Consolidating Financial Information

9 Months Ended

Jun. 30, 2014

The following schedules present the Company’s consolidating balance sheet information at June 30, 2014 and September 30, 2013, and consolidating statements of operations information for the nine months ended June 30, 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 subsequent to its acquisition on May 30, 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



June 30, 2014	Consumer Products		Insurance		Energy		Asset Management		Corporate and Other		Eliminations			Total
Assets:
Investments	$	—	$	18,365.0	$	—	$	544.7	$	88.2	$	(246.8	)	$	18,751.1
Investments in subsidiaries and affiliates	—		72.4		—		—		2,247.8		(2,320.2		)	—
Affiliated loans and receivables	—		157.4		—		28.8		0.3		(186.5		)	—
Cash and cash equivalents	85.1		920.5		22.5		98.9		328.9		—			1,455.9
Receivables, net	604.6		0.5		17.1		0.5		42.2		—			664.9
Inventories, net	734.8		—		—		—		11.9		—			746.7
Accrued investment income	—		157.2		—		3.3		—		(0.6		)	159.9
Reinsurance recoverable	—		2,393.7		—		—		—		—			2,393.7
Deferred tax assets	39.1		106.7		—		0.1		—		—			145.9
Properties, including oil and natural gas properties, net	440.4		9.9		471.0		1.2		2.0		—			924.5
Goodwill	1,484.5		—		—		10.7		43.9		—			1,539.1
Intangibles, including DAC and VOBA, net	2,136.2		486.9		—		—		41.7		—			2,664.8
Other assets	172.4		217.0		2.8		12.7		33.8		—			438.7
Total assets	$	5,697.1	$	22,887.2	$	513.4	$	700.9	$	2,840.7	$	(2,754.1	)	$	29,885.2



Liabilities and Equity:
Insurance reserves	$	—	$	19,988.0	$	—	$	—	$	—	$	—		$	19,988.0
Debt	3,336.6		300.0		250.6		291.9		1,124.3		—			5,303.4
Accounts payable and other current liabilities	680.7		58.2		33.1		7.3		120.6		—			899.9
Employee benefit obligations	84.8		—		—		—		2.6		—			87.4
Deferred tax liabilities	506.7		—		—		—		15.4		0.1			522.2
Other liabilities	28.5		653.0		26.9		24.0		1.2		—			733.6
Affiliated debt and payables	—		5.6		99.9		293.4		34.6		(433.5		)	—
Total liabilities	4,637.3		21,004.8		410.5		616.6		1,298.7		(433.4		)	27,534.5
Total stockholders’ equity	596.7		1,548.7		102.9		72.4		1,534.3		(2,320.7		)	1,534.3
Noncontrolling interests	463.1		333.7		—		11.9		7.7		—			816.4
Total permanent equity	1,059.8		1,882.4		102.9		84.3		1,542.0		(2,320.7		)	2,350.7
Total liabilities and equity	$	5,697.1	$	22,887.2	$	513.4	$	700.9	$	2,840.7	$	(2,754.1	)	$	29,885.2



