Harbinger Group Inc.
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SEC Filings

10-K
HRG GROUP, INC. filed this Form 10-K on 03/28/2002
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Company completed its sale of Charged Productions to Charged LLC (a limited
liability corporation comprised of former Charged Productions employees) whereby
Charged Productions received 20% of the outstanding equity of Charged LLC in
exchange for certain remaining assets of the original company. Further, as
Charged Productions is unsure of Charged LLC's ability to generate positive cash
flows from its operations, the investment was written down to zero during the
second quarter of 2001.
 
     In November 1999, Zapata and two of its directors capitalized Zap.Com with
$9.0 and $1.1 million, respectively, in equity to fund its Internet based
business plan. On November 12, 1999, Zapata distributed to its stockholders 2%
of Zap.Com's outstanding stock or 477,742 shares. On November 30, 1999,
Zap.Com's common stock began trading on the NASD's OTC Electronic Bulletin Board
under the symbol "ZPCM."
 
     On December 15, 2000, the Zap.Com Board of Directors concluded that
Zap.Com's operations were not likely to become profitable in the foreseeable
future and, therefore, it was in the best interest of Zap.Com and its
stockholders to cease all Internet operations. Since that date, Zap.Com has
terminated all salaried employees and all third party contractual relationships
entered into in connection with its Internet business. As of the date of this
report, Zapata holds 48,972,258 shares of Zap.Com, or approximately 98% of its
outstanding common stock. Zapata reports Zap.Com's results on a consolidated
basis.
 
     Through June 2000, Zapata had invested its excess cash reserves in U.S.
Government agency securities and cash equivalents. In June 2000, Zapata
management believed that the non-investment grade debt market provided an
opportunity for the Company to meet the funding requirements of its Internet
business and corporate overhead activities while leveraging its available funds
for future acquisitions. Specifically, Zapata management believed that this debt
would yield sufficient income to support its direct operations and free-up
capital otherwise committed for this purpose for deployment in future
acquisitions. Based on adverse non-investment grade market conditions and the
sale of the Company's non-investment grade securities during the second and
third quarters of 2001, the Company recognized a realized loss of approximately
$11.8 million during 2001. As a result of the sale, the Company expects to
receive a tax refund of approximately $7.9 million during 2002.
 
RESULTS OF OPERATIONS
 
  ZAPATA CONSOLIDATED RESULTS OF OPERATIONS
 
  2001-2000
 
     Zapata reported consolidated net income of $4.4 million on $98.8 million in
consolidated revenues in 2001 as compared to a consolidated net loss of $26.0
million on $84.1 million in consolidated revenues in 2000. Increased
consolidated revenues and consolidated income resulted primarily from the
improved performance of Omega Protein, the termination of the Company's Internet
operations in 2000, and the recognition of a benefit from income taxes, all of
which was partially offset by realized losses on investments and a reduction in
interest income.
 
     The following presents a more detailed discussion of the consolidated
operating results:
 
     Revenues.  Consolidated revenues increased from $84.1 million in 2000 to
$98.8 million in 2001. This increase was primarily attributable to higher
selling prices of Omega Protein's fish meal and fish oil, combined with a 43.8%
increase in sales volumes of fish oil as compared to 2000. Selling prices for
fish meal and fish oil products increased by 17.5% and 37.7% in 2001 and 2000,
respectively. The higher sales volumes of Omega's fish oil products were due
primarily to a 48.5% increase in oil yields from the 2001 fishing effort as
compared to the previous year. Omega attributes the higher fish meal and fish
oil selling prices to diminished global fish meal and fish oil inventories.
 
     Cost of revenues.  Zapata's consolidated cost of revenues for the year
ended December 31, 2001 was $84.7 million, a $362,000 decrease, or 0.4%, from
$85.0 million (excluding the $18.1 million inventory write-down) in Fiscal 2000.
Cost of sales as a percentage of revenues was 85.7% for 2001 as compared to
101.1% in 2000 (excluding the inventory write-down). The 15.4% decrease in cost
of sales as a percentage of revenues
 
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