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Document and Entity Information (USD $)
In Millions, except Share data, unless otherwise specified |
9 Months Ended | ||
|---|---|---|---|
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Jul. 03, 2011
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Aug. 10, 2011
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Jun. 30, 2010
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| Document and Entity Information [Abstract] | |||
| Entity Registrant Name | HARBINGER GROUP INC. | ||
| Entity Central Index Key | 0000109177 | ||
| Document Type | 10-Q | ||
| Document Period End Date | Jul. 03, 2011 | ||
| Amendment Flag | false | ||
| Document Fiscal Year Focus | 2011 | ||
| Document Fiscal Period Focus | Q3 | ||
| Current Fiscal Year End Date | --09-30 | ||
| Entity Well-known Seasoned Issuer | No | ||
| Entity Voluntary Filers | No | ||
| Entity Current Reporting Status | Yes | ||
| Entity Filer Category | Accelerated Filer | ||
| Entity Public Float | $ 58.6 | ||
| Entity Common Stock, Shares Outstanding | 139,284,286 |
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- Definition
If the value is true, then the document as an amendment to previously-filed/accepted document. No definition available.
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- Definition
End date of current fiscal year in the format --MM-DD. No definition available.
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- Definition
This is focus fiscal period of the document report. For a first quarter 2006 quarterly report, which may also provide financial information from prior periods, the first fiscal quarter should be given as the fiscal period focus. Values: FY, Q1, Q2, Q3, Q4, H1, H2, M9, T1, T2, T3, M8, CY. No definition available.
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- Definition
This is focus fiscal year of the document report in CCYY format. For a 2006 annual report, which may also provide financial information from prior periods, fiscal 2006 should be given as the fiscal year focus. Example: 2006. No definition available.
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- Definition
The end date of the period reflected on the cover page if a periodic report. For all other reports and registration statements containing historical data, it is the date up through which that historical data is presented. If there is no historical data in the report, use the filing date. The format of the date is CCYY-MM-DD. No definition available.
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- Definition
The type of document being provided (such as 10-K, 10-Q, N-1A, etc). The document type is limited to the same value as the supporting SEC submission type, minus any "/A" suffix. The acceptable values are as follows: S-1, S-3, S-4, S-11, F-1, F-3, F-4, F-9, F-10, 6-K, 8-K, 10, 10-K, 10-Q, 20-F, 40-F, N-1A, 485BPOS, 497, NCSR, N-CSR, N-CSRS, N-Q, 10-KT, 10-QT, 20-FT, POS AM and Other. No definition available.
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- Definition
A unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Indicate number of shares outstanding of each of registrant's classes of common stock, as of latest practicable date. Where multiple classes exist define each class by adding class of stock items such as Common Class A [Member], Common Class B [Member] onto the Instrument [Domain] of the Entity Listings, Instrument No definition available.
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- Definition
Indicate "Yes" or "No" whether registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. This information should be based on the registrant's current or most recent filing containing the related disclosure. No definition available.
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- Definition
Indicate whether the registrant is one of the following: (1) Large Accelerated Filer, (2) Accelerated Filer, (3) Non-accelerated Filer, or (4) Smaller Reporting Company. Definitions of these categories are stated in Rule 12b-2 of the Exchange Act. This information should be based on the registrant's current or most recent filing containing the related disclosure. No definition available.
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| X | ||||||||||
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- Definition
State aggregate market value of voting and non-voting common equity held by non-affiliates computed by reference to price at which the common equity was last sold, or average bid and asked price of such common equity, as of the last business day of registrant's most recently completed second fiscal quarter. The public float should be reported on the cover page of the registrants form 10K. No definition available.
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- Definition
The exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Indicate "Yes" or "No" if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. No definition available.
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| X | ||||||||||
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- Definition
Indicate "Yes" or "No" if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Is used on Form Type: 10-K, 10-Q, 8-K, 20-F, 6-K, 10-K/A, 10-Q/A, 20-F/A, 6-K/A, N-CSR, N-Q, N-1A. No definition available.
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- Details
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| X | ||||||||||
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- Definition
Sum of the carrying amounts of deferred costs that are expected to be recognized as a charge against earnings in periods after one year or beyond the normal operating cycle, if longer and the aggregate carrying amount of noncurrent assets not separtely disclosed in the balance sheet. Noncurrent assets are expected to be realized or consumed after one year ( or the normal operating cycle, if longer). No definition available.
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- Definition
Represents the fair value of the bifurcated conversion option for the preferred stock. No definition available.
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| X | ||||||||||
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- Definition
Carrying value as of the balance sheet date of liabilities incurred (and for which invoices have typically been received) and payable to vendors for goods and services received that are used in an entity's business. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
Interest, dividends, rents, ancillary and other revenues earned but not yet received by the entity on its investments. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Carrying value as of the balance sheet date of obligations incurred and payable, pertaining to costs that are statutory in nature, are incurred on contractual obligations, or accumulate over time and for which invoices have not yet been received or will not be rendered. Examples include taxes, interest, rent and utilities. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Accumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at period end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, unrealized gains and losses on certain investments in debt and equity securities, other than temporary impairment (OTTI) losses related to factors other than credit losses on available-for-sale and held-to-maturity debt securities that an entity does not intend to sell and it is not more likely than not that the entity will be required to sell before recovery of the amortized cost basis, as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Value received from shareholders in common stock-related transactions that are in excess of par value or stated value and amounts received from other stock-related transactions. Includes only common stock transactions (excludes preferred stock transactions). May be called contributed capital, capital in excess of par, capital surplus, or paid-in capital. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Sum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
Sum of the carrying amounts as of the balance sheet date of all assets that are expected to be realized in cash, sold, or consumed within one year (or the normal operating cycle, if longer). Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
Includes currency on hand as well as demand deposits with banks or financial institutions. It also includes other kinds of accounts that have the general characteristics of demand deposits in that the Entity may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. Cash equivalents, excluding items classified as marketable securities, include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Compensating balance arrangements that do not legally restrict the withdrawal or usage of cash amounts may be reported as Cash and Cash Equivalents, while legally restricted deposits held as compensating balances against borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits are not generally reported as cash and cash equivalents. Includes cash and cash equivalents associated with the entity's continuing operations. Excludes cash and cash equivalents associated with the disposal group (and discontinued operation). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
Represents the caption on the face of the balance sheet to indicate that the entity has entered into (1) purchase or supply arrangements that will require expending a portion of its resources to meet the terms thereof, and (2) is exposed to potential losses or, less frequently, gains, arising from (a) possible claims against a company's resources due to future performance under contract terms, and (b) possible losses or likely gains from uncertainties that will ultimately be resolved when one or more future events that are deemed likely to occur do occur or fail to occur. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
Aggregate par or stated value of issued nonredeemable common stock (or common stock redeemable solely at the option of the issuer). This item includes treasury stock repurchased by the entity. Note: elements for number of nonredeemable common shares, par value and other disclosure concepts are in another section within stockholders' equity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The aggregate tax effects as of the balance sheet date of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws; net of deducting the allocated valuation allowance, if any, to reduce such amount to net realizable value. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Represents the noncurrent portion of deferred tax liabilities, which result from applying the applicable tax rate to net taxable temporary differences pertaining to each jurisdiction to which the entity is obligated to pay income tax. A noncurrent taxable temporary difference is a difference between the tax basis and the carrying amount of a noncurrent asset or liability in the financial statements prepared in accordance with generally accepted accounting principles. In a classified statement of financial position, an enterprise separates deferred tax liabilities and assets into a current amount and a noncurrent amount. Deferred tax liabilities and assets are classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carryforwards, are classified according to the expected reversal date of the temporary difference. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
Fair values as of the balance sheet date of all assets resulting from contracts that meet the criteria of being accounted for as derivative instruments, net of the effects of master netting arrangements. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Carrying amount as of the balance sheet date, which is the cumulative amount paid and (if applicable) the fair value of any noncontrolling interest in the acquiree, adjusted for any amortization recognized prior to the adoption of any changes in generally accepted accounting principles (as applicable) and for any impairment charges, in excess of the fair value of net assets acquired in one or more business combination transactions. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Carrying amount (lower of cost or market) as of the balance sheet date of inventories less all valuation and other allowances. Excludes noncurrent inventory balances (expected to remain on hand past one year or one operating cycle, if longer). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Sum of the carrying amounts as of the balance sheet date of all investments. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Details
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| X | ||||||||||
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- Definition
Sum of the carrying amounts as of the balance sheet date of all liabilities that are recognized. Liabilities are probable future sacrifices of economic benefits arising from present obligations of an entity to transfer assets or provide services to other entities in the future. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total of all Liabilities and Stockholders' Equity items (or Partners' Capital, as applicable), including the portion of equity attributable to noncontrolling interests, if any. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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| X | ||||||||||
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- Definition
Total obligations incurred as part of normal operations that are expected to be paid during the following twelve months or within one business cycle, if longer. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The sum of the known and estimated amounts payable as of the balance sheet date to policyholders pertaining to insured events for long-duration contracts, which can be viewed as either (a) the present value of future benefits to be paid to or on behalf of policyholders and expenses less the present value of future net premiums payable under the insurance contracts or (b) the accumulated amount of net premiums already collected less the accumulated amount of benefits and expenses already paid to or on behalf of policyholders. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The aggregate amount of policy reserves (provided for future obligations including unpaid claims and claims adjustment expenses) and policy benefits (liability for future policy benefits) as of the balance sheet date; grouped amount of all the liabilities associated with the company's insurance policies. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total of the portions of the carrying amounts as of the balance sheet date of long-term debt, which may include notes payable, bonds payable, debentures, mortgage loans, and commercial paper, which are scheduled to be repaid within one year or the normal operating cycle, if longer, and after deducting unamortized discount or premiums, if any. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Sum of the carrying values as of the balance sheet date of all long-term debt, which is debt initially having maturities due after one year from the balance sheet date or beyond the operating cycle, if longer, but excluding the portions thereof scheduled to be repaid within one year (current maturities) or the normal operating cycle, if longer, and after deducting unamortized discount or premiums, if any. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
For an unclassified balance sheet, this item represents investments in common and preferred stocks and other forms of securities that provide ownership interests in a corporation. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
For an unclassified balance sheet, this item represents investments in debt securities having predetermined or determinable maturity dates. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which is directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Including the current and noncurrent portions, aggregate carrying amount of all types of notes payable, as of the balance sheet date, with initial maturities beyond one year or beyond the normal operating cycle, if longer. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The aggregate carrying amounts, as of the balance sheet date, of assets not separately disclosed in the balance sheet. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Other investments not otherwise specified in the taxonomy. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The aggregate carrying amount, as of the balance sheet date, of liabilities not separately disclosed in the balance sheet. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Aggregate carrying amount, as of the balance sheet date, of noncurrent obligations not separately disclosed in the balance sheet. Noncurrent liabilities are expected to be paid after one year (or the normal operating cycle, if longer). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
This represents the noncurrent liability for underfunded plans recognized in the balance sheet that is associated with the defined benefit pension plans and other postretirement defined benefit plans. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The total liability as of the balance sheet date of amounts due policy holders, excluding future policy benefits and claims, including unpaid policy dividends, retrospective refunds, and undistributed earnings on participating business. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The total of the amounts paid in advance for capitalized costs that will be expensed with the passage of time or the occurrence of a triggering event, and will be charged against earnings within one year or the normal operating cycle, if longer, and the aggregate carrying amount of current assets, as of the balance sheet date, not separately presented elsewhere in the balance sheet. Current assets are expected to be realized or consumed within one year (or the normal operating cycle, if longer). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Tangible assets that are held by an entity for use in the production or supply of goods and services, for rental to others, or for administrative purposes and that are expected to provide economic benefit for more than one year; net of accumulated depreciation. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The total amount due to the entity within one year of the balance sheet date (or one operating cycle, if longer) from outside sources, including trade accounts receivable, notes and loans receivable, as well as any other types of receivables, net of allowances established for the purpose of reducing such receivables to an amount that approximates their net realizable value. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The known and estimated amount recoverable as of the balance sheet date from reinsurers for claims paid or incurred by the ceding insurer and associated claims settlement expenses, including estimated amounts for claims incurred but not reported, and policy benefits, net of any related valuation allowance. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The cumulative amount of the reporting entity's undistributed earnings or deficit. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Investments which are intended to be sold in the short term (usually less than one year or the normal operating cycle, whichever is longer) including trading securities, available-for-sale securities, held-to-maturity securities, and other short-term investments not otherwise listed in the existing taxonomy. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Details
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| X | ||||||||||
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- Definition
Total of Stockholders' Equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity including portions attributable to both the parent and noncontrolling interests (previously referred to as minority interest), if any. The entity including portions attributable to the parent and noncontrolling interests is sometimes referred to as the economic entity. This excludes temporary equity and is sometimes called permanent equity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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| X | ||||||||||
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- Definition
The carrying value (book value) of an entity's issued and outstanding stock which is not included within permanent equity in Stockholders Equity. Temporary equity is a security with redemption features that are outside the control of the issuer, is not classified as an asset or liability in conformity with GAAP, and is not mandatorily redeemable. Includes any type of security that is redeemable at a fixed or determinable price or on a fixed or determinable date or dates, is redeemable at the option of the holder, or has conditions for redemption which are not solely within the control of the issuer. If convertible, the issuer does not control the actions or events necessary to issue the maximum number of shares that could be required to be delivered under the conversion option if the holder exercises the option to convert the stock to another class of equity. If the security is a warrant or a rights issue, the warrant or rights issue is considered to be temporary equity if the issuer cannot demonstrate that it would be able to deliver upon the exercise of the option by the holder in all cases. Includes stock with a put option held by an ESOP and stock redeemable by a holder only in the event of a change in control of the issuer. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Sum of operating profit and non-operating income of expense before reorganization items and income taxes. No definition available.
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| X | ||||||||||
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- Definition
The portion of profit or loss for the period, net of income taxes, which is attributable to common and participating preferred stockholders. No definition available.
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| X | ||||||||||
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- Definition
The aggregate expense charged against earnings to allocate the cost of intangible assets (nonphysical assets not used in production) in a systematic and rational manner to the periods expected to benefit from such assets. As a noncash expense, this element is added back to net income when calculating cash provided by or used in operations using the indirect method. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
In a business combination in which the amount of net identifiable assets acquired and liabilities assumed exceeds the aggregate consideration transferred or to be transferred (as defined), this element represents the amount of gain recognized by the entity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total costs related to goods produced and sold during the reporting period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total costs of sales and operating expenses for the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Details
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| X | ||||||||||
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- Definition
Amount of deferred policy acquisition costs charged to expense in the period, generally in proportion to related revenue earned, estimated gross profits, or over the customer relationship or some other period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The amount of net income or loss for the period per each share in instances when basic and diluted earnings per share are the same amount and reported as a single line item on the face of the financial statements. Basic earnings per share is the amount of net income or loss for the period per each share of common stock or unit outstanding during the reporting period. Diluted earnings per share includes the amount of net income or loss for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period. No definition available.
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| X | ||||||||||
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- Details
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| X | ||||||||||
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- Definition
This item represents the net total realized and unrealized gain (loss) included in earnings for the period as a result of selling or holding marketable securities categorized as trading, available-for-sale, or held-to-maturity, including the unrealized holding gain (loss) of held-to-maturity securities transferred to the trading security category and the cumulative unrealized gain (loss) which was included in other comprehensive income (a separate component of shareholders' equity) for available-for-sale securities transferred to trading securities during the period. Additionally, this item would include any gains (losses) realized during the period from the sale of investments accounted for under the cost method of accounting and losses recognized for other than temporary impairments (OTTI) of the subject investments. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
This element represents the income or loss from continuing operations attributable to the parent which may also be defined as revenue less expenses and taxes from ongoing operations before extraordinary items but after deduction of those portions of income or loss from continuing operations that are allocable to noncontrolling interests, if any. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
This element represents the income or loss from continuing operations attributable to the economic entity which may also be defined as revenue less expenses from ongoing operations, after income or loss from equity method investments, but before income taxes, extraordinary items, and noncontrolling interest. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The amount of net income (loss) from continuing operations per each basic and diluted share of common stock or unit when the per share amount is the same for both basic and diluted shares. No definition available.
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| X | ||||||||||
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- Definition
This element represents the overall income (loss) from a disposal group that is classified as a component of the entity, net of income tax, reported as a separate component of income before extraordinary items before deduction or consideration of the amount which may be allocable to noncontrolling interests, if any. Includes the following (net of tax): income (loss) from operations during the phase-out period, gain (loss) on disposal, provision (or any reversals of earlier provisions) for loss on disposal, and adjustments of a prior period gain (loss) on disposal. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The amount of income (loss) derived from discontinued operations during the period, net of related tax effect, per each basic and diluted share of common stock or unit when the per share amount is the same for both basic and diluted shares. No definition available.
