Consolidating Financial Information

6 Months Ended

Mar. 31, 2014

The following schedules present the Company’s consolidating balance sheet information at March 31, 2014 and March 31, 2013, and consolidating statements of operations information for the six months ended March 31, 2014 and 2013. 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. 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.

Harbinger Group Inc. - Condensed Consolidating Balance Sheet Information



March 31, 2014	Consumer Products		Insurance		Energy		Asset Management		Corporate and Other		Eliminations			Total
Assets:
Investments	$	—	$	17,884.5	$	—	$	595.6	$	82.0	$	(249.3	)	$	18,312.8
Investments in subsidiaries and affiliates	—		67.9		—		—		2,038.8		(2,106.7		)	—
Affiliated loans and receivables	—		146.4		—		2.1		—		(148.5		)	—
Cash and cash equivalents	93.4		761.8		19.3		73.0		372.3		—			1,319.8
Receivables, net	591.9		0.9		17.2		0.3		46.0		1.0			657.3
Inventories, net	725.9		—		—		—		—		—			725.9
Accrued investment income	—		178.7		—		3.9		—		(0.6		)	182.0
Reinsurance recoverable	—		2,387.4		—		—		—		—			2,387.4
Deferred tax assets	35.7		190.5		—		—		—		0.9			227.1
Properties, including oil and natural gas properties, net	444.2		8.9		476.1		0.9		0.5		—			930.6
Goodwill	1,479.6		—		—		—		—		—			1,479.6
Intangibles, including DAC and VOBA, net	2,154.9		536.6		—		—		—		—			2,691.5
Other assets	162.0		200.4		2.9		10.4		32.8		—			408.5
Total assets	$	5,687.6	$	22,364.0	$	515.5	$	686.2	$	2,572.4	$	(2,503.2	)	$	29,322.5



Liabilities and Equity:
Insurance reserves	$	—	$	19,783.0	$	—	$	—		$	—	$	—		$	19,783.0
Debt	3,429.5		300.0		250.6		291.9			1,124.3		—			5,396.3
Accounts payable and other current liabilities	666.8		48.8		33.0		5.1			67.8		—			821.5
Equity conversion feature of preferred stock	—		—		—		—			364.8		—			364.8
Employee benefit obligations	89.8		—		—		—			2.7		—			92.5
Deferred tax liabilities	490.7		—		—		—			—		2.3			493.0
Other liabilities	28.0		542.1		26.3		32.3			—		—			628.7
Affiliated debt and payables	—		1.9		102.1		289.8			—		(393.8		)	—
Total liabilities	4,704.8		20,675.8		412.0		619.1			1,559.6		(391.5		)	27,579.8
Temporary equity	—		—		—		—			319.3		—			319.3
Total stockholders’ equity	550.6		1,389.7		103.5		67.9			693.5		(2,111.7		)	693.5
Noncontrolling interests	432.2		298.5		—		(0.8		)	—		—			729.9
Total permanent equity	982.8		1,688.2		103.5		67.1			693.5		(2,111.7		)	1,423.4
Total liabilities and equity	$	5,687.6	$	22,364.0	$	515.5	$	686.2		$	2,572.4	$	(2,503.2	)	$	29,322.5



September 30, 2013	Consumer Products		Insurance		Energy		Asset Management			Corporate and Other		Eliminations			Total
Assets:
Investments	$	—	$	16,282.3	$	—	$	389.3		$	42.3	$	(248.0	)	$	16,465.9
Investment in subsidiaries and affiliates	—		62.0		—		—			2,012.9		(2,074.9		)	—
Affiliated loans and receivables	—		150.1		—		0.9			—		(151.0		)	—
Cash and cash equivalents	207.3		1,248.3		18.7		166.5			258.9		—			1,899.7
Receivables, net	546.9		—		22.2		1.2			41.0		—			611.3
Inventories, net	632.9		—		—		—			—		—			632.9
Accrued investment income	—		159.3		—		2.3			—		(0.4		)	161.2
Reinsurance recoverable	—		2,363.7		—		—			—		—			2,363.7
Deferred tax assets	33.0		260.4		—		—			—		—			293.4
Properties, including oil and natural gas properties, net	412.5		7.0		572.6		0.7			0.5		—			993.3
Goodwill	1,476.7		—		—		—			—		—			1,476.7
Intangibles, including DAC and VOBA, net	2,163.2		565.9		—		—			—		—			2,729.1
Other assets	154.2		84.1		4.1		11.3			27.9		—			281.6
Total assets	$	5,626.7	$	21,183.1	$	617.6	$	572.2		$	2,383.5	$	(2,474.3	)	$	27,908.8

