(17) Consolidating Financial Information

The following schedules present the Company’s consolidating balance sheet information at December 30, 2012 and September 30, 2012, and consolidating statements of operations information for the three months ended December 30, 2012 and January 1, 2012. These schedules present the individual segments of the Company and their contribution to the consolidated condensed 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


December 30, 2012	Consumer Products		Insurance		Other Financial Services		Corporate and Other		Eliminations			Total
Assets:
Investments	$	—	$	16,929.5	$	204.8	$	82.2	$	—		$	17,216.5
Investments in subsidiaries and affiliates		—		—		—		1,667.6		(1,667.6	)		—
Affiliated loans and receivables		—		182.6		—		209.8		(392.4	)		—
Cash and cash equivalents		70.9		605.6		20.2		407.0		—			1,103.7
Receivables, net		525.7		—		—		41.0		—			566.7
Inventories, net		679.2		—		—		—		—			679.2
Accrued investment income		—		153.0		—		—		—			153.0
Reinsurance recoverable		—		2,378.5		—		—		—			2,378.5
Deferred tax assets		20.3		163.8		—		4.9		—			189.0
Properties, net		320.1		7.3		0.4		0.2		—			328.0
Goodwill		1,421.3		—		—		—		—			1,421.3
Intangibles, including DAC and VOBA, net		2,208.0		267.7		—		—		—			2,475.7
Other assets		274.1		30.6		6.9		35.6		—			347.2

Total assets	$	5,519.6	$	20,718.6	$	232.3	$	2,448.3	$	(2,060.0	)	$	26,858.8

Liabilities and Equity:
Insurance reserves	$	—	$	19,041.0	$	—	$	—	$	—		$	19,041.0
Debt		3,222.3		—		—		695.5		—			3,917.8
Accounts payable and other current liabilities		672.5		23.7		0.2		39.8		—			736.2
Equity conversion feature of preferred stock		—		—		—		163.1		—			163.1
Employee benefit obligations		95.2		—		—		5.0		—			100.2
Deferred tax liabilities		487.4		—		—		4.9		—			492.3
Other liabilities		37.5		366.2		12.7		0.4		—			416.8
Affiliated debt and payables		—		209.8		182.6		—		(392.4	)		—

Total liabilities		4,514.9		19,640.7		195.5		908.7		(392.4	)		24,867.4
Temporary equity		—		—		—		323.0		—			323.0
Total stockholders’ equity		553.3		1,077.9		36.4		1,216.6		(1,667.6	)		1,216.6
Noncontrolling interests		451.4		—		0.4		—		—			451.8

Total permanent equity		1,004.7		1,077.9		36.8		1,216.6		(1,667.6	)		1,668.4

Total liabilities and equity	$	5,519.6	$	20,718.6	$	232.3	$	2,448.3	$	(2,060.0	)	$	26,858.8


September 30, 2012	Consumer Products		Insurance		Other Financial Services		Corporate and Other		Eliminations			Total
Assets:
Investments	$	—	$	16,556.5	$	180.1	$	181.8	$	—		$	16,918.4
Investment in subsidiaries and affiliates		—		—		—		1,583.1		(1,583.1	)		—
Affiliated loans and receivables		—		150.1		—		224.4		(374.5	)		—
Cash and cash equivalents		158.0		1,049.4		12.4		250.9		—			1,470.7
Receivables, net		373.4		—		—		41.0		—			414.4
Inventories, net		452.6		—		—		—		—			452.6
Accrued investment income		—		191.6		—		—		—			191.6
Reinsurance recoverable		—		2,363.1		—		—		—			2,363.1
Deferred tax assets		28.2		279.6		—		4.9		—			312.7
Properties, net		214.0		6.9		0.4		0.3		—			221.6
Goodwill		694.2		—		—		—		—			694.2
Intangibles, including DAC and VOBA, net		1,715.0		273.5		—		—		—			1,988.5
Other assets		116.2		35.1		2.2		19.1		—			172.6

Total assets	$	3,751.6	$	20,905.8	$	195.1	$	2,305.5	$	(1,957.6	)	$	25,200.4

Liabilities and Equity:
Insurance reserves	$	—	$	18,996.3	$	—	$	—	$	—		$	18,996.3
Debt		1,669.3		—		—		497.7		—			2,167.0
Accounts payable and other current liabilities		594.2		91.4		—		68.6		—			754.2
Equity conversion feature of preferred stock		—		—		—		232.0		—			232.0
Employee benefit obligations		90.0		—		—		5.1		—			95.1
Deferred tax liabilities		377.5		—		—		4.9		—			382.4
Other liabilities		31.6		610.0		13.3		0.4		—			655.3
Affiliated debt and payables		—		224.4		150.1		—		(374.5	)		—

Total liabilities		2,762.6		19,922.1		163.4		808.7		(374.5	)		23,282.3
Temporary equity		—		—		—		319.2		—			319.2
Total stockholders’ equity		567.7		983.7		31.7		1,177.6		(1,583.1	)		1,177.6
Noncontrolling interests		421.3		—		—		—		—			421.3