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| X | ||||||||||
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- Definition
The sum of the current income tax expense or benefit and the deferred income tax expense or benefit pertaining to continuing operations. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The cost of borrowed funds accounted for as interest that was charged against earnings during the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Income derived from investments in debt and equity securities and on cash and cash equivalents. Interest income represents earnings which reflect the time value of money or transactions in which the payments are for the use or forbearance of money. Dividend income represents a distribution of earnings to shareholders by investee companies. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
|
- Definition
The portion of profit or loss for the period, net of income taxes, which is attributable to the parent. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The portion of net Income or Loss attributable to the noncontrolling interest (if any) deducted in order to derive the portion attributable to the parent. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The net result for the period of deducting operating expenses from operating revenues. No definition available.
|
| X | ||||||||||
|
- Definition
The net amount of other income and expense amounts, the components of which are not separately disclosed on the income statement, resulting from ancillary business-related activities (that is, excluding major activities considered part of the normal operations of the business) also known as other nonoperating income (expense) recognized for the period. Such amounts may include: (a) dividends, (b) interest on securities, (c) net gains or losses on securities, (d) unusual costs, (e) gains or losses on foreign exchange transactions, and (f) miscellaneous other income and expense items. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
An amount that an insurer adds to a policy's premium, or deducts from a policy's cash value or contract holder's account, as compensation for services rendered; may include fees. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
Provision for benefits, claims and claims settlement expenses incurred during the period net of the effects of contracts assumed and ceded. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The aggregate value of preferred stock dividends and other adjustments necessary to derive net income apportioned to common stockholders. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
Premiums earned on the income statement for all insurance and reinsurance contracts after subtracting any amounts ceded to another insurer and adding premiums assumed from other insurers. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
Total amount of reorganization items. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
Aggregate revenue recognized during the period (derived from goods sold, services rendered, insurance premiums, or other activities that constitute an entity's earning process). For financial services companies, also includes investment and interest income, and sales and trading gains. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Details
|
| X | ||||||||||
|
- Definition
Aggregate revenue during the period from the sale of goods in the normal course of business, after deducting returns, allowances and discounts. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The aggregate total costs related to selling a firm's product and services, as well as all other general and administrative expenses. Direct selling expenses (for example, credit, warranty, and advertising) are expenses that can be directly linked to the sale of specific products. Indirect selling expenses are expenses that cannot be directly linked to the sale of specific products, for example telephone expenses, Internet, and postal charges. General and administrative expenses include salaries of non-sales personnel, rent, utilities, communication, etc. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
Total amount of reorganization items. No definition available.
|
| X | ||||||||||
|
- Definition
The component of net investment income representing the noncash expenses charged against earnings in the period to amortize debt discount and premium associated with the related debt instruments. Excludes amortization of financing costs. No definition available.
|
| X | ||||||||||
|
- Definition
The cash acquired through a common control transaction. No definition available.
|
| X | ||||||||||
|
- Definition
Total cash Transfers to the Company's reinsurer. No definition available.
|
| X | ||||||||||
|
- Definition
Mortality and expense charges and administrative fees. No definition available.
|
| X | ||||||||||
|
- Definition
Effect of exchange rate changes on cash and cash equivalents due to Venezuela hyperinflation No definition available.
|
| X | ||||||||||
|
- Definition
This item represents the net total realized and unrealized gain (loss) included in earnings for the period as a result of selling or holding marketable securities categorized as trading, available-for-sale, or held-to-maturity, including the unrealized holding gain (loss) of held-to-maturity securities transferred to the trading security category and the cumulative unrealized gain (loss) which was included in other comprehensive income (a separate component of shareholders' equity) for available-for-sale securities transferred to trading securities during the period. Additionally, this item would include any gains (losses) realized during the period from the sale of investments accounted for under the cost method of accounting and losses recognized for other than temporary impairments (OTTI) of the subject investments. No definition available.
|
| X | ||||||||||
|
- Definition
Non-cash expenses recognized during the period which were a direct result of the increase in inventory to fair value in conjunction with the inventory valuation as a result of fresh-start reporting upon emergence from bankruptcy. No definition available.
|
| X | ||||||||||
|
- Definition
Total amount of non-cash restructuring, and related charges. No definition available.
|
| X | ||||||||||
|
- Definition
The cash (out flow) inflow related to the Company's supplemental loan which was additional financing obtained whilet he company was under Chapter 11 Bankruptcy protection. No definition available.
|
| X | ||||||||||
|
- Definition
Cash payments related to administrative costs incurred in conjunction with bankruptcy filing, primarily legal and other professional fees. No definition available.
|
| X | ||||||||||
|
- Definition
The non-cash write-off of the unamortized debt issuance costs associated with retired debt instruments. No definition available.
|
| X | ||||||||||
|
- Definition
The non-cash write-off of the unamortized debt discount and premium associated with retired debt instruments. No definition available.
|
| X | ||||||||||
|
- Details
|
| X | ||||||||||
|
- Definition
The component of interest expense representing the noncash expenses charged against earnings in the period to amortize debt discount and premium associated with the related debt instruments. Excludes amortization of financing costs. Alternate caption: Noncash Interest Expense. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The component of interest expense comprised of the periodic charge against earnings over the life of the financing arrangement to which such costs relate. Alternate captions include Noncash Interest Expense. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The aggregate expense charged against earnings to allocate the cost of intangible assets (nonphysical assets not used in production) in a systematic and rational manner to the periods expected to benefit from such assets. As a noncash expense, this element is added back to net income when calculating cash provided by or used in operations using the indirect method. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
In a business combination in which the amount of net identifiable assets acquired and liabilities assumed exceeds the aggregate consideration transferred or to be transferred (as defined), this element represents the amount of gain recognized by the entity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
Includes currency on hand as well as demand deposits with banks or financial institutions. It also includes other kinds of accounts that have the general characteristics of demand deposits in that the Entity may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. Cash equivalents, excluding items classified as marketable securities, include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Compensating balance arrangements that do not legally restrict the withdrawal or usage of cash amounts may be reported as Cash and Cash Equivalents, while legally restricted deposits held as compensating balances against borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits are not generally reported as cash and cash equivalents. Includes cash and cash equivalents associated with the entity's continuing operations. Excludes cash and cash equivalents associated with the disposal group (and discontinued operation). Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The increase (decrease) during the reporting period in cash and cash equivalents. While for technical reasons this element has no balance attribute, the default assumption is a debit balance consistent with its label. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
This element represents cash provided by or used in the operating activities of the entity's discontinued operations during the period. This element is only used by those entities that separately report cash flows attributable to discontinued operations. If using this element, it is an indication that the cash flows of the entity which are detailed in reconciling to cash provided by or used in operating activities reflect only cash flows attributable to continuing operations. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The component of income tax expense for the period representing the increase (decrease) in the entity's deferred tax assets and liabilities pertaining to continuing operations. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The amount of expense recognized in the current period that reflects the allocation of the cost of tangible assets over the assets' useful lives. Includes production and non-production related depreciation. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The effect of exchange rate changes on cash balances held in foreign currencies. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
This element represents the income or loss from continuing operations attributable to the economic entity which may also be defined as revenue less expenses and taxes from ongoing operations before extraordinary items, and noncontrolling interest. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
This element represents the overall income (loss) from a disposal group that is classified as a component of the entity, net of income tax, reported as a separate component of income before extraordinary items before deduction or consideration of the amount which may be allocable to noncontrolling interests, if any. Includes the following (net of tax): income (loss) from operations during the phase-out period, gain (loss) on disposal, provision (or any reversals of earlier provisions) for loss on disposal, and adjustments of a prior period gain (loss) on disposal. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The increase (decrease) during the reporting period in the amounts payable to vendors for goods and services received and the amount of obligations and expenses incurred but not paid. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The increase (decrease) during the reporting period in investment income that has been earned but not yet received in cash. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The increase (decrease) during the reporting period in the balance sheet value of capitalized sales costs that are associated with acquiring a new insurance customers. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The increase (decrease) during the reporting period in the aggregate value of all inventory held by the reporting entity, associated with underlying transactions that are classified as operating activities. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Details
|
| X | ||||||||||
|
- Definition
The increase (decrease) in other insurance liabilities during the period which liabilities are not otherwise defined in the taxonomy. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The increase (decrease) during the reporting period in other assets used in operating activities less other operating liabilities used in operating activities not separately disclosed in the statement of cash flows. May include changes in other current assets and liabilities, other noncurrent assets and liabilities, or a combination of other current and noncurrent assets and liabilities. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The increase (decrease) during the reporting period in the value of prepaid expenses and other assets not separately disclosed in the statement of cash flows, for example, deferred expenses, intangible assets,or income taxes. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The increase (decrease) during the reporting period in the total amount due within one year (or one operating cycle) from all parties, associated with underlying transactions that are classified as operating activities. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The increase (decrease) during the reporting period in the amount of benefits the ceding insurer expects to recover on insurance policies ceded to other insurance entities as of the balance sheet date for all guaranteed benefit types. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The adjustment required to reconcile net income to cash provided by (used in) operations related to the unpaid portion of interest credited to policy owner accounts. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
Monetary decrease in the future benefit reserve resulting from amounts paid to policy and contract holders during the period for policy benefit claims. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The net cash inflow or outflow from financing activity for the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Details
|
| X | ||||||||||
|
- Definition
The net cash inflow or outflow from investing activity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Details
|
| X | ||||||||||
|
- Definition
The net cash from (used in) all of the entity's operating activities, including those of discontinued operations, of the reporting entity. Operating activities generally involve producing and delivering goods and providing services. Operating activity cash flows include transactions, adjustments, and changes in value that are not defined as investing or financing activities. While for technical reasons this element has no balance attribute, the default assumption is a debit balance consistent with its label. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Details
|
| X | ||||||||||
|
- Definition
The net cash from (used in) the entity's continuing operations. This element specifically EXCLUDES the cash flows derived by the entity from its discontinued operations, if any. This element is only to be used when the entity reports its cash flows attributable to discontinued operations separately from the cash flow provided by or used in operating activities. While for technical reasons this element has no balance attribute, the default assumption is a debit balance consistent with its label. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
Interest paid other than in cash for example by issuing additional debt securities. As a noncash item, it is added to net income when calculating cash provided by or used in operations using the indirect method. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The net cash outflow or inflow from other investing activities. This element is used when there is not a more specific and appropriate element in the taxonomy. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The cash outflow paid to third parties in connection with debt origination, which will be amortized over the remaining maturity period of the associated long-term debt. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The cash outflow for cost incurred in the modification of term of existing debt agreement in order for the entity to achieve some advantage. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The cash outflow associated with the acquisition of a business, net of the cash acquired from the purchase. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The cash outflow associated with the purchase of all investments (debt, security, other) during the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The cash outflow for purchases of and capital improvements on property, plant and equipment (capital expenditures), software, and other intangible assets. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The cash inflow from an insurance contract under which the policy holder make a lump sum payment or a series of payments in exchange for periodic payments to the policyholder beginning immediately or at some future date. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
Proceeds from issuance of capital stock which provides for a specific dividend that is paid to the shareholders before any dividends to common stockholders and which takes precedence over common stockholders in the event of liquidation. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The cash inflow from amounts received from issuance of long-term debt that is wholly or partially secured by collateral. Excludes proceeds from tax exempt secured debt. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The cash inflow from a borrowing with the highest claim on the assets of the entity in case of bankruptcy or liquidation (with maturities initially due after one year or beyond the operating cycle, if longer). Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The cash inflow from other borrowing not otherwise defined in the taxonomy. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The net cash inflow or outflow from other financing activities. This element is used when there is not a more specific and appropriate element in the taxonomy. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The net cash inflow or cash outflow from a contractual arrangement with the lender, including letter of credit, standby letter of credit and revolving credit arrangements, under which borrowings can be made up to a specific amount at any point in time with either short term or long term maturity that is collateralized (backed by pledge, mortgage or other lien in the entity's assets). Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The cash inflow associated with the sale, maturity and collection of all investments such as debt, security and so forth during the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The cash inflow from the sale of property, plant and equipment (capital expenditures), software, and other intangible assets. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The cash outflow for an insurance contract under which the policy holder make a lump sum payment or a series of payments in exchange for periodic payments to the policyholder beginning immediately or at some future date. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The cash outflow for the payment of other borrowing not otherwise defined in the taxonomy. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The cash outflow for a long-term debt where the holder has highest claim on the entity's asset in case of bankruptcy or liquidation during the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The aggregate amount of noncash, equity-based employee remuneration. This may include the value of stock or unit options, amortization of restricted stock or units, and adjustment for officers' compensation. As noncash, this element is an add back when calculating net cash generated by operating activities using the indirect method. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
|
Description of Business and Basis of Presentation
|
9 Months Ended |
|---|---|
|
Jul. 03, 2011
|
|
| Description of Business and Basis of Presentation [Abstract] | |
| Description of Business and Basis of Presentation |
(1) Description of Business and Basis of Presentation
Harbinger Group Inc. (“HGI” and, prior to June 16, 2010, its accounting predecessor as described
below, collectively with their respective subsidiaries, the “Company”) is a diversified holding
company that is 93.3% owned by Harbinger Capital Partners Master Fund I, Ltd. (the “Master Fund”),
Global Opportunities Breakaway Ltd. and Harbinger Capital Partners Special Situations Fund, L.P.
(together, the “Principal Stockholders”), not giving effect to the conversion of the Series A
Participating Convertible Preferred Stock (the “Preferred
Stock”) or the Series A-2 Participating Convertible Preferred
Stock (the “Series A-2 Preferred Stock”) discussed in Note
9 and Note 22. HGI’s shares
of common stock trade on the New York Stock Exchange
(“NYSE”) under the symbol “HRG.”
HGI is focused on obtaining controlling equity stakes in companies that operate across a
diversified set of industries. The Company has identified the following six sectors in which it
intends to pursue investment opportunities: consumer products, insurance and financial products,
telecommunications, agriculture, power generation and water and natural resources. In addition, the
Company owns 98% of Zap.Com Corporation (“Zap.Com”), a public shell company that may seek assets or
businesses to acquire.
On January 7, 2011, HGI completed the acquisition (the “Spectrum Brands Acquisition”) of a
controlling financial interest in Spectrum Brands Holdings, Inc. (“Spectrum Brands”) under the
terms of a contribution and exchange agreement (the “Exchange Agreement”) with the Principal
Stockholders. The Principal Stockholders contributed approximately 54.5% of the then outstanding
Spectrum Brands common stock to the Company and, in exchange for such contribution, the Company
issued to the Principal Stockholders 119,910 shares of its common stock. As of July 3, 2011, the
Principal Stockholders directly owned approximately 12.8% of the outstanding Spectrum Brands common
stock. On July 20, 2011 and July 29, 2011, the Principal Stockholders sold approximately 5,495 and
824 shares, respectively, of the Spectrum Brands common stock they held and Spectrum Brands sold
approximately 1,000 and 150 newly-issued shares, respectively, of its common stock in a public
offering. As a result, the Company’s and the Principal Stockholders’ ownership of the outstanding
common stock of Spectrum Brands was reduced to 53% and 0.3%, respectively.
Spectrum Brands was formed in connection with the combination (the “SB/RH Merger”) of Spectrum
Brands, Inc. (“SBI”), a global branded consumer products company, and Russell Hobbs, Inc. (“Russell
Hobbs”), a global branded small appliance company. The SB/RH Merger was consummated on June 16,
2010. As a result of the SB/RH Merger, both SBI and Russell Hobbs are wholly-owned subsidiaries of
Spectrum Brands and Russell Hobbs is a wholly-owned subsidiary of SBI. Prior to the SB/RH Merger,
the Principal Stockholders owned approximately 40% and 100% of the outstanding common stock of SBI
and Russell Hobbs, respectively. Spectrum Brands issued an approximately 65% controlling financial
interest to the Principal Stockholders and an approximately 35% noncontrolling financial interest
to other stockholders (other than the Principal Stockholders) in the SB/RH Merger. Spectrum Brands
trades on the NYSE under the symbol “SPB.”
