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SCHEDULE II | 12 Months Ended
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Sep. 30, 2012
SCHEDULE II | SCHEDULE II Condensed Financial Information of the Registrant HARBINGER GROUP INC. (Registrant Only) BALANCE SHEETS (In thousands)
|  | September 30, 2012 |  |  | September 30, 2011 |
ASSETS |
Cash and cash equivalents |  | $ | 235,783 |  |  | $ | 134,790 |
Short-term investments |  |  | 33,986 |  |  |  | 74,889 |
Prepaid expenses and other current assets |  |  | 6,433 |  |  |  | 1,678 |
Total current assets |  |  | 276,202 |  |  |  | 211,357 |
Investments in consolidated subsidiaries |  |  | 2,001,800 |  |  |  | 1,517,241 |
Advances to consolidated subsidiaries |  |  | 9,434 |  |  |  | 58,773 |
Properties, net |  |  | 302 |  |  |  | 410 |
Deferred charges and other assets |  |  | 11,571 |  |  |  | 14,543 |
Total assets |  | $ | 2,299,309 |  |  | $ | 1,802,324 |
LIABILITIES AND EQUITY |
Accounts payable |  | $ | 734 |  |  | $ | 366 |
Accrued and other current liabilities |  |  | 61,701 |  |  |  | 33,844 |
Total current liabilities |  |  | 62,435 |  |  |  | 34,210 |
Long-term debt |  |  | 497,739 |  |  |  | 497,168 |
Equity conversion feature of preferred stock |  |  | 231,950 |  |  |  | 75,350 |
Employee benefit obligations |  |  | 5,119 |  |  |  | 6,055 |
Deferred income taxes |  |  | 4,925 |  |  |  | 1,343 |
Other liabilities |  |  | 319 |  |  |  | 320 |
Total liabilities |  |  | 802,487 |  |  |  | 614,446 |
Temporary equity: |  |  |  |  |  |  |  |
Redeemable preferred stock |  |  | 319,225 |  |  |  | 292,437 |
Stockholders’ equity: |  |  |  |  |  |  |  |
Common stock |  |  | 1,402 |  |  |  | 1,393 |
Additional paid-in capital |  |  | 861,191 |  |  |  | 872,683 |
Accumulated deficit |  |  | (98,168 | ) |  |  | (128,083 | )
Accumulated other comprehensive income |  |  | 413,172 |  |  |  | 149,448 |
Total stockholders’ equity |  |  | 1,177,597 |  |  |  | 895,441 |
Total liabilities and equity |  | $ | 2,299,309 |  |  | $ | 1,802,324 |
See accompanying Report of Independent Registered Public Accounting Firm. HARBINGER GROUP INC. (Registrant Only) STATEMENTS OF OPERATIONS (In thousands)
|  | Year Ended September 30, |  |  | Period from June 16, 2010 (a) through September 30, 2010 |
|  | 2012 |  |  | 2011 |  |
Revenues |  | $ | — |  |  | $ | — |  |  | $ | — |
Cost of revenues |  |  | — |  |  |  | — |  |  |  | — |
Gross profit |  |  | — |  |  |  | — |  |  |  | — |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |
General and administrative |  |  | 48,377 |  |  |  | 13,883 |  |  |  | 1,438 |
Acquisition related charges |  |  | 3,729 |  |  |  | 8,696 |  |  |  | 6,649 |
Total operating expenses |  |  | 52,106 |  |  |  | 22,579 |  |  |  | 8,087 |
Operating loss |  |  | (52,106 | ) |  |  | (22,579 | ) |  |  | (8,087 | )
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |
Equity in net income (losses) of subsidiaries |  |  | 354,628 |  |  |  | 75,014 |  |  |  | (55,772 | )
Interest expense |  |  | (56,565 | ) |  |  | (39,005 | ) |  |  | — |
(Increase) decrease in fair value of equity conversion feature of preferred stock |  |  | (156,600 | ) |  |  | 27,910 |  |  |  | — |
Other, net |  |  | 190 |  |  |  | 723 |  |  |  | 195 |
Income (loss) before income taxes |  |  | 89,547 |  |  |  | 42,063 |  |  |  | (63,664 | )
Income tax (benefit) expense |  |  | (9 | ) |  |  | 4 |  |  |  | 6 |
Net income (loss) |  |  | 89,556 |  |  |  | 42,059 |  |  |  | (63,670 | )
Less: Preferred stock dividends and accretion |  |  | 59,641 |  |  |  | 19,833 |  |  |  | — |
Net income (loss) attributable to common and participating preferred stockholders |  | $ | 29,915 |  |  | $ | 22,226 |  |  | $ | (63,670 | )
(a) | Date from which the registrant’s results of operations are included in the accompanying consolidated financial statements, as discussed further in Note 1 to the consolidated financial statements.
