Condensed Financial Information of the Registrant

HARBINGER GROUP INC. (Registrant Only)

BALANCE SHEETS

(In millions)



	September 30,
	2014			2013
ASSETS
Cash and cash equivalents	$	420.0		$	256.9
Receivables, net	42.5			41.0
Prepaid expenses and other current assets	—			3.3
Total current assets	462.5			301.2
Investments in consolidated subsidiaries	2,357.4			2,049.0
Advances to consolidated subsidiaries	9.6			9.5
Properties, net	0.6			0.5
Deferred charges and other assets	31.6			23.1
Total assets	$	2,861.7		$	2,383.3
LIABILITIES AND EQUITY
Accounts payable	$	3.0		$	1.4
Accrued and other current liabilities	86.7			69.6
Total current liabilities	89.7			71.0
Long-term debt	1,325.0			924.2
Equity conversion feature of preferred stock	—			330.8
Employee benefit obligations	4.3			3.0
Other liabilities	1.1			0.3
Total liabilities	1,420.1			1,329.3
Temporary equity:
Redeemable preferred stock	—			329.3
Stockholders’ equity:
Common stock	2.0			1.4
Additional paid-in capital	1,472.3			828.0
Accumulated deficit	(276.3		)	(192.4		)
Accumulated other comprehensive income	243.6			87.7
Total stockholders’ equity	1,441.6			724.7
Total liabilities and equity	$	2,861.7		$	2,383.3

See accompanying Report of Independent Registered Public Accounting Firm.

SCHEDULE II

(continued)

HARBINGER GROUP INC. (Registrant Only)

STATEMENTS OF OPERATIONS

(In millions)



	Year ended September 30,
	2014			2013			2012
Revenues	$	—		$	—		$	—
Cost of revenues	—			—			—
Gross profit	—			—			—
Operating expenses:
General and administrative	111.1			77.4			48.4
Acquisition related charges	4.2			12.7			3.7
Total operating expenses	115.3			90.1			52.1
Operating loss	(115.3		)	(90.1		)	(52.1		)
Other income (expense):
Equity in net income of subsidiaries	207.7			263.7			354.6
Interest expense	(89.7		)	(120.1		)	(56.6		)
Loss from the change in the fair value of the equity conversion feature of preferred stock	(12.7		)	(101.6		)	(156.6		)
Gain on contingent purchase price reduction	0.5			—			—
Other, net	0.1			1.1			0.2
(Loss) income before income taxes	(9.4		)	(47.0		)	89.5
Income tax expense (benefit)	0.9			(1.2		)	—
Net (loss) income	(10.3		)	(45.8		)	89.5
Less: Preferred stock dividends and accretion and loss on conversion	73.6			48.4			59.6
Net (loss) income attributable to common and participating preferred stockholders	$	(83.9	)	$	(94.2	)	$	29.9

See accompanying Report of Independent Registered Public Accounting Firm.

SCHEDULE II

(continued)

HARBINGER GROUP INC. (Registrant Only)

STATEMENTS OF CASH FLOWS

(In millions)



	Year ended September 30,
	2014			2013			2012
Cash flows from operating activities:
Net (loss) income	$	(10.3	)	$	(45.8	)	$	89.5
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation of properties	0.2			0.2			0.1
Stock-based compensation	27.0			11.7			1.9
Amortization of debt issuance costs	3.5			2.7			2.9
Amortization of debt discount	1.5			0.5			0.6
Write-off of debt issuance costs on retired debt	—			10.8			—
Write-off of debt discount on retired debt	—			2.1			—
Deferred income taxes	—			—			3.6
Equity in net income of subsidiaries	(207.7		)	(263.7		)	(354.6		)
Dividends from subsidiaries	118.0			127.1			69.5
Loss from the change in the fair value of the equity conversion feature of preferred stock	12.7			101.6			156.6
Gain on contingent purchase price reduction	(0.5		)	—			—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	—			—			(4.6		)
Accounts payable and accrued and other current liabilities	43.5			51.4			27.0
Other operating	(0.7		)	11.6			(1.7		)
Net change in cash due to operating activities	(12.8		)	10.2			(9.2		)
Cash flows from investing activities:
Proceeds from investments sold, matured or repaid	—			34.0			108.9
Cost of investments acquired	—			—			(68.0		)
Capital contributions to consolidated subsidiaries	(115.5		)	(454.4		)	(36.3		)
Return of capital from subsidiary	—			126.8			88.0
Repayments from (advances to) consolidated subsidiaries	—			—			49.3
Capital expenditures	(0.3		)	(0.4		)	—
Net change in cash due to investing activities	(115.8		)	(294.0		)	141.9
Cash flows from financing activities:
Dividends paid on preferred stock	(28.6		)	(33.4		)	(31.7		)
Proceeds from senior secured notes	400.0			923.9			—
Repayment of senior secured notes, including tender / call premium	—			(545.9		)	—
Debt issuance costs	(10.4		)	(25.1		)	—
Common stock repurchased	(65.6		)	(12.3		)	—
Share based award tax withholding payments	(6.5		)	(2.3		)	—
Other financing activities	2.8			—			—
Net change in cash due to financing activities	291.7			304.9			(31.7		)
Net increase in cash and cash equivalents	163.1			21.1			101.0
Cash and cash equivalents at beginning of period	256.9			235.8			134.8
Cash and cash equivalents at end of period	$	420.0		$	256.9		$	235.8

See accompanying Report of Independent Registered Public Accounting Firm.