Immediately prior to the Spectrum
Brands Acquisition, the Principal Stockholders held controlling
financial interests in both HGI and Spectrum Brands. As a result, the Spectrum Brands Acquisition is
considered a transaction between entities under common control under Accounting Standards
Codification (“ASC”) Topic 805 — “Business Combinations,” and is accounted for similar to the
pooling of interest method. In accordance with the guidance in ASC Topic 805, the assets and
liabilities transferred between entities under common control are recorded by the receiving entity
based on their carrying amounts (or at the historical cost basis of the parent, if these amounts
differ). Although HGI was the issuer of shares in the Spectrum Brands Acquisition, during the
historical periods presented Spectrum Brands was an operating business and HGI was not. Therefore,
Spectrum Brands has been reflected as the predecessor and receiving entity in the Company’s
financial statements to provide a more meaningful presentation of the transaction to the Company’s
stockholders. Accordingly, the Company’s financial statements have been retrospectively adjusted to
reflect as the Company’s historical financial statements, those of SBI prior to June 16, 2010 and
the combination of Spectrum Brands, HGI and HGI’s other subsidiaries thereafter. HGI’s assets and
liabilities have been recorded at the Principal Stockholders’ basis as of June 16, 2010, the date
that common control was first established. As SBI was the accounting acquirer in the SB/RH Merger,
the financial statements of SBI are included as the Company’s predecessor entity for periods
preceding the June 16, 2010 date of the SB/RH Merger.
In connection with the Spectrum Brands Acquisition, the Company changed its fiscal year end from
December 31 to September 30 to
conform to the fiscal year end of Spectrum Brands. As a result of this change in fiscal year end,
the Company’s quarterly reporting periods for fiscal year 2011, subsequent to the Spectrum Brands
Acquisition, ended on April 3, 2011 and July 3, 2011.
As discussed further in Note 17, on April 6, 2011 (the “FGL Acquisition Date”), the Company
acquired Fidelity & Guaranty Life Holdings, Inc. (formerly, Old Mutual U.S. Life Holdings, Inc.), a
Delaware corporation (“FGL”), from OM Group (UK) Limited (“OMGUK”). Such acquisition (the “FGL
Acquisition”) has been accounted for using the acquisition method of accounting. Accordingly, the
results of FGL’s operations have been included in the Company’s Condensed Consolidated Financial
Statements commencing April 6, 2011.
FGL’s primary business is the sale of individual life insurance products and annuities through
independent agents, managing general agents, and specialty brokerage firms and in selected
institutional markets. FGL’s principal products are deferred annuities (including fixed indexed
annuities), immediate annuities and life insurance products. FGL markets products through its
wholly-owned insurance subsidiaries, Fidelity & Guaranty Life Insurance Company (“FGL Insurance”)
and Fidelity & Guaranty Life Insurance Company of New York (“FGL Insurance NY”), which together are
licensed in all fifty states and the District of Columbia.
As a result of the Spectrum Brands Acquisition and the FGL Acquisition, the Company currently
operates in two business segments, consumer products and insurance (see Note 21 for segment data).
The accompanying unaudited Condensed Consolidated Financial Statements of the Company (which
present SBI as the accounting predecessor prior to June 16, 2010) included herein have been
prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
The financial statements reflect all adjustments that are, in the opinion of management, necessary
for a fair statement of such information. All such adjustments are of a normal recurring nature,
except for the FGL purchase accounting adjustments discussed in Note 17. Although the Company
believes that the disclosures are adequate to make the information presented not misleading,
certain information and footnote disclosures, including a description of significant accounting
policies normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America (“US GAAP”), have been condensed or
omitted pursuant to such rules and regulations. These interim financial statements should be read
in conjunction with the Company’s retrospectively adjusted annual consolidated financial statements
and notes thereto which are included in the Company’s Current Report on Form 8-K filed with the SEC
on June 10, 2011. The results of operations for the nine months ended July 3, 2011 are not
necessarily indicative of the results for any subsequent periods or the entire fiscal year ending
September 30, 2011.
|
| X | ||||||||||
|
- Details
|
| X | ||||||||||
|
- Definition
The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
|
Comprehensive Income (Loss)
|
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Jul. 03, 2011
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| Comprehensive Income (Loss) [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive Income (Loss) |
(2) Comprehensive Income (Loss)
Comprehensive
income (loss) and the components of other comprehensive income
(loss), net of tax, for the
three and nine month periods ended July 3, 2011 and July 4, 2010 are as follows:
Net exchange gains or losses resulting from the translation of assets and liabilities of foreign
subsidiaries are accumulated, net of taxes and noncontrolling interest, in the “Accumulated other
comprehensive income (loss)” (“AOCI”) section of HGI’s stockholders’ equity. Also included are the
effects of exchange rate changes on intercompany balances of a long-term nature and transactions
designated as hedges of net foreign investments.
The changes in accumulated foreign currency translation for the three and nine month periods ended
July 3, 2011 and July 4, 2010 were primarily attributable to the impact of translation of the net
assets of the Company’s European and Latin American operations, primarily denominated in Euros, Pounds Sterling and
Brazilian Real.
Net unrealized gains and losses on investment securities classified as available-for-sale are
reduced by deferred income taxes and adjustments to intangible assets,
including value of business acquired (“VOBA”) and
deferred policy acquisition costs (“DAC”), that would have resulted had such gains and losses been
realized. Changes in net unrealized gains and losses on investment securities classified as
available-for-sale are recognized in other comprehensive income and loss. See Note 7 for additional
disclosures regarding VOBA and DAC.
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| X | ||||||||||
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- Definition
The entire disclosure for comprehensive income. Includes, but is not limited to, the following: 1) the amount of income tax expense or benefit allocated to each component of other comprehensive income, including reclassification adjustments, 2) the reclassification adjustments for each classification of other comprehensive income and 3) the ending accumulated balances for each component of comprehensive income. Components of comprehensive income include: (1) foreign currency translation adjustments; (2) gains (losses) on foreign currency transactions that are designated as, and are effective as, economic hedges of a net investment in a foreign entity; (3) gains (losses) on intercompany foreign currency transactions that are of a long-term-investment nature, when the entities to the transaction are consolidated, combined, or accounted for by the equity method in the reporting enterprise's financial statements; (4) change in the market value of a futures contract that qualifies as a hedge of an asset reported at fair value; (5) unrealized holding gains (losses) on available-for-sale securities and that resulting from transfers of debt securities from the held-to-maturity category to the available-for-sale category; (6) a net loss recognized as an additional pension liability not yet recognized as net periodic pension cost; and (7) the net gain (loss) and net prior service cost or credit for pension plans and other postretirement benefit plans. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Details
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Investments
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Jul. 03, 2011
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| Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments |
(3) Investments
Consumer Products and Other
HGI’s short-term investments consist of (1) marketable equity and debt securities classified as
trading and carried at fair value with unrealized gains and losses recognized in earnings,
including certain securities for which the Company has elected the fair value option under ASC 825,
Financial Instruments, which would otherwise have been classified as available-for-sale, and (2)
U.S. Treasury securities and a certificate of deposit classified as held to maturity and carried at
amortized cost, which approximates fair value. The Company’s short-term investments are summarized
as follows:
There was $1,058 of net unrealized gains recognized in “Other income (expense), net” during the
three and nine months ended July 3, 2011 that relate to trading securities held at July 3, 2011.
Insurance
FGL’s debt and equity securities have been designated as available-for-sale and are carried at fair
value with unrealized gains and losses included in AOCI, net of associated VOBA, DAC and deferred
income taxes. The amortized cost, gross unrealized gains (losses), and fair value of
available-for-sale securities of FGL at July 3, 2011 were as follows:
At July 3, 2011, Non-agency residential-mortgage-backed securities had an other-than-temporary
impairment of $(144).
The amortized cost and fair value of fixed maturity available-for-sale securities by contractual
maturities, as applicable, at July 3, 2011 were as follows:
Actual maturities may differ from contractual maturities because issuers may have the right to call
or pre-pay obligations.
As part of FGL’s ongoing securities monitoring process, FGL evaluates whether securities in an
unrealized loss position could potentially be other-than-temporarily impaired. FGL has concluded
that the declines in fair values of the securities in the sectors presented in the tables below
were not other-than-temporary impairments as of July 3, 2011,
except for the non-credit portion of other-than-temporary impairments
of non-agency residential mortgage-backed securities of $144. This conclusion is
derived from the issuers’ continued satisfaction of the securities’ obligations in accordance with
their contractual terms along with the expectation that they will continue to do so, including an
assessment of the issuers’ financial condition, and other objective evidence. Also contributing to
this conclusion is its determination that it is more likely than not
that FGL will not be required
to sell these securities prior to recovery. As it specifically relates to asset-backed securities
and commercial mortgage-backed securities, the present value of cash flows expected to be collected
is at least the amount of the amortized cost basis of the security
and FGL management has a lack of intent to sell these securities for a period of time sufficient to allow for any anticipated
recovery in fair value.
As the amortized cost of all investments was adjusted to fair value as of the FGL Acquisition Date,
no individual securities have been in a continuous unrealized loss position greater than twelve
months. The fair value and gross unrealized losses, of available-for-sale securities with gross
unrealized losses, aggregated by investment category, were as follows:
At July 3, 2011, securities in an unrealized loss position were primarily concentrated in
investment grade corporate debt instruments, residential mortgage-backed securities and commercial
mortgage-backed securities. Total unrealized losses were $49,450 at July 3, 2011. The unrealized
loss position is primarily the result of risk premiums in finance and related sectors remaining
elevated.
At July 3, 2011, securities with a fair value of $3,947 were depressed greater than 20% of
amortized cost, which represented less than 1% of the carrying values of all investments. Based
upon FGL’s current evaluation of these securities in accordance with its impairment policy and
FGL’s intent to retain these investments for a period of time sufficient to allow for recovery in
value, FGL has determined that these securities are temporarily impaired.
For the period from April 6, 2011 to June 30, 2011, FGL recognized
credit losses in operations totaling $1,259 related to non-agency
residential mortgage-backed securities, which
experience other-than-temporary impairments that
had not previously been recognized, and had an
amortized cost of $12,140 and a fair value of
$10,737 at the time of impairment.
Net Investment Income
The major categories of net investment income on the Company’s Condensed Consolidated Statements of
Operations were as follows:
Net Investment Gains (Losses)
Details underlying net investment gains (losses) reported on the Company’s Condensed Consolidated
Statements of Operations were as follows:
Additional detail regarding the net realized gain on securities is as follows:
For the
period from April 6, 2011 to July 3, 2011, proceeds from
the sale of available-for-sale securities totaled $461,506, gross gains on the sale of available-for-sale securities totaled $12,866
and gross losses totaled $1,815.
Underlying write-downs taken to residential mortgage-backed securities investments as a result of
other-than-temporary impairments that were recognized in net income and included in net realized
gains on available-for-sale securities above were $1,259 for the period from April 6, 2011 to July
3, 2011. The portion of other-than-temporary impairments recognized in AOCI is disclosed in Note 2.
Cash
flows from investing activities by security classification were as
follows:
Concentrations of Financial Instruments
As of July 3, 2011, FGL’s most significant investment in one industry was FGL’s investment
securities in the banking industry with a fair value of $2,049,367, or 12.6% of the invested assets
portfolio. FGL utilized the industry classifications to obtain the concentration of financial
instruments amount; as such, this amount will not agree to the available-for-sale securities table
above. As of July 3, 2011, FGL’s exposure to sub-prime and Alternative-A residential
mortgage-backed securities was $314,182 and $36,222 or 1.9% and 0.2% of FGL’s invested assets,
respectively.
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| X | ||||||||||
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- Details
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| X | ||||||||||
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- Definition
The entire disclosure for cash, cash equivalents, investments in debt and equity instruments (including cost and equity investees and related income statement amounts), equity and cost method investments, investments in joint ventures and any other investment. No definition available.
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Derivative Financial Instruments
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| Derivative Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Financial Instruments |
(4) Derivative Financial Instruments
HGI
As of July 3, 2011, the Company had outstanding Preferred Stock that contained a conversion option
(see Note 9). If the Company were to issue certain equity securities at a price lower than the
conversion price of the Preferred Stock, the conversion price would be adjusted to the share price
of the newly issued equity securities (a “down round” provision). Therefore, in accordance with
the guidance in ASC 815, Derivatives and Hedging, this conversion option is considered to be an
embedded derivative that must be separately accounted for as a liability at fair value with any
changes in fair value reported in current earnings. This embedded derivative has been bifurcated
from its host contract, marked to fair value and included in “Equity conversion option of preferred
stock” in the “Consumer Products and Other” sections of the accompanying Condensed Consolidated
Balance Sheet with the change in fair value included as a component of “Other income (expense),
net” in the Condensed Consolidated Statements of Operations. The Company valued the conversion
feature using the Monte Carlo simulation approach, which utilizes various inputs including the
Company’s stock price, volatility, risk free rate and discount yield.
The estimated fair value of the bifurcated conversion option at July 3, 2011 was $79,740. The
Company recorded income of $5,960 in “Other income (expense), net” due to a change in fair value
from the May 13, 2011 issue date.
Spectrum Brands
Derivative financial instruments are used by Spectrum Brands principally in the management of its
interest rate, foreign currency and raw material price exposures. Spectrum Brands does not hold or
issue derivative financial instruments for trading purposes. When hedge accounting is elected at
inception, Spectrum Brands formally designates the financial instrument as a hedge of a specific
underlying exposure if such criteria are met, and documents both the risk management objectives and
strategies for undertaking the hedge. Spectrum Brands formally assesses both at the inception and
at least quarterly thereafter, whether the financial instruments that are used in hedging
transactions are effective at offsetting changes in the forecasted cash flows of the related
underlying exposure. Because of the high degree of effectiveness between the hedging instrument and
the underlying exposure being hedged, fluctuations in the value of the derivative instruments are
generally offset by changes in the forecasted cash flows of the underlying exposures being hedged.
Any ineffective portion of a financial instrument’s change in fair value is immediately recognized
in earnings. For derivatives that are not designated as cash flow hedges, or do not qualify for
hedge accounting treatment, the change in the fair value is also immediately recognized in
earnings.
The fair value of outstanding derivative contracts recorded in the “Consumer Products and Other”
sections of the accompanying Condensed Consolidated Balance Sheet were as follows:
Cash Flow Hedges
For derivative instruments that are designated and qualify as cash flow hedges, the effective
portion of the gain or loss on the derivative is reported as a component of AOCI and reclassified
into earnings in the same period or periods during which the hedged transaction affects earnings.
Gains and losses on the derivative, representing either hedge ineffectiveness or hedge components
excluded from the assessment of effectiveness, are recognized in current earnings.
The following table summarizes the pretax impact of derivative instruments designated as cash flow
hedges on the accompanying Condensed Consolidated Statements of Operations for the three and nine
month periods ended July 3, 2011 and July 4, 2010:
Fair Value Contracts
For derivative instruments that are used to economically hedge the fair value of Spectrum Brands’
third party and intercompany foreign exchange payments, commodity purchases and interest rate
payments, the gain (loss) is recognized in earnings in the period of change associated with the
derivative contract. During the three and nine month periods ended July 3, 2011 and July 4, 2010
Spectrum Brands recognized the following gains (losses) on these derivative contracts:
Additional Disclosures
Cash Flow Hedges
Spectrum Brands uses interest rate swaps to manage its interest rate risk. The swaps are designated
as cash flow hedges with the changes in fair value recorded in AOCI and as a derivative hedge asset
or liability, as applicable. The swaps settle periodically in arrears with the related amounts for
the current settlement period payable to, or receivable from, the counter-parties included in
accrued liabilities or receivables, respectively, and recognized in earnings as an adjustment to
interest expense from the underlying debt to which the swap is designated. At July 3, 2011,
Spectrum Brands had a portfolio of U.S. dollar denominated interest rate swaps outstanding, which
effectively fix the interest on floating rate debt (exclusive of lender spreads), as follows: 2.25%
for a notional principal amount of $300,000 through December 2011 and 2.29% for a notional
principal amount of $300,000 through January 2012. At September 30, 2010, Spectrum Brands had a
portfolio of U.S. dollar-denominated interest rate swaps outstanding, which effectively fixed the
interest on floating rate debt (exclusive of lender spreads), as follows: 2.25% for a notional
principal amount of $300,000 through December 2011 and 2.29% for a notional principal amount of
$300,000 through January 2012 (the “U.S. dollar swaps”). The derivative net loss on these contracts
recorded in AOCI at July 3, 2011 was $(639), net of tax benefit of $718 and noncontrolling interest
of $533. The derivative net loss on the U.S. dollar swaps contracts recorded in AOCI at September
30, 2010 was $(1,458), net of tax benefit of $1,640 and noncontrolling interest of $1,217. At July
3, 2011, the portion of derivative net losses estimated to be reclassified from AOCI into earnings
over the next 12 months is $(639), net of tax and noncontrolling interest.
