Consolidating Financial Information

9 Months Ended

Jun. 30, 2015

The following schedules present the Company’s consolidating balance sheet information at June 30, 2015 and September 30, 2014, and consolidating statements of operations information for the nine months ended June 30, 2015 and 2014. These schedules present the individual segments of the Company and their contribution to the 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 FOH for the nine months ended June 30, 2015. The elimination adjustments are for intercompany assets and liabilities, 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



June 30, 2015	Consumer Products		Insurance			Energy		Asset Management		Corporate and Other		Eliminations			Total
Assets:
Investments	$	—	$	19,423.7		$	—	$	303.4	$	41.9	$	(271.1	)	$	19,497.9
Investments in subsidiaries and affiliates	—		(66.3		)	—		—		2,239.9		(2,173.6		)	—
Affiliated loans and receivables	—		108.1			—		0.8		0.1		(109.0		)	—
Cash and cash equivalents	107.2		676.7			31.8		125.7		351.8		—			1,293.2
Receivables, net	721.4		0.4			21.4		1.1		10.4		—			754.7
Inventories, net	903.7		—			—		—		—		—			903.7
Accrued investment income	—		164.3			—		2.1		—		(0.6		)	165.8
Reinsurance recoverable	—		2,382.2			—		—		—		—			2,382.2
Deferred tax assets	44.9		229.8			—		0.1		1.1		—			275.9
Properties, including oil and natural gas properties, net	500.1		13.8			339.5		1.3		1.1		—			855.8
Goodwill	2,488.0		—			—		10.7		—		—			2,498.7
Intangibles, including DAC and VOBA, net	2,528.1		857.9			—		—		—		—			3,386.0
Other assets	178.8		733.4			2.1		7.2		34.6		—			956.1
Total assets	$	7,472.2	$	24,524.0		$	394.8	$	452.4	$	2,680.9	$	(2,554.3	)	$	32,970.0



Liabilities and Equity:
Insurance reserves	$	—	$	21,861.1	$	—		$	—		$	—	$	—		$	21,861.1
Debt	4,345.7		300.0		327.0			123.6			1,736.4		—			6,832.7
Accounts payable and other current liabilities	751.3		37.2		30.7			9.2			98.3		0.5			927.2
Employee benefit obligations	74.5		—		—			—			4.0		—			78.5
Deferred tax liabilities	601.9		—		—			—			1.1		8.7			611.7
Other liabilities	27.5		694.3		38.8			25.0			0.9		0.5			787.0
Affiliated debt and payables	—		0.9		100.0			311.0			0.5		(412.4		)	—
Total liabilities	5,800.9		22,893.5		496.5			468.8			1,841.2		(402.7		)	31,098.2
Total stockholders’ equity	935.8		1,329.7		(101.7		)	(12.2		)	839.7		(2,151.6		)	839.7
Noncontrolling interests	735.5		300.8		—			(4.2		)	—		—			1,032.1
Total permanent equity	1,671.3		1,630.5		(101.7		)	(16.4		)	839.7		(2,151.6		)	1,871.8
Total liabilities and equity	$	7,472.2	$	24,524.0	$	394.8		$	452.4		$	2,680.9	$	(2,554.3	)	$	32,970.0



September 30, 2014	Consumer Products		Insurance		Energy		Asset Management		Corporate and Other		Eliminations			Total
Assets:
Investments	$	—	$	18,820.7	$	—	$	584.6	$	93.7	$	(246.5	)	$	19,252.5
Investment in subsidiaries and affiliates	—		68.2		—		—		2,237.9		(2,306.1		)	—
Affiliated loans and receivables	—		157.2		—		28.5		—		(185.7		)	—
Cash and cash equivalents	194.6		633.8		14.2		53.5		423.1		—			1,319.2
Receivables, net	515.3		2.1		23.7		0.9		43.1		—			585.1
Inventories, net	624.5		—		—		—		10.7		—			635.2
Accrued investment income	—		181.8		—		3.7		—		(0.6		)	184.9
Reinsurance recoverable	—		2,397.6		—		—		—		—			2,397.6
Deferred tax assets	46.7		139.0		—		—		1.1		(0.1		)	186.7
Properties, including oil and natural gas properties, net	428.9		11.4		464.4		1.4		2.5		—			908.6
Goodwill	1,469.6		—		—		10.7		44.5		—			1,524.8
Intangibles, including DAC and VOBA, net	2,091.5		550.4		—		—		41.8		—			2,683.7
Other assets	141.9		233.6		2.5		9.2		34.7		—			421.9
Total assets	$	5,513.0	$	23,195.8	$	504.8	$	692.5	$	2,933.1	$	(2,739.0	)	$	30,100.2

