Harbinger Group Inc.
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10-Q/A
HRG GROUP, INC. filed this Form 10-Q/A on 11/13/1995
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<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D. C. 20549
 
                                  FORM 10-Q/A
 
(MARK ONE)
 
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
  EXCHANGE ACT OF 1934
 
                   FOR QUARTERLY PERIOD ENDED JUNE 30, 1995
 
                                      OR
 
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
  EXCHANGE ACT OF 1934
 
                  FOR THE TRANSITION PERIOD FROM     TO
 
                         COMMISSION FILE NUMBER 1-4219
 
                              ZAPATA CORPORATION
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
               DELAWARE                             C-74-1339132
     (STATE OR OTHER JURISDICTION                 (I.R.S. EMPLOYER
   OF INCORPORATION OR ORGANIZATION)             IDENTIFICATION NO.)
 
 
    1717 ST. JAMES PLACE, SUITE 550                     77056
            HOUSTON, TEXAS                           (ZIP CODE)
    (ADDRESS OF PRINCIPAL EXECUTIVE
               OFFICES)
 
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (713) 940-6100
 
  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.   Yes [X]    No [_]
 
  Number of shares outstanding of the registrant's Common Stock, par value
$.25 per share, on November 13, 1995: 29,548,407.

<PAGE>
 

                          PART I FINANCIAL INFORMATION
 

ITEM 1. FINANCIAL STATEMENTS
 
  Zapata Corporation
 

<TABLE>
<S>                                                                          <C>
  Condensed Consolidated Balance Sheet .....................................   3
  Condensed Consolidated Income Statement ..................................   4
  Divisional Revenues and Operating Results ................................   5
  Condensed Consolidated Statement of Cash Flows ...........................   6
  Notes to Financial Statements ............................................   7
</TABLE>

 
                                       2

<PAGE>
 
                               ZAPATA CORPORATION
 
                      CONDENSED CONSOLIDATED BALANCE SHEET
 

<TABLE>
<CAPTION>
                                                        JUNE 30,   SEPTEMBER 30,
                                                          1995         1994
                                                        ---------  -------------
                                                            (IN THOUSANDS)
<S>                                                     <C>        <C>
                        ASSETS
Current assets:
  Cash and cash equivalents............................ $   4,081    $ 13,094
  Restricted cash......................................        77         779
  Receivables..........................................    31,228      39,595
  Inventories:
   Compressor equipment and components.................    24,174      17,629
   Fish products.......................................    25,845      34,143
   Gas liquids products................................       656         414
   Materials, parts and supplies.......................     3,456       3,601
  Prepaid expenses and other current assets............     4,269       2,609
                                                        ---------    --------
    Total current assets...............................    93,786     111,864
                                                        ---------    --------
Investments and other assets:
  Notes receivable.....................................       --        1,925

  Investments..........................................     2,100      14,471
  Goodwill.............................................    25,438      26,105
  Deferred income taxes................................     5,968       2,915
  Other assets.........................................    18,396      16,149
                                                        ---------    --------
                                                           51,902      61,565
                                                        ---------    --------
Property and equipment.................................   232,870     217,523
Accumulated depreciation...............................  (108,972)    (99,913)
                                                        ---------    --------
                                                          123,898     117,610
                                                        ---------    --------
    Total assets....................................... $ 269,586    $291,039
                                                        =========    ========
         LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current maturities of long-term debt................. $   8,866    $  3,009
  Accounts payable and accrued liabilities.............    36,256      48,271
                                                        ---------    --------
    Total current liabilities..........................    45,122      51,280
                                                        ---------    --------
Long-term debt.........................................    61,948      69,078
                                                        ---------    --------
Other liabilities......................................    19,365      16,139
                                                        ---------    --------
Stockholders' equity:
  Preferred and preference stock.......................         3       2,258
  Common stock.........................................     7,376       7,930
  Capital in excess of par value.......................   129,344     138,293
  Reinvested earnings from October 1, 1990.............     7,168       1,785
  Investments unrealized gain (loss), net of taxes.....      (740)      4,276
                                                        ---------    --------
                                                          143,151     154,542
                                                        ---------    --------
    Total liabilities and stockholders' equity......... $ 269,586    $291,039
                                                        =========    ========
</TABLE>

 
    The accompanying notes are an integral part of the financial statements.
 
