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

<TABLE> 
<CAPTION> 
                                                            SIX MONTHS ENDED
                                                                MARCH 31,
                                                            -----------------
                                                              1995      1994
                                                            --------  --------
<S>                                                         <C>       <C>  
Cash flow used by operating activities:
  Continuing operations:
    Net income from continuing operations                   $  2,841  $ 18,369
                                                            --------  --------
    Adjustments to reconcile net income to net cash used
     by operating activities:
      Depreciation and amortization                            5,741     5,246
      Gain on sale of assets                                  (5,720)  (37,457)
      Changes in other assets and liabilities                 (6,657)    6,642
                                                            --------  --------
        Total adjustments                                     (6,636)  (25,569)
                                                            --------  --------
      Cash flow used by continuing operations                 (3,795)   (7,200)
                                                            --------  --------
Discontinued operations:
  Income from discontinued operations                            ---     1,231
  Decrease in net assets of discontinued operations              ---     5,207
                                                            --------  --------
      Cash flow provided by discontinued operations              ---     6,438
                                                            --------  --------
        Net cash used by operating activities                 (3,795)     (762)
                                                            --------  --------
Cash flow provided (used) by investing activities:
  Proceeds from dispositions of investments and other         15,957    88,533
  Restricted cash investments                                (11,925)   74,733
  Proceeds from notes receivable                                 920       967
  Business acquisitions, net of cash acquired                    ---   (73,622)
  Capital expenditures                                        (9,229)   (7,969)
                                                            --------  --------
        Net cash provided (used) by investing activities      (4,277)   82,642
                                                            --------  --------
Cash flow provided (used) by financing activities:
  Principal borrowing (payments) of long-term obligations      4,195   (68,962)
  Preferred stock redemption and common stock buyback         (2,758)      ---
  Dividend payments                                           (1,153)     (303)
                                                            --------  --------
        Net cash provided (used) by financing activities         284   (69,265)
                                                            --------  --------
Net increase (decrease) in cash and cash equivalents          (7,788)   12,615
Cash and cash equivalents at beginning of period              14,386    16,008
                                                            --------  --------
Cash and cash equivalents at end of period                  $  6,598  $ 28,623
                                                            ========  ========
</TABLE>

 

   The accompanying notes are an integral part of the financial statements.

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