Harbinger Group Inc.
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SEC Filings

10-K
HRG GROUP, INC. filed this Form 10-K on 12/29/1994
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<PAGE>
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
NOTE 4. ACQUISITIONS
 
  In November 1993, Zapata purchased the natural gas compression business of
Energy Industries, Inc. and certain other affiliated companies ("Energy
Industries"), as well as certain real estate used by the business. Energy
Industries is in the business of renting, fabricating, selling, installing and
servicing natural gas compressor packages. Total consideration paid for the
purchase of Energy Industries and certain real estate, and for a related
noncompetition agreement (collectively, the "Energy Industries Acquisition")
was $90.2 million consisting of $74.5 million in cash and 2.7 million shares of
Common Stock based on an assigned value of $5.80 per share which approximated
the average trading price prior to closing of the acquisition. Additionally,
the Company incurred approximately $2.0 million in fees associated with the
Energy Industries Acquisition. Zapata accounted for the acquisition using the
purchase method of accounting and recorded $19.3 million of goodwill in
connection therewith. The goodwill is being amortized over 40 years.
 
  The following assets and liabilities were acquired in connection with the
Energy Industries Acquisition effective November 1, 1993 (in millions):
 

<TABLE>
      <S>                                                                 <C>
      Cash............................................................... $ 3.5
      Receivables........................................................   9.3
      Inventory..........................................................  16.2
                                                                          -----
                                                                           29.0
      Goodwill & other assets............................................  19.7
      Property & equipment, net..........................................  49.6
                                                                          -----
                                                                          $98.3
                                                                          =====
      Current Liabilities................................................ $ 5.8
      Long-term debt.....................................................    .2
                                                                          -----
                                                                          $ 6.0
                                                                          =====
</TABLE>

 
  The following pro forma information for Zapata for the twelve months ended
September 30, 1994 and September 30, 1993 includes the historical results of
Zapata, adjusted for the results of Energy Industries as if the Energy
Industries Acquisition had been consummated on October 1, 1992 (unaudited) (in
thousands, except per share amounts).
 

<TABLE>
<CAPTION>
                                                                TWELVE MONTHS
                                                                    ENDED
                                                                SEPTEMBER 30,
                                                              ------------------
                                                                1994      1993
                                                              --------  --------
      <S>                                                     <C>       <C>
      Revenues..............................................  $247,226  $269,752
      Income (loss) from continuing operations before taxes.      (891)   20,180
      Income (loss) from continuing operations..............      (501)   14,000
      Income (loss) per share from continuing operations....     (0.03)     0.45
</TABLE>

 
  The pro forma adjustments to Zapata's results for fiscal 1994 to reflect the
Energy Industries Acquisition increased revenues by $6,014,000, as well as
reducing the loss from continuing operations before taxes by $174,000.
Additional pro forma adjustments for fiscal 1994 included the elimination of
$124,000 of various operating and administrative expenses that were charged to
Energy Industries from an affiliate, additional depreciation of $120,000 and
$41,000 of goodwill amortization, a reduction in net interest expense of
$161,000 related to notes receivable and payable that were not acquired by
Zapata and a federal tax provision of $104,000.
 
  The pro forma adjustments to Zapata's results for fiscal 1993 to reflect the
Energy Industries Acquisition increased revenues by $63,272,000, as well as
income before tax by $3,737,000. Additional pro forma
 
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