3. Pro Forma Adjustments - FGL Merger (a) As a result of the FGL Merger Agreement, the Company’s ownership interest in FGL has been classified as held for sale on the condensed combined balance sheet. These adjustments represent the components of FGL’s assets and liabilities included in the September 30, 2015 combined balance sheet. Such balances reflect intercompany transactions between FGL and other entities consolidated by HRG as they will remain and continue to exist following the closing of the FGL Merger. Below is a summary of the adjustments:
| | | | | | | | | | | | | | | | | | As of September 30, 2015 | | FGL Held for Sale Classification | | Impact of intercompany transactions that will remain and continue to exist following the closing of the FGL Merger | | Deferred tax adjustment (1) | | Total adjustment due to FGL Merger Agreement | Assets: | | | | | | | | | Investments | | $ | (18,831.7 | ) | | $ | — |
| | $ | — |
| | $ | (18,831.7 | ) | Cash and cash equivalents | | (501.8 | ) | | — |
| | — |
| | (501.8 | ) | Receivables, net | | — |
| | — |
| | — |
| | — |
| Inventories, net | | — |
| | — |
| | — |
| | — |
| Accrued investment income | | (190.7 | ) | | — |
| | — |
| | (190.7 | ) | Reinsurance recoverable | | (2,351.9 | ) | | — |
| | — |
| | (2,351.9 | ) | Deferred tax assets | | (194.7 | ) | | — |
| | 328.8 |
| | 134.1 |
| Properties, including oil and gas properties, net | | (14.4 | ) | | — |
| | — |
| | (14.4 | ) | Goodwill | | — |
| | — |
| | — |
| | — |
| Intangibles, including DAC and VOBA, net | | (1,048.6 | ) | | — |
| | — |
| | (1,048.6 | ) | Other assets (including funds withheld assets) | | (82.5 | ) | | 1,073.9 |
| | — |
| | 991.4 |
| Assets held for sale | | 23,216.3 |
| | 1,769.8 |
| | — |
| | 24,986.1 |
| Total assets | | $ | — |
| | $ | 2,843.7 |
| | $ | 328.8 |
| | $ | 3,172.5 |
| | | | | | | | | | Liabilities: | | | | | | | | | Insurance liabilities | | $ | (21,302.4 | ) | | $ | 1,226.8 |
| | $ | — |
| | $ | (20,075.6 | ) | Debt | | (300.0 | ) | | 330.7 |
| | — |
| | 30.7 |
| Accounts payable and other current liabilities | | (43.7 | ) | | 1.6 |
| | — |
| | (42.1 | ) | Employee benefit obligations | | — |
| | — |
| | — |
| | — |
| Deferred tax liabilities | | — |
| | — |
| | 328.8 |
| | 328.8 |
| Other liabilities | | (502.9 | ) | | 11.0 |
| | — |
| | (491.9 | ) | Liabilities held for sale | | 22,149.0 |
| | 1,273.6 |
| | — |
| | 23,422.6 |
| Total liabilities | | $ | — |
| | $ | 2,843.7 |
| | $ | 328.8 |
| | $ | 3,172.5 |
|
(1) Included in the deferred tax assets and deferred tax liabilities above is an adjustment of $328.8 that represents the recognition of a deferred tax liability on the Company’s investment in FGL due to its classification as held for sale. The deferred tax liability resulted in a decrease in valuation allowance on deferred tax assets based on the Company’s change in judgment on realizability. (b) As a result of the FGL Merger Agreement, FGL’s operations were classified as discontinued operations and the results of continuing operations are reported separately for all periods presented. These adjustments represent the components of income attributable to FGL included in the combined statement of operations for the years ended September 30, 2015, 2014 and 2013. (c) This adjustment reflects non-controlling interest in FGL’s pro forma net income adjustments using a non-controlling interest factor of 19.5% and 19.6% for the years ended September 30, 2015 and 2014, respectively. (d) Basic and diluted earnings per share were recalculated based on 198,142,363, 162,941,070 and 139,855,645 weighted-average common shares outstanding - basic and diluted for the years ended September 30, 2015, 2014 and 2013, respectively.
|