                                       3

<PAGE>

 
                               ZAPATA CORPORATION
 
                    CONDENSED CONSOLIDATED INCOME STATEMENT
 
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 

<TABLE>
<CAPTION>
                                          THREE MONTHS
                                              ENDED         NINE MONTHS ENDED
                                            JUNE 30,            JUNE 30,
                                        ------------------  ------------------
                                          1995      1994      1995      1994
                                        --------  --------  --------  --------
<S>                                     <C>       <C>       <C>       <C>
Revenues............................... $ 56,037  $ 86,496  $179,708  $241,924
                                        --------  --------  --------  --------
Expenses:
  Operating............................   45,877    74,214   152,823   209,215
  Provisions for asset write-downs.....   12,607    18,810    12,607    18,810
  Depreciation, depletion and amortiza-
   tion................................    3,641     4,475    10,775    11,969
  Selling, general and administrative..    3,376     5,055    10,204    14,531
                                        --------  --------  --------  --------
                                          65,501   102,554   186,409   254,525
                                        --------  --------  --------  --------
Operating loss.........................   (9,464)  (16,058)   (6,701)  (12,601)
                                        --------  --------  --------  --------
Other income (expense):
  Interest income......................      371       431     1,055     1,628
  Interest expense.....................   (1,583)   (1,869)   (4,872)   (7,482)
  Gain on sales of Tidewater common
   stock...............................      --        --      4,811    37,457
  Other................................      (92)    3,016       928    (2,859)
                                        --------  --------  --------  --------
                                          (1,304)    1,578     1,922    28,744
                                        --------  --------  --------  --------
Income (loss) from continuing opera-
 tions before taxes....................  (10,768)  (14,480)   (4,779)   16,143
                                        --------  --------  --------  --------
Provision for income taxes
  State................................      217       248       546       717
  Federal..............................   (3,843)   (5,154)   (1,862)    5,400
                                        --------  --------  --------  --------
                                          (3,626)   (4,906)   (1,316)    6,117
                                        --------  --------  --------  --------
Income (loss) from continuing opera-
 tions.................................   (7,142)   (9,574)   (3,463)   10,026
Discontinued operations:
  Reversal of reserve for loss on
   disposition, net of income taxes....    8,897       --      8,897       --
                                        --------  --------  --------  --------
Net income (loss)......................    1,755    (9,574)    5,434    10,026
Preferred stock dividends..............      --        101        51       303
                                        --------  --------  --------  --------
Net income (loss) to common stockhold-
 ers................................... $  1,755  $ (9,675) $  5,383  $  9,723
                                        ========  ========  ========  ========
Per share data:
  Income (loss) from continuing opera-
   tions............................... $  (0.24) $  (0.31) $  (0.11) $   0.31
  Income from discontinued operations..     0.30       --       0.28       --
                                        --------  --------  --------  --------
Net income (loss) per share............ $   0.06  $  (0.31) $   0.17  $   0.31
                                        ========  ========  ========  ========
Average common shares and equivalents
 outstanding...........................   29,824    31,671    31,120    31,708
                                        ========  ========  ========  ========
</TABLE>

 
    The accompanying notes are an integral part of the financial statements.
 
                                       4

<PAGE>

 
                               ZAPATA CORPORATION
 
                   DIVISIONAL REVENUES AND OPERATING RESULTS
 
                                 (IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                      THREE MONTHS ENDED    NINE MONTHS ENDED
                                           JUNE 30,             JUNE 30,
                                      --------------------  ------------------
                                        1995       1994       1995      1994
                                      ---------  ---------  --------  --------
<S>                                   <C>        <C>        <C>       <C>
Revenues:
  Natural gas compression............ $  19,329  $  21,810  $ 53,086  $ 49,874
  Marine protein.....................    21,737     19,703    61,311    62,307
  Natural gas gathering and process-
   ing...............................    12,509     41,957    57,829   120,456
  Oil and gas........................     2,462      3,026     7,482     9,287
                                      ---------  ---------  --------  --------
                                      $  56,037  $  86,496  $179,708  $241,924
                                      =========  =========  ========  ========
Operating income (loss):
  Natural gas compression............ $   1,704  $   2,460  $  4,801  $  4,842
  Marine protein.....................   (10,428)     2,122    (8,599)    6,016
  Natural gas gathering and process-
   ing...............................       (39)      (473)     (482)     (696)
  Oil and gas........................       310    (18,743)      528   (18,103)
  Corporate..........................    (1,011)    (1,424)   (2,949)   (4,660)
                                      ---------  ---------  --------  --------
                                      $  (9,464) $ (16,058) $ (6,701) $(12,601)
                                      =========  =========  ========  ========
</TABLE>

 
    The accompanying notes are an integral part of the financial statements.
 
