
|
|
Comprehensive income (loss) attributable to controlling interest
|
|
$
|
189,456
|
|
|
$
|
(60,332
|
)
|
|
$
|
29,583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
Additional
|
|
|
|
Comprehensive
|
|
|
|
Total
|
|
Non-
|
|
|
||||||||||||||||
|
|
|
Common Stock
|
|
Paid-in
|
|
Accumulated
|
|
Income (Loss),
|
|
Treasury
|
|
Shareholders'
|
|
controlling
|
|
Total
|
|||||||||||||||||||
|
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
net of tax
|
|
Stock
|
|
Equity
|
|
Interest
|
|
Equity
|
|||||||||||||||||
|
Balances at September 30, 2011
|
|
52,226
|
|
|
$
|
525
|
|
|
$
|
1,374,097
|
|
|
$
|
(336,063
|
)
|
|
$
|
(14,446
|
)
|
|
$
|
(5,616
|
)
|
|
$
|
1,018,497
|
|
|
$
|
—
|
|
|
$
|
1,018,497
|
|
|
Net income
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
48,572
|
|
|
|
—
|
|
|
|
—
|
|
|
|
48,572
|
|
|
|
—
|
|
|
|
48,572
|
|
|
Other comprehensive loss
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(18,989
|
)
|
|
|
—
|
|
|
|
(18,989
|
)
|
|
|
—
|
|
|
|
(18,989
|
)
|
|
Vesting of restricted stock units
|
|
368
|
|
|
|
3
|
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Treasury stock purchases
|
|
(1,111
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(30,996
|
)
|
|
|
(30,996
|
)
|
|
|
—
|
|
|
|
(30,996
|
)
|
|
Amortization of unearned compensation
|
|
—
|
|
|
|
—
|
|
|
|
29,164
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
29,164
|
|
|
|
—
|
|
|
|
29,164
|
|
|
Restricted stock units surrendered
|
|
—
|
|
|
|
—
|
|
|
|
(3,997
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,997
|
)
|
|
|
—
|
|
|
|
(3,997
|
)
|
|
Dividend declared
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(53,156
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(53,156
|
)
|
|
|
—
|
|
|
|
(53,156
|
)
|
|
Balances at September 30, 2012
|
|
51,483
|
|
|
$
|
528
|
|
|
$
|
1,399,261
|
|
|
$
|
(340,647
|
)
|
|
$
|
(33,435
|
)
|
|
$
|
(36,612
|
)
|
|
$
|
989,095
|
|
|
$
|
—
|
|
|
$
|
989,095
|
|
|
Net loss
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(55,246
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(55,246
|
)
|
|
|
(67
|
)
|
|
|
(55,313
|
)
|
|
Other comprehensive income (loss)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,086
|
)
|
|
|
—
|
|
|
|
(5,086
|
)
|
|
|
203
|
|
|
|
(4,883
|
)
|
|
Vesting of restricted stock units
|
|
780
|
|
|
|
7
|
|
|
|
(7
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Treasury stock purchases
|
|
(53
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,208
|
)
|
|
|
(3,208
|
)
|
|
|
—
|
|
|
|
(3,208
|
)
|
|
Amortization of unearned compensation
|
|
—
|
|
|
|
—
|
|
|
|
31,534
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
31,534
|
|
|
|
—
|
|
|
|
31,534
|
|
|
Restricted stock units surrendered
|
|
—
|
|
|
|
—
|
|
|
|
(20,050
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(20,050
|
)
|
|
|
—
|
|
|
|
(20,050
|
)
|
|
Dividend declared
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(40,018
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(40,018
|
)
|
|
|
—
|
|
|
|
(40,018
|
)
|
|
Noncontrolling interest
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
42,939
|
|
|
|
42,939
|
|
|
Balances at September 30, 2013
|
|
52,210
|
|
|
$
|
535
|
|
|
$
|
1,410,738
|
|
|
$
|
(435,911
|
)
|
|
$
|
(38,521
|
)
|
|
$
|
(39,820
|
)
|
|
$
|
897,021
|
|
|
$
|
43,075
|
|
|
$
|
940,096
|
|
|
Net income
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
214,092
|
|
|
|
—
|
|
|
|
—
|
|
|
|
214,092
|
|
|
|
414
|
|
|
|
214,506
|
|
|
Other comprehensive income loss
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(24,553
|
)
|
|
|
—
|
|
|
|
(24,553
|
)
|
|
|
(61
|
)
|
|
|
(24,614
|
)
|
|
Vesting of restricted stock units
|
|
575
|
|
|
|
7
|
|
|
|
(7
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Treasury stock purchases
|
|
(72
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,518
|
)
|
|
|
(4,518
|
)
|
|
|
—
|
|
|
|
(4,518
|
)
|
|
Amortization of unearned compensation
|
|
—
|
|
|
|
—
|
|
|
|
47,675
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
47,675
|
|
|
|
—
|
|
|
|
47,675
|
|
|
Restricted stock units surrendered
|
|
—
|
|
|
|
—
|
|
|
|
(24,993
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(24,993
|
)
|
|
|
—
|
|
|
|
(24,993
|
)
|
|
Dividend declared
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(61,322
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(61,322
|
)
|
|
|
—
|
|
|
|
(61,322
|
)
|
|
Balances at September 30, 2014
|
|
52,713
|
|
|
$
|
542
|
|
|
$
|
1,433,413
|
|
|
$
|
(283,141
|
)
|
|
$
|
(63,074
|
)
|
|
$
|
(44,338
|
)
|
|
$
|
1,043,402
|
|
|
$
|
43,428
|
|
|
$
|
1,086,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|||
|
Net income (loss)
|
|
$
|
214,506
|
|
|
$
|
(55,313
|
)
|
|
$
|
48,572
|
|
|
Adjustments to reconcile net income (loss) to net cash used by operating activities, net of effects of acquisitions:
|
|
|
|
|
|
|
|
|
|
|||
|
Depreciation
|
|
|
75,902
|
|
|
|
62,114
|
|
|
|
40,950
|
|
|
Amortization of intangibles
|
|
|
81,728
|
|
|
|
77,779
|
|
|
|
63,666
|
|
|
Amortization of unearned restricted stock compensation
|
|
|
46,809
|
|
|
|
43,861
|
|
|
|
29,164
|
|
|
Amortization of debt issuance costs
|
|
|
12,796
|
|
|
|
13,241
|
|
|
|
9,922
|
|
|
Non-cash increase to cost of goods sold due to HHI acquisition inventory step up
|
|
|
—
|
|
|
|
31,000
|
|
|
|
—
|
|
|
Write off unamortized discount / (premium) on retired debt
|
|
|
2,821
|
|
|
|
(5,178
|
)
|
|
|
(466
|
)
|
|
Write off of debt issuance costs
|
|
|
6,395
|
|
|
|
21,574
|
|
|
|
2,946
|
|
|
Non-cash restructuring and related charges
|
|
|
9,187
|
|
|
|
23,245
|
|
|
|
5,195
|
|
|
Non-cash debt accretion
|
|
|
3,123
|
|
|
|
2,482
|
|
|
|
722
|
|
|
Note retirement tender, call premium and related costs
|
|
|
—
|
|
|
|
111,307
|
|
|
|
25,400
|
|
|
Changes in assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
|
|
|
|
|||
|
Accounts receivable
|
|
|
32,522
|
|
|
|
(62,316
|
)
|
|
|
22,892
|
|
|
Inventories
|
|
|
10,575
|
|
|
|
(2,707
|
)
|
|
|
(11,642
|
)
|
|
Prepaid expenses and other current assets
|
|
|
(644
|
)
|
|
|
(4,269
|
)
|
|
|
561
|
|
|
Accounts payable and accrued liabilities
|
|
|
(36,510
|
)
|
|
|
(818
|
)
|
|
|
5,360
|
|
|
Deferred taxes
|
|
|
1,929
|
|
|
|
(21,655
|
)
|
|
|
22,633
|
|
|
Other changes in assets and liabilities
|
|
|
(28,449
|
)
|
|
|
22,162
|
|
|
|
(7,124
|
)
|
|
Net cash provided by operating activities
|
|
|
432,690
|
|
|
|
256,509
|
|
|
|
258,751
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|||
|
Purchases of property, plant and equipment
|
|
|
(73,347
|
)
|
|
|
(81,976
|
)
|
|
|
(46,809
|
)
|
|
Acquisition of Liquid Fence, net of cash acquired
|
|
|
(27,629
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Acquisition of Shaser, net of cash acquired
|
|
|
—
|
|
|
|
(48,766
|
)
|
|
|
—
|
|
|
Acquisition of the HHI Business, net of cash acquired
|
|
|
—
|
|
|
|
(1,351,008
|
)
|
|
|
—
|
|
|
Acquisition of Black Flag
|
|
|
—
|
|
|
|
—
|
|
|
|
(43,750
|
)
|
|
Acquisition of FURminator, net of cash acquired
|
|
|
—
|
|
|
|
—
|
|
|
|
(139,390
|
)
|
|
Proceeds from sales of property, plant and equipment
|
|
|
9,203
|
|
|
|
203
|
|
|
|
500
|
|
|
Other investing activities
|
|
|
(1,788
|
)
|
|
|
(1,381
|
)
|
|
|
(2,045
|
)
|
|
Net cash used by investing activities
|
|
|
(93,561
|
)
|
|
|
(1,482,928
|
)
|
|
|
(231,494
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|||
|
Proceeds from issuance of Term Loan, net of discount
|
|
|
523,658
|
|
|
|
1,936,250
|
|
|
|
—
|
|
|
Proceeds from issuance of 6.375% Notes
|
|
|
—
|
|
|
|
520,000
|
|
|
|
—
|
|
|
Proceeds from issuance of 6.625% Notes
|
|
|
—
|
|
|
|
570,000
|
|
|
|
—
|
|
|
Payment of senior credit facilities, excluding ABL revolving credit facility
|
|
|
(764,874
|
)
|
|
|
(571,093
|
)
|
|
|
(155,061
|
)
|
|
Payment of 9.5% Notes, including tender and call premium
|
|
|
—
|
|
|
|
(1,061,307
|
)
|
|
|
—
|
|
|
Proceeds from issuance of 6.75% Notes
|
|
|
—
|
|
|
|
—
|
|
|
|
300,000
|
|
|
Payment of 12% Notes, including tender and call premium
|
|
|
—
|
|
|
|
—
|
|
|
|
(270,431
|
)
|
|
Proceeds from issuance of 9.5% Notes, including premium
|
|
|
—
|
|
|
|
—
|
|
|
|
217,000
|
|
|
Debt issuance costs
|
|
|
(5,411
|
)
|
|
|
(60,850
|
)
|
|
|
(11,231
|
)
|
|
Other debt financing, net
|
|
|
557
|
|
|
|
11,941
|
|
|
|
392
|
|
|
Reduction of other debt
|
|
|
(6,030
|
)
|
|
|
(1,251
|
)
|
|
|
(4,112
|
)
|
|
Cash dividends paid
|
|
|
(61,904
|
)
|
|
|
(40,108
|
)
|
|
|
(51,450
|
)
|
|
Treasury stock purchases
|
|
|
(4,518
|
)
|
|
|
(3,208
|
)
|
|
|
(30,996
|
)
|
|
Share based payment tax withholding payments
|
|
|
(24,972
|
)
|
|
|
(20,141
|
)
|
|
|
(3,936
|
)
|
|
Other financing activities
|
|
|
—
|
|
|
|
—
|
|
|
|
(953
|
)
|
|
Net cash provided (used) by financing activities
|
|
|
(343,494
|
)
|
|
|
1,280,233
|
|
|
|
(10,778
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents due to Venezuela devaluation
|
|
|
—
|
|
|
|
(1,871
|
)
|
|
|
—
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(8,259
|
)
|
|
|
(2,647
|
)
|
|
|
(932
|
)
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(12,624
|
)
|
|
|
49,296
|
|
|
|
15,547
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
207,257
|
|
|
|
157,961
|
|
|
|
142,414
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
194,633
|
|
|
$
|
207,257
|
|
|
$
|
157,961
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|||
|
Cash paid for interest
|
|
$
|
178,652
|
|
|
$
|
336,798
|
|
|
$
|
185,634
|
|
|
Cash paid for taxes
|
|
$
|
80,702
|
|
|
$
|
49,638
|
|
|
$
|
39,173
|
|
|
|
|
|
|
|
|
|
|||
|
Building and improvements
|
|
|
20
|
|
—
|
|
40
|
|
years
|
|
Machinery, equipment and other
|
|
|
2
|
|
—
|
|
15
|
|
years
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
Fiscal 2014
|
|
Fiscal 2013
|
|
Fiscal 2012
|
|||
|
Basic
|
|
52,634
|
|
|
52,034
|
|
|
51,608
|
|
|
Effect of common stock equivalents
|
|
627
|
|
|
—
|
|
|
1,701
|
|
|
Diluted
|
|
53,261
|
|
|
52,034
|
|
|
53,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
Fiscal 2014
|
|
Fiscal 2013
|
|
Fiscal 2012
|
||||||
|
Foreign Currency Translation Adjustments:
|
|
|
|
|
|
|
|
|
|
|||
|
Beginning balance
|
|
$
|
(7,050
|
)
|
|
$
|
(225
|
)
|
|
$
|
8,377
|
|
|
Gross change before reclassification adjustment
|
|
|
(32,528
|
)
|
|
|
(6,622
|
)
|
|
|
(8,602
|
)
|
|
Gross change after reclassification adjustment
|
|
$
|
(32,528
|
)
|
|
$
|
(6,622
|
)
|
|
$
|
(8,602
|
)
|
|
Deferred tax effect
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Deferred tax valuation allowance
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Other Comprehensive Income (Loss)
|
|
$
|
(32,528
|
)
|
|
$
|
(6,622
|
)
|
|
$
|
(8,602
|
)
|
|
Noncontrolling interest
|
|
|
(61
|
)
|
|
|
203
|
|
|
|
—
|
|
|
Comprehensive income (loss) attributable to controlling interest
|
|
$
|
(39,517
|
)
|
|
$
|
(7,050
|
)
|
|
$
|
(225
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Derivative Hedging Instruments:
|
|
|
|
|
|
|
|
|
|
|||
|
Beginning balance
|
|
$
|
(2,291
|
)
|
|
$
|
218
|
|
|
$
|
(1,327
|
)
|
|
Gross change before reclassification adjustment
|
|
|
13,154
|
|
|
|
(2,013
|
)
|
|
|
(1,824
|
)
|
|
Net reclassification adjustment for (gains) losses included in earnings
|
|
|
2,557
|
|
|
|
(920
|
)
|
|
|
3,097
|
|
|
Gross change after reclassification adjustment
|
|
$
|
15,711
|
|
|
$
|
(2,933
|
)
|
|
$
|
1,273
|
|
|
Deferred tax effect
|
|
|
(4,225
|
)
|
|
|
(234
|
)
|
|
|
(636
|
)
|
|
Deferred tax valuation allowance
|
|
|
45
|
|
|
|
658
|
|
|
|
908
|
|
|
Other Comprehensive Income (Loss)
|
|
$
|
11,531
|
|
|
$
|
(2,509
|
)
|
|
$
|
1,545
|
|
|
Ending balance
|
|
|
9,240
|
|
|
$
|
(2,291
|
)
|
|
$
|
218
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Defined Benefit Pension Plans:
|
|
|
|
|
|
|
|
|
|
|||
|
Beginning balance
|
|
$
|
(29,180
|
)
|
|
$
|
(33,428
|
)
|
|
$
|
(21,496
|
)
|
|
Gross change before reclassification adjustment
|
|
|
(6,600
|
)
|
|
|
8,097
|
|
|
|
(15,682
|
)
|
|
Net reclassification adjustment for losses included in Cost of goods sold
|
|
|
582
|
|
|
|
1,571
|
|
|
|
900
|
|
|
Net reclassification adjustment for (gains) losses included in Selling expenses
|
|
|
295
|
|
|
|
(584
|
)
|
|
|
—
|
|
|
Net reclassification adjustment for losses included in General and administrative expenses
|
|
|
491
|
|
|
|
373
|
|
|
|
—
|
|
|
Gross change after reclassification adjustment
|
|
$
|
(5,232
|
)
|
|
$
|
9,457
|
|
|
$
|
(14,782
|
)
|
|
Deferred tax effect
|
|
|
2,954
|
|
|
|
(5,123
|
)
|
|
|
3,632
|
|
|
Deferred tax valuation allowance
|
|
|
(1,339
|
)
|
|
|
(86
|
)
|
|
|
(782
|
)
|
|
Other Comprehensive Income (Loss)
|
|
$
|
(3,617
|
)
|
|
$
|
4,248
|
|
|
$
|
(11,932
|
)
|
|
Ending balance
|
|
$
|
(32,797
|
)
|
|
$
|
(29,180
|
)
|
|
$
|
(33,428
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total Other Comprehensive Income (Loss), net of tax
|
|
$
|
(24,614
|
)
|
|
$
|
(4,883
|
)
|
|
$
|
(18,989
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total ending AOCI
|
|
$
|
(63,074
|
)
|
|
$
|
(38,521
|
)
|
|
$
|
(33,435
|
)
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
Weighted
|
|
|
|
||||
|
|
|
|
|
Average
|
|
Fair Value
|
|||||
|
|
|
|
|
Grant Date
|
|
at Grant
|
|||||
|
Restricted Stock Awards
|
|
Shares
|
|
Fair Value
|
|
Date
|
|||||
|
Restricted stock awards at September 30, 2011
|
|
123
|
|
|
$
|
24.20
|
|
|
$
|
2,977
|
|
|
Vested
|
|
(110
|
)
|
|
|
23.75
|
|
|
|
(2,613
|
)
|
|
Restricted stock awards at September 30, 2012
|
|
13
|
|
|
$
|
28.00
|
|
|
$
|
364
|
|
|
Vested
|
|
(13
|
)
|
|
|
28.00
|
|
|
|
(364
|
)
|
|
Restricted stock awards at September 30, 2013
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Vested
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Restricted stock awards at September 30, 2014
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
Weighted
|
|
|
|
||||
|
|
|
|
|
Average
|
|
Fair Value
|
|||||
|
|
|
|
|
Grant Date
|
|
at Grant
|
|||||
|
Restricted Stock Units
|
|
Shares
|
|
Fair Value
|
|
Date
|
|||||
|
Non-vested restricted stock units at September 30, 2011
|
|
1,645
|
|
|
$
|
28.97
|
|
|
$
|
47,656
|
|
|
Granted
|
|
863
|
|
|
|
28.28
|
|
|
|
24,408
|
|
|
Forfeited
|
|
(57
|
)
|
|
|
28.49
|
|
|
|
(1,624
|
)
|
|
Vested
|
|
(520
|
)
|
|
|
29.83
|
|
|
|
(15,509
|
)
|
|
Non-vested restricted stock units at September 30, 2012
|
|
1,931
|
|
|
$
|
28.45
|
|
|
$
|
54,931
|
|
|
Granted
|
|
700
|
|
|
|
45.97
|
|
|
|
32,176
|
|
|
Forfeited
|
|
(302
|
)
|
|
|
30.36
|
|
|
|
(9,168
|
)
|
|
Vested
|
|
(1,211
|
)
|
|
|
28.25
|
|
|
|
(34,216
|
)
|
|
Non-vested restricted stock units at September 30, 2013
|
|
1,118
|
|
|
$
|
39.11
|
|
|
$
|
43,723
|
|
|
Granted
|
|
669
|
|
|
|
75.50
|
|
|
|
50,507
|
|
|
Forfeited
|
|
(6
|
)
|
|
|
69.33
|
|
|
|
(416
|
)
|
|
Vested
|
|
(954
|
)
|
|
|
39.69
|
|
|
|
(37,860
|
)
|
|
Non-vested restricted stock units at September 30, 2014
|
|
827
|
|
|
$
|
67.66
|
|
|
$
|
55,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Russell Hobbs
|
|
|
|
|
|
|
|
|
|
|||
|
Legal and professional fees
|
|
$
|
9
|
|
|
$
|
39
|
|
|
$
|
1,495
|
|
|
Integration costs
|
|
|
2,421
|
|
|
|
3,452
|
|
|
|
10,168
|
|
|
Employee termination charges
|
|
|
30
|
|
|
|
217
|
|
|
|
3,900
|
|
|
Russell Hobbs Acquisition and integration related charges
|
|
$
|
2,460
|
|
|
$
|
3,708
|
|
|
$
|
15,563
|
|
|
HHI Business
|
|
|
|
|
|
|
|
|
|
|||
|
Legal and professional fees
|
|
|
2,192
|
|
|
|
27,712
|
|
|
|
—
|
|
|
Integration costs
|
|
|
8,691
|
|
|
|
8,864
|
|
|
|
—
|
|
|
Employee termination charges
|
|
|
155
|
|
|
|
356
|
|
|
|
—
|
|
|
HHI Business Acquisition and integration related charges
|
|
$
|
11,038
|
|
|
$
|
36,932
|
|
|
$
|
—
|
|
|
Liquid Fence
|
|
|
3,475
|
|
|
|
—
|
|
|
|
—
|
|
|
Shaser
|
|
|
930
|
|
|
|
4,828
|
|
|
|
—
|
|
|
FURminator
|
|
|
53
|
|
|
|
2,270
|
|
|
|
7,938
|
|
|
Black Flag
|
|
|
—
|
|
|
|
154
|
|
|
|
3,379
|
|
|
Other
|
|
|
2,146
|
|
|
|
553
|
|
|
|
4,186
|
|
|
Total Acquisition and integration related charges
|
|
$
|
20,102
|
|
|
$
|
48,445
|
|
|
$
|
31,066
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
September, 30
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
Raw materials
|
|
$
|
104,129
|
|
|
$
|
97,290
|
|
|
Work-in-process
|
|
|
35,259
|
|
|
|
40,626
|
|
|
Finished goods
|
|
|
485,147
|
|
|
|
495,007
|
|
|
|
|
$
|
624,535
|
|
|
$
|
632,923
|
|
|
|
|
|
|
|
|
|
||
|
|
|
September, 30
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
Land, buildings and improvements
|
|
$
|
159,811
|
|
|
$
|
164,654
|
|
|
Machinery, equipment and other
|
|
|
402,931
|
|
|
|
338,335
|
|
|
Capitalized leases
|
|
|
98,461
|
|
|
|
66,791
|
|
|
Construction in progress
|
|
|
32,199
|
|
|
|
46,668
|
|
|
|
|
$
|
693,402
|
|
|
$
|
616,448
|
|
|
Accumulated depreciation
|
|
|
(264,525
|
)
|
|
|
(203,897
|
)
|
|
|
|
$
|
428,877
|
|
|
$
|
412,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
Global
|
|
Hardware &
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
Batteries &
|
|
Home
|
|
Global Pet
|
|
Home and
|
|
|
|
|||||||||
|
|
|
Appliances
|
|
Improvement
|
|
Supplies
|
|
Garden
|
|
Total
|
||||||||||
|
Goodwill:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Balance at September 30, 2012
|
|
$
|
268,556
|
|
|
$
|
—
|
|
|
$
|
237,932
|
|
|
$
|
187,757
|
|
|
$
|
694,245
|
|
|
Additions
|
|
|
67,149
|
|
|
|
717,853
|
|
|
|
—
|
|
|
|
1,614
|
|
|
|
786,616
|
|
|
Effect of translation
|
|
|
(2,205
|
)
|
|
|
(3,129
|
)
|
|
|
1,145
|
|
|
|
—
|
|
|
|
(4,189
|
)
|
|
Balance at September 30, 2013
|
|
$
|
333,500
|
|
|
$
|
714,724
|
|
|
$
|
239,077
|
|
|
$
|
189,371
|
|
|
$
|
1,476,672
|
|
|
Additions
|
|
|
—
|
|
|
|
3,460
|
|
|
|
—
|
|
|
|
7,088
|
|
|
|
10,548
|
|
|
Effect of translation
|
|
|
(6,085
|
)
|
|
|
(8,377
|
)
|
|
|
(3,197
|
)
|
|
|
—
|
|
|
|
(17,659
|
)
|
|
Balance at September 30, 2014
|
|
$
|
327,415
|
|
|
$
|
709,807
|
|
|
$
|
235,880
|
|
|
$
|
196,459
|
|
|
$
|
1,469,561
|
|
|
Intangible Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Trade Names Not Subject to Amortization
|
||||||||||||||||||||
|
Balance at September 30, 2012
|
|
$
|
545,426
|
|
|
$
|
—
|
|
|
$
|
212,142
|
|
|
$
|
83,500
|
|
|
$
|
841,068
|
|
|
Additions
|
|
|
—
|
|
|
|
331,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
331,000
|
|
|
Effect of translation
|
|
|
1,927
|
|
|
|
(229
|
)
|
|
|
4,284
|
|
|
|
—
|
|
|
|
5,982
|
|
|
Balance at September 30, 2013
|
|
$
|
547,353
|
|
|
$
|
330,771
|
|
|
$
|
216,426
|
|
|
$
|
83,500
|
|
|
$
|
1,178,050
|
|
|
Additions
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,100
|
|
|
|
5,100
|
|
|
Effect of translation
|
|
|
(2,804
|
)
|
|
|
(205
|
)
|
|
|
(5,867
|
)
|
|
|
—
|
|
|
|
(8,876
|
)
|
|
Balance at September 30, 2014
|
|
$
|
544,549
|
|
|
$
|
330,566
|
|
|
$
|
210,559
|
|
|
$
|
88,600
|
|
|
$
|
1,174,274
|
|
|
Intangible Assets Subject to Amortization
|
||||||||||||||||||||
|
