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 9. INCOME TAXES--(CONTINUED)
 
  Income tax expense (benefit) was allocated to operations as follows:
 

<TABLE>
<CAPTION>
                                                             1994    1993   1992
                                                             -----  ------  ----
                                                              (IN THOUSANDS)
      <S>                                                    <C>    <C>     <C>
      Continuing Operations................................. $(494) $3,800  $678
      Discontinued Operations............................... 1,068    (150)   82
                                                             -----  ------  ----
          Total............................................. $ 574  $3,650  $760
                                                             =====  ======  ====
</TABLE>

 
  The provision for deferred taxes results from timing differences in the
recognition of revenues and expenses for tax and financial reporting purposes.
The sources and income tax effects of these differences were as follows:
 

<TABLE>
<CAPTION>
                                                      1994     1993     1992
                                                     -------  -------  -------
                                                         (IN THOUSANDS)
      <S>                                            <C>      <C>      <C>
      Book depreciation in excess of tax
       depreciation................................  $   616  $(1,379) $(2,077)
      Tax deduction related to oil and gas
       exploration and production over (under) book
       expenses....................................   (6,277)    (163)   1,254
      Tax gain in excess of book gain on stock
       sale........................................  (10,116)  (8,065)
      Changes to tax carryforwards and other.......    7,806   12,771    1,501
      Amortization of intangibles..................      452
      Charge off uncollectible note................    2,790
                                                     -------  -------  -------
                                                     $(4,729) $ 3,164  $   678
                                                     =======  =======  =======
</TABLE>

 
  For federal income tax purposes, Zapata has $16.6 million of investment tax
credit carryforwards expiring in 1995 through 2001, and has $11.4 million of
alternative minimum tax credit carryforwards. The use of tax credits may be
limited as a result of a change of ownership as calculated for tax purposes.
Investment tax credit carryforwards are reflected in the balance sheet as a
reduction of deferred taxes using the flow-through method.
 
  The following table reconciles the income tax provisions for 1994, 1993 and
1992 computed using the U.S. statutory rate of 35%, 34% and 34%, respectively,
to the provisions reflected in the financial statements.
 

<TABLE>
<CAPTION>
                                                          1994    1993    1992
                                                          -----  ------  ------
                                                            (IN THOUSANDS)
      <S>                                                 <C>    <C>     <C>
      Taxes at statutory rate...........................  $(416) $4,627  $1,188
      Recovery of nondeductible book losses.............           (259)
      Amortization of intangibles not deductible for
       tax..............................................    185
      Other.............................................   (737)     (1)    (64)
      Equity/dividend income not recognized for tax pur-
       poses............................................   (176)   (567)   (446)
      State taxes.......................................    650
                                                          -----  ------  ------
                                                          $(494) $3,800  $  678
                                                          =====  ======  ======
</TABLE>

 
                                       49

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