Harbinger Group Inc.
    Print Page | Close Window

SEC Filings

DEF 14A
HRG GROUP, INC. filed this Form DEF 14A on 11/15/1995
Entire Document
 << Previous Page | Next Page >>
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
 
 Consolidation
 
  The financial statements include Zapata Corporation and its wholly and
majority owned domestic and foreign subsidiaries (collectively, "Zapata" or the
"Company"). Investments in affiliated companies and joint ventures representing
a 20% to 50% voting interest are accounted for using the equity method, while
interests of less than 20% are accounted for using the cost method, except for
investments in oil and gas properties. All investments in oil and gas
properties and joint ventures are proportionately consolidated. All significant
intercompany accounts and transactions are eliminated in consolidation. Certain
reclassifications of prior year information have been made to conform with the
current year presentation. THE CONSOLIDATED FINANCIAL STATEMENTS PRESENTED
HEREIN HAVE BEEN UPDATED SOLELY AS IT RELATES TO THE RECLASSIFICATION OF THE
COMPANY'S MARINE PROTEIN OPERATIONS TO CONTINUING OPERATIONS ON MAY 5, 1995.
SEE NOTE 14 TO THE CONSOLIDATED FINANCIAL STATEMENTS INCLUDED HEREIN FOR
FURTHER INFORMATION REGARDING SUCH RECLASSIFICATION.
 
 Restricted Cash
 
  Restricted cash includes cash held in short-term investments to collateralize
letters of credit totalling $779,000 and $1.0 million in fiscal 1994 and 1993,
respectively, that will expire in one year or less. Additionally, in fiscal
1993, $74.1 million from the sale of Tidewater Inc. ("Tidewater") common stock
was held in restricted short-term investments for the purpose of consummating
the Energy Industries, Inc. acquisition as discussed in Note 4.
 
 Inventories
 
  Materials, parts and supplies are stated at average cost. Compressor, fish
product and gas liquids inventories are stated at the lower of average cost or
market.
 
  The marine protein division allocates costs to production from its fish catch
using a standard cost that is based on the total fish catch and total costs
associated with each fishing season. The marine protein inventory is calculated
on a standard cost basis each month and adjusted to an actual cost basis
quarterly. The costs incurred during the off season months of December to April
are deferred to the next fishing season (April to December) and then allocated
to production as the fish catch is processed. The offseason deferred cost was
approximately $1.9 million at September 30, 1994 and 1993.
 
 Investments in equity securities
 
  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. As a result of adopting SFAS 115, these securities are
considered available for sale and reported at fair value with any unrealized
gain or loss recorded as a separate component of stockholders' equity (net of
deferred income taxes). Cost of the Tidewater common stock is determined on the
average cost method. At September 30, 1994 an adjustment has been made to
increase investments in equity securities by $6.6 million to $14.5 million
based on the value of such shares at the close of trading on September 30, 1994
of $21.50 per share, with an increase of $4.3 million to stockholders' equity
for the unrealized appreciation (net of deferred taxes).
 
 Goodwill
 
  Goodwill represents the excess of the cost of an acquisition over fair value
of net assets acquired. Management assesses whether there has been a permanent
impairment in the value of goodwill and the amount of such impairment by
comparing anticipated undiscounted future cash flows with the carrying value of
goodwill. Goodwill associated with the acquisition of Energy Industries, Inc.
in fiscal 1994 totalled $19.3 million and is being amortized over 40 years
using the straight-line method. Goodwill related to the
 
                                       18

 << Previous Page | Next Page >>