Harbinger Group Inc. Reports Fiscal 2013 Results

  Harbinger Group Inc. Reports Fiscal 2013 Results

  Revenues Increase 24% to $5.5 billion, Reflecting Strong Growth Across All
                           Four Operating Segments;

                   Operating Income Up 80% from Fiscal 2012

Business Wire

NEW YORK -- November 21, 2013

Harbinger Group Inc. ("HGI"; NYSE:HRG), a diversified holding company focused
on acquiring and growing businesses that are undervalued or fairly valued with
attractive financial or strategic characteristics, today announced its
consolidated results for the fourth quarter and full year period ended on
September30, 2013 ("Fiscal 2013"). The results include HGI's four segments:

  *Consumer Products, which consists of Spectrum Brands Holdings, Inc.
    ("Spectrum Brands"; NYSE: SPB);
  *Insurance, which includes Fidelity & Guaranty Life ("FGL") and Front
    Street Re, Ltd. ("FSR");
  *Energy, which includes the company's interest in an oil and gas joint
    venture with EXCO Resources, Inc. (the "EXCO/HGI JV"); and
  *Financial Services, which includes Salus Capital Partners, LLC ("Salus")
    and Five Island Asset Management, LLC ("Five Island").

Philip Falcone, HGI Chairman and Chief Executive Officer, said, “We are
pleased with our performance in fiscal 2013, including strong top line growth
and profitability, solid operational performance, and the successful
completion of key initiatives - such as the HHI acquisition in our Consumer
Products segment and the establishment of our Energy business - that position
us for continued success. Our performance demonstrates the value of our
diversified holding company model and patient capital approach. It also
reflects the strength of our operating subsidiaries, all of which are rooted
in industries that have attractive long-term fundamentals and market dynamics.
We are committed to building upon the progress made this year and further
enhancing shareholder value.”

Omar Asali, HGI President, said, “Each of our market segments performed well
in fiscal 2013. In particular, Consumer Products grew revenues by 26% and
operating profit by 16%, reflecting the benefits of the HHI acquisition and
power of Spectrum Brands’ ‘Same Performance, Less Price/Better Value’
proposition in today’s economic environment. Operating income in our Insurance
segment has performed strongly and grown to $522.9 million due to a more
favorable economic environment and our solid market position, while our
financial and newly-established energy businesses continued to gain scale and
positive momentum. Our focus remains on value and patient capital allocation
as we continue to build upon our disciplined strategy of seeking opportunities
in industries we know well and operating businesses with strong management
teams and strong free cash flow potential over the long term.”

Fiscal 2013 Results Highlights:

  *Total revenues increased 23.7% from the year ended September30, 2012
    ("Fiscal 2012"), driven by strong growth across all operating segments.
  *Consolidated operating income increased 80.1% to $737.4 million in Fiscal
    2013 from $409.5 million in Fiscal 2012.
  *Net loss attributable to common and participating preferred stockholders
    was $94.2 million, or $0.67 per common share attributable to controlling
    interest ($0.67 diluted), compared to net income attributable to common
    and participating preferred stockholders of $29.9 million, or $0.15 per
    common share attributable to controlling interest ($0.15 diluted), in
    Fiscal 2012.
  *Fiscal 2013 results include $248.0 million of realized investment gains in
    the Insurance segment, a $101.6 million non-cash charge related to the
    fair value of the preferred stock equity conversion feature, reflecting
    HGI’s stock price appreciation of 23.0% from $8.43 to $10.37 per share
    during Fiscal 2013 and increased interest expense primarily due to
    acquisition and other financing, along with refinancing to lower interest
    rate debt.
  *HGI ended Fiscal 2013 with corporate cash and short-term investments of
    approximately $301.2 million (primarily held at HGI and HGI Funding LLC).
  *Consumer Products segment’s operating profit for Fiscal 2013 increased
    $49.4 million, or 16.4%, to $351.2 million from $301.8 million for Fiscal
    2012.
  *Insurance segment’s operating profit for Fiscal 2013 increased by $363.0
    million, to $522.9 million from $159.9 million for Fiscal 2012. Insurance
    segment’s adjusted operating income (“Insurance AOI”) increased by $163.5
    million, or 282.4%, to $221.4 million.
  *The Financial Services segment reported operating profit of $10.4 million
    for Fiscal 2013, compared to $2.5 million earned during Fiscal 2012, an
    increase of $7.9 million.
  *Energy segment reported revenues of $90.2 million and an operating loss of
    $45.2 million primarily as a result of a non cash impairment charge of
    $54.3 million of oil and natural gas properties.
  *HGI received dividends of approximately $127.1 million from its
    subsidiaries, including $93.0 million from FGL, $22.8 million from
    Spectrum Brands, $7.5 million from the EXCO/HGI JV, and $3.8 million from
    Salus. In addition, at the close of the EXCO/HGI JV transaction, HGI
    received a $22.7 million benefit, in the form of a purchase price
    reduction.