Liabilities and Equity:
Insurance reserves	$	—	$	20,215.1	$	—	$	—	$	—	$	—		$	20,215.1
Debt	2,990.9		300.0		243.2		298.7		1,325.0		—			5,157.8
Accounts payable and other current liabilities	816.2		71.9		31.3		8.5		104.6		0.5			1,033.0
Employee benefit obligations	81.9		—		—		—		4.3		—			86.2
Deferred tax liabilities	516.0		—		—		—		17.2		0.1			533.3
Other liabilities	21.2		748.9		27.3		19.3		1.1		—			817.8
Affiliated debt and payables	—		7.8		102.3		286.5		34.8		(431.4		)	—
Total liabilities	4,426.2		21,343.7		404.1		613.0		1,487.0		(430.8		)	27,843.2
Temporary equity	—		—		—		—		—		—			—
Total stockholders’ equity	612.4		1,526.9		100.7		68.2		1,441.6		(2,308.2		)	1,441.6
Noncontrolling interests	474.4		325.2		—		11.3		4.5		—			815.4
Total permanent equity	1,086.8		1,852.1		100.7		79.5		1,446.1		(2,308.2		)	2,257.0
Total liabilities and equity	$	5,513.0	$	23,195.8	$	504.8	$	692.5	$	2,933.1	$	(2,739.0	)	$	30,100.2

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



Nine months ended June 30, 2015	Consumer Products			Insurance			Energy			Asset Management			Corporate and Other			Eliminations			Total
Revenues:
Net consumer and other product sales	$	3,382.3		$	—		$	—		$	—		$	42.7		$	—		$	3,425.0
Oil and natural gas	—			—			84.6			—			—			—			84.6
Insurance premiums	—			44.0			—			—			—			—			44.0
Net investment income	—			678.3			—			20.2			—			(11.1		)	687.4
Net investment (losses) gains	—			(65.7		)	—			—			—			119.5			53.8
Insurance and investment product fees and other	—			68.5			—			0.1			—			—			68.6
Total revenues	3,382.3			725.1			84.6			20.3			42.7			108.4			4,363.4
Operating costs and expenses:
Cost of consumer products and other goods sold	2,179.4			—			—			—			30.9			—			2,210.3
Oil and natural gas direct operating costs	—			—			66.1			—			—			—			66.1
Benefits and other changes in policy reserves	—			493.0			—			—			—			—			493.0
Selling, acquisition, operating and general expenses	799.2			92.8			49.7			30.8			141.0			—			1,113.5
Impairments and bad debt expense	—			—			439.4			72.2			60.2			41.6			613.4
Amortization of intangibles	64.0			85.6			—			—			—			—			149.6
Total operating costs and expenses	3,042.6			671.4			555.2			103.0			232.1			41.6			4,645.9
Operating income (loss)	339.7			53.7			(470.6		)	(82.7		)	(189.4		)	66.8			(282.5		)
Equity in net losses of subsidiaries	—			(80.7		)	—			—			(247.1		)	327.8			—
Interest expense	(206.5		)	(17.8		)	(7.3		)	—			(88.5		)	—			(320.1		)
Affiliated interest expense	—			—			(6.8		)	(14.8		)	(2.9		)	24.5			—
Gain on contingent purchase price reduction	—			—			—			—			8.5			—			8.5
Other income (expense), net	(5.6		)	—			162.8			(1.4		)	71.5			(4.0		)	223.3
(Loss) income from continuing operations before income taxes	127.6			(44.8		)	(321.9		)	(98.9		)	(447.9		)	415.1			(370.8		)
Income tax expense	4.8			15.3			—			—			(13.2		)	7.6			14.5
Net (income) loss	122.8			(60.1		)	(321.9		)	(98.9		)	(434.7		)	407.5			(385.3		)
Less: Net income (loss) attributable to noncontrolling interest	51.3			17.1			(0.8		)	(18.2		)	(21.0		)	—			28.4
Net income (loss) attributable to controlling interest	$	71.5		$	(77.2	)	$	(321.1	)	$	(80.7	)	$	(413.7	)	$	407.5		$	(413.7	)



