Consolidating Financial Information

6 Months Ended

Mar. 31, 2017

following schedules present the Company’s accompanying Condensed Consolidated Balance Sheets information at March 31, 2017 and September 30, 2016, and accompanying Condensed Consolidated Statements of Operations information for the six months ended March 31, 2017 and 2016. 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



March 31, 2017	Consumer Products		Insurance		Corporate and Other			Discontinued Operations		Eliminations and adjustments			Total
Assets:
Investments in subsidiaries and affiliates	$	—	$	0.6	$	2,445.2		$	—	$	(2,445.8	)	$	—
Affiliated loans and receivables	—		20.3		0.2			—		(20.5		)	—
Cash and cash equivalents	137.2		25.4		157.7			—		—			320.3
Funds withheld receivables	—		1,700.2		—			—		(66.0		)	1,634.2
Receivables, net	572.8		8.2		3.3			—		—			584.3
Inventories, net	836.3		—		—			—		—			836.3
Deferred tax assets	18.3		—		—			—		13.3			31.6
Property, plant and equipment, net	660.8		—		0.9			—		—			661.7
Goodwill	2,473.8		—		—			—		—			2,473.8
Intangibles, net	2,312.5		—		—			—		—			2,312.5
Other assets	117.7		22.2		7.7			—		16.0			163.6
Assets of business held for sale	—		—		—			27,678.5		—			27,678.5
Total assets	$	7,129.4	$	1,776.9	$	2,615.0		$	27,678.5	$	(2,503.0	)	$	36,696.8

Liabilities and Equity
Insurance reserves	$	—	$	1,664.8	$	—		$	—	$	63.4		$	1,728.2
Debt	3,780.8		—		1,793.4			—		49.7			5,623.9
Accounts payable and other current liabilities	803.1		8.3		37.1			—		0.5			849.0
Employee benefit obligations	107.8		—		4.4			—		—			112.2
Deferred tax liabilities	577.7		—		11.1			—		—			588.8
Other liabilities	23.4		2.7		4.6			—		—			30.7
Affiliated debt and payables	—		0.2		161.7			—		(161.9		)	—
Liabilities of business held for sale	—		—		—			25,995.7		—			25,995.7
Total liabilities	5,292.8		1,676.0		2,012.3			25,995.7		(48.3		)	34,928.5
Total stockholders’ equity	1,047.2		100.9		605.0			1,306.6		(2,454.7		)	605.0
Noncontrolling interests	789.4		—		(2.3		)	376.2		—			1,163.3
Total permanent equity	1,836.6		100.9		602.7			1,682.8		(2,454.7		)	1,768.3
Total liabilities and equity	$	7,129.4	$	1,776.9	$	2,615.0		$	27,678.5	$	(2,503.0	)	$	36,696.8



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



Six months ended March 31, 2017	Consumer Products			Insurance			Corporate and Other			Discontinued Operations		Eliminations and adjustments			Total
Revenues:
Net consumer and other product sales	$	2,381.7		$	—		$	—		$	—	$	—		$	2,381.7
Net investment income	—			0.1			1.0			—		22.5			23.6
Net investment gains (losses)	—			12.2			—			—		(14.0		)	(1.8		)
Insurance and investment product fees and other	—			—			—			—		2.2			2.2
Total revenues	2,381.7			12.3			1.0			—		10.7			2,405.7
Operating costs and expenses:
Cost of consumer products and other goods sold	1,476.5			—			—			—		—			1,476.5
Benefits and other changes in policy reserves	—			26.3			—			—		(4.9		)	21.4
Selling, acquisition, operating and general expenses	610.0			5.5			31.3			—		(0.2		)	646.6
Total operating costs and expenses	2,086.5			31.8			31.3			—		(5.1		)	2,144.5
Operating income	295.2			(19.5		)	(30.3		)	—		15.8			261.2
Equity in net income of subsidiaries	—			—			231.4			—		(231.4		)	—
Interest expense	(106.4		)	—			(73.6		)	—		—			(180.0		)
Affiliated interest expense	—			—			(3.7		)	—		3.7			—
Other expense, net	(0.8		)	0.1			0.5			—		(0.4		)	(0.6		)
Income from continuing operations before income taxes	188.0			(19.4		)	124.3			—		(212.3		)	80.6
Income tax expense (benefit)	64.1			8.7			(5.7		)	—		8.5			75.6
Net income from continuing operations	123.9			(28.1		)	130.0			—		(220.8		)	5.0
(Loss) income from discontinued operations, net of tax	—			—			—			204.4		—			204.4
Net (loss) income	123.9			(28.1		)	130.0			204.4		(220.8		)	209.4
Less: Net income attributable to noncontrolling interest	51.9			—			(0.1		)	27.5		—			79.3
Net (loss) income attributable to controlling interest	$	72.0		$	(28.1	)	$	130.1		$	176.9	$	(220.8	)	$	130.1



Six months ended March 31, 2016	Consumer Products			Insurance			Corporate and Other			Discontinued Operations			Eliminations and adjustments			Total
Revenues:
Net consumer and other product sales	$	2,428.4		$	—		$	—		$	—		$	—		$	2,428.4
Net investment income	—			1.5			6.7			—			28.3			36.5
Net investment gains (losses)	—			28.6			—			—			(20.9		)	7.7
Insurance and investment product fees and other	—			—			0.9			—			3.2			4.1
Total revenues	2,428.4			30.1			7.6			—			10.6			2,476.7
Operating costs and expenses:
Cost of consumer products and other goods sold	1,524.9			—			—			—			—			1,524.9
Benefits and other changes in policy reserves	—			26.1			—			—			17.2			43.3
Selling, acquisition, operating and general expenses	612.5			5.4			48.7			—			(0.4		)	666.2
Total operating costs and expenses	2,137.4			31.5			48.7			—			16.8			2,234.4
Operating income	291.0			(1.4		)	(41.1		)	—			(6.2		)	242.3
Equity in net income of subsidiaries	—			—			44.7			—			(44.7		)	—
Interest expense	(115.9		)	—			(71.4		)	—			(2.3		)	(189.6		)
Affiliated interest expense	—			—			(7.6		)	—			7.6			—
Other expense, net	(4.3		)	—			3.9			—			(0.3		)	(0.7		)
Income from continuing operations before income taxes	170.8			(1.4		)	(71.5		)	—			(45.9		)	52.0
Income tax expense (benefit)	4.4			(1.8		)	(12.9		)	—			(10.7		)	(21.0		)
Net income from continuing operations	166.4			0.4			(58.6		)	—			(35.2		)	73.0
(Loss) income from discontinued operations, net of tax	—			—			—			(50.1		)	—			(50.1		)
Net (loss) income	166.4			0.4			(58.6		)	(50.1		)	(35.2		)	22.9
Less: Net income attributable to noncontrolling interest	70.3			—			—			11.2			—			81.5
Net (loss) income attributable to controlling interest	$	96.1		$	0.4		$	(58.6	)	$	(61.3	)	$	(35.2	)	$	(58.6	)