Balance at September 30, 2012, net
|
|
$
|
447,112
|
|
|
|
—
|
|
|
$
|
264,622
|
|
|
$
|
162,127
|
|
|
$
|
873,861
|
|
|
Additions
|
|
|
29,379
|
|
|
|
158,100
|
|
|
|
802
|
|
|
|
—
|
|
|
|
188,281
|
|
|
Amortization during period
|
|
|
(35,553
|
)
|
|
|
(11,372
|
)
|
|
|
(21,379
|
)
|
|
|
(9,475
|
)
|
|
|
(77,779
|
)
|
|
Effect of translation
|
|
|
(162
|
)
|
|
|
(267
|
)
|
|
|
1,182
|
|
|
|
—
|
|
|
|
753
|
|
|
Balance at September 30, 2013, net
|
|
$
|
440,776
|
|
|
|
146,461
|
|
|
$
|
245,227
|
|
|
$
|
152,652
|
|
|
$
|
985,116
|
|
|
Additions
|
|
|
—
|
|
|
|
—
|
|
|
|
1,788
|
|
|
|
21,800
|
|
|
|
23,588
|
|
|
Amortization during period
|
|
|
(34,998
|
)
|
|
|
(14,758
|
)
|
|
|
(21,578
|
)
|
|
|
(10,394
|
)
|
|
|
(81,728
|
)
|
|
Effect of translation
|
|
|
(5,429
|
)
|
|
|
(1,171
|
)
|
|
|
(3,111
|
)
|
|
|
—
|
|
|
|
(9,711
|
)
|
|
Balance at September 30, 2014, net
|
|
$
|
400,349
|
|
|
$
|
130,532
|
|
|
$
|
222,326
|
|
|
$
|
164,058
|
|
|
$
|
917,265
|
|
|
Total Intangible Assets, net at September 30, 2014
|
|
$
|
944,898
|
|
|
$
|
461,098
|
|
|
$
|
432,885
|
|
|
$
|
252,658
|
|
|
$
|
2,091,539
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||
|
|
|
|
|
|
||||
|
Technology Assets Subject to Amortization:
|
|
|
|
|
|
|
||
|
Gross balance
|
|
$
|
192,179
|
|
|
$
|
172,105
|
|
|
Accumulated amortization
|
|
|
(57,567
|
)
|
|
|
(39,028
|
)
|
|
Carrying value, net
|
|
$
|
134,612
|
|
|
$
|
133,077
|
|
|
Trade Names Subject to Amortization:
|
|
|
|
|
|
|
||
|
Gross balance
|
|
$
|
171,072
|
|
|
$
|
171,572
|
|
|
Accumulated amortization
|
|
|
(60,997
|
)
|
|
|
(44,660
|
)
|
|
Carrying value, net
|
|
$
|
110,075
|
|
|
$
|
126,912
|
|
|
Customer Relationships Subject to Amortization:
|
|
|
|
|
|
|
||
|
Gross balance
|
|
$
|
877,157
|
|
|
$
|
885,895
|
|
|
Accumulated amortization
|
|
|
(204,579
|
)
|
|
|
(160,768
|
)
|
|
Carrying value, net
|
|
$
|
672,578
|
|
|
$
|
725,127
|
|
|
Total Intangible Assets, net Subject to Amortization
|
|
$
|
917,265
|
|
|
$
|
985,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Proprietary technology amortization
|
|
$
|
18,552
|
|
|
$
|
16,260
|
|
|
$
|
9,133
|
|
|
Trade names amortization
|
|
|
16,448
|
|
|
|
16,587
|
|
|
|
14,347
|
|
|
Customer relationships amortization
|
|
|
46,728
|
|
|
|
44,932
|
|
|
|
40,186
|
|
|
|
|
$
|
81,728
|
|
|
$
|
77,779
|
|
|
$
|
63,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
||||||||
|
Term Loan, due September 4, 2017 (Tranche A)
|
|
$
|
648,383
|
|
|
3.0
|
|
%
|
|
$
|
850,000
|
|
|
3.0
|
|
%
|
|
Term Loan, due September 4, 2019 (Tranche C)
|
|
|
509,850
|
|
|
3.6
|
|
%
|
|
|
300,000
|
|
|
3.6
|
|
%
|
|
CAD Term Loan, due December 17, 2019
|
|
|
34,219
|
|
|
5.1
|
|
%
|
|
|
81,397
|
|
|
5.1
|
|
%
|
|
Term Loan, due December 17, 2019 (Tranche B)
|
|
|
—
|
|
|
—
|
|
%
|
|
|
513,312
|
|
|
4.6
|
|
%
|
|
Euro Term Loan, due September 4, 2019
|
|
|
283,339
|
|
|
3.8
|
|
%
|
|
|
—
|
|
|
—
|
|
%
|
|
6.375% Notes, due November 15, 2020
|
|
|
520,000
|
|
|
6.4
|
|
%
|
|
|
520,000
|
|
|
6.4
|
|
%
|
|
6.625% Notes, due November 15, 2022
|
|
|
570,000
|
|
|
6.6
|
|
%
|
|
|
570,000
|
|
|
6.6
|
|
%
|
|
6.75% Notes, due March 15, 2020
|
|
|
300,000
|
|
|
6.8
|
|
%
|
|
|
300,000
|
|
|
6.8
|
|
%
|
|
ABL Facility, expiring May 24, 2017
|
|
|
—
|
|
|
2.5
|
|
%
|
|
|
—
|
|
|
5.7
|
|
%
|
|
Other notes and obligations
|
|
|
36,584
|
|
|
8.8
|
|
%
|
|
|
28,468
|
|
|
8.5
|
|
%
|
|
Capitalized lease obligations
|
|
|
94,711
|
|
|
6.1
|
|
%
|
|
|
67,402
|
|
|
6.2
|
|
%
|
|
|
|
$
|
2,997,086
|
|
|
|
|
|
$
|
3,230,579
|
|
|
|
|
||
|
Original issuance discounts on debt
|
|
|
(6,213
|
)
|
|
|
|
|
|
(11,716
|
)
|
|
|
|
||
|
Less: current maturities
|
|
|
(96,736
|
)
|
|
|
|
|
|
(102,921
|
)
|
|
|
|
||
|
Long-term debt
|
|
$
|
2,894,137
|
|
|
|
|
|
$
|
3,115,942
|
|
|
|
|
||
|
|
|
|
|
|
|
2015
|
|
$
|
96,736
|
|
|
2016
|
|
|
75,990
|
|
|
2017
|
|
|
559,244
|
|
|
2018
|
|
|
13,049
|
|
|
2019
|
|
|
766,459
|
|
|
Thereafter
|
|
|
1,485,608
|
|
|
|
|
$
|
2,997,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
2014
|
|
2013
|
||||||||||
|
|
|
Notional Amount
|
|
Remaining Years
|
|
Notional Amount
|
|
Remaining Years
|
||||||
|
Interest rate swaps - fixed
|
|
$
|
300,000
|
|
|
2.5
|
|
|
$
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
Asset Derivatives
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||
|
Derivatives designated as hedging instruments under ASC 815:
|
|
|
|
|
|
|
|
||
|
Interest rate contracts
|
Deferred charges and other
|
|
$
|
631
|
|
|
$
|
—
|
|
|
Commodity contracts
|
Receivables-Other
|
|
|
1,276
|
|
|
|
416
|
|
|
Commodity contracts
|
Deferred charges and other
|
|
|
—
|
|
|
|
3
|
|
|
Foreign exchange contracts
|
Receivables-Other
|
|
|
11,976
|
|
|
|
1,719
|
|
|
Foreign exchange contracts
|
Deferred charges and other
|
|
|
345
|
|
|
|
—
|
|
|
Total asset derivatives designated as hedging instruments under ASC 815
|
|
|
|
14,228
|
|
|
|
2,138
|
|
|
Derivatives not designated as hedging instruments under ASC 815:
|
|
|
|
|
|
|
|
||
|
Foreign exchange contracts
|
Receivables-Other
|
|
|
508
|
|
|
|
143
|
|
|
Total asset derivatives
|
|
|
$
|
14,736
|
|
|
$
|
2,281
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
Liability Derivatives
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||
|
Derivatives designated as hedging instruments under ASC 815:
|
|
|
|
|
|
|
|
||
|
Interest rate contracts
|
Other current liabilities
|
|
$
|
1,335
|
|
|
$
|
—
|
|
|
Interest rate contracts
|
Accrued interest
|
|
|
440
|
|
|
|
—
|
|
|
Commodity contracts
|
Accounts payable
|
|
|
150
|
|
|
|
450
|
|
|
Foreign exchange contracts
|
Accounts payable
|
|
|
—
|
|
|
|
4,577
|
|
|
Foreign exchange contracts
|
Other long-term liabilities
|
|
|
—
|
|
|
|
65
|
|
|
Total liability derivatives designated as hedging instruments under ASC 815
|
|
|
$
|
1,925
|
|
|
$
|
5,092
|
|
|
Derivatives not designated as hedging instruments under ASC 815:
|
|
|
|
|
|
|
|
||
|
Commodity contract
|
Accounts payable
|
|
$
|
45
|
|
|
$
|
55
|
|
|
Foreign exchange contracts
|
Accounts payable
|
|
|
149
|
|
|
|
5,323
|
|
|
Total liability derivatives
|
|
|
$
|
2,119
|
|
|
$
|
10,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Location of
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss)
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Recognized in
|
|
Amount of
|
||||
|
|
|
|
|
|
|
|
|
|
|
Income on
|
|
Gain (Loss)
|
||||
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
Recognized in
|
||||
|
|
|
Amount of
|
|
Location of
|
|
|
|
(Ineffective
|
|
Income on
|
||||||
|
|
|
Gain (Loss)
|
|
Gain (Loss)
|
|
Amount of
|
|
Portion and
|
|
Derivatives
|
||||||
|
|
|
Recognized in
|
|
Reclassified from
|
|
Gain (Loss)
|
|
Amount
|
|
(Ineffective Portion
|
||||||
|
|
|
AOCI on
|
|
AOCI into
|
|
Reclassified from
|
|
Excluded from
|
|
and Amount
|
||||||
|
Derivatives in ASC 815 Cash Flow
|
|
Derivatives
|
|
Income
|
|
AOCI into Income
|
|
Effectiveness
|
|
Excluded from
|
||||||
|
Hedging Relationships
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|
Testing)
|
|
Effectiveness Testing)
|
||||||
|
Interest rate contracts
|
|
$
|
(1,610
|
)
|
|
Interest expense
|
|
$
|
(906
|
)
|
|
Interest expense
|
|
$
|
—
|
|
|
Commodity contracts
|
|
|
1,933
|
|
|
Cost of goods sold
|
|
|
763
|
|
|
Cost of goods sold
|
|
|
(14
|
)
|
|
Foreign exchange contracts
|
|
|
147
|
|
|
Net sales
|
|
|
210
|
|
|
Net sales
|
|
|
—
|
|
|
Foreign exchange contracts
|
|
|
12,684
|
|
|
Cost of goods sold
|
|
|
(2,624
|
)
|
|
Cost of goods sold
|
|
|
—
|
|
|
Total
|
|
$
|
13,154
|
|
|
|
|
$
|
(2,557
|
)
|
|
|
|
$
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Location of
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss)
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Recognized in
|
|
Amount of
|
||||
|
|
|
|
|
|
|
|
|
|
|
Income on
|
|
Gain (Loss)
|
||||
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
Recognized in
|
||||
|
|
|
Amount of
|
|
Location of
|
|
|
|
(Ineffective
|
|
Income on
|
||||||
|
|
|
Gain (Loss)
|
|
Gain (Loss)
|
|
Amount of
|
|
Portion and
|
|
Derivatives
|
||||||
|
|
|
Recognized in
|
|
Reclassified from
|
|
Gain (Loss)
|
|
Amount
|
|
(Ineffective Portion
|
||||||
|
|
|
AOCI on
|
|
AOCI into
|
|
Reclassified from
|
|
Excluded from
|
|
and Amount
|
||||||
|
Derivatives in ASC 815 Cash Flow
|
|
Derivatives
|
|
Income
|
|
AOCI into Income
|
|
Effectiveness
|
|
Excluded from
|
||||||
|
Hedging Relationships
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|
Testing)
|
|
Effectiveness Testing)
|
||||||
|
Commodity contracts
|
|
$
|
(2,615
|
)
|
|
Cost of goods sold
|
|
$
|
(632
|
)
|
|
Cost of goods sold
|
|
$
|
(39
|
)
|
|
Foreign exchange contracts
|
|
|
884
|
|
|
Net sales
|
|
|
920
|
|
|
Net sales
|
|
|
—
|
|
|
Foreign exchange contracts
|
|
|
(282
|
)
|
|
Cost of goods sold
|
|
|
632
|
|
|
Cost of goods sold
|
|
|
—
|
|
|
Total
|
|
$
|
(2,013
|
)
|
|
|
|
$
|
920
|
|
|
|
|
$
|
(39
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Location of
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss)
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Recognized in
|
|
Amount of
|
||||
|
|
|
|
|
|
|
|
|
|
|
Income on
|
|
Gain (Loss)
|
||||
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
Recognized in
|
||||
|
|
|
Amount of
|
|
Location of
|
|
|
|
(Ineffective
|
|
Income on
|
||||||
|
|
|
Gain (Loss)
|
|
Gain (Loss)
|
|
Amount of
|
|
Portion and
|
|
Derivatives
|
||||||
|
|
|
Recognized in
|
|
Reclassified from
|
|
Gain (Loss)
|
|
Amount
|
|
(Ineffective Portion
|
||||||
|
|
|
AOCI on
|
|
AOCI into
|
|
Reclassified from
|
|
Excluded from
|
|
and Amount
|
||||||
|
Derivatives in ASC 815 Cash Flow
|
|
Derivatives
|
|
Income
|
|
AOCI into Income
|
|
Effectiveness
|
|
Excluded from
|
||||||
|
Hedging Relationships
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|
Testing)
|
|
Effectiveness Testing)
|
||||||
|
Commodity contracts
|
|
$
|
1,606
|
|
|
Cost of goods sold
|
|
$
|
(1,148
|
)
|
|
Cost of goods sold
|
|
$
|
94
|
|
|
Interest rate contracts
|
|
|
15
|
|
|
Interest expense
|
|
|
(864
|
)
|
|
Interest expense
|
|
|
—
|
|
|
Foreign exchange contracts
|
|
|
61
|
|
|
Net sales
|
|
|
(474
|
)
|
|
Net sales
|
|
|
—
|
|
|
Foreign exchange contracts
|
|
|
(3,506
|
)
|
|
Cost of goods sold
|
|
|
(611
|
)
|
|
Cost of goods sold
|
|
|
—
|
|
|
Total
|
|
$
|
(1,824
|
)
|
|
|
|
$
|
(3,097
|
)
|
|
|
|
$
|
94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
Amount of Gain (Loss)
|
|
|
||||||||||
|
|
|
Recognized in
|
|
Location of Gain (Loss)
|
||||||||||
|
Derivatives Not Designated as
|
|
Income on Derivatives
|
|
Recognized in
|
||||||||||
|
Hedging Instruments Under ASC 815
|
|
2014
|
|
2013
|
|
2012
|
|
Income on Derivatives
|
||||||
|
Commodity contracts
|
|
$
|
(99
|
)
|
|
$
|
(55
|
)
|
|
$
|
—
|
|
|
Cost of goods sold
|
|
Foreign exchange contracts
|
|
|
3,115
|
|
|
|
(3,597
|
)
|
|
|
5,916
|
|
|
Other expense, net
|
|
Total
|
|
$
|
3,016
|
|
|
$
|
(3,652
|
)
|
|
$
|
5,916
|
|
|
|
|
|
|
|
|
|
|
|||
|
Level 1 -
|
|
Unadjusted quoted prices for identical instruments in active markets.
|
|
|
|
|
||
|
Level 2 -
|
|
Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
|
|
|
|
|
||
|
Level 3 -
|
|
Significant inputs to the valuation model are unobservable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Interest rate contracts
|
|
$
|
—
|
|
|
$
|
631
|
|
|
$
|
—
|
|
|
$
|
631
|
|
|
Commodity contracts
|
|
|
—
|
|
|
|
1,276
|
|
|
|
—
|
|
|
|
1,276
|
|
|
Foreign exchange contracts
|
|
|
—
|
|
|
|
12,829
|
|
|
|
—
|
|
|
|
12,829
|
|
|
Total Assets
|
|
$
|
—
|
|
|
$
|
14,736
|
|
|
$
|
—
|
|
|
$
|
14,736
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Interest rate contracts
|
|
$
|
—
|
|
|
$
|
(1,775
|
)
|
|
$
|
—
|
|
|
$
|
(1,775
|
)
|
|
Commodity contracts
|
|
|
—
|
|
|
|
(195
|
)
|
|
$
|
—
|
|
|
|
(195
|
)
|
|
Foreign exchange contracts
|
|
|
—
|
|
|
|
(149
|
)
|
|
|
—
|
|
|
|
(149
|
)
|
|
Total Liabilities
|
|
$
|
—
|
|
|
$
|
(2,119
|
)
|
|
$
|
—
|
|
|
$
|
(2,119
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Commodity contracts
|
|
$
|
—
|
|
|
$
|
419
|
|
|
$
|
—
|
|
|
$
|
419
|
|
|
Foreign exchange contracts
|
|
|
—
|
|
|
|
1,862
|
|
|
|
—
|
|
|
|
1,862
|
|
|
Total Assets
|
|
$
|
—
|
|
|
$
|
2,281
|
|
|
$
|
—
|
|
|
$
|
2,281
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Commodity contracts
|
|
$
|
—
|
|
|
$
|
(505
|
)
|
|
$
|
—
|
|
|
$
|
(505
|
)
|
|
Foreign exchange contracts
|
|
|
—
|
|
|
|
(9,965
|
)
|
|
|
—
|
|
|
|
(9,965
|
)
|
|
Total Liabilities
|
|
$
|
—
|
|
|
$
|
(10,470
|
)
|
|
$
|
—
|
|
|
$
|
(10,470
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
Carrying
|
|
|
|
|
Carrying
|
|
|
|
||||||
|
|
|
Amount
|
|
Fair Value
|
|
Amount
|
|
Fair Value
|
||||||||
|
Total debt
|
|
$
|
(2,990,873
|
)
|
|
$
|
(3,061,467
|
)
|
|
$
|
(3,218,863
|
)
|
|
$
|
(3,297,411
|
)
|
|
Interest swap agreements
|
|
|
(1,144
|
)
|
|
|
(1,144
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Commodity swap and option agreements
|
|
|
1,081
|
|
|
|
1,081
|
|
|
|
(86
|
)
|
|
|
(86
|
)
|
|
Foreign exchange forward agreements
|
|
|
12,680
|
|
|
|
12,680
|
|
|
|
(8,103
|
)
|
|
|
(8,103
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Pretax income (loss):
|
|
|
|
|
|
|
|
|
|
|||
|
United States
|
|
$
|
80,726
|
|
|
$
|
(212,168
|
)
|
|
$
|
(66,102
|
)
|
|
Outside the United States
|
|
|
192,803
|
|
|
|
184,214
|
|
|
|
175,059
|
|
|
Total pretax income (loss)
|
|
$
|
273,529
|
|
|
$
|
(27,954
|
)
|
|
$
|
108,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Current:
|
|
|
|
|
|
|
|
|
|
|||
|
Federal
|
|
$
|
6,165
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Foreign
|
|
|
46,578
|
|
|
|
47,740
|
|
|
|
38,113
|
|
|
State
|
|
|
4,351
|
|
|
|
1,274
|
|
|
|
(361
|
)
|
|
Total current
|
|
$
|
57,094
|
|
|
$
|
49,014
|
|
|
$
|
37,752
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|||
|
Federal
|
|
|
19,694
|
|
|
|
(23,397
|
)
|
|
|
20,884
|
|
|
Foreign
|
|
|
(8,186
|
)
|
|
|
2,146
|
|
|
|
5,190
|
|
|
State
|
|
|
(9,579
|
)
|
|
|
(404
|
)
|
|
|
(3,441
|
)
|
|
Total deferred
|
|
$
|
1,929
|
|
|
$
|
(21,655
|
)
|
|
$
|
22,633
|
|
|
Income tax expense
|
|
$
|
59,023
|
|
|
$
|
27,359
|
|
|
$
|
60,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
U.S. Statutory federal income tax expense (benefit)
|
|
$
|
95,735
|
|
|
$
|
(9,784
|
)
|
|
$
|
38,135
|
|
|
Permanent items
|
|
|
4,643
|
|
|
|
10,104
|
|
|
|
8,595
|
|
|
Exempt foreign income
|
|
|
(5,665
|
)
|
|
|
(5,921
|
)
|
|
|
(5,760
|
)
|
|
Foreign statutory rate vs. U.S. statutory rate
|
|
|
(23,120
|
)
|
|
|
(19,182
|
)
|
|
|
(15,211
|
)
|
|
State income taxes, net of federal expense (benefit)
|
|
|
5,416
|
|
|
|
(11,686
|
)
|
|
|
(2,164
|
)
|
|
Residual tax on foreign earnings
|
|
|
90,939
|
|
|
|
(6,958
|
)
|
|
|
29,844
|
|
|
FURminator purchase accounting benefit
|
|
|
—
|
|
|
|
—
|
|
|
|
(14,511
|
)
|
|
HHI Business purchase accounting benefit
|
|
|
—
|
|
|
|
(49,848
|
)
|
|
|
—
|
|
|
Valuation allowance
|
|
|
(115,571
|
)
|
|
|
114,282
|
|
|
|
28,485
|
|
|
Unrecognized tax expense (benefit)
|
|
|
529
|
|
|
|
4,062
|
|
|
|
(4,386
|
)
|
|
Inflationary adjustments
|
|
|
(468
|
)
|
|
|
(245
|
)
|
|
|
(803
|
)
|
|
Foreign tax law changes
|
|
|
(7,666
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Nondeductible share compensation
|
|
|
1,441
|
|
|
|
1,669
|
|
|
|
684
|
|
|
Return to provision adjustments and other, net
|
|
|
12,810
|
|
|
|
866
|
|
|
|
(2,523
|
)
|
|
Income tax expense
|
|
$
|
59,023
|
|
|
$
|
27,359
|
|
|
$
|
60,385
|
|
|
|
|
|
|
|
|
|
||
|
|
|
September 30,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
Current deferred tax assets:
|
|
|
|
|
|
|
||
|
Employee benefits
|
|
$
|
16,487
|
|
|
$
|
11,372
|
|
|
Restructuring
|
|
|
6,318
|
|
|
|
7,085
|
|
|
Inventories and receivables
|
|
|
24,906
|
|
|
|
24,296
|
|
|
Marketing and promotional accruals
|
|
|
15,966
|
|
|
|
14,146
|
|
|
Other
|
|
|
14,207
|
|
|
|
23,261
|
|
|
Valuation allowance
|
|
|
(36,015
|
)
|
|
|
(32,342
|
)
|
|
Total current deferred tax assets
|
|
$
|
41,869
|
|
|
$
|
47,818
|
|
|
Current deferred tax liabilities:
|
|
|
|
|
|
|
||
|
Inventories and receivables
|
|
|
(745
|
)
|
|
|
(2,748
|
)
|
|
Unrealized gains
|
|
|
(1,179
|
)
|
|
|
(373
|
)
|
|
Other
|
|
|
(6,018
|
)
|
|
|
(11,738
|
)
|
|
Total current deferred tax liabilities
|
|
$
|
(7,942
|
)
|
|
$
|
(14,859
|
)
|
|
Net current deferred tax assets
|
|
$
|
33,927
|
|
|
$
|
32,959
|
|
|
Noncurrent deferred tax assets:
|
|
|
|
|
|
|
||
|
Employee benefits
|
|
$
|
41,248
|
|
|
$
|
35,578
|
|
|
Restructuring and purchase accounting
|
|
|
712
|
|
|
|
340
|
|
|
Net operating loss and credit carry forwards
|
|
|
507,514
|
|
|
|
668,679
|
|
|
Prepaid royalty
|
|
|
6,582
|
|
|
|
6,956
|
|
|
Property, plant and equipment
|
|
|
7,040
|
|
|
|
9,692
|
|
|
Unrealized losses
|
|
|
279
|
|
|
|
2,136
|
|
|
Long-term debt
|
|
|
49
|
|
|
|
668
|
|
|
Intangibles
|
|
|
6,737
|
|
|
|
3,917
|
|
|
Other
|
|
|
5,217
|
|
|
|
5,268
|
|
|
Valuation allowance
|
|
|
(297,091
|
)
|
|
|
(422,244
|
)
|
|
Total noncurrent deferred tax assets
|
|
$
|
278,287
|
|
|
$
|
310,990
|
|
|
Noncurrent deferred tax liabilities:
|
|
|
|
|
|
|
||
|
Property, plant, and equipment
|
|
|
(22,634
|
)
|
|
|
(27,478
|
)
|
|
Unrealized gains
|
|
|
(20,012
|
)
|
|
|
(13,126
|
)
|
|
Intangibles
|
|
|
(728,018
|
)
|
|
|
(735,506
|
)
|
|
Taxes on unremitted foreign earnings
|
|
|
(2,648
|
)
|
|
|
(18,581
|
)
|
|
Other
|
|
|
(8,173
|
)
|
|
|
(9,073
|
)
|
|
Total noncurrent deferred tax liabilities
|
|
$
|
(781,485
|
)
|
|
$
|
(803,764
|
)
|
|
Net noncurrent deferred tax liabilities
|
|
$
|
(503,198
|
)
|
|
$
|
(492,774
|
)
|
|
Net current and noncurrent deferred tax liabilities
|
|
$
|
(469,271
|
)
|
|
$
|
(459,815
|
)
|
|
|
|
|
|
|
|
Unrecognized tax benefits at September 30, 2011
|
|
$
|
9,013
|
|
|
Gross increase - tax positions in prior period
|
|
|
773
|
|
|
Gross decrease - tax positions in prior period
|
|
|
(1,308
|
)
|
|
Gross increase - tax positions in current period
|
|
|
776
|
|
|
Settlements
|
|
|
(1,737
|
)
|
|
Lapse of statutes of limitations
|
|
|
(1,640
|
)
|
|
Unrecognized tax benefits at September 30, 2012
|
|
$
|
5,877
|
|
|
Gross increase - tax positions in prior period
|
|
|
9,104
|
|
|
Gross decrease - tax positions in prior period
|
|
|
(327
|
)
|
|
Gross increase - tax positions in current period
|
|
|
516
|
|
|
Settlements
|
|
|
(15
|
)
|
|
Lapse of statutes of limitations
|
|
|
(1,348
|
)
|
|
Unrecognized tax benefits at September 30, 2013
|
|
$
|
13,807
|
|
|
Gross increase - tax positions in prior period
|
|
|
1,548
|
|
|
Gross decrease - tax positions in prior period
|
|
|
(1,380
|
)
|
|
Gross increase - tax positions in current period
|
|
|
714
|
|
|
Settlements
|
|
|
(2,515
|
)
|
|
Lapse of statutes of limitations
|
|
|
(841
|
)
|
|
Unrecognized tax benefits at September 30, 2014
