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TEM 2.  MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

BUSINESS

          In late 1994 and early 1995, the Company began to develop a strategic
plan involving the repositioning of the Company in the food packaging, food and
food service equipment and supply (collectively, "food services") businesses and
exiting the energy business.  The strategic plan that was developed called for
the divestiture of most of the Company's remaining energy operations, including
its natural gas compression operations, its natural gas gathering, processing
and marketing operations and the Company's remaining domestic oil and gas
assets, and the acquisition of, or joint ventures with, selected companies in
the food services industry.

          In December 1995, Zapata sold the assets of its subsidiaries engaged
in natural gas compression operations (collectively, "Energy Industries") to
Weatherford Enterra, Inc. and its wholly owned subsidiary, Enterra Compression
Company (collectively, "Weatherford Enterra").  Pursuant to the Purchase
Agreement, Weatherford Enterra purchased from the Company all of the assets of
Energy Industries for $131 million in cash, and assumed certain liabilities of
Energy Industries, subject to certain adjustments based on the net asset value
of Energy Industries on the closing date (the "Energy Industries Sale").  The
Energy Industries Sale resulted in an after-tax gain of approximately $13.2
million.  Although a sales price for Cimarron has not been determined, the
Company estimates that, based on a letter of intent with two purchasers, the
minimum sales price for Cimarron should be at least equal to book value.  The
Company expects to complete the sale of Cimarron in fiscal 1996.

          The Energy Industries Sale is a significant step in the Company's
transition from an energy company to a food services company.  Of the $131
million in cash proceeds received from the Energy Industries Sale, the Company
used approximately $26 million to repay certain bank debt.  Additionally,
approximately $1.3 million was used to pay commissions and fees associated with
the sale.  The Company intends to use the remaining net proceeds from the sale
for general corporate purposes, which may include further repayment of debt, and
for future expansion into the food services industry.  While the Company is
actively seeking acquisition and joint venture opportunities in the food
services industry, there can be no assurances that the Company will succeed in
consummating any such opportunities or that acquisitions or joint ventures, if
consummated, will be successful.

          Zapata's Board of Directors has established a special committee for
the purpose of investigating the legal and financial considerations of one or
more merger or acquisition transactions involving the Company and Houlihan's
Restaurant Group, Inc. ("Houlihan's") and Specialty Equipment Companies, Inc.
("Specialty").  Malcolm I. Glazer (the Chairman of the Board of Zapata) and
members of his family beneficially own approximately 73% and 45% of the
outstanding common stock of Houlihan's and Specialty, respectively, and Malcolm
Glazer, Avram A. Glazer (the Company's President and Chief Executive Officer)
and other members of their family serve as directors of both of those companies.
The Special Committee, consisting of Board members Ronald C. Lassiter, Robert V.
Leffler, Jr. and W. George Loar, was charged with determining what further
steps, if any, should be taken by the Company to pursue any such transactions.
The Special Committee's investigation is continuing, but it has made no
determination with respect to possible transactions involving either Houlihan's
or Specialty.

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