revenues, high expenses and low margins. Revenues of $265.0 million for fiscal
1993 (including $186.3 million in revenues from Cimarron) were significantly
higher than the $106.4 million of revenues reported for fiscal 1992.
In July 1994, Zapata announced that it intended to separate its marine
protein operations from its energy-related businesses. Alternatives for a sale
of the marine protein operations or a spin-off of the business to the
stockholders of Zapata were considered. In September 1994, the Board of
Directors determined that the interests of Zapata's stockholders would best be
served by a sale of the marine protein operations. Based on preliminary offers
to purchase the marine protein operations, the Company has recorded an $8.9
million after tax book loss. As a result of the decision to sell, the operating
results related to the marine protein operations were originally reported under
the discontinued operations classification in the Company's 1994 Form 10-K.
However, on May 5, 1995, the Company decided to retain the marine protein
operation and as a result these operations have been reclassified to continuing
operations. See Note 14.
Revenues of $96.6 million and operating income of $5.4 million for fiscal
1994 compared favorably to the fiscal 1993 revenues of $58.6 million and
operating income of $4.3 million. The improved results were achieved by
increased sales volumes that resulted from the combination of a 37% increase in
the fiscal 1994 fish catch as compared to 1993 and to higher levels of
inventories which were carried over from the fiscal 1993 fishing season.
Compared to the prior year, sales volume of fish meal during fiscal 1994 was
55% higher while the average per ton price of $344 was 9% lower. Likewise, fish
oil volumes doubled during 1994 as compared to 1993 while the average per ton
price of $300 was 6% lower.
Although fish catch improved in fiscal 1993, the marine protein division's
operating results for 1993 were slightly lower than fiscal 1992 results.
Revenues of $58.6 million and operating income of $4.3 million for fiscal 1993
compared unfavorably to the fiscal 1992 revenues of $76.3 million and operating
income of $4.7 million. The shortfall was attributable to the combination of
lower sales volumes for fish meal and fish oil, and lower prices for fish meal
that offset the positive effects from the improved fish catch.
During 1993, fish meal prices averaged $376 per ton, down slightly from the
1992 average price of $380 per ton. However, because of an oversupply of fish
meal from South America, prices for prime fish meal (the marine protein
division's primary product) temporarily dropped precipitously during 1993. When
prices fell, management intentionally stopped selling product until prices
recovered later in the year. This decision contributed to lower meal sales
volumes during the year and higher inventories at year-end. The average price
at which fish oil was sold during fiscal 1993 increased from $295 per ton in
1992 to $320 per ton.
The price for fish meal generally bears a relationship to prevailing soybean
meal prices, while prices for fish oil are usually based on prices for
vegetable fats and oils, such as soybean and palm oils. Thus, the prices for
the Company's products are significantly influenced by worldwide supply and
demand relationships over which the Company has no control, and tend to
fluctuate to a significant extent over the course of a year and from year to
The Company's total fish catch for fiscal 1994 improved for the second
consecutive year after dropping in fiscal 1992. The fish catch for fiscal 1994
improved approximately 37% from the 1993 level; the fiscal 1993 catch improved
approximately 10% from the catch in fiscal 1992. The annual fish catch can vary
from year to year depending on weather conditions and other factors outside the
Company's control; the Company cannot predict future fish catch.