|
|
$
|
11,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
Pension and Deferred
|
|
|
|
|
|
|
||||||||||||
|
|
|
Compensation Benefits
|
|
Other Benefits
|
||||||||||||||||
|
|
|
2014
|
2013
|
|
2014
|
|
2013
|
|||||||||||||
|
Changes in benefit obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Benefit obligation, beginning of year
|
|
$
|
|
|
256,142
|
|
|
$
|
|
|
240,806
|
|
|
$
|
403
|
|
|
$
|
566
|
|
|
Liabilities assumed through acquisitions
|
|
|
|
|
—
|
|
|
|
|
|
14,716
|
|
|
|
—
|
|
|
|
—
|
|
|
Service cost
|
|
|
|
|
3,191
|
|
|
|
|
|
3,061
|
|
|
|
—
|
|
|
|
9
|
|
|
Interest cost
|
|
|
|
|
10,361
|
|
|
|
|
|
9,886
|
|
|
|
18
|
|
|
|
22
|
|
|
Actuarial (gain) loss
|
|
|
|
|
12,923
|
|
|
|
|
|
1,851
|
|
|
|
7
|
|
|
|
(58
|
)
|
|
Participant contributions
|
|
|
|
|
34
|
|
|
|
|
|
59
|
|
|
|
—
|
|
|
|
—
|
|
|
Curtailments
|
|
|
|
|
—
|
|
|
|
|
|
(1,507
|
)
|
|
|
—
|
|
|
|
(135
|
)
|
|
Benefits paid
|
|
|
|
|
(9,694
|
)
|
|
|
|
|
(15,925
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
Foreign currency exchange rate changes
|
|
|
|
|
(5,940
|
)
|
|
|
|
|
3,195
|
|
|
|
|
|
|
—
|
|
|
|
Benefit obligation, end of year
|
|
$
|
|
|
267,017
|
|
|
$
|
|
|
256,142
|
|
|
$
|
427
|
|
|
$
|
403
|
|
|
Changes in plan assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Fair value of plan assets, beginning of year
|
|
$
|
|
|
175,484
|
|
|
$
|
|
|
153,927
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Assets acquired through acquisitions
|
|
|
|
|
—
|
|
|
|
|
|
6,680
|
|
|
|
—
|
|
|
|
—
|
|
|
Actual return on plan assets
|
|
|
|
|
12,487
|
|
|
|
|
|
16,759
|
|
|
|
—
|
|
|
|
—
|
|
|
Employer contributions
|
|
|
|
|
12,985
|
|
|
|
|
|
12,316
|
|
|
|
1
|
|
|
|
1
|
|
|
Employee contributions
|
|
|
|
|
34
|
|
|
|
|
|
59
|
|
|
|
—
|
|
|
|
—
|
|
|
Benefits paid
|
|
|
|
|
(9,694
|
)
|
|
|
|
|
(15,925
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
Foreign currency exchange rate changes
|
|
|
|
|
(2,434
|
)
|
|
|
|
|
1,668
|
|
|
|
|
|
|
—
|
|
|
|
Fair value of plan assets, end of year
|
|
$
|
|
|
188,862
|
|
|
$
|
|
|
175,484
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Accrued Benefit Cost
|
|
$
|
|
|
(78,155
|
)
|
|
$
|
|
|
(80,658
|
)
|
|
$
|
(427
|
)
|
|
$
|
(403
|
)
|
|
Range of assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Discount rate
|
|
|
2.0%
|
—
|
13.5%
|
|
|
|
1.8%
|
—
|
13.0%
|
|
|
|
4.7%
|
|
|
|
4.7%
|
|
|
Expected return on plan assets
|
|
|
2.0%
|
—
|
7.5%
|
|
|
|
3.6%
|
—
|
7.8%
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Rate of compensation increase
|
|
|
2.3%
|
—
|
5.5%
|
|
|
|
2.3%
|
—
|
5.5%
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
Pension and Deferred
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
Compensation Benefits
|
|
Other Benefits
|
||||||||||||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
|
2012
|
||||||||||||
|
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Service cost
|
|
$
|
3,191
|
|
|
$
|
3,061
|
|
|
$
|
2,048
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
12
|
|
|
Interest cost
|
|
|
10,361
|
|
|
|
9,886
|
|
|
|
10,593
|
|
|
|
18
|
|
|
|
22
|
|
|
|
27
|
|
|
Expected return on assets
|
|
|
(9,894
|
)
|
|
|
(8,667
|
)
|
|
|
(8,225
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Amortization of prior year service cost
|
|
|
—
|
|
|
|
—
|
|
|
|
72
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Curtailment gain
|
|
|
(93
|
)
|
|
|
(752
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Recognized net actuarial (gain) loss
|
|
|
1,461
|
|
|
|
2,112
|
|
|
|
828
|
|
|
|
—
|
|
|
|
8
|
|
|
|
(54
|
)
|
|
Net periodic benefit cost (benefit)
|
|
$
|
5,026
|
|
|
$
|
5,640
|
|
|
$
|
5,316
|
|
|
$
|
18
|
|
|
$
|
39
|
|
|
$
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
Weighted Average
|
|
||||||||||||
|
|
|
Allocation
|
|
||||||||||||
|
|
|
Target
|
|
|
Actual
|
|
|||||||||
|
Asset Category
|
|
2014
|
|
|
2014
|
|
2013
|
||||||||
|
Equity Securities
|
|
0
|
|
—
|
60
|
|
%
|
|
25
|
|
%
|
|
47
|
|
%
|
|
Fixed Income Securities
|
|
0
|
|
—
|
40
|
|
%
|
|
27
|
|
%
|
|
21
|
|
%
|
|
Other
|
|
0
|
|
—
|
100
|
|
%
|
|
48
|
|
%
|
|
32
|
|
%
|
|
Total
|
|
100%
|
|
|
100
|
|
%
|
|
100
|
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
Defined Benefit Plan Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Equity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
U.S. equity securities
|
|
$
|
19,949
|
|
|
$
|
7,098
|
|
|
$
|
—
|
|
|
$
|
27,047
|
|
|
Foreign equity securities
|
|
|
11,100
|
|
|
|
7,551
|
|
|
|
—
|
|
|
|
18,651
|
|
|
Debt Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
U.S. bonds
|
|
|
4,026
|
|
|
|
15,196
|
|
|
|
—
|
|
|
|
19,222
|
|
|
Foreign bonds
|
|
|
3,131
|
|
|
|
20,463
|
|
|
|
—
|
|
|
|
23,594
|
|
|
Foreign government bonds
|
|
|
—
|
|
|
|
8,565
|
|
|
|
—
|
|
|
|
8,565
|
|
|
Real estate
|
|
|
1,254
|
|
|
|
5,889
|
|
|
|
—
|
|
|
|
7,143
|
|
|
Life insurance contracts
|
|
|
—
|
|
|
|
37,734
|
|
|
|
—
|
|
|
|
37,734
|
|
|
Other
|
|
|
—
|
|
|
|
38,688
|
|
|
|
—
|
|
|
|
38,688
|
|
|
Foreign cash & cash equivalents
|
|
|
6,368
|
|
|
|
1,850
|
|
|
|
—
|
|
|
|
8,218
|
|
|
Total Defined Benefit Plan Assets
|
|
$
|
45,828
|
|
|
$
|
143,034
|
|
|
$
|
—
|
|
|
$
|
188,862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
Defined Benefit Plan Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Equity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
U.S. equity securities
|
|
$
|
18,497
|
|
|
$
|
15,458
|
|
|
$
|
—
|
|
|
$
|
33,955
|
|
|
Foreign equity securities
|
|
|
10,792
|
|
|
|
37,641
|
|
|
|
—
|
|
|
|
48,433
|
|
|
Debt Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
U.S. bonds
|
|
|
2,279
|
|
|
|
15,578
|
|
|
|
—
|
|
|
|
17,857
|
|
|
Foreign bonds
|
|
|
—
|
|
|
|
10,688
|
|
|
|
—
|
|
|
|
10,688
|
|
|
Foreign government bonds
|
|
|
—
|
|
|
|
7,994
|
|
|
|
—
|
|
|
|
7,994
|
|
|
Real estate
|
|
|
1,204
|
|
|
|
5,391
|
|
|
|
—
|
|
|
|
6,595
|
|
|
Life insurance contracts
|
|
|
—
|
|
|
|
37,690
|
|
|
|
—
|
|
|
|
37,690
|
|
|
Other
|
|
|
—
|
|
|
|
355
|
|
|
|
—
|
|
|
|
355
|
|
|
Foreign cash & cash equivalents
|
|
|
6,658
|
|
|
|
5,259
|
|
|
|
—
|
|
|
|
11,917
|
|
|
Total Defined Benefit Plan Assets
|
|
$
|
39,430
|
|
|
$
|
136,054
|
|
|
$
|
—
|
|
|
$
|
175,484
|
|
|
|
|
|
|
|
|
2015
|
|
$
|
12,288
|
|
|
2016
|
|
|
10,548
|
|
|
2017
|
|
|
10,743
|
|
|
2018
|
|
|
11,244
|
|
|
2019
|
|
|
12,275
|
|
|
2020-2024
|
|
|
65,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Consumer batteries
|
|
$
|
957,837
|
|
|
$
|
931,647
|
|
|
$
|
948,652
|
|
|
Small appliances
|
|
|
730,783
|
|
|
|
740,289
|
|
|
|
771,568
|
|
|
Electric shaving and grooming
|
|
|
278,315
|
|
|
|
276,783
|
|
|
|
279,468
|
|
|
Electric personal care
|
|
|
263,775
|
|
|
|
254,858
|
|
|
|
250,251
|
|
|
Global Batteries & Appliances
|
|
|
2,230,710
|
|
|
|
2,203,577
|
|
|
|
2,249,939
|
|
|
Hardware & Home Improvement
|
|
|
1,165,996
|
|
|
|
869,631
|
|
|
|
—
|
|
|
Global Pet Supplies
|
|
|
600,537
|
|
|
|
621,834
|
|
|
|
615,508
|
|
|
Home and Garden
|
|
|
431,866
|
|
|
|
390,539
|
|
|
|
386,988
|
|
|
Total segments
|
|
$
|
4,429,109
|
|
|
$
|
4,085,581
|
|
|
$
|
3,252,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Global Batteries & Appliances
|
|
$
|
73,077
|
|
|
$
|
67,229
|
|
|
$
|
63,618
|
|
|
Hardware & Home Improvement
|
|
|
40,388
|
|
|
|
31,364
|
|
|
|
—
|
|
|
Global Pet Supplies
|
|
|
31,565
|
|
|
|
29,615
|
|
|
|
27,702
|
|
|
Home and Garden Business
|
|
|
12,600
|
|
|
|
11,685
|
|
|
|
13,296
|
|
|
Total segments
|
|
|
157,630
|
|
|
|
139,893
|
|
|
|
104,616
|
|
|
Corporate
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total Depreciation and amortization
|
|
$
|
157,630
|
|
|
$
|
139,893
|
|
|
$
|
104,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Global Batteries & Appliances
|
|
$
|
256,524
|
|
|
$
|
237,544
|
|
|
$
|
244,442
|
|
|
Hardware & Home Improvement
|
|
|
172,217
|
|
|
|
88,668
|
|
|
|
—
|
|
|
Global Pet Supplies
|
|
|
82,371
|
|
|
|
91,080
|
|
|
|
85,866
|
|
|
Home and Garden
|
|
|
89,255
|
|
|
|
78,483
|
|
|
|
73,609
|
|
|
Total segments
|
|
|
600,367
|
|
|
|
495,775
|
|
|
|
403,917
|
|
|
Corporate expense
|
|
|
75,437
|
|
|
|
62,141
|
|
|
|
51,514
|
|
|
Acquisition and integration related charges
|
|
|
20,102
|
|
|
|
48,445
|
|
|
|
31,066
|
|
|
Restructuring and related charges
|
|
|
22,895
|
|
|
|
34,012
|
|
|
|
19,591
|
|
|
Interest expense
|
|
|
202,118
|
|
|
|
375,625
|
|
|
|
191,911
|
|
|
Other expense, net
|
|
|
6,286
|
|
|
|
3,506
|
|
|
|
878
|
|
|
Income (loss) from continuing operations before income taxes
|
|
$
|
273,529
|
|
|
$
|
(27,954
|
)
|
|
$
|
108,957
|
|
|
|
|
|
|
|
|
|
||
|
|
|
September 30,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
Global Batteries & Appliances
|
|
$
|
2,152,003
|
|
|
$
|
2,360,733
|
|
|
Hardware & Home Improvement
|
|
|
1,629,020
|
|
|
|
1,735,629
|
|
|
Global Pet Supplies
|
|
|
890,372
|
|
|
|
948,832
|
|
|
Home and Garden
|
|
|
526,596
|
|
|
|
500,559
|
|
|
Total segment assets
|
|
|
5,197,991
|
|
|
|
5,545,753
|
|
|
Corporate
|
|
|
315,038
|
|
|
|
80,920
|
|
|
Total assets at period end
|
|
$
|
5,513,029
|
|
|
$
|
5,626,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|||
|
Global Batteries & Appliances
|
|
$
|
40,347
|
|
|
$
|
47,928
|
|
|
$
|
36,271
|
|
|
Hardware & Home Improvement
|
|
|
21,167
|
|
|
|
23,385
|
|
|
|
—
|
|
|
Global Pet Supplies
|
|
|
5,267
|
|
|
|
8,268
|
|
|
|
7,447
|
|
|
Home and Garden Business
|
|
|
6,566
|
|
|
|
2,395
|
|
|
|
3,091
|
|
|
Total segments
|
|
|
73,347
|
|
|
|
81,976
|
|
|
|
46,809
|
|
|
Corporate
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total Capital expenditures
|
|
$
|
73,347
|
|
|
$
|
81,976
|
|
|
$
|
46,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|||
|
United States
|
|
$
|
2,640,698
|
|
|
$
|
2,411,409
|
|
|
$
|
1,772,138
|
|
|
Outside the United States
|
|
|
1,788,411
|
|
|
|
1,674,172
|
|
|
|
1,480,297
|
|
|
Total net sales to external customers
|
|
$
|
4,429,109
|
|
|
$
|
4,085,581
|
|
|
$
|
3,252,435
|
|
|
|
|
|
|
|
|
|
||
|
|
|
September 30,
|
||||||
|
|
|
|
2014
|
|
|
2013
|
||
|
United States
|
|
|
253,234
|
|
|
|
230,866
|
|
|
Outside the United States
|
|
|
175,643
|
|
|
|
181,685
|
|
|
Long-lived assets at year end
|
|
$
|
428,877
|
|
|
$
|
412,551
|
|
|
|
|
|
|
|
|
2015
|
|
$
|
37,202
|
|
|
2016
|
|
|
33,246
|
|
|
2017
|
|
|
28,373
|
|
|
2018
|
|
|
19,034
|
|
|
2019
|
|
|
14,361
|
|
|
Thereafter
|
|
|
31,872
|
|
|
Total minimum lease payments
|
|
$
|
164,088
|
|
|
•
|
for so long as the Harbinger Parties and their affiliates beneficially own 40% or more of the outstanding voting securities of SB Holdings, the Harbinger Parties and the Company will cooperate to ensure, to the greatest extent possible, the continuation of the structure of the SB Holdings board of directors as described in the Stockholder Agreement;
|
|
•
|
the Harbinger Parties will not effect any transfer of equity securities of SB Holdings to any person that would result in such person and its affiliates owning 40% or more of the outstanding voting securities of SB Holdings, unless specified conditions are met; and
|
|
•
|
the Harbinger Parties will be granted certain access and informational rights with respect to SB Holdings and its subsidiaries.
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Cost of goods sold:
|
|
|
|
|
|
|
|
|
|
|||
|
Global Batteries & Appliances
|
|
$
|
648
|
|
|
$
|
1,143
|
|
|
$
|
5,094
|
|
|
Hardware & Home Improvement
|
|
|
2,641
|
|
|
|
6,246
|
|
|
|
—
|
|
|
Global Pet Supplies
|
|
|
424
|
|
|
|
2,595
|
|
|
|
4,741
|
|
|
Total restructuring and related charges in cost of goods sold
|
|
$
|
3,713
|
|
|
$
|
9,984
|
|
|
$
|
9,835
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|||
|
Global Batteries & Appliances
|
|
$
|
10,458
|
|
|
$
|
13,627
|
|
|
$
|
2,487
|
|
|
Hardware & Home Improvement
|
|
|
5,628
|
|
|
|
—
|
|
|
|
—
|
|
|
Global Pet Supplies
|
|
|
2,563
|
|
|
|
8,556
|
|
|
|
5,395
|
|
|
Home and Garden
|
|
|
—
|
|
|
|
598
|
|
|
|
912
|
|
|
Corporate
|
|
|
533
|
|
|
|
1,247
|
|
|
|
962
|
|
|
Total restructuring and related charges in operating expenses
|
|
$
|
19,182
|
|
|
$
|
24,028
|
|
|
$
|
9,756
|
|
|
Total restructuring and related charges
|
|
$
|
22,895
|
|
|
$
|
34,012
|
|
|
$
|
19,591
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Cost of goods sold:
|
|
|
|
|
|
|
|
|
|
|||
|
Global Expense Rationalization initiatives:
|
|
|
|
|
|
|
|
|
|
|||
|
Termination benefits
|
|
$
|
971
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
Other associated costs
|
|
|
37
|
|
|
|
—
|
|
|
|
—
|
|
|
Global Cost Reduction initiatives:
|
|
|
|
|
|
|
|
|
|
|||
|
Termination benefits
|
|
|
2
|
|
|
|
228
|
|
|
|
2,941
|
|
|
Other associated costs
|
|
|
62
|
|
|
|
3,330
|
|
|
|
6,894
|
|
|
Other restructuring initiatives:
|
|
|
|
|
|
|
|
|
|
|||
|
Termination benefits
|
|
|
—
|
|
|
|
146
|
|
|
|
—
|
|
|
Other associated costs
|
|
|
2,641
|
|
|
|
6,278
|
|
|
|
—
|
|
|
Total included in cost of goods sold
|
|
$
|
3,713
|
|
|
$
|
9,984
|
|
|
$
|
9,835
|
|
|
Costs included in operating expenses:
|
|
|
|
|
|
|
|
|
|
|||
|
HHI Business Rationalization initiatives:
|
|
|
|
|
|
|
|
|
|
|||
|
Termination benefits
|
|
$
|
4,511
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Global Expense Rationalization initiatives:
|
|
|
|
|
|
|
|
|
|
|||
|
Termination benefits
|
|
|
5,497
|
|
|
|
10,259
|
|
|
|
—
|
|
|
Other associated costs
|
|
|
6,868
|
|
|
|
1,056
|
|
|
|
—
|
|
|
Global Cost Reduction initiatives:
|
|
|
|
|
|
|
|
|
|
|||
|
Termination benefits
|
|
|
244
|
|
|
|
6,351
|
|
|
|
3,079
|
|
|
Other associated costs
|
|
|
1,010
|
|
|
|
6,443
|
|
|
|
5,776
|
|
|
Other restructuring initiatives:
|
|
|
|
|
|
|
|
|
|
|||
|
Other associated costs
|
|
|
1,052
|
|
|
|
(81
|
)
|
|
|
901
|
|
|
Total included in operating expenses
|
|
$
|
19,182
|
|
|
$
|
24,028
|
|
|
$
|
9,756
|
|
|
Total restructuring and related charges
|
|
$
|
22,895
|
|
|
$
|
34,012
|
|
|
$
|
19,591
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
Termination
|
|
Other
|
|
|
||||||
|
|
|
Benefits
|
|
Costs
|
|
Total
|
||||||
|
Accrual balance at September 30, 2013
|
|
$
|
7,320
|
|
|
$
|
(35
|
)
|
|
$
|
7,285
|
|
|
Provisions
|
|
|
3,462
|
|
|
|
1,490
|
|
|
|
4,952
|
|
|
Cash expenditures
|
|
|
(7,041
|
)
|
|
|
—
|
|
|
|
(7,041
|
)
|
|
Non-cash items
|
|
|
303
|
|
|
|
(26
|
)
|
|
|
277
|
|
|
Accrual balance at September 30, 2014
|
|
$
|
4,044
|
|
|
$
|
1,429
|
|
|
$
|
5,473
|
|
|
Expensed as incurred
(A)
|
|
$
|
3,006
|
|
|
$
|
5,415
|
|
|
$
|
8,421
|
|
|
(A)
|
Consists of amounts not impacting the accrual for restructuring and related charges.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
Global
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
Batteries &
|
|
Global Pet
|
|
|
|
|
|
|
||||||
|
|
|
Appliances
|
|
Supplies
|
|
Corporate
|
|
Total
|
||||||||
|
Restructuring and related charges during fiscal 2014
|
|
$
|
11,072
|
|
|
$
|
1,768
|
|
|
$
|
533
|
|
|
$
|
13,373
|
|
|
Restructuring and related charges since initiative inception
|
|
$
|
21,142
|
|
|
$
|
1,768
|
|
|
$
|
1,781
|
|
|
$
|
24,691
|
|
|
Total future restructuring and related charges expected
|
|
$
|
13,483
|
|
|
$
|
5,748
|
|
|
$
|
2,495
|
|
|
$
|
21,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
Termination
|
|
Other
|
|
|
||||||
|
|
|
Benefits
|
|
Costs
|
|
Total
|
||||||
|
Accrual balance at September 30, 2013
|
|
$
|
4,927
|
|
|
$
|
424
|
|
|
$
|
5,351
|
|
|
Provisions
|
|
|
232
|
|
|
|
2
|
|
|
|
234
|
|
|
Cash expenditures
|
|
|
(3,541
|
)
|
|
|
(741
|
)
|
|
|
(4,282
|
)
|
|
Non-cash items
|
|
|
(289
|
)
|
|
|
475
|
|
|
|
186
|
|
|
Accrual balance at September 30, 2014
|
|
$
|
1,329
|
|
|
$
|
160
|
|
|
$
|
1,489
|
|
|
Expensed as incurred
(A)
|
|
$
|
17
|
|
|
$
|
1,067
|
|
|
$
|
1,084
|
|
|
(A)
|
Consists of amounts not impacting the accrual for restructuring and related charges.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
Global
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
Batteries &
|
|
Global Pet
|
|
Home and
|
|
|
|
|
|
|
||||||||
|
|
|
Appliances
|
|
Supplies
|
|
Garden
|
|
Corporate
|
|
Total
|
||||||||||
|
Restructuring and related charges during fiscal 2014
|
|
$
|
99
|
|
|
$
|
1,219
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,318
|
|
|
Restructuring and related charges since initiative inception
|
|
$
|
25,512
|
|
|
$
|
49,368
|
|
|
$
|
18,219
|
|
|
$
|
7,591
|
|
|
$
|
100,690
|
|
|
Total future restructuring and related charges expected
|
|
$
|
767
|
|
|
$
|
3,618
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,385
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
2013
|
|
2012
|
||||
|
Net sales:
|
|
|
|
|
|
|
|
||
|
Reported Net sales
|
|
|
$
|
4,085,581
|
|
|
$
|
3,252,435
|
|
|
HHI Business adjustment (1)
|
|
|
|
191,777
|
|
|
|
973,648
|
|
|
Pro forma Net sales
|
|
|
$
|
4,277,358
|
|
|
$
|
4,226,083
|
|
|
|
|
|
|
|
|
|
|
||
|
Net (loss) income:
|
|
|
|
|
|
|
|
||
|
Reported Net (loss) income (2) (3)
|
|
|
$
|
(55,313
|
)
|
|
$
|
48,572
|
|
|
HHI Business adjustment (1)
|
|
|
|
4,942
|
|
|
|
76,120
|
|
|
Pro forma Net (loss) income
|
|
|
$
|
(50,371
|
)
|
|
$
|
124,692
|
|
|
|
|
|
|
|
|
|
|
||
|
Basic (loss) income per share:
|
|
|
|
|
|
|
|
||
|
Reported Basic (loss) income per share
|
|
|
$
|
(1.06
|
)
|
|
$
|
0.94
|
|
|
HHI Business adjustment (1)
|
|
|
|
0.09
|
|
|
|
1.47
|
|
|
Pro forma Basic (loss) income per share
|
|
|
$
|
(0.97
|
)
|
|
$
|
2.41
|
|
|
|
|
|
|
|
|
|
|
||
|
Diluted (loss) income per share (4):
|
|
|
|
|
|
|
|
||
|
Reported Diluted (loss) income per share
|
|
|
$
|
(1.06
|
)
|
|
$
|
0.91
|
|
|
HHI Business adjustment (1)
|
|
|
|
0.09
|
|
|
|
1.43
|
|
|
Pro forma Diluted (loss) income per share
|
|
|
$
|
(0.97
|
)
|
|
$
|
2.34
|
|
|
(1)
|
The results related to the HHI Business adjustment do not reflect the TLM Taiwan business as stand alone financial data is not available for the periods presented. The TLM Taiwan business is not deemed material to the operating results of the Company.
|
|
(2)
|
Included in Reported Net (loss) income for Fiscal 2013, is an adjustment of $49,848 to record the income tax benefit resulting from the reversal of U.S. valuation allowances on deferred tax assets as a result of the HHI Business acquisition. For information pertaining to the income tax benefit, see Note 9, “Income Taxes.”
|
|
(3)
|
Included in Reported Net (loss) income for Fiscal 2013 is $36,932, of Acquisition and integration related charges as a result of the HHI Business acquisition. For information pertaining to Acquisition and integration related charges, see Note 2, “Significant Accounting Policies - Acquisition and Integration Related Charges.”
|
|
(4)
|
For Fiscal 2013, the Company has not assumed the exercise of common stock equivalents as the impact would be antidilutive due to the loss reported.
