Harbinger Group Inc.
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10-K
HRG GROUP, INC. filed this Form 10-K on 12/21/1995
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<PAGE>
 
                               ZAPATA CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
NOTE 10. INCOME TAXES--(CONTINUED)
 
  The provision for deferred taxes results from timing differences in the
recognition of revenues and expenses for tax and financial reporting purposes.
The sources and income tax effects of these differences were as follows:
 

<TABLE>
<CAPTION>
                                                     1995      1994     1993
                                                   --------  --------  -------
                                                        (IN THOUSANDS)
<S>                                                <C>       <C>       <C>
Book depreciation in excess of tax depreciation... $ (4,292) $ (1,145) $(1,468)
Tax deduction related to oil and gas exploration
 and production over (under) book expenses........    2,825    (6,277)    (163)
Tax gain in excess of book gain on stock sale.....   (1,650)  (10,116)  (8,065)
Changes to tax carryforwards and other............     (330)    8,266   13,212
Charge off uncollectible note.....................       --     2,790       --
                                                   --------  --------  -------
                                                   $(3,447)  $ (6,482) $ 3,516
                                                   ========  ========  =======
</TABLE>

 
  For federal income tax purposes, Zapata has $12.1 million of net operating
losses expiring in 2010, $17.5 million of investment tax credit carryforwards
expiring in 1997 through 2001, and $10.9 million of alternative minimum tax
credit carryforwards. The use of some of the tax credits may be limited as a
result of a change of ownership as calculated for tax purposes. Investment tax
credit carryforwards are reflected in the balance sheet as a reduction of
deferred taxes using the flow-through method.
 
  The following table reconciles the income tax provisions for fiscal 1995,
1994 and 1993 computed using the U.S. statutory rate of 35%, 35% and 34%,
respectively, to the provisions from continuing operations as reflected in the
financial statements.
 

<TABLE>
<CAPTION>
                                                         1995    1994    1993
                                                       --------  -----  ------
                                                          (IN THOUSANDS)
<S>                                                    <C>       <C>    <C>
Taxes at statutory rate............................... $ (3,158) $(500) $4,987
Recovery of nondeductible book losses.................       --     --    (259)
Amortization of intangibles not deductible for tax....       11     10      --
Other.................................................       33   (563)    (26)
Equity/dividend income not recognized for tax
 purposes.............................................      (33)  (176)   (567)
State taxes...........................................      (32)   657      75
                                                       --------  -----  ------
                                                       $(3,179)  $(572) $4,210
                                                       ========  =====  ======
</TABLE>

 
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