Total permanent equity		989.0		983.7		31.7		1,177.6		(1,583.1	)		1,598.9

Total liabilities and equity	$	3,751.6	$	20,905.8	$	195.1	$	2,305.5	$	(1,957.6	)	$	25,200.4

Harbinger Group Inc. — Condensed Consolidating Statements of Operations Information


Three Months Ended December 30, 2012	Consumer Products			Insurance			Other Financial Services			Corporate and Other			Eliminations			Total
Revenues:
Net consumer product sales	$	870.3		$	—		$	—		$	—		$	—		$	870.3
Insurance premiums		—			13.8			—			—			—			13.8
Net investment income		—			169.6			10.6			—			(2.2	)		178.0
Net investment gains		—			146.5			—			—			—			146.5
Insurance and investment product fees and other		—			13.7			—			—			—			13.7

Total revenues		870.3			343.6			10.6			—			(2.2	)		1,222.3
Operating costs and expenses:
Consumer products cost of goods sold		582.1			—			—			—			—			582.1
Benefits and other changes in policy reserves		—			83.6			—			—			—			83.6
Selling, acquisition, operating and general expenses		202.9			25.2			3.3			23.2			—			254.6
Amortization of intangibles		17.1			69.5			—			—			—			86.6

Total operating costs and expenses		802.1			178.3			3.3			23.2			—			1,006.9

Operating income		68.2			165.3			7.3			(23.2	)		(2.2	)		215.4
Interest expense		(69.9	)		(5.5	)		(2.2	)		(73.2	)		7.7			(143.1	)
Affiliated interest income		—			—			—			5.5			(5.5	)		—
Equity in net income (losses) of subsidiaries		—			—			—			103.2			(103.2	)		—
Gain from the change in the fair value of the equity conversion feature of preferred stock		—			—			—			68.9			—			68.9
Other (expense) income, net		(1.6	)		—			—			(7.1	)		—			(8.7	)

Income from continuing operations before income taxes		(3.3	)		159.8			5.1			74.1			(103.2	)		132.5
Income tax expense		10.6			53.8			—			—			—			64.4

Net income		(13.9	)		106.0			5.1			74.1			(103.2	)		68.1
Less: Net (loss) income attributable to noncontrolling interest		(6.2	)		—			0.2			—			—			(6.0	)

Net income attributable to controlling interest		(7.7	)		106.0			4.9			74.1			(103.2	)		74.1
Less: Preferred stock dividends and accretion		—			—			—			12.1			—			12.1

Net income attributable to common and participating preferred stockholders	$	(7.7	)	$	106.0		$	4.9		$	62.0		$	(103.2	)	$	62.0


Three Months Ended January 1, 2012	Consumer Products			Insurance			Other Financial Services			Corporate and Other			Eliminations			Total
Revenues:
Net consumer product sales	$	848.8		$	—		$	—		$	—		$	—		$	848.8
Insurance premiums		—			16.8			—			—			—			16.8
Net investment income		—			186.8			—			—			—			186.8
Net investment gains		—			103.9			—			—			—			103.9
Insurance and investment product fees and other		—			9.7			—			—			—			9.7

Total revenues		848.8			317.2			—			—			—			1,166.0
Operating costs and expenses:
Consumer products cost of goods sold		564.7			—			—			—			—			564.7
Benefits and other changes in policy reserves		—			176.9			—			—			—			176.9
Selling, acquisition, operating and general expenses		185.8			61.8			0.2			8.1			—			255.9
Amortization of intangibles		14.6			42.1			—			—			—			56.7

Total operating costs and expenses		765.1			280.8			0.2			8.1			—			1,054.2

Operating income		83.7			36.4			(0.2	)		(8.1	)		—			111.8
Interest expense		(41.1	)		(6.2	)		—			(14.8	)		6.2			(55.9	)
Affiliated interest income		—			—			—			6.2			(6.2	)		—
Equity in net income (losses) of subsidiaries		—			—			—			24.9			(24.9	)		—
Gain from the change in the fair value of the equity conversion feature of preferred stock		—			—			—			27.9			—			27.9
Other (expense) income, net		(2.2	)		—			—			3.4			—			1.2

Income from continuing operations before income taxes		40.4			30.2			(0.2	)		39.5			(24.9	)		85.0
Income tax expense		27.3			12.2			—			—			—			39.5

Net income		13.1			18.0			(0.2	)		39.5			(24.9	)		45.5
Less: Net (loss) income attributable to noncontrolling interest		6.0			—			—			—			—			6.0

Net income attributable to controlling interest		7.1			18.0			(0.2	)		39.5			(24.9	)		39.5
Less: Preferred stock dividends and accretion		—			—			—			15.7			—			15.7

Net income attributable to common and participating preferred stockholders	$	7.1		$	18.0		$	(0.2	)	$	23.8		$	(24.9	)	$	23.8