Spectrum Brands periodically enters into forward foreign exchange contracts to hedge the risk from
forecasted foreign denominated third party and intercompany sales or payments. These obligations
generally require Spectrum Brands to exchange foreign currencies for U.S. Dollars, Euros, Pounds
Sterling, Australian Dollars, Brazilian Reals, Canadian Dollars or Japanese Yen. These foreign
exchange contracts are cash flow hedges of fluctuating foreign exchange related to sales or product
or raw material purchases. Until the sale or purchase is recognized, the fair value of the related
hedge is recorded in AOCI and as a derivative hedge asset or liability, as applicable. At the time
the sale or purchase is recognized, the fair value of the related hedge is reclassified as an
adjustment to “Net sales” or purchase price variance in “Cost of goods sold”. At July 3, 2011,
Spectrum Brands had a series of foreign exchange derivative contracts outstanding through September
2012 with a contract value of $270,955. At September 30, 2010, Spectrum Brands had a series of
foreign exchange derivative contracts outstanding through June 2012 with a contract value of
$299,993. The derivative net loss on these contracts recorded in AOCI at July 3, 2011 was $(5,614),
net of tax benefit of $4,270 and noncontrolling interest of $4,687. The derivative net loss on
these contracts recorded in AOCI at September 30, 2010 was $(2,900), net of tax benefit of $2,204
and noncontrolling interest of $2,422. At July 3, 2011, the portion of derivative net losses
estimated to be reclassified from AOCI into earnings over the next 12 months is $(5,042) net of tax
and noncontrolling interest.
Spectrum Brands is exposed to risk from fluctuating prices for raw materials, specifically zinc
used in its manufacturing processes.
Spectrum Brands hedges a portion of the risk associated with these materials through the use of
commodity swaps. The hedge contracts are designated as cash flow hedges with the fair value changes
recorded in AOCI and as a hedge asset or liability, as applicable. The unrecognized changes in fair
value of the hedge contracts are reclassified from AOCI into earnings when the hedged purchase of
raw materials also affects earnings. The swaps effectively fix the floating price on a specified
quantity of raw materials through a specified date. At July 3,
2011, Spectrum Brands had
a series of such swap contracts
outstanding through September 2012 for 10 tons of raw materials with a contract value of $20,872.
At September 30, 2010, Spectrum Brands had a series of such swap contracts outstanding through
September 2012 for 15 tons of raw materials with a contract value of $28,897. The derivative net
gain on these contracts recorded in AOCI at July 3, 2011 was $1,173, net of tax expense of $1,147
and noncontrolling interest of $980. The derivative net gain on these contracts recorded in AOCI at
September 30, 2010 was $1,230, net of tax expense of $1,201 and noncontrolling interest of $1,026.
At July 3, 2011, the portion of derivative net gains estimated to be reclassified from AOCI into
earnings over the next 12 months is $679, net of tax and noncontrolling interest.
Fair Value Contracts
Spectrum Brands periodically enters into forward and swap foreign exchange contracts to
economically hedge the risk from third party and intercompany payments resulting from existing
obligations. These obligations generally require Spectrum Brands to exchange foreign currencies for
U.S. Dollars, Euros or Australian Dollars. These foreign exchange contracts are economic fair value
hedges of a related liability or asset recorded in the accompanying Condensed Consolidated Balance
Sheets. The gain or loss on the derivative hedge contracts is recorded in earnings as an offset to
the change in value of the related liability or asset at each period end. At July 3, 2011 and
September 30, 2010, Spectrum Brands had $277,510 and $333,562, respectively, of notional value for
such foreign exchange derivative contracts outstanding.
Credit Risk
Spectrum Brands is exposed to the default risk of the counterparties with which Spectrum Brands
transacts. Spectrum Brands monitors counterparty credit risk on an individual basis by periodically
assessing each such counterparty’s credit rating exposure. The maximum loss due to credit risk
equals the fair value of the gross asset derivatives that are primarily concentrated with a foreign
financial institution counterparty. Spectrum Brands considers these exposures when measuring its
credit reserve on its derivative assets, which were $62 and $75 at July 3, 2011 and September 30,
2010, respectively. Additionally, Spectrum Brands does not require collateral or other security to
support financial instruments subject to credit risk.
Spectrum Brands’ standard contracts do not contain credit risk related contingent features whereby
Spectrum Brands would be required to post additional cash collateral as a result of a credit event.
However, Spectrum Brands is typically required to post collateral in the normal course of business
to offset its liability positions. At both July 3, 2011 and September 30, 2010, Spectrum Brands had
posted cash collateral of $294 and $2,363, respectively, related to such liability positions. In
addition, at both July 3, 2011 and September 30, 2010, Spectrum Brands had posted standby letters
of credit of $2,000 and $4,000 related to such liability positions. The cash collateral is included
in “Receivables, net” within the accompanying Condensed Consolidated Balance Sheets.
FGL
FGL recognizes all derivative instruments as assets or liabilities in the Condensed Consolidated
Balance Sheet at fair value and any changes in the fair value of the derivatives are recognized
immediately in the Condensed Consolidated Statements of Operations. The fair value of derivative
instruments, including derivative instruments embedded in Fixed Index Annuity (“FIA”) contracts, is
as follows:
The change in fair value of derivative instruments included in the Condensed Consolidated
Statements of Operations is as follows:
FGL has FIA contracts that permit the holder to elect an interest rate return or an equity index
linked component, where interest credited to the contracts is linked to the performance of various
equity indices, primarily the S&P 500 Index. This feature represents an embedded derivative. The
FIA embedded derivative is valued at fair value and included in the liability for contractholder
funds in the Condensed Consolidated Balance Sheet with changes in fair value included as a
component of benefits and other changes in policy reserves in the Condensed Consolidated Statements
of Operations.
When FIA deposits are received from policyholders, a portion of the deposit is used to purchase
derivatives consisting of a combination of call options and futures contracts on the applicable
market indices to fund the index credits due to FIA contractholders. The majority of all such call
options are one year options purchased to match the funding requirements of the underlying
policies. On the respective anniversary dates of the index policies, the index used to compute the
interest credit is reset and FGL purchases new one, two or three year call options to fund the next
index credit. FGL manages the cost of these purchases through the terms of its FIA contracts, which
permit FGL to change caps or participation rates, subject to guaranteed minimums on each contract’s
anniversary date. The change in the fair value of the call options and futures contracts is
generally designed to offset the portion of the change in the fair value of the FIA embedded
derivative related to index performance. The call options and futures contracts are marked to fair
value with the change in fair value included as a component of net investment gains (losses). The
change in fair value of the call options and futures contracts includes the gains and losses
recognized at the expiration of the instrument term or upon early termination and the changes in
fair value of open positions.
Other market exposures are hedged periodically depending on market conditions and FGL’s risk
tolerance. FGL’s FIA hedging
strategy economically hedges the equity returns and exposes FGL to
the risk that unhedged market exposures result in divergence between changes in the fair value of
the liabilities and the hedging assets. FGL uses a variety of techniques including direct
estimation of market sensitivities and value-at-risk to monitor this risk daily. FGL intends to
continue to adjust the hedging strategy as market conditions and FGL’s risk tolerance change.
FGL is exposed to credit loss in the event of nonperformance by its counterparties on the call
options and reflects assumptions regarding this nonperformance risk in the fair value of the call
options. The nonperformance risk is the net counterparty exposure based on the fair value of the
open contracts less collateral held. The credit risk associated with such agreements is minimized
by purchasing such agreements from several financial institutions with ratings above “A3” from
Moody’s Investor Services or “A-” from Standard and Poor’s Corporation. Additionally, FGL
maintains a policy of requiring all derivative contracts to be governed by an International Swaps
and Derivatives Association (“ISDA”) Master Agreement.
Information regarding FGL’s exposure to credit loss on the call options it holds is presented in
the following table:
In addition to the collateral presented in the table above, FGL has fixed maturity securities of
$20,190 pledged as collateral by Bank of America which are considered off balance sheet and therefore
not recorded in the Condensed Consolidated Financial Statements as of July 3, 2011. FGL holds cash and
cash equivalents received from counterparties for call option collateral, which is included in
“Other liabilities” in the “Insurance” sections of the Condensed Consolidated Balance Sheet. Both
the cash and cash equivalents and fixed maturity securities held as collateral limit the maximum
amount of loss due to credit risk that FGL would incur if parties to the call options failed
completely to perform according to the terms of the contracts to $118,023 at July 3, 2011.
FGL is required to maintain minimum ratings as a matter of routine practice in its ISDA agreements.
Under some ISDA agreements, FGL has agreed to maintain certain financial strength ratings. A
downgrade below these levels could result in termination of the open derivative contracts between
the parties, at which time any amounts payable by FGL or the counterparty would be dependent on the
market value of the underlying derivative contracts. Downgrades of FGL have given multiple
counterparties the right to terminate ISDA agreements. No ISDA agreements have been terminated,
although the counterparties have reserved the right to terminate the ISDA agreements at any time.
In certain transactions, FGL and the counterparty have entered into a collateral support agreement
requiring either party to post collateral when the net exposures exceed pre-determined thresholds.
These thresholds vary by counterparty and credit rating. Downgrades of FGL’s ratings have
increased the threshold amount in FGL’s collateral support agreements, reducing the amount of
collateral held and increasing the credit risk to which FGL is exposed.
FGL held 2,679 futures contracts at July 3, 2011. The fair value of futures contracts represents
the cumulative unsettled variation margin. FGL provides cash collateral to the counterparties for
the initial and variation margin on the futures contracts which is included in “Cash and cash
equivalents” in the “Insurance” sections of the Condensed Consolidated Balance Sheet. The amount
of collateral held by the counterparties for such contracts at July 3, 2011 was $10,698.
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| X | ||||||||||
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- Details
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| X | ||||||||||
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- Definition
The entire disclosure for the entity's entire derivative instruments and hedging activities. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Fair Value of Financial Instruments
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Jul. 03, 2011
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| Fair Value of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value of Financial Instruments |
(5) Fair Value of Financial Instruments
The Company’s measurement of fair value is based on assumptions used by market participants in
pricing the asset or liability, which may include inherent risk, restrictions on the sale or use of
an asset or non-performance risk, which may include the Company’s own credit risk. The Company’s
estimate of an exchange price is the price in an orderly transaction between market participants to
sell the
asset or transfer the liability (“exit price”) in the principal market, or the most
advantageous market in the absence of a principal market, for that asset or liability, as opposed
to the price that would be paid to acquire the asset or receive a liability (“entry price”). The
Company categorizes financial instruments carried at fair value into a three-level fair value
hierarchy, based on the priority of inputs to the respective valuation technique. The three-level
hierarchy for fair value measurement is defined as follows:
Level 1 — Values are unadjusted quoted prices for identical assets and liabilities in active
markets accessible at the measurement date.
Level 2 — Inputs include quoted prices for similar assets or liabilities in active markets,
quoted prices from those willing to trade in markets that are not active, or other inputs
that are observable or can be corroborated by market data for the term of the instrument.
Such inputs include market interest rates and volatilities, spreads and yield curves.
Level 3 — Certain inputs are unobservable (supported by little or no market activity) and
significant to the fair value measurement. Unobservable inputs reflect the Company’s best
estimate of what hypothetical market participants would use to determine a transaction price
for the asset or liability at the reporting date based on the best information available in
the circumstances.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair
value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on
the lower level of input that is significant to the fair value measurement. The Company’s
assessment of the significance of a particular input to the fair value measurement in its entirety
requires judgment and considers factors specific to the investment.
When a determination is made to classify an asset or liability within Level 3 of the fair value
hierarchy, the determination is based upon the significance of the unobservable inputs to the
overall fair value measurement. Because certain securities trade in less liquid or illiquid
markets with limited or no pricing information, the determination of fair value for these
securities is inherently more difficult. However, Level 3 fair value investments may include, in
addition to the unobservable or Level 3 inputs, observable components, which are components that
are actively quoted or can be validated to market-based sources.
The carrying amounts and estimated fair values of the Company’s consolidated financial instruments
for which the disclosure of fair values is required were as follows (asset/(liability)):
The carrying amounts of 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 table above.
The fair values of cash equivalents, short-term investments, and the long-term debt set forth above
are generally based on quoted or observed market prices. Contractholder funds include investment
contracts which are comprised of deferred annuities, FIAs and immediate annuities. The fair value
of these investment contracts is based on their approximate account values. The fair value of FGL’s
note payable approximates its carrying value as it is short-term in nature and the interest rate
set on it was recently negotiated.
Goodwill, intangible assets and other long-lived assets are also tested annually or if a triggering
event occurs that indicates an impairment loss may have been incurred (See Note 6) using fair value
measurements with unobservable inputs (Level 3).
See Note 10 with respect to fair value measurements of the Company’s pension plan assets.
Financial assets and liabilities measured and carried at fair value on a recurring basis in our
financial statements are summarized, according to the hierarchy previously described, as follows
(in thousands):
The following tables
summarize changes to financial instruments carried at fair value
and classified within Level 3 of the fair value hierarchy, all of
which are held by FGL except for the equity conversion option of
HGI’s Preferred Stock. This summary excludes any impact of amortization of VOBA and DAC. The gains and losses below may include
changes in fair value due in part to observable inputs that are a component of the valuation
methodology.
The following table presents the gross components of purchases, sales, and settlements, net, of
Level 3 financial instruments from April 6, 2011 to July 3, 2011. There were no issuances during
this period.
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- Definition
The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Goodwill and Intangibles of Consumer Products Segment
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Jul. 03, 2011
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| Goodwill and Intangibles of Consumer Products Segment |
(6) Goodwill and Intangibles of Consumer Products Segment
A summary of the changes in the carrying amounts of goodwill and intangible assets of the Consumer
Products Segment is as follows:
Intangible assets are recorded at cost or at fair value if acquired in a purchase business
combination. Customer relationships, proprietary technology intangibles and certain trade names are
amortized, using the straight-line method, over their estimated useful lives of approximately four
to 20 years. Excess of cost over fair value of net assets acquired (goodwill) and indefinite lived
trade name intangibles are not amortized.
Goodwill and indefinite lived intangible assets are tested for impairment at least annually at
Spectrum Brands’ August financial period end, and more frequently if an event or circumstance
indicates that an impairment loss may have been incurred between annual impairment tests. As a
result of a realignment of reporting units, goodwill and indefinite lived trade name intangibles
were tested for impairment as of October 1, 2010. Spectrum Brands concluded that the fair values of
its reporting units and indefinite lived trade name intangible assets were in excess of the
carrying amounts of those assets and, accordingly, no impairment of goodwill or indefinite lived
trade name intangibles was recorded.
Intangible assets subject to amortization include proprietary technology, customer relationships
and certain trade names, which are summarized as follows:
Amortization expense for the three and nine month periods ended July 3, 2011 and July 4, 2010 is as
follows:
The Company estimates annual amortization expense for the next five fiscal years will approximate
$57,800 per year.
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| X | ||||||||||
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- Definition
The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Intangibles of Insurance Segment
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9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 03, 2011
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| Goodwill and Intangibles of Consumer Products Segment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangibles of Insurance Segment |
(7) Intangibles of Insurance Segment
Intangible assets of the Insurance Segment include VOBA and DAC.
VOBA
represents the estimated fair value of the right to receive future
net cash flows from in-force
contracts in a life insurance company acquisition at the acquisition date. DAC represents costs that are related directly to new or renewal insurance contracts, which may be
deferred to the extent recoverable. These costs include incremental direct costs of contract
acquisition, primarily commissions, as well as certain costs related directly to underwriting,
policy issuance and processing. Up front bonus credits to policyholder account values, which are
considered to be deferred sales inducements (“DSI”), are accounted for similarly to DAC.
The methodology for determining the amortization of VOBA and DAC varies by product type. For all
insurance contracts, amortization is based on assumptions consistent with those used in the
development of the underlying contract adjusted for emerging
experience and expected trends. US GAAP
requires that assumptions for these types of products not be modified unless recoverability testing
deems them to be inadequate. VOBA and DAC amortization are reported within “Amortization of
intangible assets” in the Condensed Consolidated Statements of Operations.
Acquisition costs for universal life insurance (“UL”) and investment-type products, which include
fixed indexed and deferred annuities, are generally amortized over the lives of the policies in
relation to the incidence of estimated gross profits (“EGPs”) from investment income, surrender
charges and other product fees, policy benefits, maintenance expenses, mortality net of reinsurance
ceded and expense margins, and actual realized gains (losses) on investments.