Liabilities and Equity:
Insurance reserves	$	—	$	18,895.9	$	—	$	—		$	—	$	—		$	18,895.9
Debt	3,218.9		300.0		271.2		181.8			924.2		—			4,896.1
Accounts payable and other current liabilities	849.4		52.9		32.8		6.3			71.3		—			1,012.7
Equity conversion feature of preferred stock	—		—		—		—			330.8		—			330.8
Employee benefit obligations	96.6		—		—		—			3.0		—			99.6
Deferred tax liabilities	492.8		—		—		—			—		—			492.8
Other liabilities	28.9		640.2		25.4		23.3			0.2		—			718.0
Affiliated debt and payables	—		0.8		102.2		293.3			—		(396.3		)	—
Total liabilities	4,686.6		19,889.8		431.6		504.7			1,329.5		(396.3		)	26,445.9
Temporary equity	—		—		0.1		—			329.3		—			329.4
Total stockholders’ equity	531.0		1,293.3		185.9		67.8			724.7		(2,078.0		)	724.7
Noncontrolling interests	409.1		—		—		(0.3		)	—		—			408.8
Total permanent equity	940.1		1,293.3		185.9		67.5			724.7		(2,078.0		)	1,133.5
Total liabilities and equity	$	5,626.7	$	21,183.1	$	617.6	$	572.2		$	2,383.5	$	(2,474.3	)	$	27,908.8

Harbinger Group Inc. - Condensed Consolidating Statements of Operations Information



Six months ended March 31, 2014	Consumer Products			Insurance			Energy			Asset Management			Corporate and Other			Eliminations			Total
Revenues:
Net consumer product sales	$	2,122.3		$	—		$	—		$	—		$	—		$	—		$	2,122.3
Oil and natural gas	—			—			74.7			—			—			—			74.7
Insurance premiums	—			28.7			—			—			—			—			28.7
Net investment income	—			400.6			—			14.3			—			(7.3		)	407.6
Net investment gains	—			182.8			—			—			—			—			182.8
Insurance and investment product fees and other	—			35.1			—			—			—			—			35.1
Total revenues	2,122.3			647.2			74.7			14.3			—			(7.3		)	2,851.2
Operating costs and expenses:
Consumer products cost of goods sold	1,381.5			—			—			—			—			—			1,381.5
Oil and natural gas direct operating costs	—			—			33.2			—			—			—			33.2
Benefits and other changes in policy reserves	—			431.2			—			—			—			—			431.2
Selling, acquisition, operating and general expenses	482.5			64.3			26.3			14.2			60.3			0.4			648.0
Impairment of oil and gas properties	—			—			81.0			—			—			—			81.0
Amortization of intangibles	40.7			40.1			—			—			—			—			80.8
Total operating costs and expenses	1,904.7			535.6			140.5			14.2			60.3			0.4			2,655.7
Operating income (loss)	217.6			111.6			(65.8		)	0.1			(60.3		)	(7.7		)	195.5
Equity in net income (losses) of subsidiaries	—			(3.8		)	—			—			48.2			(44.4		)	—
Interest expense	(104.4		)	(11.3		)	(4.1		)	—			(41.4		)	—			(161.2		)
Affiliated interest expense	—			0.2			(4.5		)	(3.0		)	—			7.3			—
(Loss) gain from the change in the fair value of the equity conversion feature of preferred stock	—			—			—			—			(50.7		)	—			(50.7		)
Gain on contingent purchase price reduction	—			—			—			—			0.5			—			0.5
Other expense, net	(1.6		)	—			(10.2		)	(1.3		)	1.4			(4.8		)	(16.5		)
(Loss) income from continuing operations before income taxes	111.6			96.7			(84.6		)	(4.2		)	(102.3		)	(49.6		)	(32.4		)
Income tax (benefit) expense	23.3			0.4			—			(0.1		)	—			1.4			25.0
Net (loss) income	88.3			96.3			(84.6		)	(4.1		)	(102.3		)	(51.0		)	(57.4		)
Less: Net income (loss) attributable to noncontrolling interest	36.6			8.6			—			(0.3		)	—			—			44.9
Net (loss) income attributable to controlling interest	51.7			87.7			(84.6		)	(3.8		)	(102.3		)	(51.0		)	(102.3		)
Less: Preferred stock dividends and accretion	—			—			—			—			24.3			—			24.3
Net (loss) income attributable to common and participating preferred stockholders	$	51.7		$	87.7		$	(84.6	)	$	(3.8	)	$	(126.6	)	$	(51.0	)	$	(126.6	)



