Consolidating Financial Information

3 Months Ended

Dec. 31, 2014

The following schedules present the Company’s consolidating balance sheet information at December 31, 2014 and September 30, 2014, and consolidating statements of operations information for the three months ended December 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, and the results of FOH for the three months ended December 31, 2014. 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 Sheets Information



December 31, 2014	Consumer Products		Insurance		Energy		Asset Management		Corporate and Other		Eliminations			Total
Assets:
Investments	$	—	$	19,359.7	$	—	$	546.3	$	81.9	$	(247.6	)	$	19,740.3
Investments in subsidiaries and affiliates	—		64.5		—		—		2,309.1		(2,373.6		)	—
Affiliated loans and receivables	—		138.8		—		18.3		0.1		(157.2		)	—
Cash and cash equivalents	408.4		599.5		12.9		78.9		211.7		—			1,311.4
Receivables, net	576.8		0.8		36.4		0.8		45.3		—			660.1
Inventories, net	701.9		—		—		—		8.3		—			710.2
Accrued investment income	—		163.8		—		4.8		—		(0.7		)	167.9
Reinsurance recoverable	—		2,416.7		—		—		—		—			2,416.7
Deferred tax assets	41.7		136.0		—		0.1		1.1		(0.1		)	178.8
Properties, including oil and natural gas properties, net	419.8		11.7		620.0		1.3		2.0		—			1,054.8
Goodwill	1,465.0		—		—		10.7		16.2		—			1,491.9
Intangibles, including DAC and VOBA, net	2,066.7		635.7		—		—		9.9		—			2,712.3
Other assets	151.8		564.7		1.7		8.9		35.1		0.1			762.3
Total assets	$	5,832.1	$	24,091.9	$	671.0	$	670.1	$	2,720.7	$	(2,779.1	)	$	31,206.7



Liabilities and Equity:
Insurance reserves	$	—	$	21,246.6	$	—	$	—	$	—		$	—		$	21,246.6
Debt	3,415.6		300.0		327.0		297.7		1,325.7			—			5,666.0
Accounts payable and other current liabilities	714.1		50.1		31.1		11.3		92.5			0.5			899.6
Employee benefit obligations	78.3		—		—		—		4.2			—			82.5
Deferred tax liabilities	510.2		—		—		—		5.4			2.4			518.0
Other liabilities	20.2		640.3		37.4		12.8		1.3			—			712.0
Affiliated debt and payables	—		1.2		100.0		271.4		30.9			(403.5		)	—
Total liabilities	4,738.4		22,238.2		495.5		593.2		1,460.0			(400.6		)	29,124.7
Total stockholders’ equity	615.3		1,522.3		175.1		65.8		1,276.2			(2,378.5		)	1,276.2
Noncontrolling interests	478.4		331.4		0.4		11.1		(15.5		)	—			805.8
Total permanent equity	1,093.7		1,853.7		175.5		76.9		1,260.7			(2,378.5		)	2,082.0
Total liabilities and equity	$	5,832.1	$	24,091.9	$	671.0	$	670.1	$	2,720.7		$	(2,779.1	)	$	31,206.7



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

Harbinger Group Inc. - Condensed Consolidating Statements of Operations Information



