<PAGE>
 
                              ZAPATA CORPORATION
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                                (in thousands)

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<CAPTION> 

                                                             Three Months ended
                                                                December 31,
                                                             ------------------
                                                               1994      1993
                                                             -------   --------
<S>                                                          <C>       <C> 
Cash flow used by operating activities:
  Continuing operations:
    Net income from continuing operations                    $   393   $ 17,015
                                                             -------   --------
    Adjustments to reconcile net income to net cash used by
     operating activities:
      Depreciation and amortization                            2,877      2,414
      Gain on sale of assets, net                               (457)   (33,852)
      Changes in other assets and liabilities                 (7,581)    12,954
                                                             -------   --------
          Total adjustments                                   (5,161)   (18,484)
                                                             -------   --------
        Cash flow used by continuing operations               (4,768)    (1,469)
                                                             -------   --------
  Discontinued operations:
    Income from discontinued operations                           --        313
    Increase in net assets of discontinued operations             --     (3,604)
                                                             -------   --------
        Cash flow used by discontinued operations                 --     (3,291)
                                                             -------   --------
          Net cash used by operating activities               (4,768)    (4,760)
                                                             -------   --------
Cash flow provided by investing activities:
  Proceeds from dispositions of investments and other          1,777     80,528
  Restricted cash investments                                    779     75,083
  Proceeds from notes receivable                                 920        859
  Business acquisitions, net of cash acquired                     --    (73,622)
  Capital expenditures                                        (2,277)    (2,981)
                                                             -------   --------
          Net cash provided by investing activities            1,199     79,867
                                                             -------   --------
Cash flow used by financing activities:
  Principal payments of long-term obligations                   (618)   (68,220)
  Preferred stock redemption and common stock buyback         (2,758)        --
  Dividend payments                                           (1,153)      (202)
                                                             -------   --------
          Net cash used by financing activities               (4,529)   (68,422)
                                                             -------   --------
Net increase (decrease) in cash and cash equivalents          (8,098)     6,685
Cash and cash equivalents at beginning of period              14,386     16,008
                                                             -------   --------
Cash and cash equivalents at end of period                   $ 6,288   $ 22,693
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   The accompanying notes are an integral part of the financial statements.

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