See accompanying Report of Independent Registered Public Accounting Firm. HARBINGER GROUP INC. (Registrant Only) STATEMENTS OF CASH FLOWS (In thousands)
|  | Year Ended September 30, |  |  | Period from June 16, 2010 through September 30, 2010 |
|  | September 30, 2012 |  |  | September 30, 2011 |  |
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) |  | $ | 89,556 |  |  | $ | 42,059 |  |  | $ | (63,670 | )
Adjustments to reconcile net income (loss) to net cash used in operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Depreciation of properties |  |  | 133 |  |  |  | 91 |  |  |  | 19 |
Stock-based compensation |  |  | 1,886 |  |  |  | 116 |  |  |  | 34 |
Amortization of debt issuance costs |  |  | 2,856 |  |  |  | 1,770 |  |  |  | — |
Amortization of debt discount |  |  | 571 |  |  |  | 613 |  |  |  | — |
Deferred income taxes |  |  | 3,582 |  |  |  | 376 |  |  |  | 881 |
Equity in net (income) losses of subsidiaries |  |  | (354,628 | ) |  |  | (75,014 | ) |  |  | 55,772 |
Dividends from subsidiaries |  |  | 69,470 |  |  |  | 20,000 |  |  |  | — |
Increase (decrease) in fair value of equity conversion feature of preferred stock |  |  | 156,600 |  |  |  | (27,910 | ) |  |  | — |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Prepaid expenses and other current assets |  |  | (4,640 | ) |  |  | 62 |  |  |  | (561 | )
Accounts payable and accrued and other current liabilities |  |  | 27,042 |  |  |  | 15,697 |  |  |  | 989 |
Other operating |  |  | (1,652 | ) |  |  | 1,797 |  |  |  | 701 |
Net cash used in operating activities |  |  | (9,224 | ) |  |  | (20,343 | ) |  |  | (5,835 | )
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |
Proceeds from investments sold, matured or repaid |  |  | 108,887 |  |  |  | 101,006 |  |  |  | 30,094 |
Cost of investments acquired |  |  | (67,983 | ) |  |  | (121,930 | ) |  |  | (3,989 | )
Capital contributions to consolidated subsidiaries |  |  | (36,330 | ) |  |  | (727,162 | ) |  |  | — |
Return of capital from subsidiary |  |  | 88,000 |  |  |  | — |  |  |  | — |
(Advances to) repayments from consolidated subsidiaries |  |  | 49,339 |  |  |  | (49,339 | ) |  |  | — |
Capital expenditures |  |  | (26 | ) |  |  | (345 | ) |  |  | (58 | )
Net cash provided by (used in) investing activities |  |  | 141,887 |  |  |  | (797,770 | ) |  |  | 26,047 |
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |
Dividends paid on preferred stock |  |  | (31,670 | ) |  |  | — |  |  |  | — |
Proceeds from senior secured notes |  |  | — |  |  |  | 498,459 |  |  |  | — |
Proceeds from preferred stock issuance, net of issuance costs |  |  | — |  |  |  | 385,973 |  |  |  | — |
Debt issuance costs |  |  | — |  |  |  | (16,207 | ) |  |  | — |
Other financing activities |  |  | — |  |  |  | 416 |  |  |  |  |
Net cash provided by (used in) financing activities |  |  | (31,670 | ) |  |  | 868,641 |  |  |  | — |
Net increase in cash and cash equivalents |  |  | 100,993 |  |  |  | 50,528 |  |  |  | 20,212 |
Cash and cash equivalents at beginning of period |  |  | 134,790 |  |  |  | 84,262 |  |  |  | 64,050 |
Cash and cash equivalents at end of period |  | $ | 235,783 |  |  | $ | 134,790 |  |  | $ | 84,262 |
(a) | Date from which the registrant’s results of operations are included in the accompanying consolidated financial statements, as discussed further in Note 1 to the consolidated financial statements.

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