Three months ended December 31, 2014	Consumer Products			Insurance			Energy			Asset Management			Corporate and Other			Eliminations			Total
Revenues:
Net consumer and other product sales	$	1,067.8		$	—		$	—		$	—		$	21.0		$	—		$	1,088.8
Oil and natural gas	—			—			34.3			—			—			—			34.3
Insurance premiums	—			11.7			—			—			—			—			11.7
Net investment income	—			226.9			—			8.0			—			(4.1		)	230.8
Net investment gains	—			51.4			—			—			—			0.6			52.0
Insurance and investment product fees and other	—			20.8			—			—			—			—			20.8
Total revenues	1,067.8			310.8			34.3			8.0			21.0			(3.5		)	1,438.4
Operating costs and expenses:
Cost of consumer products and other goods sold	697.6			—			—			—			14.4			—			712.0
Oil and natural gas direct operating costs	—			—			20.5			—			—			—			20.5
Benefits and other changes in policy reserves	—			241.5			—			—			—			—			241.5
Selling, acquisition, operating and general expenses	234.1			32.8			18.8			9.1			70.1			0.5			365.4
Impairments	—			—			190.0			—			60.2			—			250.2
Amortization of intangibles	20.5			11.3			—			—			—			—			31.8
Total operating costs and expenses	952.2			285.6			229.3			9.1			144.7			0.5			1,621.4
Operating (loss) income	115.6			25.2			(195.0		)	(1.1		)	(123.7		)	(4.0		)	(183.0		)
Equity in net income (losses) of subsidiaries	—			(2.8		)	—			—			(7.5		)	10.3			—
Interest expense	(44.4		)	(5.9		)	(2.2		)	—			(28.1		)	—			(80.6		)
Affiliated interest expense	—			—			(2.3		)	(1.5		)	(1.2		)	5.0			—
Other income (expense), net	(0.7		)	—			160.0			(0.5		)	17.4			(2.2		)	174.0
(Loss) income from continuing operations before income taxes	70.5			16.5			(39.5		)	(3.1		)	(143.1		)	9.1			(89.6		)
Income tax expense	20.5			7.8			—			—			(13.2		)	1.7			16.8
Net (income) loss	50.0			8.7			(39.5		)	(3.1		)	(129.9		)	7.4			(106.4		)
Less: Net income (loss) attributable to noncontrolling interest	20.8			3.3			(0.3		)	(0.3		)	(20.1		)	—			3.4
Net income (loss) attributable to controlling interest	$	29.2		$	5.4		$	(39.2	)	$	(2.8	)	$	(109.8	)	$	7.4		$	(109.8	)



Three months ended December 31, 2013	Consumer Products			Insurance			Energy			Asset Management			Corporate and Other			Eliminations			Total
Revenues:
Net consumer and other product sales	$	1,100.6		$	—		$	—		$	—		$	—		$	—		$	1,100.6
Oil and natural gas	—			—			35.5			—			—			—			35.5
Insurance premiums	—			13.9			—			—			—			—			13.9
Net investment income	—			200.4			—			4.5			—			(3.7		)	201.2
Net investment gains	—			141.9			—			—			—			—			141.9
Insurance and investment product fees and other	—			16.9			—			—			—			—			16.9
Total revenues	1,100.6			373.1			35.5			4.5			—			(3.7		)	1,510.0
Operating costs and expenses:
Cost of consumer products and other goods sold	719.4			—			—			—			—			—			719.4
Oil and natural gas operating costs	—			—			16.1			—			—			—			16.1
Benefits and other changes in policy reserves	—			234.7			—			—			—			—			234.7
Selling, acquisition, operating and general expenses	236.0			29.9			13.4			8.4			29.4			—			317.1
Amortization of intangibles	20.2			23.2			—			—			—			—			43.4
Total operating costs and expenses	975.6			287.8			29.5			8.4			29.4			—			1,330.7
Operating (loss) income	125.0			85.3			6.0			(3.9		)	(29.4		)	(3.7		)	179.3
Equity in net income of subsidiaries	—			—			—			—			71.5			(71.5		)	—
Interest expense	(57.0		)	(5.6		)	(2.4		)	—			(19.0		)	—			(84.0		)
Affiliated interest expense	—			—			(2.3		)	(1.4		)	—			3.7			—
Loss from the change in the fair value of the equity conversion feature of preferred stock	—			—			—			—			(47.2		)	—			(47.2		)
Gain on contingent purchase price reduction	—			—			—			—			0.5			—			0.5
Other income (expense), net	(0.9		)	—			(3.4		)	(3.7		)	(3.9		)	—			(11.9		)
(Loss) income from continuing operations before income taxes	67.1			79.7			(2.1		)	(9.0		)	(27.5		)	(71.5		)	36.7
Income tax expense	12.7			26.5			—			(0.2		)	(0.7		)	—			38.3
Net loss	54.4			53.2			(2.1		)	(8.8		)	(26.8		)	(71.5		)	(1.6		)
Less: Net income attributable to noncontrolling interest	22.6			3.3			—			(0.7		)	—			—			25.2
Net loss attributable to controlling interest	31.8			49.9			(2.1		)	(8.1		)	(26.8		)	(71.5		)	(26.8		)
Less: Preferred stock dividends and accretion	—			—			—			—			12.2			—			12.2
Net loss attributable to common and participating preferred stockholders	$	31.8		$	49.9		$	(2.1	)	$	(8.1	)	$	(39.0	)	$	(71.5	)	$	(39.0	)