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid to seller at close
|
|
$
|
24,800
|
|
Promissory note due to seller
|
|
|
9,500
|
|
Contingent consideration
|
|
|
1,500
|
|
Working capital adjustment
|
|
|
45
|
|
Purchase price
|
|
$
|
35,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
46
|
|
|
Accounts receivable
|
|
|
1,152
|
|
|
Inventories
|
|
|
2,188
|
|
|
Property, plant and equipment, net
|
|
|
59
|
|
|
Intangible assets
|
|
|
26,900
|
|
|
Total assets acquired
|
|
$
|
30,345
|
|
|
Total liabilities assumed
|
|
|
1,588
|
|
|
Total identifiable net assets less goodwill
|
|
|
28,757
|
|
|
Goodwill
|
|
|
7,088
|
|
|
Total identifiable net assets
|
|
$
|
35,845
|
|
|
•
|
The Company valued the technology assets related to formulas and processes using the income approach, specifically the excess earnings method. Under this method, the asset value was determined by estimating the earnings attributable to the technology assets, adjusted for contributory asset charges. In estimating the fair value of the technology, Net sales and associated earnings were forecasted and adjusted for a technical obsolescence factor to isolate the forecasted sales and earnings attributable to the acquired technology assets. The forecasted technology earnings were discounted to present value to arrive at the concluded fair value. The Company anticipates using the technology asset over a useful life of 17 years which is generally determined by assessing the time period in which substantially all of the discounted cash flows are expected to be generated. The technology asset was valued at approximately $20,500 under this approach.
|
|
•
|
The Company valued an indefinite-lived trade name 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 Liquid Fence, 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. Trade name and trademarks were valued at $5,100 under this approach.
|
|
•
|
The Company valued customer relationships using the distributor approach. Under this method, the asset value was determined by estimating the hypothetical earnings before interest and taxes (“EBIT”) that a comparable distributor would earn, further adjusted for contributory asset charges. In determining the fair value of the customer relationships, the distributor approach values the intangible asset at the present value of the incremental after-tax cash flows. The customer relationships were valued at $1,300 under this approach and will be amortized over 15 years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
Quarter Ended
|
||||||||||||||
|
|
|
September 30, 2014
|
|
June 29, 2014
|
|
March 30, 2014
|
|
December 29, 2013
|
||||||||
|
Net sales
|
|
$
|
1,178,312
|
|
|
$
|
1,128,509
|
|
|
$
|
1,021,688
|
|
|
$
|
1,100,600
|
|
|
Gross profit
|
|
|
411,001
|
|
|
|
417,037
|
|
|
|
359,624
|
|
|
|
381,207
|
|
|
Net income attributable to controlling interest
|
|
|
47,937
|
|
|
|
78,055
|
|
|
|
33,811
|
|
|
|
54,289
|
|
|
Basic net income per common share attributable to controlling interest
|
|
$
|
0.91
|
|
|
$
|
1.48
|
|
|
$
|
0.64
|
|
|
$
|
1.04
|
|
|
Diluted net income per common share attributable to controlling interest
|
|
$
|
0.90
|
|
|
$
|
1.47
|
|
|
$
|
0.64
|
|
|
$
|
1.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|||||||||||
|
|
|
September 30, 2013
|
|
June 30, 2013
|
|
March 31, 2013
|
|
December 30, 2012
|
|||||
|
Net sales
|
|
$
|
1,137,732
|
|
$
|
1,089,825
|
|
|
$
|
987,756
|
|
$
|
870,268
|
|
Gross profit
|
|
|
396,493
|
|
|
382,759
|
|
|
|
322,904
|
|
|
288,156
|
|
Net income (loss) attributable to controlling interest
|
|
|
(36,705)
|
|
|
36,130
|
|
|
|
(41,232)
|
|
|
(13,439)
|
|
Basic net income (loss) per common share attributable to controlling interest
|
|
$
|
(0.70)
|
|
$
|
0.69
|
|
|
$
|
(0.79)
|
|
$
|
(0.26)
|
|
Diluted net (loss) income per common share attributable to controlling interest
|
|
$
|
(0.70)
|
|
$
|
0.69
|
|
|
$
|
(0.79)
|
|
$
|
(0.26)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Column A
|
|
Column B
|
|
Column C Additions
|
|
Column D Deductions
|
|
Column E
|
||||||||||||
|
|
|
Balance at
|
|
Charged to
|
|
|
|
|
|
Balance at
|
||||||||||
|
|
|
Beginning
|
|
Costs and
|
|
|
|
Other
|
|
End of
|
||||||||||
|
Descriptions
|
|
of Period
|
|
Expenses
|
|
Deductions
|
|
Adjustments
|
|
Period
|
||||||||||
|
September 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Accounts receivable allowances
|
|
$
|
37,376
|
|
|
$
|
7,404
|
|
|
$
|
(2,409
|
)
|
|
$
|
6,270
|
|
|
$
|
48,641
|
|
|
September 30, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Accounts receivable allowances
|
|
$
|
21,870
|
|
|
$
|
15,506
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
37,376
|
|
|
September 30, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Accounts receivable allowances
|
|
$
|
14,128
|
|
|
$
|
7,742
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,870
|
|
|
|
Page
|
|
|
|
September 30,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
ASSETS
|
|
|
|
|
||||
|
Investments:
|
|
|
|
|
||||
|
Fixed maturities
|
|
$
|
17,211.5
|
|
|
$
|
15,300.0
|
|
|
Equity securities
|
|
676.5
|
|
|
310.2
|
|
||
|
Derivatives
|
|
296.3
|
|
|
221.8
|
|
||
|
Asset-based loans
|
|
811.6
|
|
|
560.4
|
|
||
|
Other invested assets
|
|
162.9
|
|
|
31.2
|
|
||
|
Total investments
|
|
19,158.8
|
|
|
16,423.6
|
|
||
|
Related party loans
|
|
136.8
|
|
|
102.3
|
|
||
|
Cash and cash equivalents
|
|
687.3
|
|
|
1,414.8
|
|
||
|
Receivables, net
|
|
3.0
|
|
|
1.2
|
|
||
|
Accrued investment income
|
|
184.9
|
|
|
161.2
|
|
||
|
Reinsurance recoverable
|
|
2,397.6
|
|
|
2,363.7
|
|
||
|
Intangibles, net
|
|
550.6
|
|
|
565.9
|
|
||
|
Deferred tax assets
|
|
139.9
|
|
|
260.4
|
|
||
|
Other assets
|
|
266.2
|
|
|
103.0
|
|
||
|
Total assets
|
|
$
|
23,525.1
|
|
|
$
|
21,396.1
|
|
|
LIABILITIES AND SHAREHOLDER’S EQUITY
|
|
|
|
|
||||
|
Insurance reserves:
|
|
|
|
|
||||
|
Contractholder funds
|
|
$
|
16,463.5
|
|
|
$
|
15,248.2
|
|
|
Future policy benefits
|
|
3,655.5
|
|
|
3,556.8
|
|
||
|
Liability for policy and contract claims
|
|
58.1
|
|
|
51.5
|
|
||
|
Funds withheld from reinsurers
|
|
38.0
|
|
|
39.4
|
|
||
|
Total insurance reserves
|
|
20,215.1
|
|
|
18,895.9
|
|
||
|
Long-term debt
|
|
598.8
|
|
|
481.8
|
|
||
|
Accounts payable and other current liabilities
|
|
80.4
|
|
|
59.2
|
|
||
|
Other liabilities
|
|
768.2
|
|
|
662.1
|
|
||
|
Total liabilities
|
|
21,662.5
|
|
|
20,099.0
|
|
||
|
Shareholder’s equity:
|
|
|
|
|
||||
|
Common stock ($0.01 par value, 1,000 shares authorized, 100 shares issued and outstanding at September 30, 2014 and 2013)
|
|
—
|
|
|
—
|
|
||
|
Additional paid-in capital
|
|
478.3
|
|
|
528.9
|
|
||
|
Retained earnings
|
|
764.6
|
|
|
657.5
|
|
||
|
Accumulated other comprehensive income
|
|
283.2
|
|
|
111.0
|
|
||
|
Total FS Holdco II Ltd. shareholder’s equity
|
|
1,526.1
|
|
|
1,297.4
|
|
||
|
Noncontrolling interest
|
|
336.5
|
|
|
(0.3
|
)
|
||
|
Total shareholder’s equity
|
|
1,862.6
|
|
|
1,297.1
|
|
||
|
Total liabilities and shareholder’s equity
|
|
$
|
23,525.1
|
|
|
$
|
21,396.1
|
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Revenues:
|
|
|
|
|
|
|
||||||
|
Premiums
|
|
$
|
56.6
|
|
|
$
|
58.8
|
|
|
$
|
55.3
|
|
|
Net investment income
|
|
852.8
|
|
|
740.4
|
|
|
722.8
|
|
|||
|
Net investment gains
|
|
395.3
|
|
|
511.6
|
|
|
410.0
|
|
|||
|
Insurance and investment product fees and other
|
|
72.7
|
|
|
62.5
|
|
|
40.3
|
|
|||
|
Total revenues
|
|
1,377.4
|
|
|
1,373.3
|
|
|
1,228.4
|
|
|||
|
Benefits and expenses:
|
|
|
|
|
|
|
||||||
|
Benefits and other changes in policy reserves
|
|
852.7
|
|
|
531.8
|
|
|
777.4
|
|
|||
|
Acquisition and operating expenses, net of deferrals
|
|
148.8
|
|
|
131.1
|
|
|
130.0
|
|
|||
|
Amortization of intangibles
|
|
97.5
|
|
|
182.3
|
|
|
160.7
|
|
|||
|
Total benefits and expenses
|
|
1,099.0
|
|
|
845.2
|
|
|
1,068.1
|
|
|||
|
Operating income
|
|
278.4
|
|
|
528.1
|
|
|
160.3
|
|
|||
|
Interest expense
|
|
(22.5
|
)
|
|
(11.5
|
)
|
|
(2.5
|
)
|
|||
|
Gain on contingent purchase price reduction
|
|
—
|
|
|
—
|
|
|
41.0
|
|
|||
|
Other (expense) income, net
|
|
(4.8
|
)
|
|
(0.2
|
)
|
|
0.2
|
|
|||
|
Income before income taxes
|
|
251.1
|
|
|
516.4
|
|
|
199.0
|
|
|||
|
Income tax expense (benefit)
|
|
51.8
|
|
|
161.1
|
|
|
(145.7
|
)
|
|||
|
Net income
|
|
199.3
|
|
|
355.3
|
|
|
344.7
|
|
|||
|
Less: Net income attributable to noncontrolling interest
|
|
26.8
|
|
|
0.4
|
|
|
—
|
|
|||
|
Net income attributable to controlling interest
|
|
$
|
172.5
|
|
|
$
|
354.9
|
|
|
$
|
344.7
|
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Net income
|
|
$
|
199.3
|
|
|
$
|
355.3
|
|
|
$
|
344.7
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
||||||
|
Unrealized investment gains (losses):
|
|
|
|
|
|
|
||||||
|
Changes in unrealized investment gains (losses) before reclassification adjustment
|
|
627.5
|
|
|
(490.5
|
)
|
|
906.5
|
|
|||
|
Net reclassification adjustment for gains included in net income
|
|
(101.0
|
)
|
|
(333.4
|
)
|
|
(263.9
|
)
|
|||
|
Changes in unrealized investment gains (losses) after reclassification adjustment
|
|
526.5
|
|
|
(823.9
|
)
|
|
642.6
|
|
|||
|
Adjustments to intangible assets
|
|
(156.8
|
)
|
|
327.3
|
|
|
(218.5
|
)
|
|||
|
Changes in deferred income tax asset/liability
|
|
(129.0
|
)
|
|
173.1
|
|
|
(148.5
|
)
|
|||
|
Net unrealized gain (loss) on investments
|
|
240.7
|
|
|
(323.5
|
)
|
|
275.6
|
|
|||
|
Non-credit related other-than-temporary impairment:
|
|
|
|
|
|
|
||||||
|
Changes in non-credit related other-than-temporary impairment
|
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|||
|
Adjustments to intangible assets
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|||
|
Changes in deferred income tax asset/liability
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|||
|
Net non-credit related other than-temporary impairment
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|||
|
Net change to derive comprehensive income for the period
|
|
240.7
|
|
|
(323.5
|
)
|
|
275.0
|
|
|||
|
Comprehensive income
|
|
440.0
|
|
|
31.8
|
|
|
619.7
|
|
|||
|
Less: Comprehensive income attributable to the noncontrolling interest:
|
|
|
|
|
|
|
||||||
|
Net income
|
|
26.8
|
|
|
0.4
|
|
|
—
|
|
|||
|
Other comprehensive income
|
|
43.0
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
69.8
|
|
|
0.4
|
|
|
—
|
|
|||
|
Comprehensive income attributable to the controlling interest
|
|
$
|
370.2
|
|
|
$
|
31.4
|
|
|
$
|
619.7
|
|
|
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Total Shareholder's Equity
|
|
Noncontrolling Interest
|
|
Total
Equity
|
|||||||||||||
|
Balances at September 30, 2011
|
|
—
|
|
|
$
|
379.4
|
|
|
$
|
136.5
|
|
|
$
|
159.5
|
|
|
$
|
675.4
|
|
|
$
|
—
|
|
|
$
|
675.4
|
|
|
Net income
|
|
—
|
|
|
—
|
|
|
344.7
|
|
|
—
|
|
|
344.7
|
|
|
—
|
|
|
344.7
|
|
||||||
|
Unrealized investment gains, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
275.6
|
|
|
275.6
|
|
|
—
|
|
|
275.6
|
|
||||||
|
Non-credit related other-than-temporary impairments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|
(0.6
|
)
|
|
—
|
|
|
(0.6
|
)
|
||||||
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
619.7
|
|
|
—
|
|
|
619.7
|
|
||||||||||
|
Stock compensation
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
||||||
|
Capital contributions from Harbinger Group Inc.
|
|
—
|
|
|
36.0
|
|
|
—
|
|
|
—
|
|
|
36.0
|
|
|
—
|
|
|
36.0
|
|
||||||
|
Dividends
|
|
—
|
|
|
—
|
|
|
(40.8
|
)
|
|
—
|
|
|
(40.8
|
)
|
|
—
|
|
|
(40.8
|
)
|
||||||
|
Balances at September 30, 2012
|
|
—
|
|
|
415.6
|
|
|
440.4
|
|
|
434.5
|
|
|
1,290.5
|
|
|
—
|
|
|
1,290.5
|
|
||||||
|
Net income
|
|
—
|
|
|
—
|
|
|
354.9
|
|
|
—
|
|
|
354.9
|
|
|
0.4
|
|
|
355.3
|
|
||||||
|
Unrealized investment losses, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(323.5
|
)
|
|
(323.5
|
)
|
|
—
|
|
|
(323.5
|
)
|
||||||
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
31.4
|
|
|
0.4
|
|
|
31.8
|
|
||||||||||
|
Stock compensation
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
||||||
|
Capital contributions from Harbinger Group Inc.
|
|
—
|
|
|
113.5
|
|
|
—
|
|
|
—
|
|
|
113.5
|
|
|
—
|
|
|
113.5
|
|
||||||
|
Distributions to Harbinger Group Inc. and subsidiaries
|
|
—
|
|
|
—
|
|
|
(41.0
|
)
|
|
—
|
|
|
(41.0
|
)
|
|
—
|
|
|
(41.0
|
)
|
||||||
|
Dividends
|
|
—
|
|
|
—
|
|
|
(96.8
|
)
|
|
—
|
|
|
(96.8
|
)
|
|
—
|
|
|
(96.8
|
)
|
||||||
|
Dividend paid by subsidiary to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
|
(0.7
|
)
|
||||||
|
Balances at September 30, 2013
|
|
—
|
|
|
528.9
|
|
|
657.5
|
|
|
111.0
|
|
|
1,297.4
|
|
|
(0.3
|
)
|
|
1,297.1
|
|
||||||
|
Net income
|
|
—
|
|
|
—
|
|
|
172.5
|
|
|
—
|
|
|
172.5
|
|
|
26.8
|
|
|
199.3
|
|
||||||
|
Unrealized investment gains, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
197.7
|
|
|
197.7
|
|
|
43.0
|
|
|
240.7
|
|
||||||
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
370.2
|
|
|
69.8
|
|
|
440.0
|
|
||||||||||
|
Proceeds from initial public offering of subsidiary shares
|
|
—
|
|
|
(58.5
|
)
|
|
—
|
|
|
(25.5
|
)
|
|
(84.0
|
)
|
|
256.6
|
|
|
172.6
|
|
||||||
|
Stock compensation
|
|
—
|
|
|
2.3
|
|
|
—
|
|
|
—
|
|
|
2.3
|
|
|
0.8
|
|
|
3.1
|
|
||||||
|
Capital contributions from Harbinger Group Inc.
|
|
—
|
|
|
5.6
|
|
|
—
|
|
|
—
|
|
|
5.6
|
|
|
—
|
|
|
5.6
|
|
||||||
|
Dividends
|
|
—
|
|
|
—
|
|
|
(65.4
|
)
|
|
—
|
|
|
(65.4
|
)
|
|
—
|
|
|
(65.4
|
)
|
||||||
|
Noncontrolling interest in acquired subsidiary
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12.5
|
|
|
12.5
|
|
||||||
|
Dividend paid by subsidiary to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|
(2.9
|
)
|
||||||
|
Balance at September 30, 2014
|
|
—
|
|
|
$
|
478.3
|
|
|
$
|
764.6
|
|
|
$
|
283.2
|
|
|
$
|
1,526.1
|
|
|
$
|
336.5
|
|
|
$
|
1,862.6
|
|
|
|
|
Fiscal
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Operating activities:
|
|
|
|
|
|
|
||||||
|
Net income
|
|
$
|
199.3
|
|
|
$
|
355.3
|
|
|
$
|
344.7
|
|
|
Adjustments to reconcile net income to operating cash flows:
|
|
|
|
|
|
|
||||||
|
Depreciation of properties
|
|
5.3
|
|
|
4.2
|
|
|
3.0
|
|
|||
|
Amortization of intangibles
|
|
97.5
|
|
|
182.3
|
|
|
160.7
|
|
|||
|
Stock-based compensation
|
|
17.3
|
|
|
5.9
|
|
|
0.1
|
|
|||
|
Amortization of debt issuance costs
|
|
3.4
|
|
|
1.7
|
|
|
—
|
|
|||
|
Deferred income taxes
|
|
(8.5
|
)
|
|
192.4
|
|
|
(220.0
|
)
|
|||
|
Gain on contingent purchase price reduction
|
|
—
|
|
|
—
|
|
|
(41.0
|
)
|
|||
|
Interest credited/index credits to contractholder account balances
|
|
711.6
|
|
|
375.0
|
|
|
586.8
|
|
|||
|
Collateral returned (posted)
|
|
63.5
|
|
|
72.0
|
|
|
49.3
|
|
|||
|
Amortization of fixed maturity discounts and premiums
|
|
(43.0
|
)
|
|
16.7
|
|
|
87.0
|
|
|||
|
Net recognized gains on investments and derivatives
|
|
(386.4
|
)
|
|
(514.6
|
)
|
|
(410.0
|
)
|
|||
|
Charges assessed to contractholders for mortality and administration
|
|
(45.9
|
)
|
|
(31.5
|
)
|
|
(14.9
|
)
|
|||
|
Deferred policy acquisition costs
|
|
(239.0
|
)
|
|
(147.4
|
)
|
|
(194.9
|
)
|
|||
|
Cash transferred to reinsurer
|
|
—
|
|
|
—
|
|
|
(176.7
|
)
|
|||
|
Changes in operating assets and liabilities
|
|
(88.7
|
)
|
|
(163.1
|
)
|
|
139.2
|
|
|||
|
Net change in cash due to operating activities
|
|
286.4
|
|
|
348.9
|
|
|
313.3
|
|
|||
|
Investing activities:
|
|
|
|
|
|
|
||||||
|
Proceeds from investments, sold, matured or repaid:
|
|
|
|
|
|
|
||||||
|
Available-for-sale
|
|
5,084.1
|
|
|
8,986.9
|
|
|
5,833.4
|
|
|||
|
Held-for-trading
|
|
43.6
|
|
|
—
|
|
|
—
|
|
|||
|
Derivative investments and other invested assets
|
|
470.2
|
|
|
317.6
|
|
|
157.6
|
|
|||
|
Cost of investments acquired:
|
|
|
|
|
|
|
||||||
|
Available-for-sale
|
|
(6,741.2
|
)
|
|
(8,757.6
|
)
|
|
(5,640.1
|
)
|
|||
|
Held-for-trading
|
|
(16.3
|
)
|
|
(30.0
|
)
|
|
—
|
|
|||
|
Derivative investments and other invested assets
|
|
(380.5
|
)
|
|
(162.4
|
)
|
|
(141.6
|
)
|
|||
|
Asset-backed loans originated
|
|
(190.6
|
)
|
|
(386.6
|
)
|
|
(181.4
|
)
|
|||
|
Acquisition, net of cash acquired
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|||
|
Related party loans and investments
|
|
—
|
|
|
(100.0
|
)
|
|
(49.5
|
)
|
|||
|
Capital expenditures
|
|
(10.3
|
)
|
|
(4.4
|
)
|
|
(6.7
|
)
|
|||
|
Net change in cash due to investing activities
|
|
(1,741.2
|
)
|
|
(136.5
|
)
|
|
(28.3
|
)
|
|||
|
Financing activities:
|
|
|
|
|
|
|
||||||
|
Contractholder account deposits
|
|
2,387.9
|
|
|
1,361.8
|
|
|
2,040.5
|
|
|||
|
Contractholder account withdrawals
|
|
(1,783.5
|
)
|
|
(1,712.5
|
)
|
|
(1,979.6
|
)
|
|||
|
Proceeds from initial public offering of subsidiary shares, less costs of issuance
|
|
172.6
|
|
|
—
|
|
|
—
|
|
|||
|
Capital contributions
|
|
5.2
|
|
|
112.0
|
|
|
36.0
|
|
|||
|
Dividends paid
|
|
(68.3
|
)
|
|
(97.5
|
)
|
|
(40.8
|
)
|
|||
|
Proceeds from issuance of new debt
|
|
16.9
|
|
|
481.8
|
|
|
—
|
|
|||
|
Debt issuance costs
|
|
(3.5
|
)
|
|
(10.2
|
)
|
|
—
|
|
|||
|
Repayments of senior secured notes, including bond tender/call premium
|
|
—
|
|
|
—
|
|
|
(95.0
|
)
|
|||
|
Net change in cash due to financing activities
|
|
727.3
|
|
|
135.4
|
|
|
(38.9
|
)
|
|||
|
Net change in cash and cash equivalents
|
|
(727.5
|
)
|
|
347.8
|
|
|
246.1
|
|
|||
|
Cash and cash equivalents at beginning of period
|
|
1,414.8
|
|
|
1,067.0
|
|
|
820.9
|
|
|||
|
Cash and cash equivalents at end of period
|
|
$
|
687.3
|
|
|
$
|
1,414.8
|
|
|
$
|
1,067.0
|
|
|
Supplemental disclosures of cash flow information
|
|
|
|
|
|
|
||||||
|
Interest paid
|
|
$
|
42.2
|
|
|
$
|
3.1
|
|
|
$
|
2.6
|
|
|
Income taxes paid
|
|
33.9
|
|
|
3.7
|
|
|
8.1
|
|
|||
|
Distribution of non-cash net assets to Harbinger Group Inc. and subsidiaries
|
|
—
|
|
|
41.0
|
|
|
—
|
|
|||
|
•
|
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.
|
|
•
|
The Company does not expect full recovery of its amortized cost based on the estimate of cash flows expected to be collected;
|
|
•
|
The Company intends to sell a security; or
|
|
•
|
It is more likely than not that the Company 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.