Fiscal 2013 Business Highlights:

  *Finalized joint venture with EXCO Resources, Inc. to create the EXCO/HGI
    JV to operate certain of EXCO’s producing U.S. conventional oil and
    natural gas assets in the Permian Basin and the Cotton Valley of East
    Texas and North Louisiana. Subsequently, EXCO/HGI JV purchased the
    associated shallow Cotton Valley assets from an affiliate of BG Group.
  *Completed Spectrum Brands' acquisition of Stanley Black & Decker, Inc.'s
    Hardware & Home Improvement Group ("HHI"), including the acquisition of
    the Taiwanese residential lockset business, Tong Lung Metal Industry.
  *Refinanced $500.0 million of 10.625% senior secured notes on more
    favorable terms, and further increased financial flexibility through the
    issuance of an aggregate $925.0 million of 7.875% senior secured notes.
  *Pursuant to a $50.0 million share repurchase program in August 2013,
    purchased $12.3 million of common stock in the fourth quarter.

Detail on Fiscal 2013 Results:

HGI's consolidated revenues for Fiscal 2013 were $5.5 billion, compared to
$4.5 billion for Fiscal 2012. The increase was primarily driven by the HHI
acquisition in the Consumer Products segment, realized gains on sales of fixed
maturity securities in the Insurance segment, revenues from the EXCO/HGI JV,
and new business activity in the Energy and Financial Services segments.

Operating profit for Fiscal 2013 increased $327.9 million, or 80.1%, to $737.4
million from $409.5 million for Fiscal 2012. The increase was primarily the
result of revenue increases described above, and favorable changes in reserve
and amortization estimates in our Insurance segment. The increase was offset
in part by increased stock compensation, bonus and transaction related costs
in our Corporate segment, and impairments of oil and gas properties at our
Energy segment.

HGI's Fiscal 2013 results include a $101.6 million loss from the change in the
fair value of the equity conversion feature of preferred stock which was the
result of a 23.0% increase in HGI’s stock price from $8.43 to $10.37 per share
during Fiscal 2013, and a $260.9 million increase in interest expense, that
was primarily due to acquisition and other financing, along with refinancing
to lower interest rate debt.

Additionally, the Company incurred tax expense totaling $187.3 million, which
was primarily driven by: (i) the profitability of FGL’s life insurance
business; (ii) pre-tax losses in the United States and some foreign
jurisdictions for which the tax benefits are offset by valuation allowances;
(iii) an increase in the fair value of the equity conversion feature of the
Preferred Stock with no tax benefit; (iv) tax amortization of certain
indefinite lived intangibles; and (v) tax expense on income in certain foreign
jurisdictions for which the Company will not receive tax credits in the United
States due to its tax loss position. Partially offsetting these factors was a
partial release of U.S. valuation allowances as a result of a recent
acquisition by Spectrum Brands.

