Consolidating Financial Information

3 Months Ended

Dec. 31, 2016

following schedules present the Company’s accompanying Condensed Consolidated Balance Sheets information at December 31, 2016 and September 30, 2016, and accompanying Condensed Consolidated Statements of Operations information for the three months ended December 31, 2016 and 2015. These schedules present the individual segments of the Company and their contribution to the Condensed Consolidated Financial Statements. Amounts presented will not necessarily be the same as those in the individual financial statements of the Company’s subsidiaries due to adjustments for purchase accounting, income taxes and noncontrolling interests. In addition, some of the Company’s subsidiaries use a classified balance sheet which also leads to differences in amounts reported for certain line items.

The Corporate and Other column primarily reflects the parent company’s investment in its subsidiaries, invested cash portfolio and corporate long term debt, and the results of Salus and HGI Energy. The elimination adjustments are for intercompany assets and liabilities, adjustments to align segment accounting policies with the consolidated basis, interest and dividends, the parent company’s investment in capital stocks of subsidiaries, and various reclasses of debit or credit balances to the amounts in consolidation. Purchase accounting adjustments have been pushed down to the appropriate subsidiary.

HRG Group, Inc. - Condensed Consolidating Balance Sheets Information



December 31, 2016	Consumer Products		Insurance		Corporate and Other		Discontinued Operations		Eliminations and adjustments			Total
Assets:
Investments in subsidiaries and affiliates	$	—	$	0.6	$	2,362.3	$	—	$	(2,362.9	)	$	—
Affiliated loans and receivables	—		20.2		0.2		—		(20.4		)	—
Cash and cash equivalents	143.3		35.4		170.1		—		—			348.8
Funds withheld receivables	—		1,682.8		—		—		(73.8		)	1,609.0
Receivables, net	546.2		9.7		0.4		—		0.2			556.5
Inventories, net	779.7		—		—		—		—			779.7
Deferred tax assets	18.2		12.4		—		—		17.8			48.4
Property, plant and equipment, net	568.2		—		0.9		—		—			569.1
Goodwill	2,464.5		—		—		—		—			2,464.5
Intangibles, net	2,327.9		—		—		—		—			2,327.9
Other assets	106.5		19.3		15.3		—		16.1			157.2
Assets of business held for sale	—		—		—		26,801.6		—			26,801.6
Total assets	$	6,954.5	$	1,780.4	$	2,549.2	$	26,801.6	$	(2,423.0	)	$	35,662.7



Liabilities and Equity:
Insurance reserves	$	—	$	1,653.3	$	—		$	—	$	68.6		$	1,721.9
Debt	3,656.2		—		1,746.0			—		56.8			5,459.0
Accounts payable and other current liabilities	825.4		6.6		67.9			—		0.5			900.4
Employee benefit obligations	106.5		—		5.2			—		—			111.7
Deferred tax liabilities	563.1		—		9.9			—		0.1			573.1
Other liabilities	17.9		2.8		6.0			—		—			26.7
Affiliated debt and payables	—		0.3		168.4			—		(168.7		)	—
Liabilities of business held for sale	—		—		—			25,200.5		—			25,200.5
Total liabilities	5,169.1		1,663.0		2,003.4			25,200.5		(42.7		)	33,993.3
Total stockholders’ equity	1,003.3		117.4		548.1			1,259.6		(2,380.3		)	548.1
Noncontrolling interests	782.1		—		(2.3		)	341.5		—			1,121.3
Total permanent equity	1,785.4		117.4		545.8			1,601.1		(2,380.3		)	1,669.4
Total liabilities and equity	$	6,954.5	$	1,780.4	$	2,549.2		$	26,801.6	$	(2,423.0	)	$	35,662.7



September 30, 2016	Consumer Products		Insurance		Corporate and Other			Discontinued Operations		Eliminations and adjustments			Total
Assets:
Investment in subsidiaries and affiliates	$	—	$	3.4	$	2,405.3		$	—	$	(2,408.7	)	$	—
Affiliated loans and receivables	—		20.3		0.2			—		(20.5		)	—
Cash and cash equivalents	275.3		32.1		189.9			—		—			497.3
Funds withheld receivables	—		1,725.0		—			—		(74.6		)	1,650.4
Receivables, net	538.2		17.4		0.7			—		—			556.3
Inventories, net	740.6		—		—			—		—			740.6
Deferred tax assets	18.3		8.6		—			—		15.7			42.6
Property, plant and equipment, net	542.1		—		1.3			—		—			543.4
Goodwill	2,478.4		—		—			—		—			2,478.4
Intangibles, net	2,372.5		—		—			—		—			2,372.5
Other assets	103.7		18.1		34.6			—		16.2			172.6
Assets of business held for sale	—		—		—			26,738.7		—			26,738.7
Total assets	$	7,069.1	$	1,824.9	$	2,632.0		$	26,738.7	$	(2,471.9	)	$	35,792.8