Changes in assumptions can have a significant impact on VOBA and DAC balances and amortization
rates. Due to the relative size and sensitivity to minor changes in underlying assumptions of VOBA
and DAC balances, FGL performs quarterly and annual analyses of VOBA and DAC for the annuity and
life businesses, respectively. The VOBA and DAC balances are also evaluated for recoverability. At
each evaluation date, actual historical gross profits are reflected, and estimated future gross
profits and related assumptions are evaluated for continued reasonableness. Any adjustment in
estimated future gross profits requires that the amortization rate be revised (“unlocking”)
retroactively to the date of the policy or contract issuance. The cumulative unlocking adjustment
is recognized as a component of current period amortization. In general, sustained increases in
investment, mortality, and expense margins, and thus estimated future profits, lower the rate of
amortization. However, sustained decreases in investment, mortality, and expense margins, and thus
estimated future gross profits, increase the rate of amortization.
The carrying amounts of VOBA and DAC are adjusted for the effects of realized and unrealized gains
and losses on debt securities classified as available-for-sale and certain derivatives and embedded
derivatives. Amortization expense of VOBA and DAC reflects an assumption for an expected level of
credit-related investment losses. When actual credit-related investment losses are realized, FGL
performs a retrospective unlocking of VOBA and DAC amortization as actual margins vary from
expected margins. This unlocking is reflected in the Condensed
Consolidated Statements of
Operations.
For annuity, UL, and investment-type products, the DAC asset is adjusted for the impact of
unrealized gains (losses) on investments as if these gains (losses) had been realized, with
corresponding credits or charges included in accumulated other comprehensive income.
VOBA and DAC are reviewed periodically to ensure that the unamortized portion does not exceed the
expected recoverable amounts.
Information regarding VOBA and DAC (including DSI) is as follows:
The above DAC balances include $2,966 of DSI, net of shadow adjustments as of July 3, 2011.
Amortization of VOBA and DAC is attributed to both investment gains and losses and to other
expenses for the amount of gross margins or profits originating from transactions other than
investment gains and losses. Unrealized investment gains and losses represent the amount of VOBA
and DAC that would have been amortized if such gains and losses had been recognized.
The estimated future amortization expense for VOBA is $21,364 for the three months remaining to
September 30, 2011. Estimated amortization expense for
VOBA in future fiscal years is as follows:
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- Definition
The entire disclosure for all or part of the information related to intabgible assets for Insurance, which includes Deferred Acquisition Costs and Value of Business Acquired. No definition available.
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- Details
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Debt
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| Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt |
(8) Debt
The
Company’s consolidated debt consists of the following:
HGI
On November 15, 2010 and June 28, 2011, HGI issued $350,000 and $150,000, respectively, or $500,000
aggregate principal amount of 10.625% Senior Secured Notes due
November 15, 2015 (“10.625% Notes”).
The 10.625% Notes were sold only to qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”), and to certain persons in offshore
transactions in reliance on Regulation S. The initial $350,000 of 10.625% Notes were subsequently
registered under the Securities Act and the other $150,000 of 10.625%
Notes are in the process of being registered. The 10.625% Notes were issued at an aggregate price equal to 99.311% of the
principal amount thereof, with a net original issue discount (“OID”) of $3,445. Interest on the
10.625% Notes is payable semi-annually, commencing on May 15, 2011 and ending November 15, 2015.
The 10.625% Notes are collateralized with a first priority lien on substantially all of the assets
directly held by HGI, including stock in its subsidiaries (with the exception of Zap.Com, but
including Spectrum Brands, Harbinger F&G, LLC (“HFG”), the wholly-owned parent of FGL, and HGI
Funding LLC) and HGI’s directly held cash and investment securities.
HGI has the option to redeem the 10.625% Notes prior to May 15, 2013 at a redemption price equal to
100% of the principal amount plus a make-whole premium and accrued and unpaid interest to the date
of redemption. At any time on or after May 15, 2013, HGI may redeem some or all of the 10.625%
Notes at certain fixed redemption prices expressed as percentages of the principal amount, plus
accrued and unpaid interest. At any time prior to November 15, 2013, HGI may redeem up to 35% of
the original aggregate principal amount of the 10.625% Notes with net cash proceeds received by HGI
from certain equity offerings at a price equal to 110.625% of the principal amount of the 10.625%
Notes redeemed, plus accrued and unpaid interest, if any, to the date of redemption, provided that
redemption occurs within 90 days of the closing date of such equity offering, and at least 65% of
the aggregate principal amount of the 10.625% Notes remains outstanding immediately thereafter.
The indenture governing the 10.625% Notes contains covenants limiting, among other things, and
subject to certain qualifications and exceptions, the ability of HGI, and, in certain cases, HGI’s
subsidiaries, to incur additional indebtedness; create liens; engage in sale-leaseback
transactions; pay dividends or make distributions in respect of capital stock; make certain
restricted payments; sell assets; engage in certain transactions with affiliates; or consolidate or
merge with, or sell substantially all of its assets to, another person. HGI is also required to
maintain compliance with certain financial tests, including minimum liquidity and collateral
coverage ratios that are based on the fair market value of the
assets held directly by HGI, including our equity interests in
Spectrum Brands and our other subsidiaries such as HFG
and HGI Funding LLC. At July 3, 2011, the Company was in compliance
with all covenants under the 10.625% Notes.
HGI
incurred $16,200 of costs in connection with its issuance of the 10.625% Notes. These costs are
classified as “Deferred charges and other assets” in the accompanying Condensed Consolidated
Balance Sheet as of July 3, 2011 and, along with the OID, are being amortized to interest expense
utilizing the effective interest method over the term of the 10.625% Notes.
Spectrum
Brands
In connection with the SB/RH Merger, on June 16, 2010, Spectrum Brands (i) entered into a
senior secured term loan pursuant to a senior credit agreement (the “Senior Credit Agreement”)
consisting of a $750,000 U.S. dollar term loan due June 16, 2016, (ii) issued $750,000 in aggregate
principal amount of 9.5% Senior Secured Notes due June 15, 2018 (the “9.5% Notes”) and (iii)
entered into a $300,000 U.S. dollar asset based revolving loan facility due June 16, 2014 (the “ABL
Revolving Credit Facility”). The proceeds from such financing were used to repay Spectrum Brands’
then-existing senior term credit facility and Spectrum Brands’ then-existing asset based revolving
loan facility, to pay fees and expenses in connection with the refinancing and for general
corporate purposes.
On February 1, 2011, Spectrum Brands completed the refinancing of its term loan facility
established in connection with the SB/RH Merger, which, at February 1, 2011, had an aggregate
amount outstanding of $680,000, with an amended and restated credit agreement (the “Term Loan”,
together with the amended ABL Revolving Credit Facility, the “Senior Credit Facilities”) at a lower
interest rate. The Term Loan was issued at par and has a maturity date of June 17, 2016. Subject to
certain mandatory prepayment events, the Term Loan is subject to repayment according to a scheduled
amortization, with the final payment of all amounts outstanding, plus accrued and unpaid interest,
due at maturity. Among other things, the Term Loan provides for interest at a rate per annum equal
to, at Spectrum Brands’ option, the LIBO rate (adjusted for statutory reserves) subject to a 1.00%
floor plus a margin equal to 4.00%, or an alternate base rate plus a margin equal to 3.00%.
The Term Loan contains financial covenants with respect to debt, including, but not limited to, a
maximum leverage ratio and a minimum interest coverage ratio, which covenants, pursuant to their
terms, become more restrictive over time. In addition, the Term Loan contains customary restrictive
covenants, including, but not limited to, restrictions on Spectrum Brands’ ability to incur
additional indebtedness, create liens, make investments or specified payments, give guarantees, pay
dividends, make capital expenditures, engage in mergers or acquire or sell assets. Pursuant to a
guarantee and collateral agreement, Spectrum Brands’ and its domestic subsidiaries have guaranteed
their respective obligations under the Term Loan and related loan documents and have pledged
substantially all of their respective assets to secure such obligations. The Term Loan also
provides for customary events of default, including payment defaults and cross-defaults on other
material indebtedness.
In connection with voluntary prepayments of $90,000 under the previous term loan and the
refinancing of the remaining $680,000 balance, during the nine month period ended July 3, 2011,
Spectrum Brands recorded charges to interest expense aggregating $44,241, consisting of (i) the
write off or accelerated amortization of debt issuance costs of $24,370 and $4,121, respectively,
(ii) the write off of original issue discount of $8,950 and (iii) prepayment penalties of $6,800.
Spectrum Brands incurred $8,698 of fees in connection with the Term Loan, which are classified as
“Deferred charges and other assets” in the accompanying Condensed Consolidated Balance Sheet as of
July 3, 2011 and are being amortized to interest expense utilizing the effective interest method
over the term of the Term Loan. In connection with voluntary prepayments of $90,000 of term debt
during the nine month period ended July 3, 2011, the Company recorded cash charges of $700 and
accelerated amortization of portions of the unamortized discount and unamortized Debt issuance
costs totaling $4,121 as an adjustment to increase interest expense.
On
April 21, 2011, Spectrum Brands amended the ABL Revolving Credit
Facility. The amended facility carries an interest rate, at Spectrum Brand’s option, which is subject to change based on
availability under the facility, of either: (a) the base rate
plus currently 1.25% per annum or (b) the reserve-adjusted LIBO
rate (the “Eurodollar Rate”) plus currently 2.25% per annum.
No amortization is required with respect to the ABL Revolving Credit
Facility. The ABL Revolving Credit Facility is scheduled to expire on
April 21, 2016.
As a result of borrowings and payments under the ABL Revolving Credit Facilities at July 3, 2011,
Spectrum Brands had aggregate borrowing availability of approximately $146,893, net of lender
reserves of $48,769 and outstanding letters of credit of $24,105.
At
July 3, 2011, Spectrum Brands was in compliance with all its debt
covenants. However, Spectrum Brands is subject to certain limitations under the indenture governing the 12% Notes
maturing August 28, 2019 (the “12% Notes”) as a result of the Fixed Charge Coverage Ratio, as
defined under that indenture, being below 2:1. Until the test is satisfied, Spectrum Brands and
certain of its subsidiaries are limited in their ability to pay
dividends, make significant acquisitions or incur
significant additional senior credit facility debt beyond the Senior Credit Facilities. Spectrum
Brands does not expect its inability to satisfy the Fixed Charge Coverage Ratio test to impair its
ability to provide adequate liquidity to meet the short-term and long-term liquidity requirements
of its existing businesses, although no assurance can be given in this regard.
FGL
On April 7, 2011, Raven Reinsurance Company (“Raven Re”), a newly-formed wholly-owned subsidiary of
FGL, borrowed $95,000 from OMGUK, the seller in the FGL Acquisition, in the form of a surplus note,
as discussed further in Note 11. The surplus note was issued at par and carries a 6% fixed interest
rate. Interest payments are subject to regulatory approval and are further restricted until all
contractual obligations that Raven Re has to certain financial institutions have been satisfied in
full. The note has a maturity date which is the later of (i) December 31, 2012 or (ii) the date on
which all amounts due and payable to the lender have been paid in full.
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- Definition
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Temporary Equity
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9 Months Ended |
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Jul. 03, 2011
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| Temporary Equity [Abstract] | |
| Temporary Equity |
(9) Temporary Equity
On May 13, 2011, the Company issued 280 shares of Preferred Stock in a private placement subject to
future registration rights, pursuant to a securities purchase agreement entered into on May 12,
2011, for aggregate gross proceeds of $280,000. The Preferred Stock
(i) is redeemable for cash (or,
if a holder does not elect cash, automatically converted into common stock) on the seventh
anniversary of issuance, (ii) is convertible into the Company’s common stock at an initial
conversion price of $6.50 per share, subject to anti-dilution adjustments, (iii) has a liquidation
preference of the greater of 150% of the purchase price or the value that would be received if it
were converted into common stock, (iv) accrues a cumulative quarterly cash dividend at an
annualized rate of 8% and (v) has a quarterly non-cash principal accretion at an annualized rate of
4% that will be reduced to 2% or 0% if the Company achieves specified rates of growth measured by
increases in its net asset value. The Preferred Stock is entitled to vote and to receive cash
dividends and in-kind distributions on an as-converted basis with the common stock. The net
proceeds from the issuance of the Preferred Stock of $269,000, net of related fees and expenses of
approximately $11,000, are expected to be used for general corporate purposes, which may include
future acquisitions and other investments.
If the Company were to issue certain equity securities at a price lower than the conversion price
of the Preferred Stock, the conversion price would be adjusted to the share price of the newly
issued equity securities (a “down round” provision). Therefore, in accordance with the guidance in
ASC 815, Derivatives and Hedging, this conversion option requires bifurcation and must be
separately accounted for as a derivative liability at fair value with any changes in fair value
reported in current earnings (see Note 4). The Company valued the conversion feature using the
Monte Carlo simulation approach, which utilizes various inputs including the Company’s stock price,
volatility, risk-free rate and discount yield.
As of May 13, 2011, the Company determined the issue date fair value of the bifurcated conversion
option was approximately $85,700. The residual $194,300 value of the host contract, less $11,000
of issuance costs, has been classified as mezzanine equity, as the securities are redeemable at the
option of the holder and upon the occurrence of an event that is not solely within the control of
the issuer. The resulting $96,700 difference between the issuance price and initial carrying value
of $183,300 is being accreted to “Preferred stock dividends and accretion” in the accompanying
Condensed Consolidated Statements of Operations using the effective interest method over the
Preferred Stock’s contractual/expected life of seven years.
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| X | ||||||||||
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- Definition
The entire disclosure for information about temporary equity, which includes preferred stock. No definition available.
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- Details
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Defined Benefit Plans
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Jul. 03, 2011
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| Defined Benefit Plans [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Defined Benefit Plans |
(10) Defined Benefit Plans
HGI
HGI has a noncontributory defined benefit pension plan (the “HGI Pension Plan”) covering certain
former U.S. employees. During 2006, the Pension Plan was frozen which caused all existing
participants to become fully vested in their benefits.
Additionally, HGI has an unfunded supplemental pension plan (the “Supplemental Plan”) which
provides supplemental retirement payments to certain former senior executives of HGI. The amounts
of such payments equal the difference between the amounts
received under the HGI Pension Plan and the amounts that would otherwise be received if HGI Pension
Plan payments were not reduced as the result of the limitations upon compensation and benefits
imposed by Federal law. Effective December 1994, the Supplemental Plan was frozen.
Spectrum Brands
Spectrum Brands has various defined benefit pension plans (“Spectrum Brands Pension Plans”)
covering some of its employees in the United States and certain employees in other countries,
primarily the United Kingdom and Germany. The Spectrum Brands Pension Plans generally provide
benefits of stated amounts for each year of service. Spectrum Brands funds its U.S. pension plans
in accordance with the requirements of the defined benefit plans and, where applicable, in amounts
sufficient to satisfy the minimum funding requirements of applicable laws. Additionally, in
compliance with Spectrum Brands’ funding policy, annual contributions to non-U.S. defined benefit
plans are equal to the actuarial recommendations or statutory requirements in the respective
countries.
Spectrum Brands also sponsors or participates in a number of other non-U.S. pension arrangements,
including various retirement and termination benefit plans, some of which are covered by local law
or coordinated with government-sponsored plans, which are not significant in the aggregate and
therefore are not included in the information presented below. Spectrum Brands also has various
nonqualified deferred compensation agreements with certain of its employees. Under certain of these
agreements, Spectrum Brands has agreed to pay certain amounts annually for the first 15 years
subsequent to retirement or to a designated beneficiary upon death. It is management’s intent that
life insurance contracts owned by Spectrum Brands will fund these agreements. Under the remaining
agreements, Spectrum Brands has agreed to pay such deferred amounts in up to 15 annual installments
beginning on a date specified by the employee, subsequent to retirement or disability, or to a
designated beneficiary upon death.
Spectrum Brands also provides postretirement life insurance and medical benefits to certain
retirees under two separate contributory plans.
Consolidated
The components of consolidated net periodic benefit and deferred compensation benefit costs and
contributions made during the periods are as follows:
Contributions. Based on the currently enacted minimum pension plan funding requirements, the
Company expects to make contributions during the remaining three months of fiscal 2011 totaling
approximately $1,100.
Fair value measurements of the Company’s defined benefit plan assets are as follows:
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| X | ||||||||||
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- Details
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| X | ||||||||||
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- Definition
The entire disclosure for pension and other postretirement benefits. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Reinsurance
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Jul. 03, 2011
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| Insurance [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reinsurance |
(11) Reinsurance
FGL’s insurance subsidiaries enter into reinsurance agreements with other companies in the normal
course of business. The assets, liabilities, premiums and benefits of certain reinsurance
contracts are presented on a net basis in the Condensed Consolidated Balance Sheet and Condensed
Consolidated Statements of Operations, respectively, when there is a right of offset explicit in
the reinsurance agreements. All other reinsurance agreements are reported on a gross basis in the
Company’s Condensed Consolidated Balance Sheet as an asset for amounts recoverable from reinsurers
or as a component of other liabilities for amounts, such as premiums, owed to the reinsurers, with
the exception of amounts for which the right of offset also exists. Premiums, benefits and DAC are
reported net of insurance ceded.