Consumer Products:

Net sales increased by $833.2 million, or 25.6%, to $4.09 billion in Fiscal
2013 from $3.25 billion in Fiscal 2012. Excluding negative foreign exchange
impacts of $19.2 million, net sales increased $852.4 million, or 26.2%. The
increase was primarily due to sales from HHI. In addition, and to a lesser
extent, sales benefited from an increase in pet supplies as a result of
increased companion animal sales, an increase in electric personal care
products due to new innovative products and additional distribution channels,
increased home and garden product sales due to favorable weather conditions,
and the full period impact of the FURminator acquisition completed in December
of 2011. The increases were offset in part by the planned exit of marginally
profitable small appliances products, the ongoing, negative impact of a
one-time shaving and grooming category shelf space reduction at a major
retailer, and the negative impact of movements in foreign currency in consumer
batteries. Since the acquisition by Spectrum Brands on December 17, 2012, the
HHI products category recorded net sales of $869.6 million.

Consumer Products delivered Adjusted EBITDA of $677.1 million, up $8.7
million, or 1.3% year-on-year (or 4.7% excluding the negative impact of
foreign exchange) including HHI as if acquired at the beginning of Fiscal
2012. For the fourth consecutive year, legacy Spectrum Brands delivered record
adjusted EBITDA with growth of 2.1% to $495.5 million in Fiscal 2013 versus
Fiscal 2012, or 6.1% excluding the negative impact of foreign exchange.
Adjusted EBITDA is a non-U.S. GAAP measure that excludes interest, income tax
expense, restructuring and related charges, acquisition and integration
related charges, intangible asset impairment and depreciation and amortization
expenses - see "Non-U.S. GAAP Measures" and the reconciliation of Adjusted
EBITDA to the Consumer Product segment's net income or loss table below.

Consumer Products operating income increased to $351.2 million in Fiscal 2013
from $301.8 million in Fiscal 2012, representing an increase of 16.4% or $49.4
million. Gross profit, representing Consumer Products’ net sales minus its
cost of goods sold, for Fiscal 2013 was $1.39 billion, compared to $1.12
billion for Fiscal 2012. Spectrum Brands’ gross profit margin, representing
gross profit as a percentage of net sales, for Fiscal 2013 decreased to 34.0%
from 34.3% in Fiscal 2012. The slight decrease in gross profit margin was
driven by a $31.0 million increase to cost of goods sold due to the sale of
inventory which was revalued in connection with the acquisition of the HHI
business, which offset improvements to gross profit resulting from the exit of
low margin products in Spectrum Brands’ small appliances category.

For more information on HGI's Consumer Products segment, interested parties
should read Spectrum Brands' announcements and public filings, including
Spectrum Brands' fourth quarter earnings announcement, by visiting Spectrum
Brands' website: www.spectrumbrands.com.

Insurance:

The Insurance segment recorded annuity sales, which for GAAP purposes are
recorded as deposit liabilities (i.e. contract holder funds), for Fiscal 2013
of $1.0 billion, compared to $1.7 billion for Fiscal 2012. The reduced sales
level reflects company initiated pricing changes that depressed sales as well
as high sales during the same period last year due to the launch of new
products. Such pricing changes were made in order to maintain target
profitability and target capital ratios. Sales levels have been consistent for
the past four quarters and FGL continues to achieve target profitability
levels. Additionally, during Fiscal 2013, FGL grew indexed universal life
sales by 16%.

The Insurance segment had net income of $350.2 million for Fiscal 2013,
compared to $344.2 million for Fiscal 2012. The Insurance segment reported
operating income of $522.9 million for Fiscal 2013 versus operating income of
$159.9 million for Fiscal 2012. The increase is primarily due to gains on bond
sales and adjustments to amortization and reserves to reflect updated
assumptions related to interest rates and option costs based on the current
market environment, which significantly improved during Fiscal 2013 versus
last year.

The segment’s adjusted operating income (“Insurance AOI”) increased by $163.5
million (pre-tax), or 282.4%, to $221.4 million from $57.9 million for Fiscal
2012. This increase is primarily due to annual assumption changes made to the
surrender rates, earned rates and future index credits used in the FIA
embedded derivative reserve calculation which resulted in a reserve decrease
of $86.5 million during the fourth quarter of Fiscal 2013, net of related DAC
and VOBA amortization and unlocking impact. Also contributing to the increase
were immediate annuity mortality gains of $36.3 million during Fiscal 2013
caused by large case deaths, as discussed above in benefits and other changes
in policy reserves, and the absence of an $11.0 million charge for unclaimed
death benefits, net of reinsurance, recorded in Fiscal 2012 - see “Non-GAAP
Measures” and a reconciliation of adjusted operating net income before taxes
to the Insurance segment's reported net income before taxes below.

