Net cash used in operating activities during the first quarter of fiscal
1994 totalled $4.4 million as compared to the $1.7 million provided from
operating activities in the corresponding period in fiscal 1993. The use of
cash was attributable to an increased investment in working capital and to the
Norex debt prepayment premium.
During the first quarter of fiscal 1994, net cash provided from investing
activities of $79.6 million was significantly better than the $5.5 million used
in investing activities in the first quarter of fiscal 1993. The improvement
was due to the sale of Tidewater common stock in November 1993.
Reflecting the Norex debt prepayment, net cash used in financing activities
totalled $68.4 million in the first quarter of fiscal 1994 compared to the $5.2
million net use of cash in the fiscal 1993 period. As of December 31, 1993, the
Company's weighted-average interest rate had been reduced to 9.8% as a result of
the Norex debt prepayment. Additionally, a portion of such interest is deferred
and added to principal in accordance with certain loan provisions. Mandatory
principal payments for the next twelve months totals $2.9 million; no
significant amount of debt matures prior to fiscal 1996. Depending upon certain
conditions, most of the principal payments due in 1996 may be either converted
into shares of Zapata common stock or exchanged for shares of Zapata's Tidewater
common stock as provided for in the Norex loan agreements.
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 from the deferred method to an asset and liability approach. The
impact of adopting SFAS 109 was to give recognition to previously generated tax
credit carryforward items by recording a net deferred tax asset of $11.6 million
and increasing capital in excess of par value by $15.3 million.
RESULTS OF OPERATIONS
The Company's net income of $17.3 million for the first quarter of fiscal
1994 represented a significant improvement from net income of $1.0 million for
the same period in fiscal 1993. The improvement was attributable to a $33.8
million pretax gain from the sale of 3.75 million shares of Tidewater common
stock. This gain was partially offset by a $6.8 million expense comprised of
the $3.5 million debt prepayment premium and a $3.3 million write-off of
previously deferred expenses related to the origination of such indebtedness.
The Company's operating income of $2.2 million for the first quarter of
fiscal 1994 was slightly lower than the $2.5 million operating income reported
for the fiscal 1993 period. The shortfall was attributable to lower natural gas
production from Zapata's domestic oil and gas operations; other operations
reported improved results.