<PAGE>
 
     Cash provided by operating activities totalled $4.9 million during the
first nine months of fiscal 1995 as compared to a $2.9 million use of cash
during the corresponding prior-year period.  The use of cash in fiscal 1994 was
primarily due to increases in working capital.  Cash provided by investing
activities totalled $239,000 during the first nine months of fiscal 1995 as
compared to $71.4 million during the first nine months of fiscal 1994.  The
fiscal 1994 period included proceeds of $85.9 million from the sale of 4.13
million shares of Zapata's Tidewater common stock.  Net cash used by financing
activities totalled $14.2 million during the first nine months of fiscal 1995 as
compared to $72.0 million in the corresponding prior-year period, which included
a $68.5 million prepayment of senior debt.

     In April 1995, Zapata repurchased 2.25 million shares of Zapata's common
stock from Norex America, Inc. for $4.00 per share.  The shares repurchased by
Zapata represented 7% of the Company's then outstanding common stock.  Following
the repurchase of these shares, Zapata had approximately 29.5 million shares of
common stock outstanding.

     In June 1995, Zapata announced that its board of directors had authorized
the repurchase of up to 7.5 million shares of its common stock depending on
market conditions.

     In August 1995, Zapata announced that it had acquired 31% of the
outstanding common stock of Envirodyne Industries, Inc. ("Envirodyne") for $18.8
million from Malcolm Glazer, Chairman of the Board of Zapata and a director of
Envirodyne.  Zapata paid the purchase price by issuing to the seller a
subordinated promissory note bearing interest at prime and maturing in August
1997.  Envirodyne is one of the world's major suppliers of food packaging
products and food service supplies.  This acquisition is the first major step in
the transformation of Zapata away from the energy business and into food-related
businesses.  Zapata is evaluating acquiring additional shares or proposing a
merger with, or acquisition of, Envirodyne in the future.

RESULTS OF OPERATIONS
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     Zapata's net income of $1.8 million for the third quarter of fiscal 1995
compared favorably to the fiscal 1994 third quarter net loss of $9.6 million.
The fiscal 1995 third quarter net income included net income of $8.9 million
from discontinued operations as a result of the reversal of an estimated loss on
the disposition of the marine protein operations which was recorded in fiscal
1994.

     The Company's net loss from continuing operations of $7.1 million for the
three months ended June 30,  1995 compared favorably to a net loss of $9.6
million for the corresponding 1994 period. The fiscal 1995 results include a
$12.6 million pretax provision for asset impairment of the Company's marine
protein assets as a result of adopting Statement of Financial Accounting
Standards No. 121 ("SFAS 121") while the fiscal 1994 results include a pretax
valuation provision of $18.8 million associated with the Company's oil and gas
operations.  Revenues of $56.0 million and an operating loss of $9.5 million in
the fiscal 1995 third quarter compared to revenues of $86.5 million and an
operating loss of $16.1 million in the 1994 third quarter.  The decrease in
revenues from the prior year reflects the Company's decision to decrease natural
gas trading activity in its gathering and processing operations.

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