Harbinger Group Inc.
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SEC Filings

10-Q
HRG GROUP, INC. filed this Form 10-Q on 05/05/2017
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For derivative instruments that are used to economically hedge the fair value of Spectrum Brands’ third party and intercompany foreign currency payments, commodity purchases and interest rate payments, the gain (loss) associated with the derivative contract is recognized in earnings in the period of change. The Company recognizes all derivative instruments as assets or liabilities in the accompanying Condensed Consolidated Balance Sheets at fair value.
The following tables summarize the impact of the effective portion of designated hedges and the gain (loss) recognized in the accompanying Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2017 and 2016:
 
 
 
 
Three months ended March 31,
 
 
 
 
2017
 
2016
 
 
Classification
 
Gain (Loss) in AOCI
 
Gain (Loss) reclassified to Earnings
 
Gain (Loss) in AOCI
 
Gain (Loss) reclassified to Earnings
Interest rate swaps
 
Interest expense
 
$
(0.4
)
 
$
(0.7
)
 
$
(0.6
)
 
$
(0.5
)
Commodity swaps
 
Cost of consumer products and other goods sold
 
3.7

 
1.7

 
1.8

 
(1.6
)
Net investment hedge
 
Other expense, net
 
(9.2
)
 
—

 
—

 
—

Foreign exchange contracts
 
Net consumer and other product sales
 
(0.1
)
 
—

 
—

 
—

Foreign exchange contracts
 
Cost of consumer products and other goods sold
 
(4.4
)
 
2.8

 
(6.6
)
 
2.8

 
 
 
 
$
(10.4
)
 
$
3.8

 
$
(5.4
)
 
$
0.7

 
 
 
 
Six months ended March 31,
 
 
 
 
2017
 
2016
 
 
Classification
 
Gain (Loss) in AOCI
 
Gain (Loss) reclassified to Earnings
 
Gain (Loss) in AOCI
 
Gain (Loss) reclassified to Earnings
Interest rate swaps
 
Interest expense
 
$
(0.3
)
 
$
(1.0
)
 
$
(0.3
)
 
$
(1.0
)
Commodity swaps
 
Cost of consumer products and other goods sold
 
3.8

 
2.5

 
0.8

 
(3.0
)
Net investment hedge
 
Other expense, net
 
23.3

 
—

 
—

 
—

Foreign exchange contracts
 
Net consumer and other product sales
 
0.1

 
—

 
(0.1
)
 
—

Foreign exchange contracts
 
Cost of consumer products and other goods sold
 
5.9

 
7.1

 
(1.2
)
 
4.9

 
 
 
 
$
32.8

 
$
8.6

 
$
(0.8
)
 
$
0.9

During the three and six months ended March 31, 2017 and 2016, the Company recognized the following gains and losses on its derivatives:
 
 
 
 
Three months ended March 31,
 
Six months ended March 31,
Classification
 
Derivatives Not Designated as Hedging Instruments
 
2017
 
2016
 
2017
 
2016
Revenues:
 
 
 
 
 
 
 
 
 
 
Net investment gains (losses)
 
Call options
 
$
5.8

 
$
(1.4
)
 
$
8.9

 
$
0.5

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
 
Cost of consumer products and other goods sold
 
Commodity swaps
 
$
—

 
$
—

 
$
0.1

 
$
—

Benefits and other changes in policy reserves
 
Embedded derivatives in Front Street's assumed FIA business
 
(0.2
)
 
(3.4
)
 
(10.2
)
 
(5.8
)
Other expense, net
 
Foreign exchange contracts
 
(2.1
)
 
2.9

 
(1.4
)
 
0.8

Additional Disclosures
Call options. Derivative financial instruments included within the funds withheld receivables at fair value in the accompanying Condensed Consolidated Balance Sheets are in the form of call options receivable by Front Street. Front Street hedges exposure to product related equity market risk by entering into derivative transactions. These options hedge Front Street’s share of the FIA index credit. The change in fair value is recognized within “Net investment gains (losses)” in the accompanying Condensed Consolidated Statements of Operations.

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