FGL had approximately $17.4 billion of assets under management as of September
30, 2013, compared to $17.6 billion as of September 30, 2012. The investment
portfolio continues to be conservatively positioned in its credit and duration
profile and well matched against its liabilities.

As of September 30, 2013, HGI's Insurance segment had a net GAAP book value of
$1.2 billion (excluding Accumulated Other Comprehensive Income ("AOCI") of
$112.9 million). As of September 30, 2013, the Insurance segment's investment
portfolio had $305.0 million in net unrealized gains on a GAAP basis. FGL's
statutory total adjusted capital at September 30, 2013 was approximately
$1,135.5 million.

On November 1, 2013, FGL announced that it is re-domesticating from Maryland
to Iowa effective November 1, 2013. Iowa’s deep insurance talent pool,
sophisticated regulatory approach to indexed products, and strong business
climate will allow FGL to continue to grow and pursue its business. In
addition, on August 29, 2013, FGL filed for a U.S. initial public offering.

Energy:

On February 14, 2013, HGI closed on the EXCO/HGI JV transaction, which created
a private oil and gas limited partnership. From inception through September
30, 2013, the partnership generated oil and natural gas revenues of $90.2
million, while the segment experienced an operating loss of $45.2 million,
primarily as the result of the $54.3 million non-cash impairment of oil and
natural gas properties. Energy segment adjusted earnings before interest,
taxes, depreciation and amortization ("Adjusted EBITDA-Energy") from inception
through September 30, 2013 was $39.6 million. Adjusted EBITDA-Energy is a
non-GAAP measure that excludes non-recurring other operating items, accretion
of discount on asset retirement obligations, unrealized gains or losses of
derivatives, non-cash write-downs of assets, and stock-based compensation -
see "Non-GAAP Measures" and a reconciliation of Adjusted EBITDA-Energy to the
Energy segment's net loss below.

For the period from inception to September 30, 2013, the Energy segment’s
developmental activities in the Permian basin included 14 wells spud and 15
wells completed and turned-to-sales. For the same period, the segment's net
production was 18.1 Bcfe, consisting of approximately 81% natural gas, 10%
natural gas liquids and 9% oil.

On October 22, 2013, the Oil and Gas Financial Journal recognized the EXCO/HGI
JV as the Transaction of the Year under $1.0 Billion.

Financial Services:

The Financial Services segment had net income for Fiscal 2013 of $6.2 million.
The Financial Services segment reported operating income of $10.4 million in
Fiscal 2013, compared to $2.5 million earned during Fiscal 2012, an increase
of $7.9 million. Revenues for Fiscal 2013 increased $20.3 million to $28.9
million from $8.6 million in Fiscal 2012. The increases in revenues and
operating income during the year are as a result of an increase in
asset-backed loans originated and serviced by the operations of Salus to
$565.6 million in Fiscal 2013 from $181.5 million in Fiscal 2012.

Also contributing to revenues and operating income in Fiscal 2013 was an
increase in asset management fees earned from the Insurance segment by the
operations of Five Island, a newly formed, wholly-owned asset management
company, with up to $0.5 billion, as of September 30, 2013, in assets under
management related to the Reinsurance Transaction.

During Fiscal 2013, Salus closed on 33 transactions, representing $779.5
million in total commitments to a variety of well recognized businesses.
Additionally, Salus expanded its scope in third party asset management with
two successful closings of a CLO, representing $550.0 million in direct loan
participations.