The use of reinsurance does not discharge an insurer from liability on the insurance ceded. The
insurer is required to pay in full the amount of its insurance liability regardless of whether it
is entitled to or able to receive payment from the reinsurer. The portion of risks exceeding FGL’s
retention limit is reinsured with other insurers. FGL seeks reinsurance coverage in order to limit
its exposure to mortality losses and enhance capital management. FGL follows reinsurance accounting
when there is adequate risk transfer. Otherwise, the deposit method of accounting is followed. FGL
also assumes policy risks from other insurance companies.
The effect of reinsurance on premiums earned and benefits incurred for the period from April 6,
2011 to July 3, 2011 were as follows:
Amounts payable or recoverable for reinsurance on paid and unpaid claims are not subject to
periodic or maximum limits. During the period April 6, 2011 to July 3, 2011, FGL did not write off
any reinsurance balances nor did it commute any ceded reinsurance other than the recapture
discussed below under “Reserve Facility.”
No policies issued by FGL have been reinsured with a foreign company, which is controlled, either
directly or indirectly, by a party not primarily engaged in the business of insurance.
FGL has not entered into any reinsurance agreements in which the reinsurer may unilaterally cancel
any reinsurance for reasons other than nonpayment of premiums or other similar credit issues.
FGL has the following significant reinsurance agreements as of July 3, 2011:
Reserve Facility
Pursuant to the First Amended and Restated Stock Purchase Agreement (the “F&G Stock Purchase
Agreement”), on April 7, 2011, FGL Insurance recaptured all of the life insurance business ceded to
Old Mutual Reassurance (Ireland) Ltd. (“OM Re”), an
affiliated company of OMGUK, FGL’s former
parent. OM Re transferred assets with a fair value of $653,684 to FGL Insurance in settlement of
all of OM Re’s obligations under these reinsurance agreements. The fair value of the transferred
assets, which was based on the economic reserves was approved by the Maryland Insurance
Administration. No gain or loss was recognized in connection with the recapture. The fair value of
the assets transferred is reflected in the purchase price allocation (see Note 17).
On April 7, 2011, FGL Insurance ceded to Raven Re, on a coinsurance basis, a significant portion of
the business recaptured from OM Re. Raven Re was capitalized by a $250 capital contribution from
FGL Insurance and a surplus note (i.e., subordinated debt) issued to OMGUK in the principal amount of $95,000 (see Note 8 for the terms of such note). The
proceeds from the surplus note issuance and the surplus note are reflected in the purchase price
allocation. Raven Re financed $535,000 of statutory reserves for this business with a letter of
credit facility provided by an unaffiliated financial institution and guaranteed by OMGUK and HFG.
On April 7, 2011, FGL Insurance entered into a Reimbursement Agreement with Nomura Bank
International plc (“Nomura”) to establish a reserve facility and Nomura charged an upfront
structuring fee (the “Structuring Fee”). The Structuring Fee was in the amount of $13,750 and is
related to the retrocession of the life business recaptured from OM Re and related credit facility.
The Structuring Fee was deferred and will be amortized on a straight line basis over the term of
the facility.
Commissioners Annuity Reserve Valuation Method Facility (“CARVM”)
Effective September 30, 2008, FGL entered into a yearly renewable term quota share reinsurance
agreement with OM Re, whereby OM Re assumes a portion of the risk that policyholders exercise the
“waiver of surrender charge” features on certain deferred annuity policies. This agreement did not
meet risk transfer requirements to qualify as reinsurance under US GAAP. Under the terms of the
agreement, FGL Insurance expensed net fees of $1,545, for the period from April 6, 2011 to July 3,
2011. Although this agreement does not provide reinsurance for
reserves on a US GAAP basis, it does
provide for reinsurance of reserves on a statutory basis. The statutory reserves are secured by a
$280,000 letter of credit with Old Mutual plc of London, England (“OM”), OMGUK’s parent.
Wilton Agreement
On January 26, 2011, HFG entered into a commitment agreement (the “Commitment Agreement”) with
Wilton Re U.S. Holdings, Inc. (“Wilton”) committing Wilton Reassurance Company (“Wilton Re”), a
wholly owned subsidiary of Wilton and a Minnesota insurance company, to enter into certain
coinsurance agreements with FGL Insurance. On April 8, 2011, FGL Insurance ceded significantly all
of the remaining life insurance business that it had retained to Wilton Re under the first of the
two amendments with Wilton. FGL Insurance transferred assets with a
fair value of $535,826, net of ceding commission to
Wilton Re. FGL Insurance considered the effects of the
first amendment in the purchase price allocation. Effective
April 26, 2011, HFG elected the second
amendment (the “Raven Springing Amendment”) that commits FGL Insurance to cede to Wilton Re all of
the business currently reinsured with Raven Re by November 30, 2012, subject to regulatory
approval. The Raven Springing Amendment is intended to mitigate the risk associated with FGL’s
obligation to replace the Raven Re reserve facility by December 31, 2012 under the F&G Stock
Purchase Agreement entered into in connection with the FGL Acquisition.
Pursuant to the terms of the Raven Springing Amendment, the amount payable to Wilton at the closing
of such amendment will be adjusted to reflect the economic performance for the Raven Block from
January 1, 2011 until the effective time of the closing of the Raven Springing Amendment. However,
Wilton Re will have no liability with respect to the Raven Block prior to the effective date of the
Raven Springing Amendment, and regardless of the date of closing of Wilton’s obligation to reinsure
the Raven Block. Based on the facts and circumstances related to the Raven Springing Amendment,
FGL Insurance has assessed the consummation of the Raven Springing Amendment to be probable and
will record charges for any experience adjustments payable to Wilton
Re. There were no such charges for the
period from April 6, 2011 to June 30, 2011.
The
Raven Springing Agreement may require regulatory approval, which may
include approval from the Maryland Insurance
Administration for the recapture of the Raven Block from Raven Re and the reinsurance by FGL
Insurance of substantially all of a major class of its insurance in force by an agreement of bulk
reinsurance. Filings with the Maryland Insurance Administration requesting these approvals, or
confirmation of the inapplicability of regulation requiring such approvals, were made in June 2011.
FGL Insurance has a significant concentration of reinsurance with Wilton Re that could have a
material impact on FGL Insurance’s financial position. FGL Insurance monitors both the financial
condition of individual reinsurers and risk concentration arising from similar geographic regions,
activities and economic characteristics of reinsurers to reduce the risk of default by such
reinsurers.
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- Definition
The entire disclosure pertaining to the existence, magnitude and information about insurance that has been ceded to or assumed from another insurance company, including the methodologies and assumptions used in determining recorded amounts. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Stock Compensation
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| Stock Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Compensation |
(12) Stock Compensation
The Company recognized stock-based compensation expense associated with stock option awards issued
by HGI and restricted stock awards and restricted stock units issued by Spectrum Brands. For the
three and nine month periods ended July 3, 2011, the Company recognized consolidated stock-based
compensation expense of $8,557 and $22,903, or $3,050 and $8,170 net of taxes and noncontrolling
interest, respectively. For the three and nine month periods ended July 4, 2010, the Company
recognized $5,881 and $12,273, or $3,147 and $7,303, net of taxes and noncontrolling interest,
respectively. The Company includes stock-based compensation in “Selling, general and administrative
expenses”.
HGI
Total stock compensation expense associated with stock option awards recognized by HGI during the
three and nine month periods ended July 3, 2011 was $29 and $88, respectively.
A summary of HGI’s outstanding stock options as of July 3, 2011, and changes during the period, is
as follows:
Spectrum Brands
Total stock compensation expense associated with restricted stock awards and restricted stock units
recognized by Spectrum Brands during the three and nine month periods ended July 3, 2011 was $8,528, or $3,021 net of taxes and
noncontrolling interest, and $22,815, or $8,082 net of taxes and noncontrolling interest,
respectively. Total stock compensation expense associated with restricted stock awards recognized
by Spectrum Brands during the three and nine month periods ended July 4, 2010 was $5,881, or $3,147
net of taxes and noncontrolling interest, and $12,273, or $7,303 net of taxes and noncontrolling
interest, respectively.
Spectrum Brands granted approximately 1,580 restricted stock units during the nine month period
ended July 3, 2011. Of these grants, 1,547 restricted stock units are performance and time-based
with 665 units vesting over a two year period and 882 units vesting over a
three year period. 15 restricted stock units are time-based and vest over a one year period and 18 restricted stock units
are time-based and vest over a three year period. The total market value of the restricted stock
units on the dates of the grants was approximately $46,034.
Spectrum Brands granted approximately 939 shares of restricted stock awards during the nine month
period ended July 4, 2010, including 271 restricted stock units in connection with the SB/RH
Merger. Of these grants, 289 shares are time-based and vest over a one year period and 650 shares
are time-based and vest over a two or three year period. All vesting dates are subject to the
recipient’s continued employment with the Company, except as otherwise permitted by the Spectrum
Brands’ board of directors or in certain cases if the employee is terminated without cause. The
total market value of the restricted stock awards on the date of grant was approximately $23,299.
The fair value of restricted stock awards and restricted stock units is determined based on the
market price of Spectrum Brands’ shares of common stock on the grant date.
A summary of the Spectrum Brands’ non-vested restricted stock awards and restricted stock units as
of July 3, 2011, and changes during the period, is as follows:
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- Definition
The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Income Taxes
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9 Months Ended |
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Jul. 03, 2011
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| Income Taxes [Abstract] | |
| Income Taxes |
(13) Income Taxes
For the three months ended July 3, 2011, the Company’s effective tax rate was only 2% principally
due to (i) the recognition of a bargain purchase gain from the FGL Acquisition, for which a
deferred tax liability has not been recorded as the Company believes it has the ability to not
incur tax on this gain; and (ii) the release of valuation allowances on tax benefits from net
operating and capital loss carryforwards that the Company determined are more-likely-than-not realizable. In addition to
the factors noted above, the Company’s effective tax rate for the nine months ended July 3, 2011 of
41% differs from the U.S. Federal statutory rate of 35% principally due to: (i) deferred income
taxes provided on the change in book versus tax basis of indefinite lived intangibles, which are
amortized for tax purposes but not for book purposes; and (ii) income in foreign jurisdictions
subject to tax at rates different from the U.S. statutory rate.
For the three and nine months ended July 4, 2010, the Company reported a provision for income
taxes, despite a pre-tax loss from continuing operations, in each of those periods principally due
to: (i) deferred income taxes provided on the change in book versus tax basis of indefinite lived
intangibles, which are amortized for tax purposes but not for book purposes; (ii) losses in the
United States and some foreign jurisdictions for which no tax benefit can be recognized due to full
valuation allowances; and (iii) income subject to tax in certain other foreign jurisdictions.
HGI’s effective tax rate was computed using a discrete period approach as a result of its recent
acquisition of FGL. FGL is unable to project its expected income for the year ending September 30,
2011 and, as a result, must use a discrete period approach. FGL is unable to project its
expected income for the year ending September 30, 2011 because of its inability to reliably project
the realization of built-in gains on investments due to unknown variables related to
future market conditions, coupled with the potential
impact
that such would have on its effective tax rate. As FGL does not have significant permanent differences, it is
anticipated that were they to compute an annual effective tax rate, it would not appreciably differ
from the U.S. Federal statutory rate of 35%.
The Company files income tax returns in the United States Federal jurisdiction and various state
and local, and foreign jurisdictions, and is subject to ongoing examination by various taxing
authorities. The Company’s major taxing jurisdictions are the United States, United Kingdom and
Germany. The Company believes its tax reserves for uncertain tax positions are adequate,
consistent with the principles of ASC 740, Income Taxes. The Company regularly assesses the
likelihood of additional tax assessments in those jurisdictions and, if necessary, adjusts its tax
reserves based on new information or developments.
HGI is effectively settled with respect to United States income tax audits for years prior to 2007.
With limited exception, HGI is no longer subject to state and local income tax audits for years
prior to 2007. Spectrum Brands and Russell Hobbs are effectively settled with respect to U.S.
Federal income tax audits for years prior to 2006 and 2008, respectively. However, Federal net
operating loss carryforwards from their fiscal years ended September 30, 2006 and June 30, 2008,
respectively, continue to be subject to Internal Revenue Service
examination until the statute of
limitations expires for the years in which these net operating loss carryforwards are ultimately
utilized. FGL is effectively settled with respect to U.S. Federal income tax audits for years
prior to 2007. FGL is no longer subject to state and local income tax audits for years prior to
2007. However, Federal net operating loss carryforwards from tax years ended June 30, 2006 and
December 31, 2006, respectively, continue to be subject to Internal Revenue Service examination
until the statute of limitations expires for the year in which these net operating loss
carryforwards are ultimately utilized.
The Company recognizes in its consolidated financial statements the impact of a tax position if it
concludes that the position is more likely than not sustainable upon audit, based on the technical
merits of the position. At July 3, 2011 and September 30, 2010, the Company had $9,366 and
$13,174, respectively, of unrecognized tax benefits related to uncertain tax positions. The
Company also had approximately $6,000 of accrued interest and penalties related to the uncertain
tax positions at those dates. Interest and penalties related to uncertain tax positions are
reported in the financial statements as part of income tax expense.
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- Definition
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Earnings Per Share
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| Earnings Per Share |
(14) Earnings Per Share
The Company follows the provisions of ASC 260, Earnings Per Share, which requires companies
with complex capital structures, such as having two (or more) classes of securities that
participate in declared dividends to calculate earnings (loss) per share (“EPS”) utilizing the
two-class method. As the holders of the Preferred Stock are entitled to receive dividends with
common shares on an as-converted basis, the Preferred Stock has the right to participate in
undistributed earnings and must therefore be considered under the two-class method.
The following table sets forth the computation of basic and diluted EPS for the three and nine
month periods ended July 3, 2011 and July 4, 2010:
The number of common shares outstanding used in calculating the weighted average thereof reflects:
(i) for periods prior to the June 16, 2010 date of the SB/RH Merger, the number of Spectrum Brands
common shares outstanding multiplied by the 1:1 Spectrum Brands share exchange ratio used in the
SB/RH Merger and the 4.32 HGI share exchange ratio used in the Spectrum Brands Acquisition, (ii)
for the period from June 16, 2010 to the January 7, 2011 date of the Spectrum Brands Acquisition,
the number of HGI common shares outstanding plus the 119,910 HGI common shares subsequently issued
in connection with the Spectrum Brands Acquisition and (iii) for the period subsequent to and
including January 7, 2011, the actual number of HGI common shares outstanding.
At July 3, 2011, there were 43,077 and 351 potential common shares issuable upon the conversion of
the Preferred Stock and exercise of stock options, respectively, excluded from the calculation of
“Diluted income (loss) per common share attributable to controlling interest” because the
as-converted effect of the Preferred Stock would have been anti-dilutive and the exercise prices of
the stock options were greater than the average market price of the Company’s common stock during
the three and nine month periods ended July 3, 2011. The Preferred Stock had a conversion price of
$6.50 and the stock options had a weighted average exercise price of $6.89 per share.
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- Definition
The entire disclosure for earnings per share. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Commitments and Contingencies
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Jul. 03, 2011
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| Commitments and Contingencies [Abstract] | |
| Commitments and Contingencies |
(15) Commitments and Contingencies
The Company has aggregate reserves for its legal, environmental and regulatory matters of
approximately $15,900 at July 3, 2011. These reserves relate primarily to the matters described
below. However, based on currently available information, including legal defenses available to the
Company, and given the aforementioned reserves and related insurance coverage, the Company does not
believe that the outcome of these legal, environmental and regulatory matters will have a material
effect on its financial position, results of operations or cash flows.
Legal and Environmental Matters
HGI
HGI is a nominal defendant, and the members of its board of directors are named as defendants in a
derivative action filed in December 2010 by Alan R. Kahn in the Delaware Court of Chancery. The
plaintiff alleges that the Spectrum Brands Acquisition was financially unfair to HGI and its public
stockholders and seeks unspecified damages and the rescission of the transaction. The Company
believes the allegations are without merit and intends to vigorously defend this matter.
HGI is also involved in other litigation and claims incidental to its current and prior businesses.
