Harbinger Group Inc.
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SEC Filings

DEF 14A
HRG GROUP, INC. filed this Form DEF 14A on 11/15/1995
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  Revenues of $96.6 million and operating income of $5.4 million for fiscal
1994 compared favorably to the fiscal 1993 revenues of $58.6 million and
operating income of $4.3 million. The improved results were achieved by
increased sales volumes that resulted from the combination of a 37% increase in
the fiscal 1994 fish catch as compared to 1993 and to higher levels of
inventories which were carried over from the fiscal 1993 fishing season.
Compared to the prior year, sales volume of fish meal during fiscal 1994 was
55% higher while the average per ton price of $344 was 9% lower. Likewise, fish
oil volumes doubled during 1994 as compared to 1993 while the average per ton
price of $300 was 6% lower.
 
  Although fish catch improved in fiscal 1993, the marine protein division's
operating results for 1993 were slightly lower than fiscal 1992 results.
Revenues of $58.6 million and operating income of $4.3 million for fiscal 1993
compared unfavorably to the fiscal 1992 revenues of $76.3 million and operating
income of $4.7 million. The shortfall was attributable to the combination of
lower sales volumes for fish meal and fish oil, and lower prices for fish meal
that offset the positive effects from the improved fish catch.
 
  During 1993, fish meal prices averaged $376 per ton, down slightly from the
1992 average price of $380 per ton. However, because of an oversupply of fish
meal from South America, prices for prime fish meal (the marine protein
division's primary product) temporarily dropped precipitously during 1993. When
prices fell, management intentionally stopped selling product until prices
recovered later in the year. This decision contributed to lower meal sales
volumes during the year and higher inventories at year-end. The average price
at which fish oil was sold during fiscal 1993 increased from $295 per ton in
1992 to $320 per ton.
 
  The price for fish meal generally bears a relationship to prevailing soybean
meal prices, while prices for fish oil are usually based on prices for
vegetable fats and oils, such as soybean and palm oils. Thus, the prices for
the Company's products are significantly influenced by worldwide supply and
demand relationships over which the Company has no control, and tend to
fluctuate to a significant extent over the course of a year and from year to
year.
 
  The Company's total fish catch for fiscal 1994 improved for the second
consecutive year after dropping in fiscal 1992. The fish catch for fiscal 1994
improved approximately 37% from the 1993 level; the fiscal 1993 catch improved
approximately 10% from the catch in fiscal 1992. The annual fish catch can vary
from year to year depending on weather conditions and other factors outside the
Company's control; the Company cannot predict future fish catch.
 
RECENTLY ISSUED ACCOUNTING STANDARDS
 
  In the first quarter of fiscal 1994, Zapata was required to adopt Statement
of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income
Taxes." The adoption of SFAS 109 changed Zapata's method of accounting for
income taxes to an asset and liability approach. The impact of adopting SFAS
109 was to record an increase to capital in excess of par value of $15.3
million and a net deferred tax asset of $11.6 million arising from the
recognition of previously existing credit carryforward items.
 
  Additionally, in fiscal 1994, the Company adopted Statement of Financial
Accounting Standards No. 115 ("SFAS 115"), "Accounting for Certain Investments
in Debt and Equity Securities," which addresses the accounting and reporting
for investments in equity securities that have readily determinable fair values
and for all investments in debt securities. Zapata currently owns 673,077
shares of Tidewater common stock which had a book value of approximately $7.9
million. As a result of adopting SFAS 115, this security is reported at fair
value at September 30, 1994 and any unrealized gain or loss recorded as a
separate component of stockholders' equity (net of deferred income taxes). At
September 30, 1994 an adjustment was made to increase investments in equity
securities by $6.6 million and increase stockholders equity by $4.3 million for
the unrealized appreciation (net of deferred taxes).
 
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