Fourth Quarter 2013 Highlights:

  *Total revenues for the fourth quarter of Fiscal 2013 were $1.5 billion,
    compared to $1.2 billion in the same period last year, an increase of
    25.2%.
  *Operating income for the fourth quarter of Fiscal 2013 increased by $85.1
    million, or 70.7%, to $205.4 million from $120.3 million for same period
    last year.
  *Consumer Products segment recorded net sales of $1.14 billion in the
    fourth quarter of Fiscal 2013, compared to $832.6 million last year.
    Consumer Products' operating income for the fourth quarter increased $47.5
    million, or 70.4%, to $115.0 million from $67.5 million for the fourth
    quarter of Fiscal 2012.
  *Insurance segment recorded annuity sales of $246.9 million in the fourth
    quarter of Fiscal 2013, compared to $264.4 million last year. Insurance’s
    operating income for the fourth quarter was $171.4 million, compared to
    $70.4 million for the fourth quarter of Fiscal 2012.
  *Energy segment recorded net sales of $35.7 million in the fourth quarter
    of Fiscal 2013 and operating loss of $50.5 million.
  *Financial Services segment recorded net sales of $7.7 million in the
    fourth quarter of Fiscal 2013, compared to $6.5 million last year, and
    operating income of $0.4 million compared to $3.0 million for the fourth
    quarter of Fiscal 2012.

Forward Looking Statements

“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of
1995: This document contains, and certain oral statements made by our
representatives from time to time may contain, forward-looking statements,
including those statements regarding our subsidiaries' ability to pay
dividends. Such statements are subject to risks and uncertainties that could
cause actual results, events and developments to differ materially from those
set forth in or implied by such statements. These statements are based on the
beliefs and assumptions of HGI's management and the management of HGI's
subsidiaries (including target businesses). Generally, forward-looking
statements include information concerning possible or assumed future
distributions from subsidiaries, other actions, events, results, strategies
and expectations and are generally identifiable by use of the words
“believes,” “expects,” “intends,” “anticipates,” “plans,” “seeks,”
“estimates,” “projects,” “may,” “will” “could,” “might,” or “continues” or
similar expressions. Factors that could cause actual results, events and
developments to differ include, without limitation: the ability of HGI's
subsidiaries (including, target businesses following their acquisition) to
generate sufficient net income and cash flows to make upstream cash
distributions, capital market conditions, HGI and its subsidiaries ability to
identify any suitable future acquisition opportunities, efficiencies/cost
avoidance, cost savings, income and margins, growth, economies of scale,
combined operations, future economic performance, conditions to, and the
timetable for, completing the integration of financial reporting of acquired
or target businesses with HGI or HGI subsidiaries, completing future
acquisitions and dispositions, litigation, potential and contingent
liabilities, management's plans, changes in regulations, taxes and the those
forward looking statements included under the caption “Risk Factors” in HGI's
most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q
filed during fiscal 2013. All forward-looking statements described herein are
qualified by these cautionary statements and there can be no assurance that
the actual results, events or developments referenced herein will occur or be
realized. HGI does not undertake any obligation to update or revise
forward-looking statements to reflect changed assumptions, the occurrence of
unanticipated events or changes to future operation results.

Non-GAAP Measures

Management believes that certain non-GAAP financial measures may be useful in
certain instances to provide additional meaningful comparisons between current
results and results in prior operating periods. Reconciliations of such
measures to the most comparable GAAP measures are included herein.

Our Consumer Products segment uses adjusted earnings before interest, taxes,
depreciation and amortization (“Adjusted EBITDA-Consumer Products”), a
non-GAAP financial measure. Management believes that Adjusted EBITDA-Consumer
Products is significant to gaining an understanding of Spectrum Brands'
results as it is frequently used by the financial community to provide insight
into an organization's operating trends and facilitates comparisons between
peer companies, since interest, taxes, depreciation and amortization can
differ greatly between organizations as a result of differing capital
structures and tax strategies. Adjusted EBITDA-Consumer Products can also be a
useful measure of our Consumer Product segment's ability to service debt and
is one of the measures used for determining Spectrum Brand's debt covenant
compliance. Adjusted EBITDA-Consumer Products excludes certain items that are
unusual in nature or not comparable from period to period.