|
|
|
|
September 30, 2014
|
||||||||||||||||||
|
|
|
Cost or Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Carrying
Value
|
||||||||||
|
Fixed-maturity securities, available-for sale
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Asset-backed securities
|
|
$
|
1,800.8
|
|
|
$
|
10.9
|
|
|
$
|
(18.8
|
)
|
|
$
|
1,792.9
|
|
|
$
|
1,792.9
|
|
|
Commercial mortgage-backed securities
|
|
617.6
|
|
|
21.3
|
|
|
(2.0
|
)
|
|
636.9
|
|
|
636.9
|
|
|||||
|
Corporates
|
|
9,345.5
|
|
|
499.2
|
|
|
(48.9
|
)
|
|
9,795.8
|
|
|
9,795.8
|
|
|||||
|
Hybrids
|
|
1,279.1
|
|
|
52.2
|
|
|
(15.2
|
)
|
|
1,316.1
|
|
|
1,316.1
|
|
|||||
|
Municipals
|
|
1,149.9
|
|
|
116.2
|
|
|
(6.3
|
)
|
|
1,259.8
|
|
|
1,259.8
|
|
|||||
|
Agency residential mortgage-backed securities
|
|
104.3
|
|
|
3.1
|
|
|
(0.1
|
)
|
|
107.3
|
|
|
107.3
|
|
|||||
|
Non-agency residential mortgage-backed securities
|
|
1,880.5
|
|
|
137.2
|
|
|
(11.0
|
)
|
|
2,006.7
|
|
|
2,006.7
|
|
|||||
|
U.S. Government
|
|
291.0
|
|
|
6.4
|
|
|
(1.4
|
)
|
|
296.0
|
|
|
296.0
|
|
|||||
|
Total fixed-maturity securities
|
|
16,468.7
|
|
|
846.5
|
|
|
(103.7
|
)
|
|
17,211.5
|
|
|
17,211.5
|
|
|||||
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Available-for-sale
|
|
645.7
|
|
|
23.0
|
|
|
(5.1
|
)
|
|
663.6
|
|
|
663.6
|
|
|||||
|
Held for trading
|
|
9.2
|
|
|
3.7
|
|
|
—
|
|
|
12.9
|
|
|
12.9
|
|
|||||
|
Total equity securities
|
|
654.9
|
|
|
26.7
|
|
|
(5.1
|
)
|
|
676.5
|
|
|
676.5
|
|
|||||
|
Derivatives
|
|
177.7
|
|
|
123.3
|
|
|
(4.7
|
)
|
|
296.3
|
|
|
296.3
|
|
|||||
|
Asset-based loans
|
|
811.6
|
|
|
—
|
|
|
—
|
|
|
811.6
|
|
|
811.6
|
|
|||||
|
Other invested assets
|
|
162.9
|
|
|
—
|
|
|
—
|
|
|
162.9
|
|
|
162.9
|
|
|||||
|
Total investments
|
|
$
|
18,275.8
|
|
|
$
|
996.5
|
|
|
$
|
(113.5
|
)
|
|
$
|
19,158.8
|
|
|
$
|
19,158.8
|
|
|
|
|
September 30, 2013
|
||||||||||||||||||
|
|
|
Cost or Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
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-maturity securities
|
|
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
|
|
48.6
|
|
|
0.6
|
|
|
(10.0
|
)
|
|
39.2
|
|
|
39.2
|
|
|||||
|
Total equity securities
|
|
323.2
|
|
|
7.3
|
|
|
(20.3
|
)
|
|
310.2
|
|
|
310.2
|
|
|||||
|
Derivatives
|
|
141.7
|
|
|
88.5
|
|
|
(8.4
|
)
|
|
221.8
|
|
|
221.8
|
|
|||||
|
Asset-based loans
|
|
560.4
|
|
|
—
|
|
|
—
|
|
|
560.4
|
|
|
560.4
|
|
|||||
|
Other invested assets
|
|
31.2
|
|
|
—
|
|
|
—
|
|
|
31.2
|
|
|
31.2
|
|
|||||
|
Total investments
|
|
$
|
16,118.6
|
|
|
$
|
587.3
|
|
|
$
|
(282.3
|
)
|
|
$
|
16,423.6
|
|
|
$
|
16,423.6
|
|
|
|
|
September 30, 2014
|
||||||
|
|
|
Amortized Cost
|
|
Fair Value
|
||||
|
Corporate, Non-structured Hybrids, Municipal and U.S. Government securities:
|
|
|
|
|
||||
|
Due in one year or less
|
|
$
|
370.0
|
|
|
$
|
372.8
|
|
|
Due after one year through five years
|
|
2,297.6
|
|
|
2,360.2
|
|
||
|
Due after five years through ten years
|
|
3,128.9
|
|
|
3,232.7
|
|
||
|
Due after ten years
|
|
5,794.5
|
|
|
6,230.0
|
|
||
|
Subtotal
|
|
11,591.0
|
|
|
12,195.7
|
|
||
|
Other securities which provide for periodic payments:
|
|
|
|
|
||||
|
Asset-backed securities
|
|
1,800.8
|
|
|
1,792.9
|
|
||
|
Commercial-mortgage-backed securities
|
|
617.6
|
|
|
636.9
|
|
||
|
Structured hybrids
|
|
474.5
|
|
|
472.0
|
|
||
|
Agency residential mortgage-backed securities
|
|
104.3
|
|
|
107.3
|
|
||
|
Non-agency residential mortgage-backed securities
|
|
1,880.5
|
|
|
2,006.7
|
|
||
|
Total fixed maturity available-for-sale securities
|
|
$
|
16,468.7
|
|
|
$
|
17,211.5
|
|
|
|
|
September 30, 2014
|
||||||||||||||||||||||
|
|
|
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
|
|
$
|
825.8
|
|
|
$
|
(11.8
|
)
|
|
$
|
288.2
|
|
|
$
|
(7.0
|
)
|
|
$
|
1,114.0
|
|
|
$
|
(18.8
|
)
|
|
Commercial-mortgage-backed securities
|
|
160.3
|
|
|
(0.9
|
)
|
|
0.4
|
|
|
(1.1
|
)
|
|
160.7
|
|
|
(2.0
|
)
|
||||||
|
Corporates
|
|
816.6
|
|
|
(16.3
|
)
|
|
1,127.8
|
|
|
(32.6
|
)
|
|
1,944.4
|
|
|
(48.9
|
)
|
||||||
|
Equities
|
|
180.4
|
|
|
(2.2
|
)
|
|
54.9
|
|
|
(2.9
|
)
|
|
235.3
|
|
|
(5.1
|
)
|
||||||
|
Hybrids
|
|
258.2
|
|
|
(2.3
|
)
|
|
290.0
|
|
|
(12.9
|
)
|
|
548.2
|
|
|
(15.2
|
)
|
||||||
|
Municipals
|
|
—
|
|
|
—
|
|
|
264.9
|
|
|
(6.3
|
)
|
|
264.9
|
|
|
(6.3
|
)
|
||||||
|
Agency residential mortgage-backed securities
|
|
24.1
|
|
|
(0.1
|
)
|
|
0.6
|
|
|
—
|
|
|
24.7
|
|
|
(0.1
|
)
|
||||||
|
Non-agency residential mortgage-backed securities
|
|
274.4
|
|
|
(5.7
|
)
|
|
177.0
|
|
|
(5.3
|
)
|
|
451.4
|
|
|
(11.0
|
)
|
||||||
|
U.S. Government
|
|
37.3
|
|
|
(0.1
|
)
|
|
81.7
|
|
|
(1.3
|
)
|
|
119.0
|
|
|
(1.4
|
)
|
||||||
|
Total available-for-sale securities
|
|
$
|
2,577.1
|
|
|
$
|
(39.4
|
)
|
|
$
|
2,285.5
|
|
|
$
|
(69.4
|
)
|
|
$
|
4,862.6
|
|
|
$
|
(108.8
|
)
|
|
Total number of available-for-sale securities in an unrealized loss position
|
|
|
|
319
|
|
|
|
|
310
|
|
|
|
|
629
|
|
|||||||||
|
|
|
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
|
|
|||||||||
|
|
|
Fiscal
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Beginning balance
|
|
$
|
2.7
|
|
|
$
|
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
|
|
|||
|
Ending balance
|
|
$
|
2.7
|
|
|
$
|
2.7
|
|
|
$
|
2.7
|
|
|
|
|
Fiscal
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Other-than-temporary impairments recognized in net income:
|
|
|
|
|
|
|
||||||
|
Corporates
|
|
$
|
—
|
|
|
$
|
1.2
|
|
|
$
|
4.1
|
|
|
Municipals
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|||
|
Non-agency residential mortgage-backed securities
|
|
0.1
|
|
|
1.2
|
|
|
7.5
|
|
|||
|
Hybrids
|
|
—
|
|
|
—
|
|
|
9.7
|
|
|||
|
Other invested assets
|
|
0.3
|
|
|
0.5
|
|
|
1.5
|
|
|||
|
Total other-than-temporary impairments
|
|
$
|
0.7
|
|
|
$
|
2.9
|
|
|
$
|
22.8
|
|
|
|
|
September 30,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
Asset-based loans, net of deferred fees, by major industry:
|
|
|
|
|
||||
|
Electronics
|
|
$
|
245.4
|
|
|
$
|
—
|
|
|
Apparel
|
|
191.6
|
|
|
252.9
|
|
||
|
Jewelry
|
|
100.1
|
|
|
125.8
|
|
||
|
Home Furnishings
|
|
71.7
|
|
|
—
|
|
||
|
Manufacturing
|
|
56.9
|
|
|
34.3
|
|
||
|
Transportation
|
|
44.3
|
|
|
85.7
|
|
||
|
Sporting Goods
|
|
13.9
|
|
|
25.1
|
|
||
|
Other
|
|
94.9
|
|
|
41.8
|
|
||
|
Total asset-based loans
|
|
818.8
|
|
|
565.6
|
|
||
|
Less: Allowance for loan losses
|
|
7.2
|
|
|
5.2
|
|
||
|
Total asset-based loans, net
|
|
$
|
811.6
|
|
|
$
|
560.4
|
|
|
|
|
Fiscal
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Allowance for credit losses:
|
|
|
|
|
|
|
||||||
|
Balance at beginning of year
|
|
$
|
5.2
|
|
|
$
|
1.4
|
|
|
$
|
—
|
|
|
Provision for credit losses
|
|
2.0
|
|
|
3.8
|
|
|
1.4
|
|
|||
|
Balance at end of year
|
|
$
|
7.2
|
|
|
$
|
5.2
|
|
|
$
|
1.4
|
|
|
|
Internal Risk Rating
|
||||||||||||||||||
|
|
Pass
|
|
Special Mention
|
|
Substandard
|
|
Doubtful
|
|
Total
|
||||||||||
|
September 30, 2014
|
$
|
195.3
|
|
|
$
|
372.7
|
|
|
$
|
250.8
|
|
|
$
|
—
|
|
|
$
|
818.8
|
|
|
September 30, 2013
|
$
|
306.9
|
|
|
$
|
36.7
|
|
|
$
|
222.0
|
|
|
$
|
—
|
|
|
$
|
565.6
|
|
|
|
|
Fiscal
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Fixed maturity available-for-sale securities
|
|
$
|
787.4
|
|
|
$
|
686.2
|
|
|
$
|
707.1
|
|
|
Equity available-for-sale securities
|
|
22.8
|
|
|
14.8
|
|
|
14.0
|
|
|||
|
Policy loans
|
|
0.7
|
|
|
0.8
|
|
|
0.7
|
|
|||
|
Invested cash and short-term investments
|
|
0.3
|
|
|
1.4
|
|
|
4.9
|
|
|||
|
Asset-based loans
|
|
41.5
|
|
|
35.4
|
|
|
8.6
|
|
|||
|
Other investments
|
|
17.2
|
|
|
18.6
|
|
|
(0.8
|
)
|
|||
|
Gross investment income
|
|
869.9
|
|
|
757.2
|
|
|
734.5
|
|
|||
|
External investment expense
|
|
(17.1
|
)
|
|
(16.8
|
)
|
|
(11.7
|
)
|
|||
|
Net investment income
|
|
$
|
852.8
|
|
|
$
|
740.4
|
|
|
$
|
722.8
|
|
|
|
|
Fiscal
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Net realized gains before other-than-temporary impairments
|
|
$
|
101.9
|
|
|
$
|
332.9
|
|
|
$
|
287.2
|
|
|
Gross other-than-temporary impairments
|
|
(0.6
|
)
|
|
(2.9
|
)
|
|
(24.3
|
)
|
|||
|
Non-credit portion of other-than-temporary impairments included in other comprehensive income
|
|
—
|
|
|
—
|
|
|
1.5
|
|
|||
|
Net realized gains on fixed maturity available-for-sale securities
|
|
101.3
|
|
|
330.0
|
|
|
264.4
|
|
|||
|
Realized gains on equity securities
|
|
13.5
|
|
|
12.6
|
|
|
0.9
|
|
|||
|
Net realized gains on securities
|
|
114.8
|
|
|
342.6
|
|
|
265.3
|
|
|||
|
Realized gains (losses) on certain derivative instruments
|
|
233.8
|
|
|
148.6
|
|
|
(10.3
|
)
|
|||
|
Unrealized gains on certain derivative instruments
|
|
37.7
|
|
|
20.5
|
|
|
156.3
|
|
|||
|
Change in fair value of other embedded derivatives
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|||
|
Change in fair value of derivatives
|
|
271.4
|
|
|
169.1
|
|
|
146.0
|
|
|||
|
Realized gains (losses) on other invested assets
|
|
9.1
|
|
|
(0.1
|
)
|
|
(1.3
|
)
|
|||
|
Net investment gains
|
|
$
|
395.3
|
|
|
$
|
511.6
|
|
|
$
|
410.0
|
|
|
|
|
|
|
September 30,
|
||||||
|
Derivatives not designated as hedging instruments:
|
|
Classification
|
|
2014
|
|
2013
|
||||
|
Assets:
|
|
|
|
|
|
|
||||
|
Call options
|
|
Derivatives
|
|
$
|
296.3
|
|
|
$
|
221.8
|
|
|
Other embedded derivatives
|
|
Other invested assets
|
|
11.2
|
|
|
—
|
|
||
|
|
|
|
|
$
|
307.5
|
|
|
$
|
221.8
|
|
|
Liabilities:
|
|
|
|
|
|
|
||||
|
FIA embedded derivative
|
|
Contractholder funds
|
|
$
|
1,908.1
|
|
|
$
|
1,544.4
|
|
|
Futures contracts
|
|
Other liabilities
|
|
0.5
|
|
|
1.0
|
|
||
|
|
|
|
|
$
|
1,908.6
|
|
|
$
|
1,545.4
|
|
|
|
|
Fiscal
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Revenues:
|
|
|
|
|
|
|
||||||
|
Net investment gains:
|
|
|
|
|
|
|
||||||
|
Call options
|
|
$
|
246.0
|
|
|
$
|
151.6
|
|
|
$
|
100.0
|
|
|
Other embedded derivatives
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|||
|
Futures contracts
|
|
25.5
|
|
|
17.5
|
|
|
46.0
|
|
|||
|
|
|
271.4
|
|
|
169.1
|
|
|
146.0
|
|
|||
|
Net investment income:
|
|
|
|
|
|
|
||||||
|
Available-for-sale embedded derivatives
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|||
|
|
|
$
|
271.4
|
|
|
$
|
169.1
|
|
|
146.4
|
|
|
|
Benefits and other changes in policy reserves:
|
|
|
|
|
|
|
||||||
|
FIA embedded derivatives
|
|
$
|
363.7
|
|
|
$
|
(6.4
|
)
|
|
$
|
154.5
|
|
|
|
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||||||||||||||||||||
|
Counterparty
|
|
Credit Rating
(Fitch/Moody’s/S&P) (a) |
|
Notional
Amount |
|
Fair Value
|
|
Collateral
|
|
Net Credit Risk
|
|
Notional
Amount |
|
Fair Value
|
|
Collateral
|
|
Net Credit Risk
|
||||||||||||||||
|
Merrill Lynch
|
|
A/*/A
|
|
$
|
2,239.9
|
|
|
$
|
92.7
|
|
|
$
|
52.5
|
|
|
$
|
40.2
|
|
|
$
|
2,037.8
|
|
|
$
|
70.7
|
|
|
$
|
—
|
|
|
$
|
70.7
|
|
|
Deutsche Bank
|
|
A+/A3/A
|
|
2,810.0
|
|
|
108.0
|
|
|
72.5
|
|
|
35.5
|
|
|
1,620.4
|
|
|
51.7
|
|
|
23.0
|
|
|
28.7
|
|
||||||||
|
Morgan Stanley
|
|
*/A3/A
|
|
2,294.7
|
|
|
85.0
|
|
|
63.0
|
|
|
22.0
|
|
|
2,264.1
|
|
|
75.7
|
|
|
49.0
|
|
|
26.7
|
|
||||||||
|
Royal Bank of Scotland
|
|
A-/*/A-
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
364.3
|
|
|
20.3
|
|
|
—
|
|
|
20.3
|
|
||||||||
|
Barclay's Bank
|
|
A/A2/A-
|
|
258.0
|
|
|
10.6
|
|
|
—
|
|
|
10.6
|
|
|
120.8
|
|
|
3.4
|
|
|
—
|
|
|
3.4
|
|
||||||||
|
|
|
|
|
$
|
7,602.6
|
|
|
$
|
296.3
|
|
|
$
|
188.0
|
|
|
$
|
108.3
|
|
|
$
|
6,407.4
|
|
|
$
|
221.8
|
|
|
$
|
72.0
|
|
|
$
|
149.8
|
|
|
|
|
September 30,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
Maximum loss exposure
|
|
$
|
455.9
|
|
|
$
|
337.8
|
|
|
|
|
|
|
|
||||
|
Asset-based loans receivable
|
|
$
|
455.9
|
|
|
$
|
337.8
|
|
|
Cash and other assets
|
|
35.5
|
|
|
156.7
|
|
||
|
Total assets of consolidated VIE
|
|
$
|
491.4
|
|
|
$
|
494.5
|
|
|
|
|
|
|
|
||||
|
Long-term debt
|
|
$
|
484.0
|
|
|
$
|
485.0
|
|
|
Other liabilities
|
|
6.7
|
|
|
2.9
|
|
||
|
Total liabilities of consolidated VIE
|
|
$
|
490.7
|
|
|
$
|
487.9
|
|
|
|
|
September 30, 2014
|
||||||||||||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair Value
|
||||||||
|
Assets
|
|
|
|
|
|
|
|
|
||||||||
|
Fixed maturity securities, available-for-sale:
|
|
|
|
|
|
|
|
|
||||||||
|
Asset-backed securities
|
|
$
|
—
|
|
|
$
|
1,755.9
|
|
|
$
|
37.0
|
|
|
$
|
1,792.9
|
|
|
Commercial mortgage-backed securities
|
|
—
|
|
|
553.8
|
|
|
83.1
|
|
|
636.9
|
|
||||
|
Corporates
|
|
—
|
|
|
8,945.8
|
|
|
850.0
|
|
|
9,795.8
|
|
||||
|
Hybrids
|
|
—
|
|
|
1,316.1
|
|
|
—
|
|
|
1,316.1
|
|
||||
|
Municipals
|
|
—
|
|
|
1,222.6
|
|
|
37.2
|
|
|
1,259.8
|
|
||||
|
Agency residential mortgage-backed securities
|
|
—
|
|
|
107.3
|
|
|
—
|
|
|
107.3
|
|
||||
|
Non-agency residential mortgage-backed securities
|
|
—
|
|
|
2,006.7
|
|
|
—
|
|
|
2,006.7
|
|
||||
|
U.S. Government
|
|
115.6
|
|
|
180.4
|
|
|
—
|
|
|
296.0
|
|
||||
|
Equity securities:
|
|
|
|
|
|
|
|
|
||||||||
|
Available-for-sale
|
|
59.2
|
|
|
598.4
|
|
|
6.0
|
|
|
663.6
|
|
||||
|
Trading
|
|
12.9
|
|
|
—
|
|
|
—
|
|
|
12.9
|
|
||||
|
Other invested assets
|
|
—
|
|
|
—
|
|
|
11.2
|
|
|
11.2
|
|
||||
|
Funds withheld receivable
|
|
—
|
|
|
154.4
|
|
|
—
|
|
|
154.4
|
|
||||
|
Derivative financial instruments
|
|
—
|
|
|
296.3
|
|
|
—
|
|
|
296.3
|
|
||||
|
Total financial assets
|
|
$
|
187.7
|
|
|
$
|
17,137.7
|
|
|
$
|
1,024.5
|
|
|
$
|
18,349.9
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
|
Derivatives:
|
|
|
|
|
|
|
|
|
||||||||
|
FIA embedded derivatives, included in contractholder funds
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,908.1
|
|
|
$
|
1,908.1
|
|
|
Futures contracts
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
0.5
|
|
||||
|
Front Street future policyholder benefit liability
|
|
—
|
|
|
—
|
|
|
151.3
|
|
|
151.3
|
|
||||
|
Total financial liabilities
|
|
$
|
—
|
|
|
$
|
0.5
|
|
|
$
|
2,059.4
|
|
|
$
|
2,059.9
|
|
|
|
|
September 30, 2013
|
||||||||||||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair Value
|
||||||||
|
Assets
|
|
|
|
|
|
|
|
|
||||||||
|
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
|
|
39.2
|
|
|
—
|
|
|
—
|
|
|
39.2
|
|
||||
|
Derivative financial instruments
|
|
—
|
|
|
221.8
|
|
|
—
|
|
|
221.8
|
|
||||
|
Total financial assets
|
|
$
|
830.1
|
|
|
$
|
14,530.1
|
|
|
$
|
471.8
|
|
|
$
|
15,832.0
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
|
Derivatives:
|
|
|
|
|
|
|
|
|
||||||||
|
FIA embedded derivatives, included in contractholder funds
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,544.4
|
|
|
$
|
1,544.4
|
|
|
Futures contracts
|
|
—
|
|
|
1.0
|
|
|
—
|
|
|
1.0
|
|
||||
|
Total financial liabilities
|
|
$
|
—
|
|
|
$
|
1.0
|
|
|
$
|
1,544.4
|
|
|
$
|
1,545.4
|
|
|
|
|
|
|
|
|
Fair Value at
|
|
Range (Weighted average)
|
||||||||
|
Assets
|
|
Valuation
Technique
|
|
Unobservable
Input(s)
|
|
September 30, 2014
|
|
September 30, 2013
|
|
September 30, 2014
|
|
September 30, 2013
|
||||
|
Asset-backed securities
|
|
Broker-quoted
|
|
Offered quotes
|
|
$
|
37.0
|
|
|
$
|
5.0
|
|
|
100% - 109%
(101%) |
|
103%
|
|
Commercial mortgage-backed securities
|
|
Broker-quoted
|
|
Offered quotes
|
|
83.1
|
|
|
5.7
|
|
|
105% - 121% (118%)
|
|
96%
|
||
|
Corporates
|
|
Broker-quoted
|
|
Offered quotes
|
|
848.0
|
|
|
404.5
|
|
|
62% - 120% (100%)
|
|
0% - 113% (90%)
|
||
|
Corporates
|
|
Matrix pricing
|
|
Quoted prices
|
|
2.0
|
|
|
56.6
|
|
|
142%
|
|
90% - 131% (97%)
|
||
|
Municipal
|
|
Broker-quoted
|
|
Offered quotes
|
|
37.2
|
|
|
—
|
|
|
107%
|
|
—
|
||
|
Equity
|
|
Broker-quoted
|
|
Offered quotes
|
|
6.0
|
|
|
—
|
|
|
100%
|
|
—
|
||
|
Other invested assets
|
|
Black Scholes model
|
|
Net asset value of Anchor Path fund
|
|
11.2
|
|
|
—
|
|
|
100%
|
|
—
|
||
|
Total
|
|
|
|
|
|
$
|
1,024.5
|
|
|
$
|
471.8
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
FIA embedded derivatives, included in contractholder funds
|
|
Discounted cash flow
|
|
Market value of option
|
|
$
|
1,908.1
|
|
|
$
|
1,544.4
|
|
|
0% - 50% (3%)
|
|
0% - 38% (4%)
|
|
|
|
|
|
SWAP rates
|
|
|
|
|
|
2% - 3% (2%)
|
|
2% - 3% (2%)
|
||||
|
|
|
|
|
Mortality multiplier
|
|
|
|
|
|
80%
|
|
80%
|
||||
|
|
|
|
|
Surrender rates
|
|
|
|
|
|
0.50% - 75% (7%)
|
|
0.50% - 75% (7%)
|
||||
|
|
|
|
|
Non-performance risk spread
|
|
|
|
|
|
0.25%
|
|
0.25%
|
||||
|
Front Street future policyholder benefit liability
|
|
Discounted cash flow
|
|
Non-performance risk spread
|
|
151.3
|
|
|
—
|
|
|
0.50% - 1.50%
|
|
—
|
||
|
|
|
|
|
Risk margin to reflect uncertainty
|
|
|
|
|
|
0.50%
|
|
—
|
||||
|
Total
|
|
|
|
|
|
$
|
2,059.4
|
|
|
$
|
1,544.4
|
|
|
|
|
|
|
|
|
Fiscal 2014
|
||||||||||||||||||||||||||||||
|
|
|
Balance at
Beginning of Period |
|
Total Gains (Losses)
|
|
Purchases
|
|
Sales
|
|
Settlements |
|
Net
Transfer In (Out) of Level 3 (a) |
|
Balance at
End of Period |
||||||||||||||||||
|
|
|
Included
in Earnings |
|
Included
in AOCI |
|
|
|
|||||||||||||||||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Fixed maturity securities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Asset-backed securities
|
|
$
|
5.0
|
|
|
$
|
—
|
|
|
$
|
(0.3
|
)
|
|
$
|
36.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3.8
|
)
|
|
$
|
37.0
|
|
|
Commercial mortgage-backed securities
|
|
5.7
|
|
|
—
|
|
|
—
|
|
|
83.7
|
|
|
(0.3
|
)
|
|
—
|
|
|
(6.0
|
)
|
|
83.1
|
|
||||||||
|
Corporates
|
|
461.1
|
|
|
—
|
|
|
19.1
|
|
|
398.1
|
|
|
(11.8
|
)
|
|
(2.4
|
)
|
|
(14.1
|
)
|
|
850.0
|
|
||||||||
|
Hybrids
|
|
—
|
|
|
—
|
|
|
2.2
|
|
|
35.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37.2
|
|
||||||||
|
Equity securities available-for-sale
|
|
—
|
|
|
—
|
|
|
1.2
|
|
|
4.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.0
|
|
||||||||
|
Other invested assets
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
11.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.2
|
|
||||||||
|
Total assets at fair value
|
|
$
|
471.8
|
|
|
$
|
(0.1
|
)
|
|
$
|
22.2
|
|
|
$
|
569.0
|
|
|
$
|
(12.1
|
)
|
|
$
|
(2.4
|
)
|
|
$
|
(23.9
|
)
|
|
1,024.5
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
FIA embedded derivatives
|
|
$
|
1,544.4
|
|
|
$
|
363.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,908.1
|
|
|
Front Street future policyholder
|
|
—
|
|
|
7.0
|
|
|
—
|
|
|
150.6
|
|
|
—
|
|
|
(6.3
|
)
|
|
—
|
|
|
151.3
|
|
||||||||
|
Total liabilities at fair value
|
|
$
|
1,544.4
|
|
|
$
|
370.7
|
|
|
$
|
—
|
|
|
$
|
150.6
|
|
|
$
|
—
|
|
|
$
|
(6.3
|
)
|
|
$
|
—
|
|
|
$
|
2,059.4
|
|
|
|
|
Fiscal 2013
|
||||||||||||||||||||||||||||||
|
|
|
Balance at
Beginning
of Period
|
|
Total Gains (Losses)
|
|
Purchases
|
|
Sales
|
|
Settlements (b) |
|
Net
Transfer
In (Out) of
Level 3 (a)
|
|
Balance at
End of
Period
|
||||||||||||||||||
|
|
|
Included
in Earnings
|
|
Included
in AOCI
|
|
|
|
|||||||||||||||||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Contingent purchase price reduction receivable (b)
|
|
$
|
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 available-for-sale
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
10.5
|
|
|
(10.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
Total assets at fair value
|
|
$
|
206.0
|
|
|
$
|
(0.1
|
)
|
|
$
|
(14.0
|
)
|
|
$
|
417.5
|
|
|
$
|
(20.3
|
)
|
|
$
|
(64.3
|
)
|
|
$
|
(53.0
|
)
|
|
$
|
471.8
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
FIA embedded derivatives
|
|
$
|
1,550.8
|
|
|
$
|
(6.4
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,544.4
|
|
|
Total liabilities at fair value
|
|
$
|
1,550.8
|
|
|
$
|
(6.4
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,544.4
|
|
|
|
|
Fiscal 2012
|
||||||||||||||||||||||||||||||
|
|
|
Balance at
Beginning of Period |
|
Total Gains (Losses)
|
|
Purchases
|
|
Sales
|
|
Settlements |
|
Net
Transfer In (Out) of Level 3 (a) |
|
Balance at
End of Period |
||||||||||||||||||
|
|
|
Included
in Earnings |
|
Included
in AOCI |
|
|
|
|||||||||||||||||||||||||
|
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
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
FIA embedded derivatives
|
|
$
|
1,396.3
|
|
|
$
|
154.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,550.8
|
|
|
Total liabilities at fair value
|
|
$
|
1,396.3
|
|
|
$
|
154.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,550.8
|
|
|
(a)
|
The net transfers in and out of Level 3 during
Fiscal 2014
,
2013
and
2012
were to or from Level 2.