Six months ended March 31, 2013	Consumer Products			Insurance		Energy			Asset Management			Corporate and Other			Eliminations			Total
Revenues:
Net consumer product sales	$	1,858.0		$	—	$	—		$	—		$	—		$	—		$	1,858.0
Oil and natural gas	—			—		16.7			—			—			—			16.7
Insurance premiums	—			27.9		—			—			—			—			27.9
Net investment income	—			336.5		—			13.7			—			(0.9		)	349.3
Net investment gains	—			353.2		—			—			—			—			353.2
Insurance and investment product fees and other	—			28.3		—			—			—			—			28.3
Total revenues	1,858.0			745.9		16.7			13.7			—			(0.9		)	2,633.4
Operating costs and expenses:
Consumer products cost of goods sold	1,247.0			—		—			—			—			—			1,247.0
Oil and natural gas operating costs	—			—		8.8			—			—			—			8.8
Benefits and other changes in policy reserves	—			324.5		—			—			—			—			324.5
Selling, acquisition, operating and general expenses	453.4			51.4		7.4			5.9			50.9			(0.9		)	568.1
Amortization of intangibles	37.2			98.4		—			—			—			—			135.6
Total operating costs and expenses	1,737.6			474.3		16.2			5.9			50.9			(0.9		)	2,284.0
Operating income	120.4			271.6		0.5			7.8			(50.9		)	—			349.4
Equity in net income of subsidiaries	—			—		—			—			148.0			(148.0		)	—
Interest expense	(130.2		)	—		(0.9		)	—			(87.7		)	—			(218.8		)
Affiliated interest expense	—			2.5		(1.1		)	(1.4		)	—			—			—
Loss from the change in the fair value of the equity conversion feature of preferred stock	—			—		—			—			29.3			—			29.3
Other (expense) income, net	(5.3		)	0.3		(8.9		)	(0.1		)	2.1			—			(11.9		)
(Loss) income from continuing operations before income taxes	(15.1		)	274.4		(10.4		)	6.3			40.8			(148.0		)	148.0
Income tax (benefit) expense	39.8			90.6		—			—			—			—			130.4
Net income	(54.9		)	183.8		(10.4		)	6.3			40.8			(148.0		)	17.6
Less: Net income attributable to noncontrolling interest	(23.5		)	—		—			0.3			—			—			(23.2		)
Net income attributable to controlling interest	(31.4		)	183.8		(10.4		)	6.0			40.8			(148.0		)	40.8
Less: Preferred stock dividends and accretion	—			—		—			—			24.3			—			24.3
Net income attributable to common and participating preferred stockholders	$	(31.4	)	$	183.8	$	(10.4	)	$	6.0		$	16.5		$	(148.0	)	$	16.5