Our Insurance segment uses Adjusted Operating Income, a non-GAAP financial
measure frequently used throughout the insurance industry. Adjusted Operating
Income is calculated by adjusting the reported insurance segment operating
income to eliminate the impact of net investment gains, excluding gains and
losses on derivatives and including net other-than-temporary impairment losses
recognized in operations, the effect of changes in the rates used to discount
the FIA embedded derivative liability and the effects of acquisition-related
reinsurance transactions. While these adjustments are an integral part of the
overall performance of our Insurance Segment, market conditions impacting
these items can overshadow the underlying performance of the business.
Accordingly, we believe using a measure which excludes their impact is
effective in analyzing the trends of our Insurance segment's operations.

Our Energy segment uses adjusted earnings before interest, taxes, depreciation
and amortization (“Adjusted EBITDA-Energy”), a non-GAAP financial measure.
Management believes that Adjusted EBITDA-Energy is significant to gaining an
understanding of the EXCO/HGI Partnership's results as it is frequently used
by the financial community and management to provide insight into an
organization's operating trends and facilitates comparisons between peer
companies, since interest, taxes, depreciation and amortization can differ
greatly between organizations as a result of differing capital structures and
tax strategies. Adjusted EBITDA-Energy excludes certain items that are unusual
in nature or not comparable from period to period such as accretion of
discount on asset retirement obligations, unrealized gains or losses of
derivatives, non-cash write-downs of assets, and stock-based compensation.

While management believes that non-GAAP measurements are useful supplemental
information, such adjusted results are not intended to replace GAAP financial
results and should be read in conjunction with those GAAP results.

                               (Tables Follow)

                                                  
HARBINGER GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
                                                     
                    Three months ended September     Year ended September 30,
                    30,
                    2013             2012           2013         2012
                    (Unaudited)                      (Unaudited)
Revenues:
Net consumer        $  1,137.8        $  832.6       $ 4,085.6     $ 3,252.4
product sales
Oil and natural     35.7              —              90.2          —
gas
Insurance           11.9              13.1           58.8          55.3
premiums
Net investment      195.0             183.7          734.7         722.7
income
Net investment      100.1             155.4          511.6         410.0
gains
Insurance and
investment          18.1             12.1          62.5         40.3      
product fees and
other
Total revenues      1,498.6           1,196.9        5,543.4       4,480.7
Operating costs
and expenses:
Consumer products
cost of goods       741.3             552.7          2,695.3       2,136.8
sold
Oil and natural
gas direct          17.1              —              44.0          —
operating costs
Benefits and
other changes in    100.1             217.7          531.8         777.4
policy reserves
Selling,
acquisition,        340.9             240.4          1,220.5       932.7
operating and
general expenses
Impairment of oil
and natural gas     54.3              —              54.3          —
properties
Amortization of     39.5             65.8          260.1        224.3     
intangibles
Total operating
costs and           1,293.2          1,076.6       4,806.0      4,071.2   
expenses
Operating income    205.4             120.3          737.4         409.5
Interest expense    (209.2      )     (56.6     )    (511.9    )   (251.0    )
Loss from the
change in the
fair value of the   (183.5      )     (32.6     )    (101.6    )   (156.6    )
equity conversion
feature of
preferred stock
Gain on
contingent          —                 —              —             41.0
purchase price
reduction
Other income        2.1              8.5           (5.6      )   (17.5     )
(expense), net
(Loss) income
from continuing     (185.2      )     39.6           118.3         25.4
operations before
income taxes
Income tax          20.1             (135.9    )    187.3        (85.3     )
expense (benefit)
Net (loss) income   (205.3      )     175.5          (69.0     )   110.7
Less: Net (loss)
income
attributable to     (15.1       )     2.4           (23.2     )   21.2      
noncontrolling
interest
Net (loss) income
attributable to     (190.2      )     173.1          (45.8     )   89.5
controlling
interest
Less: Preferred
stock dividends     12.1             14.0          48.4         59.6      
and accretion
Net (loss) income
attributable to
common and          $  (202.3   )     $  159.1      $ (94.2   )   $ 29.9    
participating
preferred
stockholders
                                                                   