|
|
(b)
|
As discussed further in
Note 1
,
Basis of Presentation and Nature of Operations
, the contingent purchase price reduction receivable were distributed to Harbinger Group Inc. and subsidiaries during
Fiscal 2013
. Consequently this distribution is reflected as a settlement.
|
|
|
September 30, 2014
|
||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Estimated Fair Value
|
|
Carrying Amount
|
||||||||||
|
Assets (a)
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Cash and cash equivalents
|
$
|
687.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
687.3
|
|
|
$
|
687.3
|
|
|
Other invested assets
|
—
|
|
|
—
|
|
|
151.7
|
|
|
151.7
|
|
|
151.7
|
|
|||||
|
Asset-based loans
|
—
|
|
|
—
|
|
|
811.6
|
|
|
811.6
|
|
|
811.6
|
|
|||||
|
Related party loans
|
—
|
|
|
—
|
|
|
136.8
|
|
|
136.8
|
|
|
136.8
|
|
|||||
|
Total financial assets
|
$
|
687.3
|
|
|
$
|
—
|
|
|
$
|
1,100.1
|
|
|
$
|
1,787.4
|
|
|
$
|
1,787.4
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Liabilities (a)
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total debt (b)
|
$
|
—
|
|
|
$
|
615.3
|
|
|
$
|
—
|
|
|
$
|
615.3
|
|
|
$
|
598.8
|
|
|
Investment contracts, included in contractholder funds
|
—
|
|
|
—
|
|
|
13,108.8
|
|
|
13,108.8
|
|
|
14,555.4
|
|
|||||
|
Total financial liabilities
|
$
|
—
|
|
|
$
|
615.3
|
|
|
$
|
13,108.8
|
|
|
$
|
13,724.1
|
|
|
$
|
15,154.2
|
|
|
|
September 30, 2013
|
||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Estimated Fair Value
|
|
Carrying Amount
|
||||||||||
|
Assets (a)
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Cash and cash equivalents
|
$
|
1,414.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
1,414.8
|
|
|
1,414.8
|
|
||
|
Other invested assets
|
—
|
|
|
—
|
|
|
31.2
|
|
|
31.2
|
|
|
31.2
|
|
|||||
|
Asset-based loans
|
—
|
|
|
—
|
|
|
560.4
|
|
|
560.4
|
|
|
560.4
|
|
|||||
|
Related party loans
|
—
|
|
|
—
|
|
|
102.3
|
|
|
102.3
|
|
|
102.3
|
|
|||||
|
Total financial assets
|
$
|
1,414.8
|
|
|
$
|
—
|
|
|
$
|
693.9
|
|
|
$
|
2,108.7
|
|
|
$
|
2,108.7
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Liabilities (a)
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total debt (b)
|
$
|
—
|
|
|
$
|
481.8
|
|
|
$
|
—
|
|
|
$
|
481.8
|
|
|
$
|
481.8
|
|
|
Investment contracts, included in contractholder funds
|
—
|
|
|
—
|
|
|
12,378.6
|
|
|
12,378.6
|
|
|
13,703.8
|
|
|||||
|
Total financial liabilities
|
$
|
—
|
|
|
$
|
481.8
|
|
|
$
|
12,378.6
|
|
|
$
|
12,860.4
|
|
|
$
|
14,185.6
|
|
|
(a)
|
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.
|
|
(b)
|
The fair values of debt set forth above are generally based on quoted or observed market prices.
|
|
|
VOBA
|
|
DAC
|
|
Total
|
||||||
|
Balance at September 30, 2012
|
$
|
104.3
|
|
|
$
|
169.2
|
|
|
$
|
273.5
|
|
|
Deferrals
|
—
|
|
|
147.4
|
|
|
147.4
|
|
|||
|
Less: Components of amortization:
|
|
|
|
|
|
||||||
|
Periodic amortization
|
(194.6
|
)
|
|
(62.1
|
)
|
|
(256.7
|
)
|
|||
|
Interest
|
21.8
|
|
|
9.5
|
|
|
31.3
|
|
|||
|
Unlocking
|
35.8
|
|
|
7.3
|
|
|
43.1
|
|
|||
|
Adjustment for unrealized investment losses, net
|
258.0
|
|
|
69.3
|
|
|
327.3
|
|
|||
|
Balance at September 30, 2013
|
225.3
|
|
|
340.6
|
|
|
565.9
|
|
|||
|
Deferrals
|
—
|
|
|
239.0
|
|
|
239.0
|
|
|||
|
Less: Components of amortization:
|
|
|
|
|
|
|
|||||
|
Periodic amortization
|
(92.4
|
)
|
|
(58.0
|
)
|
|
(150.4
|
)
|
|||
|
Interest
|
15.0
|
|
|
13.6
|
|
|
28.6
|
|
|||
|
Unlocking
|
21.6
|
|
|
2.7
|
|
|
24.3
|
|
|||
|
Adjustment for unrealized investment gains, net
|
(82.7
|
)
|
|
(74.1
|
)
|
|
(156.8
|
)
|
|||
|
Balance at September 30, 2014
|
$
|
86.8
|
|
|
$
|
463.8
|
|
|
$
|
550.6
|
|
|
|
|
Estimated Amortization Expense
|
||
|
Fiscal Year
|
|
VOBA
|
||
|
2015
|
|
$
|
42.8
|
|
|
2016
|
|
38.4
|
|
|
|
2017
|
|
31.2
|
|
|
|
2018
|
|
25.0
|
|
|
|
2019
|
|
25.5
|
|
|
|
2020 and thereafter
|
|
88.1
|
|
|
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||
|
|
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
||||||
|
FGH
|
|
|
|
|
|
|
|
|
||||||
|
6.375% Senior Notes, due April 1, 2021
|
|
$
|
300.0
|
|
|
6.4
|
%
|
|
$
|
300.0
|
|
|
6.4
|
%
|
|
Salus
|
|
|
|
|
|
|
|
|
||||||
|
Unaffiliated long-term debt of consolidated variable-interest entity
|
|
193.0
|
|
|
6.7
|
%
|
|
182.9
|
|
|
6.6
|
%
|
||
|
Secured borrowings under non-qualifying loan participations
|
|
106.8
|
|
|
10.8
|
%
|
|
—
|
|
|
—
|
%
|
||
|
Total
|
|
599.8
|
|
|
|
|
482.9
|
|
|
|
||||
|
Original issuance (discounts) premiums on debt, net
|
|
(1.0
|
)
|
|
|
|
(1.1
|
)
|
|
|
||||
|
Total debt
|
|
$
|
598.8
|
|
|
|
|
$
|
481.8
|
|
|
|
||
|
Fiscal Year
|
|
Scheduled maturities
|
||
|
2015
|
|
$
|
0.7
|
|
|
2016
|
|
1.6
|
|
|
|
2017
|
|
4.5
|
|
|
|
2018
|
|
—
|
|
|
|
2019
|
|
100.0
|
|
|
|
Thereafter
|
|
493.0
|
|
|
|
|
|
$
|
599.8
|
|
|
|
|
Unrealized Investment Gains, net
|
|
Non-credit Related Other-than-temporary
Impairments
|
|
Total
|
||||||
|
Cumulative components at September 30, 2014:
|
|
|
|
|
|
|
||||||
|
Gross amounts (after reclassification adjustments)
|
|
$
|
762.2
|
|
|
$
|
(1.0
|
)
|
|
$
|
761.2
|
|
|
Intangible assets adjustments
|
|
(220.0
|
)
|
|
0.4
|
|
|
(219.6
|
)
|
|||
|
Tax effects
|
|
(190.1
|
)
|
|
0.2
|
|
|
(189.9
|
)
|
|||
|
Noncontrolling interest
|
|
(68.5
|
)
|
|
—
|
|
|
(68.5
|
)
|
|||
|
|
|
$
|
283.6
|
|
|
$
|
(0.4
|
)
|
|
$
|
283.2
|
|
|
Cumulative components at September 30, 2013:
|
|
|
|
|
|
|
||||||
|
Gross amounts (after reclassification adjustments)
|
|
$
|
235.7
|
|
|
$
|
(1.0
|
)
|
|
$
|
234.7
|
|
|
Intangible assets adjustments
|
|
(63.2
|
)
|
|
0.4
|
|
|
(62.8
|
)
|
|||
|
Tax effects
|
|
(61.1
|
)
|
|
0.2
|
|
|
(60.9
|
)
|
|||
|
|
|
$
|
111.4
|
|
|
$
|
(0.4
|
)
|
|
$
|
111.0
|
|
|
|
|
FGH
|
|
FGL
|
|||||||||||||
|
Stock Option Awards
|
|
Options
|
|
Weighted Average Exercise Price
|
|
Options
|
|
Weighted Average Exercise Price
|
|
Weighted
Average Grant Date Fair Value |
|||||||
|
Stock options outstanding at September 30, 2013
|
|
335
|
|
|
$
|
44.23
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Granted
|
|
—
|
|
|
—
|
|
|
249
|
|
|
17.00
|
|
|
3.76
|
|
||
|
Exercised
|
|
(105
|
)
|
|
39.86
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
|
Forfeited or expired
|
|
(5
|
)
|
|
47.30
|
|
|
(7
|
)
|
|
17.00
|
|
|
5.26
|
|
||
|
Stock options outstanding at September 30, 2014
|
|
225
|
|
|
46.19
|
|
|
242
|
|
|
17.00
|
|
|
3.72
|
|
||
|
Stock options vested and exercisable at September 30, 2014
|
|
99
|
|
|
46.68
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
|
Stock options outstanding and expected to vest
|
|
122
|
|
|
46.15
|
|
|
231
|
|
|
17.00
|
|
|
3.64
|
|
||
|
|
|
Units
|
|
Awards
|
|||||||||
|
|
|
FGH
|
|
FGL
|
|||||||||
|
Restricted Stock Awards
|
|
Shares
|
|
Weighted
Average Grant
Date Fair Value
|
|
Shares
|
|
Weighted
Average Grant Date Fair Value |
|||||
|
Restricted stock outstanding at September 30, 2013
|
|
46
|
|
|
$
|
49.60
|
|
|
—
|
|
|
—
|
|
|
Granted
|
|
—
|
|
|
—
|
|
|
179
|
|
|
18.25
|
|
|
|
Exercised / Released
|
|
(18
|
)
|
|
49.53
|
|
|
—
|
|
|
—
|
|
|
|
Forfeited
|
|
(2
|
)
|
|
49.45
|
|
|
(7
|
)
|
|
19.98
|
|
|
|
Restricted stock outstanding at September 30, 2014
|
|
26
|
|
|
49.55
|
|
|
172
|
|
|
18.18
|
|
|
|
Restricted stock outstanding and expected to vest
|
|
25
|
|
|
49.55
|
|
|
159
|
|
|
18.03
|
|
|
|
|
2014
|
|
2013
|
|
2012
|
|
Risk-free interest rate
|
1.40% to 1.41%
|
|
0.8%
|
|
0.8%
|
|
Assumed dividend yield
|
1.30% to 1.50%
|
|
6.0%
|
|
10.0%
|
|
Expected option term
|
4.5 years
|
|
4.5 years
|
|
4.5 years
|
|
Volatility
|
25.0%
|
|
27.0%
|
|
35.0%
|
|
|
|
Fiscal
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Pretax income (loss):
|
|
|
|
|
|
|
||||||
|
United States
|
|
$
|
239.9
|
|
|
$
|
503.4
|
|
|
$
|
202.3
|
|
|
Outside the United States
|
|
11.2
|
|
|
13.0
|
|
|
(3.3
|
)
|
|||
|
Total pretax income
|
|
$
|
251.1
|
|
|
$
|
516.4
|
|
|
$
|
199.0
|
|
|
|
|
Fiscal
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Current:
|
|
|
|
|
|
|
||||||
|
Federal
|
|
$
|
56.8
|
|
|
$
|
(31.4
|
)
|
|
$
|
74.3
|
|
|
State
|
|
3.5
|
|
|
0.1
|
|
|
—
|
|
|||
|
Total current
|
|
60.3
|
|
|
(31.3
|
)
|
|
74.3
|
|
|||
|
Deferred:
|
|
|
|
|
|
|
||||||
|
Federal
|
|
(7.4
|
)
|
|
192.4
|
|
|
(220.0
|
)
|
|||
|
State
|
|
(1.1
|
)
|
|
—
|
|
|
—
|
|
|||
|
Total deferred
|
|
(8.5
|
)
|
|
192.4
|
|
|
(220.0
|
)
|
|||
|
Income tax expense (benefit)
|
|
$
|
51.8
|
|
|
$
|
161.1
|
|
|
$
|
(145.7
|
)
|
|
|
|
Fiscal
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Expected income tax benefit at Federal statutory rate
|
|
$
|
87.9
|
|
|
$
|
180.7
|
|
|
$
|
69.7
|
|
|
Valuation allowance for deferred tax assets
|
|
(37.9
|
)
|
|
(22.7
|
)
|
|
(205.0
|
)
|
|||
|
Gain on contingent purchase price reduction
|
|
—
|
|
|
—
|
|
|
(14.4
|
)
|
|||
|
Other
|
|
1.8
|
|
|
3.1
|
|
|
4.0
|
|
|||
|
Reported income tax expense (benefit)
|
|
$
|
51.8
|
|
|
$
|
161.1
|
|
|
$
|
(145.7
|
)
|
|
Effective tax rate
|
|
20.6
|
%
|
|
31.2
|
%
|
|
(73.2
|
)%
|
|||
|
|
|
September 30,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
Current deferred tax assets:
|
|
|
|
|
||||
|
Employee compensation
|
|
$
|
1.0
|
|
|
$
|
0.3
|
|
|
Other
|
|
0.1
|
|
|
—
|
|
||
|
Valuation allowance
|
|
(0.8
|
)
|
|
(0.2
|
)
|
||
|
Total current deferred tax assets
|
|
0.3
|
|
|
0.1
|
|
||
|
Current deferred tax liabilities
|
|
|
|
|
||||
|
Other
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
Total current deferred tax liabilities
|
|
—
|
|
|
(0.1
|
)
|
||
|
Noncurrent deferred tax assets:
|
|
|
|
|
||||
|
Net operating loss, credit and capital loss carryforwards
|
|
170.6
|
|
|
201.8
|
|
||
|
Intangibles
|
|
1.8
|
|
|
—
|
|
||
|
Deferred acquisition costs
|
|
0.4
|
|
|
0.4
|
|
||
|
Insurance reserves and claim related adjustments
|
|
456.4
|
|
|
477.7
|
|
||
|
Outside basis difference
|
|
3.2
|
|
|
2.3
|
|
||
|
Other
|
|
64.8
|
|
|
26.5
|
|
||
|
Valuation allowance
|
|
(108.2
|
)
|
|
(146.5
|
)
|
||
|
Total noncurrent deferred tax assets
|
|
589.0
|
|
|
562.2
|
|
||
|
Noncurrent deferred tax liabilities:
|
|
|
|
|
||||
|
Value of business acquired
|
|
(20.8
|
)
|
|
(67.3
|
)
|
||
|
Deferred acquisition costs
|
|
(104.2
|
)
|
|
(63.7
|
)
|
||
|
Investments
|
|
(310.8
|
)
|
|
(156.5
|
)
|
||
|
Funds withheld receivable
|
|
(9.7
|
)
|
|
—
|
|
||
|
Other
|
|
(3.9
|
)
|
|
(14.3
|
)
|
||
|
Total noncurrent deferred tax liabilities
|
|
(449.4
|
)
|
|
(301.8
|
)
|
||
|
Total gross deferred tax assets
|
|
$
|
589.3
|
|
|
$
|
562.3
|
|
|
Total gross deferred tax liabilities
|
|
$
|
(449.4
|
)
|
|
$
|
(301.9
|
)
|
|
|
Amount
|
||
|
Unrecognized tax benefits at September 30, 2013
|
$
|
—
|
|
|
Gross increase — tax positions in prior period
|
1.2
|
|
|
|
Gross decrease — tax positions in prior period
|
—
|
|
|
|
Gross increase — tax positions in current period
|
—
|
|
|
|
Settlements
|
—
|
|
|
|
Lapse of statutes of limitations
|
—
|
|
|
|
Unrecognized tax benefits at September 30, 2014
|
$
|
1.2
|
|
|
|
Future Minimum
Rental Commitments
|
||
|
Fiscal Year
|
|
||
|
2015
|
$
|
2.3
|
|
|
2016
|
2.3
|
|
|
|
2017
|
2.2
|
|
|
|
2018
|
2.1
|
|
|
|
2019
|
1.9
|
|
|
|
Thereafter
|
3.0
|
|
|
|
Total minimum lease payments
|
$
|
13.8
|
|
|
|
|
Fiscal
|
||||||||||||||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||||||||||||||
|
|
|
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
|
|
$
|
266.8
|
|
|
$
|
1,103.3
|
|
|
$
|
279.2
|
|
|
$
|
776.5
|
|
|
$
|
298.0
|
|
|
$
|
1,033.4
|
|
|
Assumed
|
|
35.9
|
|
|
33.0
|
|
|
32.8
|
|
|
23.3
|
|
|
47.2
|
|
|
34.9
|
|
||||||
|
Ceded
|
|
(246.1
|
)
|
|
(283.6
|
)
|
|
(253.2
|
)
|
|
(268.0
|
)
|
|
(289.9
|
)
|
|
(290.9
|
)
|
||||||
|
Net
|
|
$
|
56.6
|
|
|
$
|
852.7
|
|
|
$
|
58.8
|
|
|
$
|
531.8
|
|
|
$
|
55.3
|
|
|
$
|
777.4
|
|
|
|
|
September 30,
|
||||||||||||||||||||||||||||||
|
|
|
2014
|
|
2013
|
||||||||||||||||||||||||||||
|
Type
|
|
Asset Carrying Value
|
|
Investment Accrued Income
|
|
Total Carrying Value
|
|
Net Investment Income
|
|
Asset Carrying Value
|
|
Investment Accrued Income
|
|
Total Carrying Value
|
|
Net Investment Income
|
||||||||||||||||
|
HGI Energy loan
|
|
$
|
100.0
|
|
|
$
|
2.3
|
|
|
$
|
102.3
|
|
|
$
|
9.0
|
|
|
$
|
100.0
|
|
|
$
|
2.3
|
|
|
$
|
102.3
|
|
|
$
|
5.6
|
|
|
FOH credit facility
|
|
34.1
|
|
|
0.4
|
|
|
34.5
|
|
|
1.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
Total
|
|
$
|
134.1
|
|
|
$
|
2.7
|
|
|
$
|
136.8
|
|
|
$
|
10.5
|
|
|
$
|
100.0
|
|
|
$
|
2.3
|
|
|
$
|
102.3
|
|
|
$
|
5.6
|
|
|
|
|
Subsidiary (state of domicile)(a)
|
||||||
|
|
|
FGL Insurance (IA) (b)
|
|
FGL NY Insurance (NY)
|
||||
|
Statutory Net Income (Loss):
|
|
|
|
|
||||
|
Fiscal year ended September 30, 2014 (Unaudited)
|
|
$
|
180.3
|
|
|
$
|
2.7
|
|
|
Year ended December 31, 2013
|
|
118.2
|
|
|
1.3
|
|
||
|
Year ended December 31, 2012
|
|
102.2
|
|
|
1.0
|
|
||
|
|
|
|
|
|
||||
|
Statutory Capital and Surplus:
|
|
|
|
|
||||
|
September 30, 2014 (Unaudited)
|
|
$
|
1,134.4
|
|
|
$
|
64.1
|
|
|
December 31, 2013
|
|
1,108.3
|
|
|
61.9
|
|
||
|
December 31, 2012
|
|
900.5
|
|
|
41.1
|
|
||
|
(a)
|
FGL NY Insurance is a subsidiary of FGL Insurance, and the columns should not be added together.
|
|
(b)
|
FGL Insurance Company re-domesticated to Iowa effective November 1, 2013. Prior to November 1, 2013, the Company was incorporated in the state of Maryland.
|
|
|
|
Fiscal
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Revenues:
|
|
|
|
|
|
|
||||||
|
Insurance
|
|
$
|
1,349.7
|
|
|
$
|
1,348.4
|
|
|
$
|
1,221.8
|
|
|
Asset Management
|
|
34.2
|
|
|
28.9
|
|
|
8.6
|
|
|||
|
Intersegment elimination
|
|
(6.5
|
)
|
|
(4.0
|
)
|
|
(2.0
|
)
|
|||
|
Consolidated revenues
|
|
$
|
1,377.4
|
|
|
$
|
1,373.3
|
|
|
$
|
1,228.4
|
|
|
|
|
|
|
|
|
|
||||||
|
Depreciation and amortization
|
|
|
|
|
|
|
||||||
|
Insurance
|
|
$
|
102.5
|
|
|
$
|
186.3
|
|
|
$
|
163.6
|
|
|
Asset Management
|
|
0.3
|
|
|
0.2
|
|
|
0.1
|
|
|||
|
Consolidated depreciation and amortization
|
|
$
|
102.8
|
|
|
$
|
186.5
|
|
|
$
|
163.7
|
|
|
|
|
|
|
|
|
|
||||||
|
Operating income:
|
|
|
|
|
|
|
||||||
|
Insurance
|
|
$
|
284.8
|
|
|
$
|
522.9
|
|
|
$
|
159.9
|
|
|
Asset Management
|
|
0.7
|
|
|
10.4
|
|
|
2.5
|
|
|||
|
Intersegment elimination
|
|
(7.1
|
)
|
|
(5.2
|
)
|
|
(2.1
|
)
|
|||
|
Consolidated operating income
|
|
278.4
|
|
|
528.1
|
|
|
160.3
|
|
|||
|
Interest expense
|
|
(22.5
|
)
|
|
(11.5
|
)
|
|
(2.5
|
)
|
|||
|
Gain on contingent purchase price reduction
|
|
—
|
|
|
—
|
|
|
41.0
|
|
|||
|
Other (expense) income, net
|
|
(4.8
|
)
|
|
(0.2
|
)
|
|
0.2
|
|
|||
|
Consolidated income from continuing operations before income taxes
|
|
$
|
251.1
|
|
|
$
|
516.4
|
|
|
$
|
199.0
|
|
|
|
|
Fiscal
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Capital expenditures:
|
|
|
|
|
|
|
||||||
|
Insurance
|
|
$
|
9.4
|
|
|
$
|
4.1
|
|
|
$
|
6.2
|
|
|
Asset Management
|
|
0.9
|
|
|
0.3
|
|
|
0.5
|
|
|||
|
Consolidated capital expenditures
|
|
$
|
10.3
|
|
|
$
|
4.4
|
|
|
$
|
6.7
|
|
|
|
September 30,
|
||||||
|
Total assets:
|
2014
|
|
2013
|
||||
|
Insurance
|
$
|
23,195.8
|
|
|
$
|
21,183.1
|
|
|
Asset Management
|
692.5
|
|
|
572.2
|
|
||
|
Intersegment elimination
|
(363.2
|
)
|
|
(359.2
|
)
|
||
|
Consolidated total assets
|
$
|
23,525.1
|
|
|
$
|
21,396.1
|
|
|
|
September 30,
|
||||||
|
Total long-lived assets:
|
2014
|
|
2013
|
||||
|
Insurance
|
$
|
11.4
|
|
|
$
|
7.0
|
|
|
Asset Management
|
1.4
|
|
|
0.7
|
|
||
|
Consolidated total long-lived assets
|
$
|
12.8
|
|
|
$
|
7.7
|
|
|
|
|
Amortized cost (a)
|
|
Fair value
|
|
Amount at which
shown in the
balance sheet
|
||||||
|
Fixed maturities:
|
|
|
|
|
|
|
||||||
|
Bonds:
|
|
|
|
|
|
|
||||||
|
United States Government and government agencies and authorities
|
|
$
|
395.3
|
|
|
$
|
403.3
|
|
|
$
|
403.3
|
|
|
States, municipalities and political subdivisions
|
|
1,149.9
|
|
|
1,259.8
|
|
|
1,259.8
|
|
|||
|
Foreign governments
|
|
13.1
|
|
|
12.9
|
|
|
12.9
|
|
|||
|
Public utilities
|
|
1,822.2
|
|
|
1,922.4
|
|
|
1,922.4
|
|
|||
|
All other corporate bonds
|
|
12,968.2
|
|
|
13,492.4
|
|
|
13,492.4
|
|
|||
|
Redeemable preferred stock
|
|
120.0
|
|
|
120.7
|
|
|
120.7
|
|
|||
|
Total fixed maturities
|
|
16,468.7
|
|
|
17,211.5
|
|
|
17,211.5
|
|
|||
|
Equity securities:
|
|
|
|
|
|
|
||||||
|
Common Stocks:
|
|
|
|
|
|
|
||||||
|
Banks, trust and insurance companies
|
|
98.4
|
|
|
85.4
|
|
|
85.4
|
|
|||
|
Industrial, miscellaneous and all other
|
|
9.2
|
|
|
12.9
|
|
|
12.9
|
|
|||
|
Nonredeemable preferred stock
|
|
547.3
|
|
|
578.2
|
|
|
578.2
|
|
|||
|
Total equity securities
|
|
654.9
|
|
|
676.5
|
|
|
676.5
|
|
|||
|
Derivative investments
|
|
177.7
|
|
|
296.3
|
|
|
296.3
|
|
|||
|
Asset-based loans
|
|
811.6
|
|
|
811.6
|
|
|
811.6
|
|
|||
|
Policy loans
|
|
10.6
|
|
|
10.6
|
|
|
10.6
|
|
|||
|
Other long-term investments
|
|
152.3
|
|
|
152.3
|
|
|
152.3
|
|
|||
|
Total investments
|
|
$
|
18,275.8
|
|
|
$
|
19,158.8
|
|
|
$
|
19,158.8
|
|
|
(a)
|
Represents (i) original cost reduced by repayments and other-tan-temporary impairments and adjusted for amortization of premiums and accrual of discounts for fixed maturity securities, (ii) original cost reduced by other-tan-temporary impairments for equity securities and (iii) original cost for derivative investments, and (iv) unpaid principal balance reduced by an allowance for credit losses for asset-based loans.