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



Nine months ended June 30, 2014	Consumer Products			Insurance			Energy			Asset Management			Corporate and Other			Eliminations			Total
Revenues:
Net consumer and other product sales	$	3,250.8		$	—		$	—		$	—		$	4.7		$	—		$	3,255.5
Oil and natural gas	—			—			112.3			—			—			—			112.3
Insurance premiums	—			42.0			—			—			—			—			42.0
Net investment income	—			602.9			—			25.6			—			(10.0		)	618.5
Net investment gains	—			366.9			—			—			—			0.5			367.4
Insurance and investment product fees and other	—			54.9			—			—			—			—			54.9
Total revenues	3,250.8			1,066.7			112.3			25.6			4.7			(9.5		)	4,450.6
Operating costs and expenses:
Cost of consumer products and other goods sold	2,092.9			—			—			—			3.5			—			2,096.4
Oil and natural gas direct operating costs	—			—			50.9			—			—			—			50.9
Benefits and other changes in policy reserves	—			696.3			—			—			—			—			696.3
Selling, acquisition, operating and general expenses	730.4			89.9			37.6			22.4			99.4			0.2			979.9
Impairment of oil and gas properties	—			—			81.0			—			—			—			81.0
Amortization of intangibles	61.2			60.3			—			—			—			—			121.5
Total operating costs and expenses	2,884.5			846.5			169.5			22.4			102.9			0.2			4,026.0
Operating income (loss)	366.3			220.2			(57.2		)	3.2			(98.2		)	(9.7		)	424.6
Equity in net income (losses) of subsidiaries	—			(1.8		)	—			—			159.8			(158.0		)	—
Interest expense	(151.7		)	(16.9		)	(5.9		)	—			(64.6		)	—			(239.1		)
Affiliated interest expense	—			0.2			(6.8		)	(4.4		)	(0.5		)	11.5			—
Gain (loss) from the change in the fair value of the equity conversion feature of preferred stock	—			—			—			—			(12.7		)	—			(12.7		)
Gain on contingent purchase price reduction	—			—			—			—			0.5			—			0.5
Other expense, net	(4.4		)	—			(12.4		)	(0.7		)	11.1			(4.1		)	(10.5		)
(Loss) income from continuing operations before income taxes	210.2			201.7			(82.3		)	(1.9		)	(4.6		)	(160.3		)	162.8
Income tax expense	43.8			35.2			—			(0.1		)	—			(0.2		)	78.7
Net income	166.4			166.5			(82.3		)	(1.8		)	(4.6		)	(160.1		)	84.1
Less: Net income (loss) attributable to noncontrolling interest	69.0			19.7			—			—			(0.6		)	—			88.1
Net income (loss) attributable to controlling interest	97.4			146.8			(82.3		)	(1.8		)	(4.0		)	(160.1		)	(4.0		)
Less: Preferred stock dividends, accretion and loss on conversion	—			—			—			—			73.6			—			73.6
Net income (loss) attributable to common and participating preferred stockholders	$	97.4		$	146.8		$	(82.3	)	$	(1.8	)	$	(77.6	)	$	(160.1	)	$	(77.6	)



Nine months ended June 30, 2013	Consumer Products			Insurance			Energy			Asset Management			Corporate and Other			Eliminations			Total
Revenues:
Net consumer and other product sales	$	2,947.8		$	—		$	—		$	—		$	—		$	—		$	2,947.8
Oil and natural gas	—			—			54.5			—			—			—			54.5
Insurance premiums	—			46.9			—			—			—			—			46.9
Net investment income	—			522.8			—			20.8			—			(6.1		)	537.5
Net investment gains	—			411.5			—			—			—			—			411.5
Insurance and investment product fees and other	—			44.4			—			—			—			—			44.4
Total revenues	2,947.8			1,025.6			54.5			20.8			—			(6.1		)	4,042.6
Operating costs and expenses:
Cost of consumer products and other goods sold	1,954.0			—			—			—			—			—			1,954.0
Oil and natural gas operating costs	—			—			26.9			—			—			—			26.9
Benefits and other changes in policy reserves	—			431.7			—			—			—			—			431.7
Selling, acquisition, operating and general expenses	700.2			75.9			22.3			10.6			68.4			—			877.4
Amortization of intangibles	57.5			163.1			—			—			—			—			220.6
Total operating costs and expenses	2,711.7			670.7			49.2			10.6			68.4			—			3,510.6
Operating income	236.1			354.9			5.3			10.2			(68.4		)	(6.1		)	532.0
Equity in net income of subsidiaries	—			—			—			—			233.0			(233.0		)	—
Interest expense	(191.8		)	(5.9		)	(2.8		)	—			(102.2		)	—			(302.7		)
Affiliated interest expense	—			—			(3.4		)	(2.7		)	—			6.1			—
Loss from the change in the fair value of the equity conversion feature of preferred stock	—			—			—			—			81.9			—			81.9
Other (expense) income, net	(7.9		)	0.2			0.8			(0.9		)	0.1			—			(7.7		)
Income from continuing operations before income taxes	36.4			349.2			(0.1		)	6.6			144.4			(233.0		)	303.5
Income tax expense	54.9			112.1			—			0.2			—			—			167.2
Net income	(18.5		)	237.1			(0.1		)	6.4			144.4			(233.0		)	136.3
Less: Net income attributable to noncontrolling interest	(8.5		)	—			—			0.4			—			—			(8.1		)
Net income attributable to controlling interest	(10.0		)	237.1			(0.1		)	6.0			144.4			(233.0		)	144.4
Less: Preferred stock dividends, accretion and loss on conversion	—			—			—			—			36.3			—			36.3
Net income attributable to common and participating preferred stockholders	$	(10.0	)	$	237.1		$	(0.1	)	$	6.0		$	108.1		$	(233.0	)	$	108.1