Nine months ended June 30, 2014	Consumer Products			Insurance			Energy			Asset Management			Corporate and Other			Eliminations			Total
Revenues:
Net consumer and other product sales	$	3,250.8		$	—		$	—		$	—		$	4.7		$	—		$	3,255.5
Oil and natural gas	—			—			112.3			—			—			—			112.3
Insurance premiums	—			42.0			—			—			—			—			42.0
Net investment income	—			602.9			—			25.6			—			(10.0		)	618.5
Net investment gains	—			366.9			—			—			—			0.5			367.4
Insurance and investment product fees and other	—			54.9			—			—			—			—			54.9
Total revenues	3,250.8			1,066.7			112.3			25.6			4.7			(9.5		)	4,450.6
Operating costs and expenses:
Cost of consumer products and other goods sold	2,092.9			—			—			—			3.5			—			2,096.4
Oil and natural gas operating costs	—			—			50.9			—			—			—			50.9
Benefits and other changes in policy reserves	—			696.3			—			—			—			—			696.3
Selling, acquisition, operating and general expenses	730.4			89.9			37.6			21.1			99.4			—			978.4
Impairments and bad debt expense	—			—			81.0			1.3			—			0.2			82.5
Amortization of intangibles	61.2			60.3			—			—			—			—			121.5
Total operating costs and expenses	2,884.5			846.5			169.5			22.4			102.9			0.2			4,026.0
Operating income (loss)	366.3			220.2			(57.2		)	3.2			(98.2		)	(9.7		)	424.6
Equity in net (loss) income of subsidiaries	—			(1.8		)	—			—			159.8			(158.0		)	—
Interest expense	(151.7		)	(16.9		)	(5.9		)	—			(64.6		)	—			(239.1		)
Affiliated interest expense	—			0.2			(6.8		)	(4.4		)	(0.5		)	11.5			—
Loss from the change in the fair value of the equity conversion feature of preferred stock	—			—			—			—			(12.7		)	—			(12.7		)
Gain on contingent purchase price reduction	—			—			—			—			0.5			—			0.5
Other income (expense), net	(4.4		)	—			(12.4		)	(0.7		)	11.1			(4.1		)	(10.5		)
(Loss) income from continuing operations before income taxes	210.2			201.7			(82.3		)	(1.9		)	(4.6		)	(160.3		)	162.8
Income tax expense	43.8			35.2			—			(0.1		)	—			(0.2		)	78.7
Net (loss) income	166.4			166.5			(82.3		)	(1.8		)	(4.6		)	(160.1		)	84.1
Less: Net income attributable to noncontrolling interest	69.0			19.7			—			—			(0.6		)	—			88.1
Net (loss) income attributable to controlling interest	97.4			146.8			(82.3		)	(1.8		)	(4.0		)	(160.1		)	(4.0		)
Less: Preferred stock dividends and accretion	—			—			—			—			73.6			—			73.6
Net (loss) income attributable to common and participating preferred stockholders	$	97.4		$	146.8		$	(82.3	)	$	(1.8	)	$	(77.6	)	$	(160.1	)	$	(77.6	)