Harbinger Group Inc.
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SEC Filings

10-Q
HRG GROUP, INC. filed this Form 10-Q on 05/10/2002
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Forward-looking statements in this Form 10-Q, future filings by the Company with
the Securities and Exchange Commission ("Commission"), the Company's press
releases and oral statements by authorized officers of the Company are intended
to be subject to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Investors are cautioned that all forward-looking statements
involve risks and uncertainty, including without limitation those identified
from time to time in press releases and other communications with stockholders
by the Company and the filings made with the Commission by the Company, Omega
Protein Corporation ("Omega Protein" or "Omega") and Zap.Com Corporation
("Zap.Com"), such as those disclosed under the caption "Significant Factors That
Could Affect Future Performance and Forward-Looking Statements" appearing in
Item 2 "Management's Discussion and Analysis of Financial Condition and Results
of Operation" of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2001 filed with the Commission or elsewhere in this report.
The Company believes that forward-looking statements made by it are based on
reasonable expectations. However, no assurances can be given that actual results
will not differ materially from those contained in such forward-looking
statements.

GENERAL

Zapata Corporation is a holding company which currently operates in the food
segment through its 61% owned subsidiary, Omega Protein Corporation ("Omega
Protein" or "Omega"), which is the nation's largest marine protein company. In
addition, Zapata holds approximately 98% of the outstanding stock of Zap.Com
Corporation ("Zap.Com"), which is currently a public shell corporation.

Omega Protein produces and markets a variety of products produced from menhaden
(herring-like fish found in commercial quantities in the U.S. coastal waters of
the Atlantic Ocean and Gulf of Mexico) including regular grade and value added
specialty fish meals, crude and refined fish oils and fish solubles. Omega's
fish meal products are used as nutritional feed additives by animal feed
manufacturers and by commercial livestock producers. Omega operates its own
fleet of fishing vessels as well as four processing plants. Omega's crude fish
oil is sold primarily to food producers in Europe, and its refined fish oil
products, which are high in nutritionally desirable Omega-3 fatty acids, are
used in a variety of foods for human consumption, as well as in aquaculture
feeds and certain industrial applications. Fish solubles are sold as protein
additives for animal feed and as organic fertilizers. Omega Protein is engaged
in the marine protein business and its stock is traded on the New York Stock
Exchange ("NYSE") under the symbol "OME."

Zap.Com was in the Internet industry and its stock is traded on the
over-the-counter market on the NASD's OTC Electronic Bulletin Board under the
symbol "ZPCM." In December 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, all signed agreements with web site owners
who joined the ZapNetwork, and all third party contractual relationships entered
into in connection with its Internet business.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2002 and 2001

Zapata experienced consolidated net income of approximately $1.2 million for the
quarter ended March 31, 2002 compared to net loss of approximately $1.2 million
for the quarter ended March 31, 2001.

Revenues. For the three months ended March 31, 2002, Zapata's consolidated
revenues increased approximately 23% from the quarter ended March 31, 2001. The
revenue increase was primarily due to higher sales prices of 18% and 79% for
Omega Protein Corporation's fish meal and fish oil, respectively. Omega
attributes the higher fish meal and fish oil prices to strong worldwide demand
for protein meal and competing oil markets rebounding from historic low levels.

Cost of Revenues. Zapata's consolidated cost of revenues for the quarter ended
March 31, 2002 was $16.9 million, a $1.1 million decrease from $18.0 million for
the quarter ended March 31, 2001. Cost of sales primarily includes Omega
Protein's direct fishing and processing costs. As a percent of revenues, cost of
sales was 72% for the quarter ended March 31, 2002 as compared to 95% for the
quarter ended March 31, 2001. The decrease in cost of sales as a


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