|
|
|
|
September 30,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
ASSETS
|
|
|
|
|
||||
|
Investments in consolidated subsidiaries
|
|
$
|
1,522.3
|
|
|
$
|
1,293.4
|
|
|
Deferred tax assets
|
|
1.0
|
|
|
—
|
|
||
|
Receivables, net
|
|
0.7
|
|
|
1.5
|
|
||
|
Cash and cash equivalents
|
|
2.2
|
|
|
2.5
|
|
||
|
Total assets
|
|
$
|
1,526.2
|
|
|
$
|
1,297.4
|
|
|
LIABILITIES AND SHAREHOLDER’S EQUITY
|
|
|
|
|
||||
|
Accounts payable and accrued expenses
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
Total liabilities
|
|
0.1
|
|
|
—
|
|
||
|
Shareholder’s equity
|
|
|
|
|
||||
|
Common Stock
|
|
—
|
|
|
—
|
|
||
|
Contributed capital
|
|
478.3
|
|
|
528.9
|
|
||
|
Retained earnings
|
|
764.6
|
|
|
657.5
|
|
||
|
Accumulated other comprehensive income
|
|
283.2
|
|
|
111.0
|
|
||
|
Total shareholder’s equity
|
|
1,526.1
|
|
|
1,297.4
|
|
||
|
Total liabilities and shareholder’s equity
|
|
$
|
1,526.2
|
|
|
$
|
1,297.4
|
|
|
|
|
Year Ended September 30,
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Cost of revenues
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Operating Expenses:
|
|
|
|
|
|
|
||||||
|
General and administrative expenses
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|||
|
Total operating expenses
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|||
|
Operating loss
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|||
|
Other income:
|
|
|
|
|
|
|
||||||
|
Equity in net income of subsidiaries
|
|
173.2
|
|
|
354.9
|
|
|
344.7
|
|
|||
|
Income before income taxes
|
|
172.9
|
|
|
354.9
|
|
|
344.7
|
|
|||
|
Income tax expense
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|||
|
Net income
|
|
$
|
172.5
|
|
|
$
|
354.9
|
|
|
$
|
344.7
|
|
|
|
|
Year Ended September 30,
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
|
Net income
|
|
$
|
172.5
|
|
|
$
|
354.9
|
|
|
$
|
344.7
|
|
|
|
|
|
|
|
|
|
||||||
|
Adjustments to reconcile net income to net cash used in operating activities
|
|
|
|
|
|
|
||||||
|
Equity in net income of subsidiaries
|
|
(173.2
|
)
|
|
(354.9
|
)
|
|
(344.7
|
)
|
|||
|
Dividends received
|
|
65.4
|
|
|
96.8
|
|
|
40.8
|
|
|||
|
Change in deferred tax assets
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|||
|
Change in accounts receivable and prepaid expenses
|
|
(0.7
|
)
|
|
—
|
|
|
—
|
|
|||
|
Change in accounts payable and accrued expenses
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
|
Net change in cash due to operating activities
|
|
65.1
|
|
|
96.8
|
|
|
40.8
|
|
|||
|
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
|
Capital contributions to subsidiaries
|
|
(5.2
|
)
|
|
(109.5
|
)
|
|
(36.0
|
)
|
|||
|
Net change in cash due to investing activities
|
|
(5.2
|
)
|
|
(109.5
|
)
|
|
(36.0
|
)
|
|||
|
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
|
Cash contributions from parent
|
|
5.2
|
|
|
112.0
|
|
|
36.0
|
|
|||
|
Dividend payments
|
|
(65.4
|
)
|
|
(96.8
|
)
|
|
(40.8
|
)
|
|||
|
Net change in cash due to financing activities
|
|
(60.2
|
)
|
|
15.2
|
|
|
(4.8
|
)
|
|||
|
Net change in cash and cash equivalents
|
|
(0.3
|
)
|
|
2.5
|
|
|
—
|
|
|||
|
Cash and cash equivalents at beginning of year
|
|
2.5
|
|
|
—
|
|
|
—
|
|
|||
|
Cash and cash equivalents at end of year
|
|
$
|
2.2
|
|
|
$
|
2.5
|
|
|
$
|
—
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
||||||
|
Distribution of non-cash net assets to Harbinger Group Inc. and subsidiaries
|
|
$
|
—
|
|
|
$
|
41.0
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
As of or for the year ended
September 30, |
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Life Insurance (single segment):
|
|
|
|
|
|
|
||||||
|
Deferred acquisition costs
|
|
$
|
463.8
|
|
|
$
|
340.6
|
|
|
$
|
169.2
|
|
|
Future policy benefits, losses, claims and loss expenses
|
|
3,655.5
|
|
|
3,556.8
|
|
|
3,614.8
|
|
|||
|
Other policy claims and benefits payable
|
|
58.1
|
|
|
51.5
|
|
|
91.1
|
|
|||
|
Premium revenue
|
|
56.6
|
|
|
58.8
|
|
|
55.3
|
|
|||
|
Net investment income
|
|
824.5
|
|
|
715.5
|
|
|
716.2
|
|
|||
|
Benefits, claims, losses and settlement expenses
|
|
(852.7
|
)
|
|
(531.8
|
)
|
|
(777.4
|
)
|
|||
|
Amortization of deferred acquisition costs
|
|
(41.7
|
)
|
|
(45.3
|
)
|
|
(15.2
|
)
|
|||
|
Other operating expenses
|
|
(114.7
|
)
|
|
(111.4
|
)
|
|
(123.9
|
)
|
|||
|
For the year ended September 30, 2014
|
|
Gross Amount
|
|
Ceded to other
companies |
|
Assumed from
other companies |
|
Net Amount
|
|
Percentage
of amount assumed to net |
|||||||||
|
Life insurance in force
|
|
$
|
2,785.6
|
|
|
$
|
(2,014.3
|
)
|
|
$
|
16.4
|
|
|
$
|
787.7
|
|
|
2.1
|
%
|
|
Premiums and other considerations:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Traditional life insurance premiums
|
|
$
|
266.8
|
|
|
$
|
(246.1
|
)
|
|
$
|
35.9
|
|
|
$
|
56.6
|
|
|
63.4
|
%
|
|
Annuity product charges
|
|
142.5
|
|
|
(71.4
|
)
|
|
—
|
|
|
71.1
|
|
|
—
|
%
|
||||
|
Total premiums and other considerations
|
|
$
|
409.3
|
|
|
$
|
(317.5
|
)
|
|
$
|
35.9
|
|
|
$
|
127.7
|
|
|
28.1
|
%
|
|
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
|
|
|
2.7
|
%
|
|
Premiums and other considerations:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Traditional life insurance premiums
|
|
$
|
279.2
|
|
|
$
|
(253.2
|
)
|
|
$
|
32.8
|
|
|
$
|
58.8
|
|
|
55.8
|
%
|
|
Annuity product charges
|
|
135.5
|
|
|
(75.0
|
)
|
|
—
|
|
|
60.5
|
|
|
—
|
%
|
||||
|
Total premiums and other considerations
|
|
$
|
414.7
|
|
|
$
|
(328.2
|
)
|
|
$
|
32.8
|
|
|
$
|
119.3
|
|
|
27.5
|
%
|
|
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
|
|
|
4.3
|
%
|
|
Premiums and other considerations:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Traditional life insurance premiums
|
|
$
|
298.0
|
|
|
$
|
(289.9
|
)
|
|
$
|
47.2
|
|
|
$
|
55.3
|
|
|
85.4
|
%
|
|
Annuity product charges
|
|
117.9
|
|
|
(79.6
|
)
|
|
—
|
|
|
38.3
|
|
|
—
|
%
|
||||
|
Total premiums and other considerations
|
|
$
|
415.9
|
|
|
$
|
(369.5
|
)
|
|
$
|
47.2
|
|
|
$
|
93.6
|
|
|
50.4
|
%
|
|
(in thousands)
|
|
September 30,
2014 |
|
September 30,
2013 |
||||
|
ASSETS
|
|
|
|
|
||||
|
Current assets:
|
|
|
|
|
||||
|
Cash and cash equivalents
|
|
$
|
14,161
|
|
|
$
|
18,742
|
|
|
Accounts receivable, net:
|
|
|
|
|
||||
|
Oil and natural gas
|
|
20,347
|
|
|
16,654
|
|
||
|
Joint interest
|
|
1,177
|
|
|
1,677
|
|
||
|
Other
|
|
232
|
|
|
78
|
|
||
|
Derivative financial instruments
|
|
1,520
|
|
|
3,336
|
|
||
|
Other
|
|
24
|
|
|
355
|
|
||
|
Total current assets
|
|
37,461
|
|
|
40,842
|
|
||
|
Oil and natural gas properties (full cost accounting method):
|
|
|
|
|
||||
|
Unproved oil and natural gas properties and development costs not being amortized
|
|
20,173
|
|
|
36,455
|
|
||
|
Proved developed and undeveloped oil and natural gas properties
|
|
493,889
|
|
|
546,044
|
|
||
|
Accumulated depletion
|
|
(68,369
|
)
|
|
(30,112
|
)
|
||
|
Oil and natural gas properties, net
|
|
445,693
|
|
|
552,387
|
|
||
|
Gas gathering assets
|
|
21,083
|
|
|
21,079
|
|
||
|
Accumulated depreciation and amortization
|
|
(2,442
|
)
|
|
(901
|
)
|
||
|
Gas gathering assets, net
|
|
18,641
|
|
|
20,178
|
|
||
|
Deferred financing costs, net
|
|
2,467
|
|
|
3,773
|
|
||
|
Derivative financial instruments
|
|
382
|
|
|
442
|
|
||
|
Other assets
|
|
86
|
|
|
—
|
|
||
|
Total assets
|
|
$
|
504,730
|
|
|
$
|
617,622
|
|
|
|
|
|
|
|
||||
|
LIABILITIES AND MEMBER'S EQUITY
|
|
|
|
|
||||
|
Current liabilities:
|
|
|
|
|
||||
|
Accounts payable and accrued liabilities
|
|
$
|
16,482
|
|
|
$
|
13,492
|
|
|
Revenues and royalties payable
|
|
14,373
|
|
|
14,947
|
|
||
|
Accrued interest payable
|
|
155
|
|
|
2,585
|
|
||
|
Current portion of asset retirement obligations
|
|
632
|
|
|
558
|
|
||
|
Derivative financial instruments
|
|
269
|
|
|
1,834
|
|
||
|
Total current liabilities
|
|
31,911
|
|
|
33,416
|
|
||
|
Long-term debt
|
|
243,210
|
|
|
271,180
|
|
||
|
Derivative financial instruments
|
|
48
|
|
|
34
|
|
||
|
Asset retirement obligations and other long-term liabilities
|
|
26,637
|
|
|
24,797
|
|
||
|
Related party payables
|
|
102,250
|
|
|
102,264
|
|
||
|
Commitments and contingencies
|
|
|
|
|
||||
|
Temporary equity:
|
|
|
|
|
||||
|
Redeemable common units
|
|
—
|
|
|
124
|
|
||
|
Member's equity
|
|
100,674
|
|
|
185,807
|
|
||
|
Total liabilities and member's equity
|
|
$
|
504,730
|
|
|
$
|
617,622
|
|
|
|
|
For the year ended
|
|
Period from inception to
|
||||
|
(in thousands)
|
|
September 30, 2014
|
|
September 30, 2013
|
||||
|
Revenues:
|
|
|
|
|
||||
|
Oil and natural gas
|
|
$
|
147,005
|
|
|
$
|
90,180
|
|
|
Costs and expenses:
|
|
|
|
|
||||
|
Oil and natural gas operating costs
|
|
43,241
|
|
|
27,087
|
|
||
|
Production and ad valorem taxes
|
|
13,197
|
|
|
9,867
|
|
||
|
Gathering and transportation
|
|
13,166
|
|
|
7,009
|
|
||
|
Depletion, depreciation and amortization
|
|
39,878
|
|
|
31,014
|
|
||
|
Impairment of oil and natural gas properties
|
|
81,024
|
|
|
54,261
|
|
||
|
Accretion of discount on asset retirement obligations
|
|
1,962
|
|
|
1,189
|
|
||
|
General and administrative
|
|
8,318
|
|
|
4,974
|
|
||
|
Acquisition and integration related charges
|
|
—
|
|
|
9,203
|
|
||
|
Other operating items
|
|
(41
|
)
|
|
(39
|
)
|
||
|
Total costs and expenses
|
|
200,745
|
|
|
144,565
|
|
||
|
Operating loss
|
|
(53,740
|
)
|
|
(54,385
|
)
|
||
|
Interest expense
|
|
(16,661
|
)
|
|
(10,322
|
)
|
||
|
Loss on derivative financial instruments
|
|
(6,557
|
)
|
|
(1,262
|
)
|
||
|
Other income
|
|
51
|
|
|
23
|
|
||
|
Total other expense
|
|
(23,167
|
)
|
|
(11,561
|
)
|
||
|
Net loss
|
|
$
|
(76,907
|
)
|
|
$
|
(65,946
|
)
|
|
(in thousands)
|
Total Member's Equity
|
||
|
Balance at October 18, 2012
|
$
|
—
|
|
|
Contributions
|
250,023
|
|
|
|
Contributed capital for unreimbursed acquisition and integration related charges
|
9,203
|
|
|
|
Distributions
|
(7,473
|
)
|
|
|
Net loss
|
(65,946
|
)
|
|
|
Balance at September 30, 2013
|
185,807
|
|
|
|
Contributions
|
9,000
|
|
|
|
Stock compensation, net of reclassification of liability-classified awards and capitalized expense
|
(116
|
)
|
|
|
Distributions
|
(17,110
|
)
|
|
|
Net loss
|
(76,907
|
)
|
|
|
Balance at September 30, 2014
|
$
|
100,674
|
|
|
|
|
For the year ended
|
|
Period from inception to
|
||||
|
(in thousands)
|
|
September 30, 2014
|
|
September 30, 2013
|
||||
|
Operating Activities:
|
|
|
|
|
||||
|
Net loss
|
|
$
|
(76,907
|
)
|
|
$
|
(65,946
|
)
|
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
||||
|
Depletion, depreciation, and amortization
|
|
39,878
|
|
|
31,014
|
|
||
|
Contributed capital for unreimbursed acquisition and integration related charges
|
|
—
|
|
|
9,203
|
|
||
|
Share-based compensation expense
|
|
343
|
|
|
—
|
|
||
|
Accretion of discount on asset retirement obligations
|
|
1,962
|
|
|
1,189
|
|
||
|
Impairment of oil and natural gas properties
|
|
81,024
|
|
|
54,261
|
|
||
|
Loss on derivative financial instruments
|
|
6,557
|
|
|
1,262
|
|
||
|
Cash payments on derivative financial instruments
|
|
(6,219
|
)
|
|
(1,784
|
)
|
||
|
Amortization of deferred financing costs
|
|
1,302
|
|
|
536
|
|
||
|
Effect of changes in:
|
|
|
|
|
||||
|
Accounts receivable
|
|
(3,575
|
)
|
|
(18,408
|
)
|
||
|
Other current assets
|
|
332
|
|
|
(355
|
)
|
||
|
Accounts payable and other current liabilities
|
|
(416
|
)
|
|
27,743
|
|
||
|
Net change in cash due to operating activities
|
|
44,281
|
|
|
38,715
|
|
||
|
Investing Activities:
|
|
|
|
|
||||
|
Additions to oil and natural gas properties, gathering systems and equipment
|
|
(13,434
|
)
|
|
(13,378
|
)
|
||
|
Property acquisitions
|
|
—
|
|
|
(616,039
|
)
|
||
|
Proceeds from sales of assets
|
|
235
|
|
|
—
|
|
||
|
Net change in cash due to investing activities
|
|
(13,199
|
)
|
|
(629,417
|
)
|
||
|
Financing Activities:
|
|
|
|
|
||||
|
Borrowings under the Compass Credit Agreement
|
|
—
|
|
|
278,630
|
|
||
|
Borrowings from related parties
|
|
—
|
|
|
100,000
|
|
||
|
Repayments under the Compass Credit Agreement
|
|
(27,553
|
)
|
|
(7,450
|
)
|
||
|
Distributions to member
|
|
(17,110
|
)
|
|
(7,450
|
)
|
||
|
Contributions from member
|
|
9,000
|
|
|
250,023
|
|
||
|
Deferred financing costs
|
|
—
|
|
|
(4,309
|
)
|
||
|
Net change in cash due to financing activities
|
|
(35,663
|
)
|
|
609,444
|
|
||
|
Net change in cash and cash equivalents
|
|
(4,581
|
)
|
|
18,742
|
|
||
|
Cash at beginning of period
|
|
18,742
|
|
|
—
|
|
||
|
Cash at end of period
|
|
$
|
14,161
|
|
|
$
|
18,742
|
|
|
Supplemental Cash Flow Information:
|
|
|
|
|
||||
|
Cash interest payments
|
|
$
|
16,045
|
|
|
$
|
7,851
|
|
|
Supplemental non-cash investing and financing activities:
|
|
|
|
|
||||
|
Capitalized interest
|
|
817
|
|
|
800
|
|
||
|
Contributed capital for unreimbursed acquisition and integration related charges
|
|
—
|
|
|
9,203
|
|
||
|
1.
|
Organization and basis of presentation
|
|
2.
|
Significant accounting policies
|
|
3.
|
Asset retirement obligations
|
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||
|
Asset retirement obligations at beginning of period
|
|
$
|
25,355
|
|
|
$
|
—
|
|
|
Activity during the period:
|
|
|
|
|
||||
|
Liabilities incurred during the period
|
|
79
|
|
|
134
|
|
||
|
Liabilities settled during the period
|
|
(127
|
)
|
|
(38
|
)
|
||
|
Adjustment to liability due to acquisitions
|
|
—
|
|
|
24,070
|
|
||
|
Accretion of discount
|
|
1,962
|
|
|
1,189
|
|
||
|
Asset retirement obligations at end of period
|
|
27,269
|
|
|
25,355
|
|
||
|
Less current portion
|
|
632
|
|
|
558
|
|
||
|
Long-term portion
|
|
$
|
26,637
|
|
|
$
|
24,797
|
|
|
4.
|
Acquisitions
|
|
|
|
EXCO's Contributed Assets
|
|
BG Cotton Valley Assets
|
||||||||||||
|
|
|
February 14, 2013
|
|
March 5, 2013
|
||||||||||||
|
Purchase Price Allocation:
|
|
Compass Production Partners
|
|
HGI Energy's Proportionate Interest
|
|
Compass Production Partners
|
|
HGI Energy's Proportionate Interest
|
||||||||
|
Assets acquired:
|
|
|
|
|
|
|
|
|
||||||||
|
Derivative financial instruments
|
|
$
|
3,856
|
|
|
$
|
2,873
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Unproved oil and natural gas properties
|
|
65,098
|
|
|
48,498
|
|
|
7,185
|
|
|
5,353
|
|
||||
|
Proved developed and undeveloped oil and natural gas properties
|
|
631,802
|
|
|
470,692
|
|
|
130,951
|
|
|
97,558
|
|
||||
|
Gas gathering assets
|
|
28,903
|
|
|
21,533
|
|
|
—
|
|
|
—
|
|
||||
|
Liabilities assumed:
|
|
|
|
|
|
|
|
|
||||||||
|
Revenues and royalties payable
|
|
(8,423
|
)
|
|
(6,275
|
)
|
|
—
|
|
|
—
|
|
||||
|
Derivative financial instruments
|
|
(1,993
|
)
|
|
(1,485
|
)
|
|
—
|
|
|
—
|
|
||||
|
Asset retirement obligations
|
|
(24,756
|
)
|
|
(18,443
|
)
|
|
(7,433
|
)
|
|
(5,538
|
)
|
||||
|
Total purchase price
|
|
$
|
694,487
|
|
|
$
|
517,393
|
|
|
$
|
130,703
|
|
|
$
|
97,373
|
|
|
5.
|
Derivative financial instruments
|
|
Fair Value of Derivative Financial Instruments
|
|
September 30, 2014
|
|
September 30, 2013
|
||||
|
Derivative financial instruments - Current assets
|
|
$
|
1,520
|
|
|
$
|
3,336
|
|
|
Derivative financial instruments - Long-term assets
|
|
382
|
|
|
442
|
|
||
|
Derivative financial instruments - Current liabilities
|
|
(269
|
)
|
|
(1,834
|
)
|
||
|
Derivative financial instruments - Long-term liabilities
|
|
(48
|
)
|
|
(34
|
)
|
||
|
Net derivative financial instruments
|
|
$
|
1,585
|
|
|
$
|
1,910
|
|
|
|
|
Volume Mmmbtus/Mbbls
|
|
Weighted average strike price per Mmbtu/Bbl
|
|
September 30,
2014 |
|||||
|
Natural gas:
|
|
|
|
|
|
|
|||||
|
Swaps:
|
|
|
|
|
|
|
|||||
|
Remainder of 2014
|
|
4,106
|
|
|
$
|
4.15
|
|
|
$
|
192
|
|
|
2015
|
|
2,715
|
|
|
3.98
|
|
|
(53
|
)
|
||
|
Total natural gas
|
|
6,821
|
|
|
|
|
$
|
139
|
|
||
|
Oil:
|
|
|
|
|
|
|
|||||
|
Swaps:
|
|
|
|
|
|
|
|||||
|
Remainder of 2014
|
|
68
|
|
|
$
|
91.87
|
|
|
$
|
114
|
|
|
2015
|
|
186
|
|
|
94.98
|
|
|
1,332
|
|
||
|
Total oil
|
|
254
|
|
|
|
|
$
|
1,446
|
|
||
|
|
|
|
|
|
|
|
|||||
|
Total oil and natural gas derivatives
|
|
|
|
|
|
$
|
1,585
|
|
|||
|
6.
|
Fair value measurements
|
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||||||||||||||||||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
|
Oil and natural gas derivative financial instruments
|
|
$
|
—
|
|
|
$
|
1,585
|
|
|
$
|
—
|
|
|
$
|
1,585
|
|
|
$
|
—
|
|
|
$
|
1,910
|
|
|
$
|
—
|
|
|
$
|
1,910
|
|
|
7.
|
|
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||
|
Compass Credit Agreement
|
|
$
|
243,210
|
|
|
$
|
271,180
|
|
|
Related party notes
|
|
100,000
|
|
|
100,000
|
|
||
|
•
|
As of
September 30, 2014
, Compass was in compliance with the financial covenants contained in the Compass Credit Agreement: 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 ratio of consolidated funded indebtedness to consolidated EBITDAX (as defined in the agreement) to be greater than 4.5 to 1.0 at the end of any fiscal quarter.
|
|
8.
|
Distributions
|
|
9.
|
Income taxes
|
|
10.