Liabilities and Equity:
Insurance reserves	$	—	$	1,685.9	$	—		$	—	$	65.4		$	1,751.3
Debt	3,620.2		—		1,747.7			—		63.0			5,430.9
Accounts payable and other current liabilities	931.6		6.1		51.6			—		0.5			989.8
Employee benefit obligations	120.2		—		5.2			—		—			125.4
Deferred tax liabilities	532.7		—		13.3			—		—			546.0
Other liabilities	20.4		3.5		8.3			—		(0.2		)	32.0
Affiliated debt and payables	—		0.2		171.2			—		(171.4		)	—
Liabilities of business held for sale	—		—		—			25,100.2		—			25,100.2
Total liabilities	5,225.1		1,695.7		1,997.3			25,100.2		(42.7		)	33,975.6
Total stockholders’ equity	1,040.4		129.2		638.1			1,259.6		(2,429.2		)	638.1
Noncontrolling interests	803.6		—		(3.4		)	378.9		—			1,179.1
Total permanent equity	1,844.0		129.2		634.7			1,638.5		(2,429.2		)	1,817.2
Total liabilities and equity	$	7,069.1	$	1,824.9	$	2,632.0		$	26,738.7	$	(2,471.9	)	$	35,792.8

HRG Group, Inc. - Condensed Consolidating Statements of Operations Information



Three months ended December 31, 2016	Consumer Products			Insurance			Corporate and Other			Discontinued Operations		Eliminations and adjustments			Total
Revenues:
Net consumer and other product sales	$	1,211.8		$	—		$	—		$	—	$	—		$	1,211.8
Net investment income	—			—			0.3			—		10.4			10.7
Net investment losses	—			(28.7		)	—			—		(5.1		)	(33.8		)
Insurance and investment product fees and other	—			—			—			—		0.9			0.9
Total revenues	1,211.8			(28.7		)	0.3			—		6.2			1,189.6
Operating costs and expenses:
Cost of consumer products and other goods sold	761.8			—			—			—		—			761.8
Benefits and other changes in policy reserves	—			(15.7		)	—			—		4.1			(11.6		)
Selling, acquisition, operating and general expenses	299.0			2.4			20.5			—		(0.2		)	321.7
Total operating costs and expenses	1,060.8			(13.3		)	20.5			—		3.9			1,071.9
Operating income	151.0			(15.4		)	(20.2		)	—		2.3			117.7
Equity in net income of subsidiaries	—			—			263.7			—		(263.7		)	—
Interest expense	(55.8		)	—			(35.9		)	—		—			(91.7		)
Affiliated interest expense	—			—			(1.7		)	—		1.7			—
Other income (expense), net	1.1			—			0.3			—		—			1.4
Income from continuing operations before income taxes	96.3			(15.4		)	206.2			—		(259.7		)	27.4
Income tax expense (benefit)	31.1			(3.8		)	(6.0		)	—		4.1			25.4
Net income from continuing operations	65.2			(11.6		)	212.2			—		(263.8		)	2.0
Income (loss) from discontinued operations, net of tax	—			—			—			258.8		—			258.8
Net income	65.2			(11.6		)	212.2			258.8		(263.8		)	260.8
Less: Net income attributable to noncontrolling interest	27.5			—			—			21.1		—			48.6
Net income (loss) attributable to controlling interest	$	37.7		$	(11.6	)	$	212.2		$	237.7	$	(263.8	)	$	212.2



Three months ended December 31, 2015	Consumer Products			Insurance			Corporate and Other			Discontinued Operations			Eliminations and adjustments			Total
Revenues:
Net consumer and other product sales	$	1,218.8		$	—		$	—		$	—		$	—		$	1,218.8
Net investment income	—			0.9			5.1			—			14.3			20.3
Net investment losses	—			(11.7		)	—			—			(20.3		)	(32.0		)
Insurance and investment product fees and other	—			0.8			0.9			—			0.6			2.3
Total revenues	1,218.8			(10.0		)	6.0			—			(5.4		)	1,209.4
Operating costs and expenses:
Cost of consumer products and other goods sold	778.1			—			—			—			—			778.1
Benefits and other changes in policy reserves	—			(12.4		)	—			—			13.2			0.8
Selling, acquisition, operating and general expenses	298.2			2.4			29.7			—			0.4			330.7
Total operating costs and expenses	1,076.3			(10.0		)	29.7			—			13.6			1,109.6
Operating income	142.5			—			(23.7		)	—			(19.0		)	99.8
Equity in net income of subsidiaries	—			—			20.6			—			(20.6		)	—
Interest expense	(58.4		)	—			(35.7		)	—			(1.1		)	(95.2		)
Affiliated interest expense	—			—			(5.4		)	—			5.4			—
Other income (expense), net	(3.5		)	—			3.0			—			(0.2		)	(0.7		)
Income from continuing operations before income taxes	80.6			—			(41.2		)	—			(35.5		)	3.9
Income tax expense (benefit)	6.9			(1.3		)	(7.5		)	—			(3.7		)	(5.6		)
Net income from continuing operations	73.7			1.3			(33.7		)	—			(31.8		)	9.5
Income (loss) from discontinued operations, net of tax	—			—			—			(2.5		)	—			(2.5		)
Net income	73.7			1.3			(33.7		)	(2.5		)	(31.8		)	7.0
Less: Net income attributable to noncontrolling interest	31.1			—			0.2			9.6			—			40.9
Net income (loss) attributable to controlling interest	$	42.6		$	1.3		$	(33.9	)	$	(12.1	)	$	(31.8	)	$	(33.9	)