These include worker compensation and environmental matters and pending cases in Mississippi and
Louisiana state courts and in a federal multi-district litigation alleging injury from exposure to
asbestos on offshore drilling rigs and shipping vessels formerly owned or operated by its offshore
drilling and bulk-shipping affiliates. Based on currently available information, including legal
defenses available to it, and given its reserves and related insurance coverage, the Company does
not believe that the outcome of these legal and environmental matters will have a material effect
on its financial position, results of operations or cash flows.
Spectrum Brands
Spectrum Brands has provided for approximately $8,600 in the estimated costs associated with the
resolution of claims for environmental remediation activities at some of its current and former
manufacturing sites. Spectrum Brands believes that any additional liability in excess of the
amounts provided for will not have a material adverse effect on the financial condition, results of
operations or cash flows of Spectrum Brands.
In December 2009, San Francisco Technology, Inc. filed an action in the Federal District Court for
the Northern District of California against Spectrum Brands, as well as a number of unaffiliated
defendants, claiming that each of the defendants had falsely marked patents on certain of its
products in violation of Article 35, Section 292 of the U.S. Code and seeking to have civil fines
imposed on
each of the defendants for such claimed violations. In July 2011, the parties reached a full and
final settlement of this matter and the case has been dismissed.
Applica
Consumer Products, Inc. (“Applica”) is a defendant in three asbestos lawsuits in which the plaintiffs have alleged injury as
the result of exposure to asbestos in hair dryers distributed by that subsidiary over 20 years ago.
Although Applica never manufactured such products, asbestos was used in certain hair dryers
distributed by it prior to 1979. Spectrum Brands believes that these actions are without merit, but
may be unable to resolve the disputes successfully without incurring significant expenses which
Spectrum Brands is unable to estimate at this time. At this time, Spectrum Brands does not believe
it has coverage under its insurance policies for the asbestos lawsuits.
Spectrum Brands is a defendant in various other matters of litigation generally arising out of the
ordinary course of business.
FGL
FGL is involved in various pending or threatened legal proceedings, including purported class
actions, arising out of the ordinary course of business. In some instances, these proceedings
include claims for unspecified or substantial punitive damages and similar types of relief in
addition to amounts for alleged contractual liability or requests for equitable relief. In the
opinion of FGL management and in light of existing insurance and other potential indemnification,
reinsurance and established reserves, such litigation is not expected to have a material adverse
effect on FGL’s financial position, although it is possible that the results of operations could be
materially affected by an unfavorable outcome in any one annual period.
Regulatory Matters
FGL
FGL is assessed amounts by the state guaranty funds to cover losses to policyholders of insolvent
or rehabilitated insurance companies. Those mandatory assessments may be partially recovered
through a reduction in future premium taxes in certain states. At July 3, 2011, FGL has accrued
$6,995 for guaranty fund assessments which is expected to be offset by estimated future premium tax
deductions of $5,000.
Guarantees
Throughout its history, the Company has entered into indemnifications in the ordinary course of
business with customers, suppliers, service providers, business partners and, in certain instances,
when it sold businesses. Additionally, the Company has indemnified its directors and officers who
are, or were, serving at the request of the Company in such capacities. Although the specific terms
or number of such arrangements is not precisely known due to the extensive history of past
operations, costs incurred to settle claims related to these indemnifications have not been
material to the Company’s financial statements. The Company has no reason to believe that future
costs to settle claims related to its former operations will have a material impact on its
financial position, results of operations or cash flows.
The
F&G Stock Purchase Agreement between HFG and OMGUK includes a Guarantee and Pledge
Agreement which creates certain obligations for FGL as a grantor and also grants a security
interest to OMGUK of FGL’s equity interest in FGL Insurance in the event that Harbinger F&G fails
to perform in accordance with the terms of the F&G Stock Purchase Agreement. FGL is not aware of
any events or transactions that would result in non-compliance with the Guarantee and Pledge
Agreement.
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Insurance Subsidiary Financial Information
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Jul. 03, 2011
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| Insurance Subsidiary Financial Information [Abstract] | |
| Insurance Subsidiary Financial Information |
(16) Insurance Subsidiary Financial Information
The Company’s insurance subsidiaries file financial statements with state insurance regulatory
authorities and the National Association of Insurance Commissioners (“NAIC”) that are prepared in
accordance with Statutory Accounting Principles (“SAP”) prescribed or permitted by such
authorities, which may vary materially from US GAAP. Prescribed SAP includes the Accounting Practices
and Procedures Manual of the NAIC as well as state laws, regulations and administrative rules.
Permitted SAP encompasses all accounting practices not so prescribed. The principal differences
between statutory financial statements and financial statements
prepared in accordance with US GAAP
are that statutory financial statements do not reflect VOBA and DAC, some bond portfolios may be
carried at amortized cost, assets and liabilities are presented net of reinsurance, contractholder
liabilities are generally valued using more conservative assumptions and certain assets are
non-admitted. Accordingly, statutory operating results and statutory capital and surplus may differ substantially
from amounts reported in the US GAAP basis financial statements for comparable items. For example, in
accordance with the US GAAP acquisition method of accounting, the amortized cost of FGL’s invested
assets was adjusted to fair value as of the FGL Acquisition Date while it was not adjusted for
statutory reporting. Thus, the net unrealized gains on a statutory basis were $527,000 as of July
3, 2011 compared to net unrealized gains of $212,000 on a US GAAP basis, as reported in Note 3.
The Company’s insurance subsidiaries’ statutory financial statements are based on a December 31
year end. The total adjusted capital of FGL Insurance Company was $941,472 and $902,118 at July 3,
2011 and December 31, 2010, respectively. Life insurance companies are subject to certain
Risk-Based Capital (“RBC”) requirements as specified by the NAIC. The RBC is used to evaluate the
adequacy of capital and surplus maintained by an insurance company in relation to risks associated
with: (i) asset risk, (ii) insurance risk, (iii) interest rate risk and (iv) business risk. FGL
monitors the RBC of the Company’s insurance subsidiaries. As of
July 3, 2011 and December 31,
2010, each of FGL’s insurance subsidiaries has exceeded the minimum RBC requirements.
The Company’s insurance subsidiaries are restricted by state laws and regulations as to the amount
of dividends they may pay to their parent without regulatory approval in any year, the purpose of
which is to protect affected insurance policyholders, depositors or investors. Any dividends in
excess of limits are deemed “extraordinary” and require approval. Based on statutory results as of
December 31, 2010, in accordance with applicable dividend restrictions FGL’s subsidiaries could pay
“ordinary” dividends of $90,212 to FGL in 2011. On December 20, 2010, FGL Insurance paid a
dividend to OMGUK in the amount of $59,000 with respect to its 2009 results. Based on its 2010
fiscal year results, FGL Insurance is able to declare an ordinary dividend up to $31,212
through December 20, 2011 (taking into account the December 20, 2010 dividend payment of $59,000).
In addition, between December 21, 2011 and December 31, 2011, FGL Insurance may be able to
declare an additional ordinary dividend in the amount of 2011 eligible dividends of $90,212 less
any dividends paid in the previous twelve months.
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The entire disclosure for required supplementary insurance information giving segment detail in support of various balance sheet and income statement captions. The balance sheet information generally is presented as of the date of each audited balance sheet filed, and the income statement information generally is presented for each period for which an audited income statement is required to be filed. Supplementary insurance information table includes segment name; deferred policy acquisition costs; future policy benefits, losses, claims and loss expenses; unearned premiums; other policy claims and benefits payable; premium revenue; net investment income; benefits, claims, losses and settlement expenses; amortization of deferred policy acquisition costs; other operating expenses; and premiums written. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| Acquisitions |
(17) Acquisitions
FGL
On April 6, 2011, the Company acquired all of the outstanding shares of capital stock of FGL and
certain intercompany loan agreements between the seller, as lender, and FGL, as borrower, for
cash consideration of $350,000, which amount could be reduced by up to $50,000 post closing if
certain regulatory approval is not received (as discussed further below). The Company incurred
approximately $22,700 of expenses related to the FGL Acquisition, including $5,000 of the
$350,000 cash purchase price which has been re-characterized as an expense since the seller made
a $5,000 expense reimbursement to the Master Fund upon closing of the FGL Acquisition. Such
expenses are included in “Selling, general and administrative expenses” in the Condensed
Consolidated Statements of Operations for the three and nine months ended July 3, 2011 in the
amounts of $1,900 and $22,700, respectively. The FGL Acquisition represents one of the steps
in implementing HGI’s strategy of obtaining controlling equity stakes in subsidiaries that
operate across a diversified set of industries.
Net Assets Acquired
The acquisition of FGL has been accounted for under the acquisition method of accounting which
requires the total purchase price to be allocated to the assets acquired and liabilities assumed
based on their estimated fair values. The fair values assigned to the assets acquired and liabilities assumed are based on valuations
using management’s best estimates and assumptions and are preliminary pending the completion of the
valuation analysis of selected assets and liabilities. During the measurement period (which is not
to exceed one year from the acquisition date), the Company is required to retrospectively adjust
the provisional assets or liabilities if new information is obtained about facts and circumstances
that existed as of the acquisition date that, if known, would have resulted in the recognition of
those assets or liabilities as of that date. The following table summarizes the preliminary
amounts recognized at fair value for each major class of assets acquired and liabilities assumed
as of the FGL Acquisition Date:
The application of purchase accounting resulted in a bargain purchase gain of $134,668, which is
reflected in the Condensed Consolidated Statements of Operations for the three and nine months
ended July 3, 2011. The amount of the bargain purchase gain is equal to the amount by which the
fair value of net assets acquired exceeded the consideration transferred. The Company believes
that the resulting bargain purchase gain is reasonable based on the following circumstances:
(a) the seller was highly motivated to sell FGL, as it had publicly announced its intention to
do so approximately a year ago, (b) the fair value of FGL’s investments and statutory capital
increased between the date that the purchase price was initially negotiated and the FGL
Acquisition Date, (c) as a further inducement to consummate the sale, the seller waived, among
other requirements, any potential upward adjustment of the purchase price for an improvement in
FGL’s statutory capital between the date of the initially negotiated purchase price and the FGL
Acquisition Date and (d) an independent appraisal of FGL’s business indicated
that its fair value was in excess of the purchase price.
Contingent Purchase Price Reduction
As contemplated by the terms of the F&G Stock Purchase Agreement and more fully described in
Note 20, Front Street Re, Ltd. (“Front Street”), a recently formed Bermuda-based reinsurer and
wholly-owned subsidiary of the Company, subject to regulatory approval, will enter into a
reinsurance agreement (“Front Street Reinsurance Transaction”) with FGL whereby Front Street
would reinsure up to $3,000,000 of insurance obligations under annuity contracts of FGL, and
Harbinger Capital Partners II LP (“HCP II”), an affiliate of the Principal Stockholders, would
be appointed the investment manager of up to $1,000,000 of assets securing Front Street’s
reinsurance obligations under the reinsurance agreement. These assets would be deposited in a
reinsurance trust account for the benefit of FGL.
The F&G Stock Purchase Agreement provides for up to a $50,000 post-closing reduction in purchase
price if the Front Street Reinsurance Transaction is not approved by the Maryland Insurance
Administration or is approved subject to certain restrictions or conditions. Based on
management’s assessment as of July 3, 2011, it is not probable that the purchase price will be
required to be reduced; therefore no value was assigned to the contingent purchase price
reduction as of the FGL Acquisition Date.
Reserve Facility
As discussed in Note 11, pursuant to the F&G Stock Purchase Agreement on April 7, 2011, FGL
recaptured all of the life business ceded to OM Re. OM Re transferred assets with a fair value
of $653,684 to FGL in settlement of all of OM Re’s obligations under these reinsurance
agreements. Such amounts are reflected in FGL’s purchase price allocation. Further, on April 7,
2011, FGL ceded on a coinsurance basis a significant portion of this business to Raven Re.
Certain transactions related to Raven Re such as
the surplus note issued to OMGUK in the principal amount of $95,000, which was used to partially
capitalize Raven Re and the Structuring Fee of $13,750 are also reflected in FGL’s purchase
price allocation. See Note 11 for additional details.
Intangible Assets
VOBA
represents the estimated fair value of the right to receive future
net cash flows from in-force contracts in a life insurance company
acquisition at the acquisition date. VOBA will be amortized over the
expected life of the contracts in proportion to either gross premiums or gross profits,
depending on the type of contract. Total gross profits will include both actual experience as it
arises and estimates of gross profits for future periods. FGL will regularly evaluate and adjust
the VOBA balance with a corresponding charge or credit to earnings for the effects of actual
gross profits and changes in assumptions regarding estimated future gross profits. The
amortization of VOBA is reported in “Amortization of intangible assets” in the Condensed
Consolidated Statements of Operations. The proportion of the VOBA balance attributable to each
of the product groups associated with this acquisition is as follows: 80.4% related to FIAs, and
19.6% related to deferred annuities.
Refer to Note 7 for FGL’s estimated future amortization of VOBA, net of interest, for the next
five fiscal years.
Deferred taxes
The future tax effects of temporary differences between financial reporting and tax bases of assets
and liabilities are measured at the balance sheet date and are recorded as deferred income tax
assets and liabilities. The acquisition of FGL is considered a non-taxable acquisition under tax
accounting criteria, therefore, tax basis and liabilities reflect an historical (carryover) basis
at the FGL Acquisition Date. However, since assets and liabilities
reported under US GAAP are adjusted
to fair value as of the FGL Acquisition Date, the deferred tax assets and liabilities are also
adjusted to reflect the effects of those fair value adjustments. This resulted in shifting FGL into
a significant net deferred tax asset position at the FGL Acquisition Date. This shift, coupled with
the application of certain tax limitation provisions that apply in the context of a change in
ownership transaction; most notably Section 382 of the Internal Revenue Code (the “IRC”), relating
to “limitation in Net Operating Loss Carryforwards and Certain Built-in Losses Following Ownership
Change,” as well as other applicable provisions under Sections 381-384 of the IRC, require FGL to
reconsider the admissibility of the asset/liability components related to FGL’s gross deferred tax
asset position and the need to establish a valuation allowance against it. Management determined
that a valuation allowance against a portion of the gross admitted deferred tax asset (“DTA”) would
be required. The components of the net deferred tax assets as of the FGL Acquisition Date are as
follows:
The deferred tax position of FGL as of the FGL Acquisition Date will be evaluated in successive
reporting periods in order to reconsider the need for a valuation allowance in future reporting
periods. Adjustments to the opening position are expected to flow through as a current period
income tax benefit or expense.
Results
of FGL since the FGL Acquisition Date
The following table presents selected financial information reflecting results for FGL from
April 6, 2011 through June 30, 2011 that are included in the Condensed Consolidated Statements
of Operations.
Russell Hobbs
On June 16, 2010, Spectrum Brands consummated the SB/RH Merger, pursuant to which SBI became a
wholly-owned subsidiary of Spectrum Brands and Russell Hobbs became a wholly owned subsidiary of
SBI. The results of Russell Hobbs’ operations since June 16, 2010 are included in the accompanying
Condensed Consolidated Statements of Operations. The measurement period for determination of the
purchase price allocation for the SB/RH Merger has closed, during which no adjustments were made to
the original preliminary purchase price allocation as of June 16, 2010.
Supplemental Pro Forma Information
The following table reflects the Company’s pro forma results for the three and nine month periods
ended July 3, 2011 and July 4, 2010, had the results of Russell Hobbs and FGL been included for all
periods beginning after September 30, 2009, as if the respective acquisitions were completed on
October 1, 2009.
Other Acquisitions
On December 3, 2010, Spectrum Brands completed the $10,524 cash acquisition of Seed Resources, LLC
(“Seed Resources”) and on April 14, 2011, Spectrum Brands completed the $775 cash acquisition of
Ultra Stop. Seed Resources is a wild seed cake producer through its Birdola premium brand seed
cakes. Ultra Stop is a trade name used to market a variety of home and garden control products at a
major customer. These acquisitions were not significant individually or collectively. They were
each accounted for under the acquisition method of accounting. The results of Seed Resources’
operations since December 3, 2010 and Ultra Stop’s operations since April 14, 2011 are included in
the accompanying Condensed Consolidated Statements of Operations for the three and nine month
periods ended July 3, 2011. The preliminary purchase prices aggregating $13,275 (representing cash
paid of $11,299 and contingent consideration accrued of $1,976), including $1,250 of trade name
intangible assets and $10,284 of goodwill, for these acquisitions were based upon preliminary
valuations. Spectrum Brands’ estimates and assumptions for these acquisitions are subject to change
as Spectrum Brands obtains additional information for its estimates during the respective
measurement periods. The primary areas of the purchase price allocations that are not yet finalized
relate to certain legal matters, income and non-income based taxes and residual goodwill.