|
Related party, services agreements and Compass member transactions
|
|
|
|
Year ended September 30, 2014
|
|
Period from inception to September 30, 2013
|
||||||||||||||||||||||||||||
|
|
|
TGGT
|
|
EXCO
|
|
EXCO Operating Company, LP
|
|
HGI Affiliates
|
|
TGGT
|
|
EXCO
|
|
EXCO Operating Company, LP
|
|
HGI Affiliates
|
||||||||||||||||
|
Amounts paid:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Gathering, treating and well connection fees (1)
|
|
$
|
1,360
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,260
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
General and administrative services (2)
|
|
—
|
|
|
13,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,123
|
|
|
—
|
|
|
—
|
|
||||||||
|
Interest paid on Affiliated Notes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,375
|
|
||||||||
|
Total
|
|
$
|
1,360
|
|
|
$
|
13,000
|
|
|
$
|
—
|
|
|
$
|
9,000
|
|
|
$
|
2,260
|
|
|
$
|
8,123
|
|
|
$
|
—
|
|
|
$
|
3,375
|
|
|
Amounts received:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Natural gas purchases (3)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
129,117
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
77,175
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
(1)
|
Represents the gross billings from TGGT.
|
|
(2)
|
Represents total service agreement fees paid to EXCO.
|
|
(3)
|
Represents gross purchases from Compass.
|
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||||||||||||||||
|
|
|
EXCO
|
|
EXCO Operating Company, LP
|
|
HGI Affiliates
|
|
TGGT
|
|
EXCO
|
|
EXCO Operating Company, LP
|
|
HGI Affiliates
|
||||||||||||||
|
Amounts due to HGI Energy
|
|
$
|
—
|
|
|
$
|
9,520
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,123
|
|
|
$
|
—
|
|
|
Amounts due from HGI Energy
|
|
1,370
|
|
|
352
|
|
|
102,250
|
|
|
712
|
|
|
1,145
|
|
|
1,182
|
|
|
102,251
|
|
|||||||
|
11.
|
Share-based compensation
|
|
|
|
Units
|
|
Weighted average grant date fair value per unit
|
|||
|
Non-vested awards at September 30, 2013
|
|
101,800
|
|
|
$
|
10.00
|
|
|
Granted
|
|
323,179
|
|
|
7.90
|
|
|
|
Vested (1)
|
|
(137,245
|
)
|
|
7.88
|
|
|
|
Terminated
|
|
(18,056
|
)
|
|
8.44
|
|
|
|
Non-vested awards at September 30, 2014
|
|
269,678
|
|
|
$
|
8.67
|
|
|
(1)
|
83,333 vested units were settled by issuance of Class B Units. All remaining vested units were settled in cash.
|
|
12.
|
Commitments and contingencies
|
|
|
|
Compass Credit Agreement (1)
|
|
Loan due to affiliates
|
|
Interest Payments (2)
|
|
Other Fixed Commitments
|
|
Total
|
||||||||||
|
Remainder of 2014
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,634
|
|
|
$
|
77
|
|
|
$
|
1,711
|
|
|
2015
|
|
—
|
|
|
—
|
|
|
15,536
|
|
|
229
|
|
|
15,765
|
|
|||||
|
2016
|
|
—
|
|
|
—
|
|
|
15,536
|
|
|
70
|
|
|
15,606
|
|
|||||
|
2017
|
|
—
|
|
|
—
|
|
|
15,536
|
|
|
3
|
|
|
15,539
|
|
|||||
|
2018
|
|
243,210
|
|
|
—
|
|
|
9,817
|
|
|
—
|
|
|
253,027
|
|
|||||
|
2019
|
|
—
|
|
|
—
|
|
|
9,000
|
|
|
—
|
|
|
9,000
|
|
|||||
|
Thereafter
|
|
—
|
|
|
100,000
|
|
|
14,625
|
|
|
—
|
|
|
114,625
|
|
|||||
|
Total
|
|
$
|
243,210
|
|
|
$
|
100,000
|
|
|
$
|
81,684
|
|
|
$
|
379
|
|
|
$
|
425,273
|
|
|
(1)
|
The Compass Credit Agreement, as amended, matures on February 14, 2018. The interest is payable at LIBOR plus 175 bps to LIBOR plus 275 bps, or from ABR plus 75 bps to ABR plus 175 bps, depending on borrowing base usage.
|
|
(2)
|
Interest payments under the Compass Credit Agreement were estimated using the average interest rate of 2.7% as of
September 30, 2014
. Our proportionate share of outstanding borrowings of
$243,210
as of
September 30, 2014
were used in calculating the estimated interest payments within this table. The interest payments of the $100,000 Affiliated Notes are calculated by using fixed interest at 9% per year, payable semi-annually in arrears on January 1 and July 1.
|
|
13.
|
Supplemental information relating to oil and natural gas producing activities (unaudited)
|
|
|
|
Year ended September 30, 2014
|
|
From inception to September 30, 2013
|
||||
|
Proved property acquisition costs
|
|
$
|
—
|
|
|
$
|
569,547
|
|
|
Unproved property acquisition costs
|
|
—
|
|
|
53,851
|
|
||
|
Total property acquisition costs
|
|
—
|
|
|
623,398
|
|
||
|
Development
|
|
11,423
|
|
|
11,846
|
|
||
|
Lease acquisitions and other
|
|
156
|
|
|
—
|
|
||
|
Capitalized asset retirement costs
|
|
79
|
|
|
134
|
|
||
|
Depletion per Boe
|
|
$
|
8.68
|
|
|
$
|
10.00
|
|
|
Depletion per Mcfe
|
|
$
|
1.45
|
|
|
$
|
1.67
|
|
|
|
|
Oil
(Mbbls)
|
|
Natural
Gas
(Mmcf)
|
|
Natural Gas Liquids (Mbbls)
|
|
Natural Gas Equivalent (Mmcfe)
|
||||
|
Inception
|
|
|
|
|
|
|
|
|
||||
|
Purchase of reserves in place (1)
|
|
3,940
|
|
|
331,592
|
|
|
7,353
|
|
|
399,350
|
|
|
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
|
)
|
|
Production
|
|
(283
|
)
|
|
(14,570
|
)
|
|
(300
|
)
|
|
(18,068
|
)
|
|
September 30, 2013
|
|
3,424
|
|
|
322,418
|
|
|
5,730
|
|
|
377,342
|
|
|
Discoveries and extensions (2)
|
|
112
|
|
|
839
|
|
|
173
|
|
|
2,549
|
|
|
Revisions of previous estimates:
|
|
|
|
|
|
|
|
|
||||
|
Changes in price
|
|
233
|
|
|
20,815
|
|
|
496
|
|
|
25,189
|
|
|
Other factors (4)
|
|
335
|
|
|
(13,750
|
)
|
|
342
|
|
|
(9,688
|
)
|
|
Production
|
|
(414
|
)
|
|
(20,882
|
)
|
|
(521
|
)
|
|
(26,492
|
)
|
|
September 30, 2014
|
|
3,690
|
|
|
309,440
|
|
|
6,220
|
|
|
368,900
|
|
|
(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 Compass’ 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 Compass’ 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, 2014
|
|
3,356
|
|
|
304,628
|
|
|
5,145
|
|
|
355,634
|
|
|
September 30, 2013
|
|
3,107
|
|
|
317,748
|
|
|
4,799
|
|
|
365,185
|
|
|
Proved undeveloped:
|
|
|
|
|
|
|
|
|
||||
|
September 30, 2014
|
|
334
|
|
|
4,812
|
|
|
1,075
|
|
|
13,266
|
|
|
September 30, 2013
|
|
317
|
|
|
4,670
|
|
|
931
|
|
|
12,157
|
|
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||
|
Future cash inflows
|
|
$
|
1,895,189
|
|
|
$
|
1,638,524
|
|
|
Future production costs
|
|
914,902
|
|
|
923,676
|
|
||
|
Future development costs
|
|
164,387
|
|
|
156,039
|
|
||
|
Future net cash flows
|
|
815,900
|
|
|
558,809
|
|
||
|
Discount of future net cash flows at 10% per annum
|
|
404,700
|
|
|
235,669
|
|
||
|
Standardized measure of discounted future net cash flows
|
|
$
|
411,200
|
|
|
$
|
323,140
|
|
|
|
|
Year ended September 30, 2014
|
|
Period from inception to September 30, 2013
|
||||
|
Sales and transfers of oil and natural gas produced
|
|
$
|
(77,355
|
)
|
|
$
|
(46,216
|
)
|
|
Net changes in prices and production costs
|
|
141,779
|
|
|
39,242
|
|
||
|
Extensions and discoveries, net of future development and production costs
|
|
3,480
|
|
|
8,067
|
|
||
|
Development costs during the period
|
|
10,033
|
|
|
7,418
|
|
||
|
Changes in estimated future development costs
|
|
(11,996
|
)
|
|
20,251
|
|
||
|
Revisions of previous quantity estimates
|
|
24,167
|
|
|
(50,200
|
)
|
||
|
Purchase of reserves in place
|
|
—
|
|
|
300,546
|
|
||
|
Accretion of discount
|
|
32,261
|
|
|
16,108
|
|
||
|
Changes in timing and other
|
|
(34,309
|
)
|
|
27,924
|
|
||
|
Net change
|
|
$
|
88,060
|
|
|
$
|
323,140
|
|
|
|
|
Total
|
|
Year ended September 30, 2014
|
|
Period from inception to September 30, 2013
|
||||||
|
Property acquisition costs
|
|
$
|
18,910
|
|
|
$
|
—
|
|
|
$
|
18,910
|
|
|
Capitalized interest
|
|
1,263
|
|
|
714
|
|
|
549
|
|
|||
|
Total
|
|
$
|
20,173
|
|
|
$
|
714
|
|
|
$
|
19,459
|
|
|
|
|
September 30,
2014 |
|
September 30,
2013 |
||||
|
Standardized measure of discounted future net cash flows (excluding income taxes)
|
|
$
|
411,200
|
|
|
$
|
323,140
|
|
|
Future income taxes
|
|
(136,173
|
)
|
|
(39,286
|
)
|
||
|
Discount of future income taxes at 10% per annum
|
|
70,781
|
|
|
18,432
|
|
||
|
Standardized measure of discounted future net cash flows (including income taxes)
|
|
$
|
345,808
|
|
|
$
|
302,286
|
|
|
14.
|
Subsequent Events
|
|
HGI FUNDING, LLC FINANCIAL STATEMENTS
|
|
|
|
September 30,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
ASSETS
|
|
|
|
|
||||
|
Investments, at fair value:
|
|
|
|
|
||||
|
Non-affiliates
|
|
$
|
93,684
|
|
|
$
|
42,342
|
|
|
Affiliate
|
|
288,454
|
|
|
206,493
|
|
||
|
|
|
382,138
|
|
|
248,835
|
|
||
|
Cash
|
|
1,874
|
|
|
831
|
|
||
|
Dividends and interest receivable
|
|
14
|
|
|
—
|
|
||
|
Due from affiliate
|
|
10,487
|
|
|
—
|
|
||
|
Restricted cash
|
|
1,275
|
|
|
1,530
|
|
||
|
Total assets
|
|
$
|
395,788
|
|
|
$
|
251,196
|
|
|
LIABILITIES AND MEMBER’S EQUITY
|
|
|
|
|
||||
|
Other liabilities
|
|
—
|
|
|
300
|
|
||
|
Total liabilities
|
|
—
|
|
|
300
|
|
||
|
Commitments and contingencies (Note 7)
|
|
|
|
|
||||
|
Member’s equity:
|
|
|
|
|
||||
|
Contributed capital
|
|
297,229
|
|
|
229,101
|
|
||
|
Retained earnings
|
|
98,559
|
|
|
21,795
|
|
||
|
Total member’s equity
|
|
395,788
|
|
|
250,896
|
|
||
|
Total liabilities and member’s equity
|
|
$
|
395,788
|
|
|
$
|
251,196
|
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Investment income:
|
|
|
|
|
|
|
||||||
|
Dividend and interest income:
|
|
|
|
|
|
|
||||||
|
Non-affiliates
|
|
$
|
2,411
|
|
|
$
|
668
|
|
|
$
|
5,041
|
|
|
Affiliate
|
|
3,622
|
|
|
2,001
|
|
|
1,779
|
|
|||
|
Total investment income
|
|
6,033
|
|
|
2,669
|
|
|
6,820
|
|
|||
|
Investment expenses:
|
|
|
|
|
|
|
||||||
|
Investment fees
|
|
90
|
|
|
54
|
|
|
118
|
|
|||
|
Interest expense
|
|
—
|
|
|
—
|
|
|
96
|
|
|||
|
Total investment expenses
|
|
90
|
|
|
54
|
|
|
214
|
|
|||
|
Net investment income
|
|
5,943
|
|
|
2,615
|
|
|
6,606
|
|
|||
|
Realized and unrealized gains and losses on investments:
|
|
|
|
|
|
|
||||||
|
Net realized gains (losses) on sale of investments
|
|
3,686
|
|
|
(18,186
|
)
|
|
(20,500
|
)
|
|||
|
Unrealized gain on investment in affiliate
|
|
78,166
|
|
|
61,627
|
|
|
17,120
|
|
|||
|
Net unrealized (losses) gains on investments in non-affiliates
|
|
(11,060
|
)
|
|
15,797
|
|
|
(2,048
|
)
|
|||
|
Net realized and unrealized foreign exchange gains on investments
|
|
54
|
|
|
11
|
|
|
1,078
|
|
|||
|
Net realized and unrealized foreign exchange losses on cash and futures contracts
|
|
—
|
|
|
(98
|
)
|
|
(343
|
)
|
|||
|
Net recognized gains (losses) on investments
|
|
70,846
|
|
|
59,151
|
|
|
(4,693
|
)
|
|||
|
General and administrative expenses
|
|
325
|
|
|
646
|
|
|
232
|
|
|||
|
Other income
|
|
300
|
|
|
—
|
|
|
—
|
|
|||
|
Income before income taxes
|
|
76,764
|
|
|
61,120
|
|
|
1,681
|
|
|||
|
Income tax expense (Note 6)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Net income
|
|
76,764
|
|
|
61,120
|
|
|
1,681
|
|
|||
|
Other comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Total comprehensive income
|
|
$
|
76,764
|
|
|
$
|
61,120
|
|
|
$
|
1,681
|
|
|
|
|
Contributed capital
|
|
Retained earnings
|
|
Total member’s equity
|
||||||
|
Balances at September 30, 2011
|
|
$
|
350,000
|
|
|
$
|
(41,006
|
)
|
|
$
|
308,994
|
|
|
Return of capital to Harbinger Group Inc.
|
|
(88,000
|
)
|
|
—
|
|
|
(88,000
|
)
|
|||
|
Deemed contributed capital from Harbinger Group Inc. for unreimbursed management services (Note 8)
|
|
232
|
|
|
—
|
|
|
232
|
|
|||
|
Comprehensive income
|
|
—
|
|
|
1,681
|
|
|
1,681
|
|
|||
|
Balances at September 30, 2012
|
|
262,232
|
|
|
(39,325
|
)
|
|
222,907
|
|
|||
|
Return of capital to Harbinger Group Inc.
|
|
(125,160
|
)
|
|
—
|
|
|
(125,160
|
)
|
|||
|
Deemed contributed capital from Harbinger Group Inc. for unreimbursed management services (Note 8)
|
|
346
|
|
|
—
|
|
|
346
|
|
|||
|
Contributed capital from Harbinger Group Inc.
|
|
91,683
|
|
|
—
|
|
|
91,683
|
|
|||
|
Comprehensive income
|
|
—
|
|
|
61,120
|
|
|
61,120
|
|
|||
|
Balances at September 30, 2013
|
|
229,101
|
|
|
21,795
|
|
|
250,896
|
|
|||
|
Return of capital to Harbinger Group Inc.
|
|
(4,181
|
)
|
|
—
|
|
|
(4,181
|
)
|
|||
|
Deemed distribution to Harbinger Group Inc.
|
|
(13,537
|
)
|
|
—
|
|
|
(13,537
|
)
|
|||
|
Deemed contributed capital from Harbinger Group Inc. for unreimbursed management services (Note 8)
|
|
295
|
|
|
—
|
|
|
295
|
|
|||
|
Contributed capital from Harbinger Group Inc.
|
|
85,551
|
|
|
—
|
|
|
85,551
|
|
|||
|
Comprehensive income
|
|
—
|
|
|
76,764
|
|
|
76,764
|
|
|||
|
Balances at September 30, 2014
|
|
$
|
297,229
|
|
|
$
|
98,559
|
|
|
$
|
395,788
|
|
|
|
|
Year ended September 30,
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
|
Net income
|
|
$
|
76,764
|
|
|
$
|
61,120
|
|
|
$
|
1,681
|
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
||||||
|
Net realized and unrealized (gains) losses on investments
|
|
(70,792
|
)
|
|
(59,238
|
)
|
|
5,428
|
|
|||
|
Realized and unrealized foreign exchange gains on investments
|
|
(54
|
)
|
|
(11
|
)
|
|
(1,078
|
)
|
|||
|
Cost of trading securities acquired for resale
|
|
—
|
|
|
—
|
|
|
(643,763
|
)
|
|||
|
Proceeds from trading securities sold
|
|
—
|
|
|
—
|
|
|
766,120
|
|
|||
|
Deemed contributed capital from Harbinger Group Inc. for unreimbursed management services
|
|
295
|
|
|
346
|
|
|
232
|
|
|||
|
Amortization of discount on affiliate receivable
|
|
(1,442
|
)
|
|
—
|
|
|
—
|
|
|||
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
|
Broker receivable
|
|
—
|
|
|
—
|
|
|
14,874
|
|
|||
|
Dividends and interest receivable
|
|
(14
|
)
|
|
—
|
|
|
111
|
|
|||
|
Broker payable
|
|
—
|
|
|
(4
|
)
|
|
(4,461
|
)
|
|||
|
Other liabilities
|
|
(300
|
)
|
|
(4,142
|
)
|
|
(10,050
|
)
|
|||
|
Net change in cash due to operating activities
|
|
4,457
|
|
|
(1,929
|
)
|
|
129,094
|
|
|||
|
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
|
Cost of investments acquired
|
|
(83,417
|
)
|
|
(20,801
|
)
|
|
(122,289
|
)
|
|||
|
Purchase of common stock of an affiliate
|
|
(3,795
|
)
|
|
(73,691
|
)
|
|
(54,054
|
)
|
|||
|
Proceeds from sales of investments acquired
|
|
11,218
|
|
|
122,922
|
|
|
106,074
|
|
|||
|
Purchase of affiliate receivable
|
|
(9,045
|
)
|
|
—
|
|
|
—
|
|
|||
|
Net change in cash due to investing activities
|
|
(85,039
|
)
|
|
28,430
|
|
|
(70,269
|
)
|
|||
|
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
|
Return of capital to Harbinger Group Inc.
|
|
(4,181
|
)
|
|
(125,160
|
)
|
|
(88,000
|
)
|
|||
|
Change in restricted cash
|
|
255
|
|
|
(1,530
|
)
|
|
—
|
|
|||
|
Contributed capital from Harbinger Group Inc.
|
|
85,551
|
|
|
91,683
|
|
|
—
|
|
|||
|
Net change in cash due to financing activities
|
|
81,625
|
|
|
(35,007
|
)
|
|
(88,000
|
)
|
|||
|
Net change in cash and cash equivalents
|
|
1,043
|
|
|
(8,506
|
)
|
|
(29,175
|
)
|
|||
|
Cash and cash equivalents at beginning of period
|
|
831
|
|
|
9,337
|
|
|
38,512
|
|
|||
|
Cash and cash equivalents at end of period
|
|
$
|
1,874
|
|
|
$
|
831
|
|
|
$
|
9,337
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
||||||
|
Non-cash transaction:
|
|
|
|
|
|
|
||||||
|
Deemed distribution to Harbinger Group Inc.
|
|
$
|
13,537
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Cash paid during the year for:
|
|
|
|
|
|
|
||||||
|
Interest
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
96
|
|
|
Income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
September 30,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
Marketable equity securities
|
|
$
|
380,103
|
|
|
$
|
238,182
|
|
|
Marketable debt securities
|
|
2,035
|
|
|
—
|
|
||
|
Convertible preferred stock
|
|
—
|
|
|
10,653
|
|
||
|
Total
|
|
$
|
382,138
|
|
|
$
|
248,835
|
|
|
|
|
September 30,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
Balance sheet data:
|
|
|
|
|
||||
|
Current assets
|
|
$
|
1,434,626
|
|
|
$
|
1,482,905
|
|
|
Non-current assets
|
|
4,078,403
|
|
|
4,143,768
|
|
||
|
Current liabilities
|
|
915,704
|
|
|
952,370
|
|
||
|
Non-current liabilities
|
|
3,510,495
|
|
|
3,734,207
|
|
||
|
Stockholders' equity
|
|
1,086,830
|
|
|
940,096
|
|
||
|
|
|
Fiscal
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Operating data:
|
|
|
|
|
|
|
||||||
|
Net sales
|
|
$
|
4,429,109
|
|
|
$
|
4,085,581
|
|
|
$
|
3,252,435
|
|
|
Gross profit
|
|
1,568,869
|
|
|
1,390,312
|
|
|
1,115,678
|
|
|||
|
Operating income
|
|
481,933
|
|
|
351,177
|
|
|
301,746
|
|
|||
|
Net income (loss)
|
|
214,506
|
|
|
(55,313
|
)
|
|
48,572
|
|
|||
|
Basic net income (loss) per common share
|
|
4.07
|
|
|
(1.06
|
)
|
|
0.94
|
|
|||
|
Diluted net income (loss) per common share
|
|
4.02
|
|
|
(1.06
|
)
|
|
0.91
|
|
|||
|
Dividends declared per common share
|
|
1.15
|
|
|
0.75
|
|
|
1.00
|
|
|||
|
|
|
September 30, 2014
|
||||||||||||||||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair Value
|
|
Carrying
Amount
|
||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Investments
|
|
$
|
380,103
|
|
|
$
|
2,035
|
|
|
$
|
—
|
|
|
$
|
382,138
|
|
|
$
|
382,138
|
|
|
Cash
|
|
1,874
|
|
|
—
|
|
|
—
|
|
|
1,874
|
|
|
1,874
|
|
|||||
|
Restricted cash
|
|
1,275
|
|
|
—
|
|
|
—
|
|
|
1,275
|
|
|
1,275
|
|
|||||
|
Total financial assets
|
|
$
|
383,252
|
|
|
$
|
2,035
|
|
|
$
|
—
|
|
|
$
|
385,287
|
|
|
$
|
385,287
|
|
|
|
|
September 30, 2013
|
||||||||||||||||||
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair Value
|
|
Carrying
Amount
|
||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Investments
|
|
$
|
238,182
|
|
|
$
|
—
|
|
|
$
|
10,653
|
|
|
$
|
248,835
|
|
|
$
|
248,835
|
|
|
Cash
|
|
831
|
|
|
—
|
|
|
—
|
|
|
831
|
|
|
831
|
|
|||||
|
Restricted cash
|
|
1,530
|
|
|
—
|
|
|
—
|
|
|
1,530
|
|
|
1,530
|
|
|||||
|
Total financial assets
|
|
$
|
240,543
|
|
|
$
|
—
|
|
|
$
|
10,653
|
|
|
$
|
251,196
|
|
|
$
|
251,196
|
|
|
Asset
|
|
Fair Value at September 30, 2013
|
|
Assumptions
|
|
Inputs
|
||
|
Convertible Preferred Stock
|
|
$
|
10,653
|
|
|
Risk-adjusted rate
|
|
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%
|
||
|
|
Year ended September 30, 2014
|
||||||||||||||||||||||||||||||
|
|
Balance at Beginning
of Period
|
|
Total Gains (Losses)
|
|
|
|
|
|
|
|
Net transfer In (Out) of
Level 3
|
|
Balance at End of
Period
|
||||||||||||||||||
|
|
|
Included in
Earnings
|
|
Included in
AOCI
|
|
Purchases
|
|
Sales
|
|
Settlements (Note 8)
|
|
|
|||||||||||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Preferred Stock
|
$
|
10,653
|
|
|
$
|
1,394
|
|
|
$
|
—
|
|
|
$
|
1,490
|
|
|
$
|
—
|
|
|
$
|
(13,537
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Total assets at fair value
|
$
|
10,653
|
|
|
$
|
1,394
|
|
|
$
|
—
|
|
|
$
|
1,490
|
|
|
$
|
—
|
|
|
$
|
(13,537
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Year ended September 30, 2013
|
||||||||||||||||||||||||||||||
|
|
Balance at Beginning
of Period
|
|
Total Gains (Losses)
|
|
|
|
|
|
|
|
Net transfer In (Out) of
Level 3
|
|
Balance at End of
Period
|
||||||||||||||||||
|
|
|
Included in
Earnings
|
|
Included in
AOCI
|
|
Purchases
|
|
Sales
|
|
Settlements
|
|
|
|||||||||||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Preferred Stock
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,653
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,653
|
|
|
Total assets at fair value
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,653
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,653
|
|
|
|
September 30, 2014
|
||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair Value
|
|
Carrying Amount
|
||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Due from affiliate
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,487
|
|
|
$
|
10,487
|
|
|
$
|
10,487
|
|
|
Total financial assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,487
|
|
|
$
|
10,487
|
|
|
$
|
10,487
|
|
|
|
September 30, 2013
|
||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair Value
|
|
Carrying Amount
|
||||||||||
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Other liabilities
|
$
|
300
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
300
|
|
|
$
|
300
|
|
|
Total financial liabilities
|
$
|
300
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
300
|
|
|
$
|
300
|
|
|
Fiscal Year
|
|
Future Minimum Rental Commitments
|
||
|
2015
|
|
$
|
2,391
|
|
|
2016
|
|
2,391
|
|
|
|
2017
|
|
2,391
|
|
|
|
2018
|
|
2,391
|
|
|
|
2019
|
|
1,653
|
|
|
|
Thereafter
|
|
4,893
|
|
|
|
Total minimum lease payments
|
|
$
|
16,110
|
|
|
|
|
May 30, 2014
|
||
|
Fair value of previously held equity interest (Series B preferred stock)
|
|
$
|
12,047
|
|
|
Series A preferred stock purchase
|
|
1,490
|
|
|
|
Preliminary purchase price
|
|
$
|
13,537
|
|
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 |
|---|