<PAGE>
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
NOTE 10. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
 
  The Company has an operating lease agreement with a purchase option that
totals $2.1 million. The purchase option price includes a nonrefundable deposit
of $1.2 million that is currently classified with other assets. The Company
intends to exercise this purchase option during 1995, therefore, operating
lease payments totalling $3.7 million related to this lease have not been
included in the future minimum payments under operating lease obligations noted
above.
 
  Rental expenses for operating leases were $4.5 million, $2.7 million and $1.9
million in 1994, 1993 and 1992, respectively.
 
 Litigation
 
  On July 9, 1991, a purported class action lawsuit styled Armand A. Vari, et
al. v. Zapata Corporation, et al. was filed in the U.S. District Court for the
Southern District of Florida, Miami Division (Civil Action No. 91-1455), naming
as defendants Zapata, each of its directors and two of its executive officers,
and IBJ Schroder Bank & Trust Company. The lawsuit was dismissed on summary
judgment in 1994.
 
  Zapata is defending various claims and litigation arising from continuing and
discontinued operations. In the opinion of management, uninsured losses, if
any, resulting from these matters and from the matter discussed above will not
have a material adverse effect on Zapata's results of operations or financial
position.
 
NOTE 11. FINANCIAL INSTRUMENTS
 
 Concentrations of Credit Risk
 
  As indicated in the industry segment information which appears in Note 16,
the market for the Company's services and products is primarily the natural gas
industry. The Company's customers consist primarily of major integrated
international oil companies and independent natural gas marketers and
producers. The Company performs ongoing credit evaluations of its customers and
generally does not require material collateral. The Company maintains reserves
for potential credit losses, and such losses have been within management's
expectations.
 
  At September 30, 1994 and 1993 the Company had cash deposits concentrated
primarily in three major banks. In addition, the Company had certificates of
deposits, commercial paper and Eurodollar time deposits with a variety of
companies and financial institutions with strong credit ratings. As a result of
the foregoing, the Company believes that credit risk in such instruments is
minimal.
 
NOTE 12. PENSION PLANS
 
 Qualified Pension Plans
 
  Zapata has two noncontributory pension plans covering certain U.S. employees.
Plan benefits are generally based on employees' years of service and
compensation level. All of the costs of these plans are borne by Zapata. Each
plan has adopted an excess benefit formula integrated with covered
compensation. Participants are 100% vested in the accrued benefit after five
years of service.
 
  Net pension credits for 1994, 1993 and 1992 included the following
components:
 

<TABLE>
<CAPTION>
                                                        1994    1993     1992
                                                       ------  -------  -------
                                                           (IN THOUSANDS)
      <S>                                              <C>     <C>      <C>
      Service cost--benefits earned during the year..  $  692  $   660  $   945
      Interest cost on projected benefit obligations.   2,278    1,982    2,395
      Actual loss (gain) on plan assets..............  (2,730)   1,028   (4,950)
      Amortization of transition asset and other
       deferrals.....................................    (546)  (5,445)      22
                                                       ------  -------  -------
        Net pension credit...........................  $ (306) $(1,775) $(1,588)
                                                       ======  =======  =======
</TABLE>

 
 
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