and bad debt expense from both periods, the operating expenses decreased $2.4 million in the Fiscal 2016 Quarter compared to the Fiscal 2015 Quarter reflecting a reduction in operating expenses at Salus.
Corporate and Other Segment
Presented below is a table that summarizes the results of operations of our Corporate and Other segment and compares the amount of the change between the fiscal periods (in millions):
|
| | | | | | | | | | | |
| Fiscal Quarter |
| 2016 | | 2015 | | Increase / (Decrease) |
Net consumer and other product sales | $ | — |
| | $ | 21.0 |
| | $ | (21.0 | ) |
Cost of consumer products and other goods sold | — |
| | 14.4 |
| | (14.4 | ) |
Corporate and Other gross profit | — |
| | 6.6 |
| | (6.6 | ) |
Selling, acquisition, operating and general expenses | 14.6 |
| | 70.2 |
| | (55.6 | ) |
Impairments of goodwill and intangibles | — |
| | 60.2 |
| | (60.2 | ) |
Operating loss - Corporate and Other segment | $ | (14.6 | ) | | $ | (123.8 | ) | | $ | 109.2 |
|
Net consumer and other product sales. Net consumer and other product sales for the Fiscal 2015 Quarter represents sales from FOH which was deconsolidated in the third quarter of fiscal 2015 following FOH’s declaration of bankruptcy in May 2015.
Cost of consumer products and other goods sold / Corporate and Other gross profit. Corporate and Other gross profit for the Fiscal 2015 Quarter represents FOH sales less consumer products cost of goods sold for the Fiscal 2016 Quarter.
Selling, acquisition, operating and general expenses. Selling, acquisition, operating and general expenses decreased $55.6 million to $14.6 million for the Fiscal 2016 Quarter from $70.2 million for the Fiscal 2015 Quarter. The $55.6 million decrease in corporate expenses for the Fiscal 2016 Quarter when compared to the Fiscal 2015 Quarter was primarily due to $33.2 million of severance costs associated with the departure of Company’s former Chief Executive Officer (“CEO”) and $9.3 million of selling, operating and general expenses associated with FOH during the Fiscal 2015 Quarter, as well as lower stock based compensation, acquisition and integration costs, and legal expenses for the Fiscal 2016 Quarter when compared to the Fiscal 2015 Quarter.
Impairments of goodwill and intangibles. Impairments of goodwill and intangibles of $60.2 million were recognized in the Fiscal 2015 Quarter. The impairments were due to a change in view of the strategic direction of FOH following the departure of the Company’s former CEO during the first fiscal quarter of 2015, which triggered goodwill and intangibles impairment tests. The tests resulted in total impairments of $60.2 million to goodwill and intangible assets.
Non-GAAP Measures
We believe that certain financial measures that are not prescribed by generally accepted accounting principles (“GAAP”) may be useful in certain instances to provide additional meaningful comparisons between current results and results in prior operating periods. Adjusted EBITDA is a non-GAAP financial measure used in our Consumer Products and Energy segments and one of the measures used for determining Spectrum Brands and Compass’ debt covenant compliance.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) represent net income adjusted to exclude interest expense, income taxes and depreciation, depletion and amortization. Adjusted EBITDA excludes certain items that are unusual in nature or not comparable from period to period and other non-recurring operating items, such as accretion of discount on asset retirement obligations, non-cash changes in the fair value of derivatives, non-cash write-downs of assets, gains or losses on disposal of assets and stock-based compensation. Adjusted EBITDA is a metric used by management and frequently used by the financial community and provides insight into an organization’s operating trends and facilitates comparisons between peer companies, since interest, taxes, depreciation and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA can also be a useful measure of a company’s ability to service debt. Computations of EBITDA and Adjusted EBITDA may differ from computations of similarly titled measures of other companies due to differences in the inclusion or exclusion of items in our computations as compared to those of others.
While management believes that non-GAAP measurements are useful supplemental information, such adjusted results are not intended to replace the Company’s GAAP financial results. EBITDA and Adjusted EBITDA are measures that are not prescribed by U.S. GAAP. EBITDA and Adjusted EBITDA exclude changes in working capital, capital expenditures and other items that are set forth on a cash flow statement presentation of a company’s operating, investing and financing activities. As such, we encourage investors not to use these measures as substitutes for the determination of net income, net cash provided by operating activities or other similar GAAP measures.