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| Restructuring and Related Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and Related Charges |
(18) Restructuring and Related Charges
The Company reports restructuring and related charges associated with manufacturing and related
initiatives of Spectrum Brands in “Cost of goods sold.” Restructuring and related charges reflected
in “Cost of goods sold” include, but are not limited to, termination, compensation and related
costs associated with manufacturing employees, asset impairments relating to manufacturing
initiatives, and other costs directly related to the restructuring or integration initiatives
implemented. The Company reports restructuring and related charges relating to administrative
functions of Spectrum Brands in “Selling, general and administrative expenses”, which include, but
are not limited to, initiatives impacting sales, marketing, distribution, or other
non-manufacturing related functions. Restructuring and related charges reflected in “Selling,
general and administrative expenses” include, but are not limited to, termination and related
costs, and any asset impairments relating to the functional areas described above, and other costs
directly related to the initiatives implemented.
In 2009, Spectrum Brands implemented a series of initiatives to reduce operating costs as well as
evaluate Spectrum Brands’ opportunities to improve its capital structure (the “Global Cost
Reduction Initiatives”). In 2008, Spectrum Brands implemented an initiative within certain of its
operations in China to reduce operating costs and rationalize Spectrum Brands’ manufacturing
structure. These initiatives included the plan to exit Spectrum Brands’ Ningbo, China battery
manufacturing facility (the “Ningbo Exit Plan”). In 2007, Spectrum Brands began managing its
business in three vertically integrated, product-focused lines of business (the “Global Realignment
Initiative”). In 2007, Spectrum Brands implemented an initiative in Latin America to reduce
operating costs (the “Latin American Initiatives”). In 2006, Spectrum Brands implemented a series
of initiatives within certain of its European operations to reduce operating costs and rationalize
Spectrum Brands’ manufacturing structure (the “European Initiatives”).
The following table summarizes restructuring and related charges incurred by initiative for the
three and nine month periods ended July 3, 2011 and July 4, 2010 and where those charges are
classified in the accompanying Condensed Consolidated Statements of Operations:
Restructuring and Related Charges
The following table summarizes the remaining accrual balance associated with the initiatives
and the activity during the nine month period ended July 3, 2011:
Remaining Accrual Balance
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The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Other Required Disclosures
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Jul. 03, 2011
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| Other Required Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Required Disclosures |
(19) Other Required Disclosures
Recent Accounting Pronouncements Not Yet Adopted
In June 2011, the Financial Accounting Standards Board issued Accounting Standards Update 2011-05,
Comprehensive Income (Topic 220): Presentation of Comprehensive
Income, which amends current
comprehensive income presentation guidance. This accounting update eliminates the option to present the
components of other comprehensive income as part of the statement of shareholders’ equity. Instead,
comprehensive income must be reported in either a single continuous statement of comprehensive
income which contains two sections, net income and other comprehensive income, or in two separate
but consecutive statements. This guidance will be effective for the Company beginning in fiscal
2013. The Company does not expect the guidance to impact its Condensed Consolidated Financial
Statements, as it only requires a change in the format of presentation.
Receivables and Concentrations of Credit Risk
“Receivables, net” in the accompanying Condensed Consolidated Balance Sheets consist of the
following:
Trade receivables subject Spectrum Brands to credit risk. Trade accounts receivable are carried at
net realizable value. Spectrum Brands extends credit to its customers based upon an evaluation of
the customer’s financial condition and credit history, and generally does not require collateral.
Spectrum Brands monitors its customers’ credit and financial condition based on changing economic
conditions and makes adjustments to credit policies as required. Provision for losses on
uncollectible trade receivables are determined principally on the basis of past collection
experience applied to ongoing evaluations of Spectrum Brands’ receivables and evaluations of the
risks of nonpayment for a given customer.
Spectrum Brands has a broad range of customers including many large retail outlet chains, one of
which accounts for a significant percentage of its sales volume. This customer represented
approximately 25% and 23% of Spectrum Brands’ net sales during the three and nine month periods
ended July 3, 2011, respectively. This customer represented approximately 24% and 22% of Spectrum
Brands’ net sales during the three and nine month periods ended July 4, 2010, respectively. This
customer also represented approximately 14% and 15% of the Spectrum Brands’ trade accounts
receivable, net at July 3, 2011 and September 30, 2010, respectively.
Approximately 40% and 44% of Spectrum Brands’ net sales during the three and nine month periods
ended July 3, 2011, respectively, and 37% and 43% of Spectrum Brands’ net sales during the three
and nine month periods ended July 4, 2010, respectively, occurred outside the United States. These
sales and related receivables are subject to varying degrees of credit, currency, political and
economic risk. Spectrum Brands monitors these risks and makes appropriate provisions for
collectability based on an assessment of the risks present.
Inventories
Inventories of Spectrum Brands, which are stated at the lower of cost (using the first-in,
first-out method) or market, consist of the following:
Insurance- Other Liabilities
“Other liabilities” in the “Insurance” section of the Condensed Consolidated Balance Sheet consist
of the following:
Shipping and Handling Costs
Spectrum Brands incurred shipping and handling costs of $51,172 and $150,140 for the three and nine
month periods ended July 3, 2011, respectively, and $40,204 and $111,615 for the three and nine
month periods ended July 4, 2010, respectively. These costs are included in “Selling, general and
administrative” expenses in the accompanying Condensed Consolidated Statements of Operations.
Shipping and handling costs include costs incurred with third-party carriers to transport products
to customers as well as salaries and overhead costs related to activities to prepare the Spectrum
Brands products for shipment from its distribution facilities.
Reorganization Items
On February 3, 2009, SBI and each of its wholly-owned U.S. subsidiaries (collectively, the
“Debtors”) filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code (the “Bankruptcy
Code”), in the U.S. Bankruptcy Court for the Western District of Texas. On August 28, 2009 the
Debtors emerged from Chapter 11 of the Bankruptcy Code. SBI adopted fresh-start reporting as of a
convenience date of August 30, 2009.
Reorganization items are presented separately in the accompanying Condensed Consolidated Statements
of Operations and represent expenses, income, gains and losses that SBI has identified as directly
relating to its voluntary petitions under the Bankruptcy Code. Reorganization items expense, net
for the nine month period ended July 4, 2010 consists of the following:
Discontinued Operations
On November 11, 2008, SBI approved the shutdown of its line of growing products, which included the
manufacturing and marketing of fertilizers, enriched soils, mulch and grass seed. The decision to
shut down growing products was made only after SBI was unable to successfully sell this business,
in whole or in part. The shutdown of its line of growing products was completed during the second
quarter of SBI's fiscal year ended September 30, 2009.
The presentation herein of the results of continuing operations excludes its line of growing
products for all periods presented. The following amounts have been segregated from continuing
operations and are reflected as discontinued operations for the nine month period ended July 4,
2010:
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The entire disclosure for other required disclosures. No definition available.
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Related Party Transactions
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9 Months Ended |
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| Related Party Transactions [Abstract] | |
| Related Party Transactions |
(20) Related Party Transactions
The Company has a management agreement with Harbinger Capital Partners LLC (“Harbinger Capital”),
an affiliate of the Company and the Principal Stockholders, whereby Harbinger Capital may provide
advisory and consulting services to the Company. The Company has agreed to reimburse Harbinger
Capital for its out-of-pocket expenses and the cost of certain services performed by legal and
accounting personnel of Harbinger Capital under the agreement. For the nine months ended July 3,
2011, the Company did not incur any costs related to this agreement.
On January 7, 2011, the Company completed the Spectrum Brands Acquisition pursuant to the Exchange
Agreement entered into on September 10, 2010 with the Principal Stockholders. In connection
therewith, the Company issued an aggregate of 119,910 shares of its common stock in exchange
for an aggregate of 27,757 shares of common stock of Spectrum Brands (the “Spectrum Brands
Contributed Shares”), or approximately 54.5% of the then outstanding Spectrum Brands common stock.
The exchange ratio of 4.32 to 1.00 was based on the respective volume weighted average trading
prices of the Company’s common stock ($6.33 per share) and Spectrum Brands common stock ($27.36 per
share) on the NYSE for the 30 trading days from and including
July 2, 2010 to and including August
13, 2010, the day the Company received the Principal Stockholders’ proposal for the Spectrum Brands
Acquisition.
Upon the consummation of the Spectrum Brands Acquisition, the Company became a party to a
registration rights agreement, by and among the Principal Stockholders, Spectrum Brands and the
other parties listed therein, pursuant to which the Company obtained certain demand and “piggy
back” registration rights with respect to the shares of Spectrum Brands’ common stock held by the
Company.
Following the consummation of the Spectrum Brands Acquisition, the Company also became a party to a
stockholders agreement, by and among the Principal Stockholders and Spectrum Brands (the “SB
Stockholder Agreement”). Under the SB Stockholder Agreement, the parties thereto have agreed to
certain governance arrangements, transfer restrictions and certain other limitations with respect
to Going Private Transactions (as such term is defined in the SB Stockholder Agreement).
The issuance of shares of the Company’s common stock to the Principal Stockholders pursuant to the
Exchange Agreement and the acquisition by the Company of the Spectrum Brands Contributed Shares
were not registered under the Securities Act. These shares are restricted securities under the
Securities Act. The Company may not be able to sell the Spectrum Brands Contributed Shares and the
Principal Stockholders may not be able to sell their shares of the Company’s common stock acquired
pursuant to the Exchange
Agreement except pursuant to: (i) an effective registration statement under the Securities Act
covering the resale of those shares, (ii) Rule 144 under the Securities Act, which requires a
specified holding period and limits the manner and volume of sales, or (iii) any other applicable
exemption under the Securities Act.
On March 7, 2011, the Company entered into an agreement (the “Transfer Agreement”) with the Master
Fund whereby on March 9, 2011, (i) the Company acquired from the Master Fund a 100% membership
interest in HFG, which was the buyer under the F&G Stock Purchase Agreement, between HFG and OMGUK,
pursuant to which HFG agreed to acquire all of the outstanding shares of capital stock of FGL and
certain intercompany loan agreements between OM Group, as lender, and FGL, as borrower (the “FGL
Acquisition”), in consideration for $350,000, which could be reduced by up to $50,000 post closing
if certain regulatory approval is not received, and (ii) the Master Fund transferred to HFG the
sole issued and outstanding Ordinary Share of FS Holdco Ltd, a Cayman Islands exempted limited
company (“FS Holdco”) (together, the “Insurance Transaction”). In consideration for the interests
in HFG and FS Holdco, the Company agreed to reimburse the Master Fund for certain expenses incurred
by the Master Fund in connection with the Insurance Transaction (up to a maximum of $13,300) and to
submit certain expenses of the Master Fund for reimbursement by OM Group under the Purchase
Agreement. The Transfer Agreement and the transactions contemplated thereby, including the Purchase
Agreement, was approved by the Company’s Board of Directors upon a determination by a special
committee (the “FGL Special Committee”) comprised solely of directors who were independent under the rules of the NYSE, that it
was in the best interests of the Company and its stockholders (other than the Master Fund and its
affiliates) to enter into the Transfer Agreement and proceed with the Insurance Transaction. On
April 6, 2011, the Company completed the FGL Acquisition.
FS Holdco is a recently formed holding company, which is the indirect parent company of Front.
Neither HFG nor FS Holdco has engaged in any business other than transactions contemplated in
connection with the Insurance Transaction.
On
May 19, 2011, FGL
Special Committee unanimously determined that it is (i) in the best
interests of the Company for Front Street and FGL, to enter into a reinsurance agreement (the
“Reinsurance Agreement”), pursuant to which Front Street would reinsure up to $3,000,000 of
insurance obligations under annuity contracts of FGL and (ii) in the best interests of the Company
for Front Street and HCP II to enter into an investment management agreement (the “Investment
Management Agreement”), pursuant to which HCP II would be appointed as the investment manager of up
to $1,000,000 of assets securing Front Street’s reinsurance obligations under the Reinsurance
Agreement, which assets will be deposited in a reinsurance trust account for the benefit of FGL
pursuant to a trust agreement (the “Trust Agreement”). On May 19, 2011, the Company’s board of
directors approved the Reinsurance Agreement, the Investment Management Agreement, the Trust
Agreement and the transactions contemplated thereby. The FGL Special Committee’s consideration of
the Reinsurance Agreement, the Trust Agreement, and the Investment Management Agreement was
contemplated by the terms of the Transfer Agreement. In considering the foregoing matters, the FGL
Special Committee was advised by independent counsel and received an independent third-party
fairness opinion.
HFG’s pre-closing and closing obligations under the Purchase Agreement, including payment of the
purchase price, were guaranteed by the Master Fund. Pursuant to the Transfer Agreement, the Company
entered into a Guaranty Indemnity Agreement (the “Guaranty Indemnity”) with the Master Fund,
pursuant to which the Company agreed to indemnify the Master Fund for any losses incurred by it or
its representatives in connection with the Master Fund’s guaranty of HFG’s pre-closing and closing
obligations under the Purchase Agreement.
On July 14, 2011, the Master Fund and Spectrum Brands entered into an equity underwriting agreement
with Credit Suisse Securities (USA) LLC, as representative of the underwriters listed therein, with
respect to the offering of 1,000 shares of Spectrum Brands common stock by Spectrum Brands and
5,495 shares of Spectrum Brands common stock by the Master Fund, at a price per share to the
public of $28.00. HGI did not sell any shares of Spectrum Brands common stock in the offering. In
connection with the offering, HGI entered into a 180-day lock up agreement. In addition, the
Master Fund entered into a standstill agreement with HGI, pursuant to which the Master Fund agreed
that it would not, among other things (a) either individually or as part of a group, acquire, offer
to acquire, or agree to acquire any securities (or beneficial ownership thereof) of Spectrum
Brands; (b) other than with respect to certain existing holdings, form, join or in any way
participate in a group with respect to any securities of Spectrum Brands; (c) effect, seek, offer,
propose or cause or participate in (i) any merger, consolidation, share exchange or business
combination involving Spectrum Brands or any material portion of Spectrum Brands’ business, (ii)
any purchase or sale of all or any substantial part of the assets of Spectrum Brands or any
material portion of the Spectrum Brands’ business; (iii) any recapitalization, reorganization or
other extraordinary transaction with respect to Spectrum Brands or any material portion of the
Spectrum Brands’ business, or (iv) any representation on the board of directors of Spectrum Brands.
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- Definition
The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Segment Data
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Jul. 03, 2011
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| Segment Data [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Data |
(21) Segment Data
The Company follows the accounting guidance which establishes standards for reporting information
about operating segments in interim and annual financial statements. The Company’s reportable
business segments are organized in a manner that reflects how HGI’s management views those business
activities. Accordingly, the Company currently operates its business in two reporting segments: (i)
consumer products through Spectrum Brands and (ii) insurance
through FGL (see Note 1 for additional
information).
Segment information for the periods presented is as follows:
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- Details
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- Definition
The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Subsequent Events
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9 Months Ended |
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Jul. 03, 2011
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| Subsequent Events [Abstract] | |
| Subsequent Events |
(22) Subsequent Events
On July 27, 2011, Spectrum Brands made a voluntary prepayment of $40,000 to reduce the Term Loan to
$617,000.
On August 5, 2011, the Company issued 120 shares of Series A-2
Preferred Stock, in a private placement subject to future registration rights, pursuant to a
securities purchase agreement entered into on August 5, 2011, for aggregate gross proceeds of
$120,000. The Series A-2 Preferred Stock (i) is redeemable in cash (or, if a holder does not elect cash,
automatically converted into common stock) on the seventh anniversary of issuance, (ii) is
convertible into the Company’s common stock at an initial conversion price of $7.00 per share,
subject to anti-dilution adjustments, (iii) has a liquidation preference of the greater of 150% of
the purchase price or the value that would be received if it were converted into common stock, (iv)
accrues a cumulative quarterly cash dividend at an annualized rate of 8% and (v) has a quarterly
non-cash principal accretion at an annualized rate of 4% that will be reduced to 2% or 0% if the
Company achieves specified rates of growth measured by increases in its net asset value. The
Series A-2 Preferred Stock is entitled to vote and to receive cash dividends and in-kind distributions on an
as-converted basis with the common stock. The net proceeds from the issuance of the Series A-2 Preferred Stock
of $115,000, net of related fees and expenses of approximately $5,000, are expected to be used for
general corporate purposes, which may include future acquisitions and other investments.
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- Definition
Tabular disclosure of significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, losses resulting from fire or flood, losses on receivables, significant realized and unrealized gains and losses that result from changes in quoted market prices of securities, declines in market prices of inventory, changes in authorized or issued debt (SEC), significant foreign exchange rate changes, substantial loans to insiders or affiliates, significant long-term investments, and substantial dividends not in the ordinary course of business. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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