Net (loss) income
per common share
attributable to
controlling
interest:
                                                                   
Basic               $  (1.45    )     $  0.79       $ (0.67   )   $ 0.15    
Diluted             $  (1.45    )     $  0.78       $ (0.67   )   $ 0.15    
                                                                             

                                                 
HARBINGER GROUP INC. AND SUBSIDIARIES
ADJUSTED EBITDA AND ADJUSTED OPERATING INCOME RECONCILIATIONS
(In millions)

The table below shows the adjustments made to the reported net (loss) income
of the consumer products segment to calculate its Adjusted EBITDA (unaudited):

                                                     
                     Fiscal Quarter                  Fiscal
Reconciliation to
reported net         2013           2012            2013           2012
(loss) income:
Reported net
(loss) income -      $  (36.9  )     $  5.4          $  (55.3  )     $  48.6
consumer products
segment
Add back:
Interest expense     183.8           41.8            375.6           191.9
Income tax           (27.5     )     21.6            27.4            60.4
(benefit) expense
HHI Business
inventory fair       —               —               31.0            —
value adjustment
Pre-acquisition
earnings of HHI      —               53.0            30.3            183.1
Business
Restructuring and    6.3             3.7             34.0            19.6
related charges
Acquisition and
integration          7.9             10.5            48.4            31.1
related charges
Venezuela            —              —              2.0            —
devaluation
Adjusted EBIT -
consumer products    133.6           136.0           493.4           534.7
segment
Depreciation and
amortization, net
of accelerated
depreciation
Depreciation of      19.4            12.1            62.0            40.8
properties
Amortization of      20.3            17.2            77.8            63.7
intangibles
Stock-based          11.3           13.4           43.9           29.2
compensation
Adjusted EBITDA -
consumer products    $  184.6       $  178.7       $  677.1       $  668.4
segment

                                                         
The table below shows the adjustments made to the reported net loss of the
energy segment to calculate its Adjusted EBITDA (unaudited):
                                                               
                                    Fiscal Quarter             Fiscal
Reconciliation to reported net      2013                       2013
loss:
Reported net loss - energy          $     (56.7     )          $   (56.8   )
segment
Interest expense                    4.1                        10.3
Depreciation, amortization and      12.5                      31.0        
depletion
EBITDA - energy segment             (40.1           )          (15.5       )
Accretion of discount on asset      0.5                        1.2
retirement obligations
Non-cash write down of oil and      54.3                       54.3
natural gas properties
Loss on derivative financial        2.1                        1.3
instruments
Cash settlements on derivative      (0.5            )          (1.8        )
financial instruments
Stock based compensation            0.1                       0.1         
expense
Adjusted EBITDA - energy            $     16.4                $   39.6    
segment

                                                   
The table below shows the adjustments made to the reported net income before
income taxes of the insurance segment to calculate its pretax adjusted
operating income (unaudited):
                                                       
                        Fiscal Quarter                 Fiscal
Reconciliation to
reported net income     2013           2012           2013         2012
before income taxes:
Reported net income     $  162.0        $  69.9        $  511.2      $ 198.5
before income taxes:
Interest expense        9.0             0.6            11.5          2.5
Other expense           0.4             (0.1     )     0.2           (0.1    )
(income)
Gain on contingent
purchase price          —              —             —            (41.0   )
reduction
Reported operating
income - insurance      171.4           70.4           522.9         159.9
segment
Effect of investment
gains, net of           (41.9     )     (60.2    )     (248.0    )   (132.4  )
offsets
Effect of change in
FIA embedded            5.3             7.8            (53.5     )   18.6
derivative discount
rate, net of offsets
Effects of
transaction-related     —              —             —            11.8    
reinsurance
Adjusted operating
income - insurance      $  134.8       $  18.0       $  221.4     $ 57.9  
segment
                                                                             

Contact:

For investor inquiries:
Harbinger Group Inc.
Investor Relations
Tara Gendelman, 212-906-8560
investorrelations@harbingergroupinc.com
or
For media inquiries:
Sard Verbinnen & Co
Jamie Tully or David Millar
212-687-8080
 
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