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 12. PENSION PLANS--(CONTINUED)
  The Company's funding policy is to make contributions as required by
applicable regulations. No contributions to the plan have been required since
1984. The plan's funded status and amounts recognized in the Company's balance
sheet at September 30, 1994 and 1993 is presented below:
 

<TABLE>
<CAPTION>
                                                               1994     1993
                                                              -------  -------
                                                              (IN THOUSANDS)
      <S>                                                     <C>      <C>
      Fair value of plan assets.............................. $21,452  $20,943
                                                              -------  -------
      Actuarial present value of benefit obligations:
        Vested benefits......................................  17,460   14,505
        Nonvested benefits...................................     381      446
                                                              -------  -------
        Accumulated benefit obligation.......................  17,841   14,951
        Additional benefits based on projected salary
         increases...........................................     684      760
                                                              -------  -------
        Projected benefit obligations........................  18,525   15,711
                                                              -------  -------
      Excess of plan assets over projected benefit
       obligations...........................................   2,927    5,232
      Unrecognized transition asset..........................  (3,928)  (4,419)
      Unrecognized prior service cost........................      13       15
      Unrecognized net loss..................................   7,949    7,177
                                                              -------  -------
      Prepaid pension cost................................... $ 6,961  $ 8,005
                                                              =======  =======
</TABLE>

 
  The unrecognized transition asset at October 1, 1987 was $10.6 million, which
is being amortized over 15 years. For 1994 and 1993 the actuarial present value
of the projected benefit obligation was based on a 4.75% weighted average
annual increase in salary levels and a 7.5% discount rate. For 1992 the
actuarial present value of the projected benefit obligations was based on a
5.5% annual increase in salary levels and an 8.0% discount rate. Pension plan
assets are invested in cash, common and preferred stocks, short-term
investments and insurance contracts. The projected long-term rate of return on
plan assets was 9.0% in 1994, 1993 and 1992.
 
  The effect of the assumption changes in 1993 resulted in an increase in the
projected benefit obligation and a corresponding increase in the unrecognized
net loss. The combined unrecognized net loss of $7.9 million at September 30,
1994 is expected to be reduced by future returns on plan assets and through
decreases in future net pension credits.
 
  In 1986, Zapata terminated the Dredging Pension Plan (the "Dredging Plan") in
connection with the sale of the assets of its dredging operations. Annuities
were purchased with Executive Life Insurance Co. ("Executive Life") for
terminated participants of the Dredging Plan. Subsequently, Executive Life
experienced financial difficulties resulting in a reduction of payments to the
former participants of the Dredging Plan. The Company is currently negotiating
a settlement with the U.S. Department of Labor that the Zapata Corporation
Pension Plan would assume the liability associated with the reduction in
benefits of the Dredging Plan participants. The accumulated benefit obligation
at September 30, 1994 that would be assumed by the plan is estimated to be $2.1
million, of which $1.4 million has been expensed in the 1994 statement of
operations as other expense.
 
  During 1992, Zapata terminated agreements with Arethusa and its subsidiaries,
pursuant to which Zapata managed the operation of Arethusa's rigs. In
connection therewith, Arethusa agreed to establish a pension plan into which
Zapata transferred its pension obligation with respect to certain employees who
terminated their employment with Zapata and became employees of Arethusa. A
gain of $1.7 million associated with this curtailment and settlement is
included in the 1992 statement of operations as other income.
 
 
                                       52

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