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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<PAGE>
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
NOTE 4. ACQUISITIONS--(CONTINUED)
adjustments for fiscal 1993 included the elimination of $2,696,000 of various
operating and administrative expenses that were charged to Energy Industries
from an affiliate, additional depreciation of $1,440,000 and $429,000 of
goodwill amortization, a reduction in net interest expense of $2,007,000
related to notes receivable and payable that were not acquired by Zapata, a
federal tax provision of $2,380,000 and the issuance of 2.7 million shares of
Common Stock.
 
  The pro forma amounts presented above may not be indicative of the results
that would have actually resulted if the transactions had occurred on the date
indicated or which may be obtained in the future.
 
  The Company expects to dispose of its heat exchanger manufacturing operation
in fiscal 1995. These operations were acquired as part of the Energy Industries
acquisition. The sale of the heat exchanger operation is not expected to have a
material impact on the Company's results of operations or financial position.
 
  During the first quarter of fiscal 1993, Zapata acquired the common stock of
Cimarron for $3.8 million consisting of $2.5 million and 437,333 shares of
Common Stock. Cimarron through its subsidiaries is involved in natural gas and
natural gas liquids related businesses. Zapata accounted for the acquisition
using the purchase method of accounting and recorded $2.0 million of goodwill
in connection therewith. The goodwill is being amortized over 20 years. The
following assets and liabilities were acquired effective October 1, 1992 (in
millions):
 

<TABLE>
       <S>                                                                <C>
       Current assets.................................................... $20.3
       Property and equipment, net.......................................   2.0
                                                                          -----
                                                                          $22.3
                                                                          =====
       Current liabilities............................................... $19.6
       Long-term debt....................................................    .7
                                                                          -----
                                                                          $20.3
                                                                          =====
</TABLE>

 
  In September 1993, Cimarron acquired the natural gas gathering and processing
plant interests of Stellar for approximately $16.4 million. The purchase price
reflects an upward adjustment of $200,000 related to the net working capital of
Stellar as of August 31, 1993. The acquisition was financed through the use of
working capital cash and assumption of certain existing indebtedness of
Stellar. The acquisition of Stellar is not significant to the Company's results
of operations or financial position. Zapata accounted for the acquisition using
the purchase method of accounting and recorded $5.5 million of goodwill in
connection therewith. The goodwill is being amortized over 20 years.
 
NOTE 5. UNCONSOLIDATED AFFILIATES
 
  In January 1992, Zapata exchanged its 34.7% interest in Zapata Gulf Marine
Corporation ("Zapata Gulf") for approximately 8.3 million shares of Tidewater
common stock. Zapata sold 4.1 million and 3.5 million shares of its Tidewater
common stock in fiscal 1994 and 1993, respectively. Initially, Zapata followed
the equity method of accounting for its investment in Tidewater based on its
percent ownership and proxies that allowed the Company to have voting control
of 20% of the total shares of Tidewater common stock outstanding.
 
  Effective January 1, 1993, Zapata changed from the equity to the cost method
of accounting for its investment in Tidewater as a result of Zapata's decision
to sell 3.5 million of its 8,258,220 shares of Tidewater
 
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