                                       5

<PAGE>

 
                               ZAPATA CORPORATION
 
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
 
                                 (IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                            NINE MONTHS ENDED
                                                                JUNE 30,
                                                            ------------------
                                                              1995      1994
                                                            --------  --------
<S>                                                         <C>       <C>
Cash flow provided (used) by operating activities:
  Continuing operations:
   Net income (loss) from continuing operations............ $ (3,463) $ 10,026
                                                            --------  --------
   Adjustments to reconcile net income (loss) to net cash
    provided (used) by operating activities:
    Depreciation, amortization and valuation provisions....   23,382    30,779
    Gain on sale of assets.................................   (5,268)  (37,457)
    Changes in other assets and liabilities................   (9,719)   (6,282)
                                                            --------  --------
      Total adjustments....................................    8,395   (12,960)
                                                            --------  --------
    Net cash provided (used) by continuing operations......    4,932    (2,934)
                                                            --------  --------
Cash flow provided (used) by investing activities:
  Proceeds from dispositions of investments and other......   12,381    88,533
  Proceeds from restricted cash investments................      702    75,083
  Proceeds from notes receivable...........................    5,495     1,061
  Business acquisitions, net of cash acquired..............      --    (73,222)
  Capital expenditures.....................................  (18,339)  (20,049)
                                                            --------  --------
      Net cash provided by investing activities............      239    71,406
                                                            --------  --------
Cash flow used by financing activities:
  Borrowings...............................................   12,864       --
  Principal payments of long-term obligations..............  (14,137)  (69,360)
  Preferred stock redemption and common stock buybacks.....  (11,758)   (2,245)
  Dividend payments........................................   (1,153)     (404)
                                                            --------  --------
      Net cash used by financing activities................  (14,184)  (72,009)
                                                            --------  --------
Net decrease in cash and cash equivalents..................   (9,013)   (3,537)
Cash and cash equivalents at beginning of period...........   13,094    15,273
                                                            --------  --------
Cash and cash equivalents at end of period................. $  4,081  $ 11,736
                                                            ========  ========
</TABLE>

 
    The accompanying notes are an integral part of the financial statements.
 
                                       6

<PAGE>
 
                              ZAPATA CORPORATION
 
                         NOTES TO FINANCIAL STATEMENTS
 
NOTE 1. FINANCIAL STATEMENTS
 
  The condensed consolidated financial statements included herein have been
prepared by Zapata Corporation ("Zapata" or the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. The financial statements reflect all adjustments that are, in the
opinion of management, necessary to fairly present such information. All such
adjustments are of a normal recurring nature. Although Zapata believes that
the disclosures are adequate to make the information presented not misleading,
certain information and footnote disclosures, including significant accounting
policies, normally included in financial statements prepared in accordance
with generally accepted accounting principles, have been condensed or omitted
pursuant to such rules and regulations. It is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes thereto included in Zapata's latest annual report on Form 10-K.
 
  In April 1995, Zapata adopted Statement of Financial Accounting Standards
No. 121 ("SFAS 121") "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of," which established accounting
standards for the impairment of long-lived assets, certain identifiable
intangibles, and goodwill related to those assets to be held and used, and for
long-lived assets and certain identifiable intangibles to be disposed of. As a
result of adopting SFAS 121, the Company recorded a $12.6 million pretax
provision for asset impairment to reduce its marine protein assets to their
estimated fair market value. The fair market value of the marine protein
assets was determined based upon the highest third-party competitive bid which
had been received by the Company.
 
NOTE 2. SALE OF NATURAL GAS COMPRESSION OPERATIONS
 
  In April 1995, Zapata announced that the Company was considering the sale of
its natural gas compression operations. In June 1995, Zapata announced that it
had entered into an agreement to sell the assets of its natural gas
compression division for $130 million to Enterra Corporation and reflected
these operations as discontinued operations in the Company's financial
statements as of and for the periods presented in its Form 10-Q. The sale is
subject to stockholder approval and certain governmental approvals.
 
  Subsequent to filing the Company's Form 10-Q for the period ended June 30,
1995, management concluded that it would seek stockholder approval, under
Delaware law, for the sale of its natural gas compression operations. As a
result of this additional condition, the criteria for reporting these
operations as discontinued as of June 30, 1995 had not been met. Therefore,
the Company's Form 10-Q as of June 30, 1995 has been amended to show the
natural gas compression operations in continuing operations. The result of
this restatement had no effect on net income or net income per share data, for
any period presented however, it did have the following effects (in
thousands):
 

<TABLE>
<CAPTION>
                                      THREE MONTHS ENDED   NINE MONTHS ENDED
                                           JUNE 30,            JUNE 30,
                                      -------------------  ------------------
                                        1995      1994       1995      1994
                                      --------- ---------  --------  --------
<S>                                   <C>       <C>        <C>       <C>
Income statement:
Income (loss) from continuing
 operations:
  As previously reported............. $ (7,679) $ (10,681) $ (5,223) $  8,633
  As restated........................   (7,142)    (9,574)   (3,463)   10,026
                                      --------  ---------  --------  --------
Effect of correction................. $    537  $   1,107  $  1,760  $  1,393
                                      ========  =========  ========  ========
Income from discontinued operations,
 net of income taxes:
  As previously reported............. $    537  $   1,107  $  1,760  $  1,393
  As restated........................       --         --        --        --
                                      --------  ---------  --------  --------
Effect of correction................. $   (537) $  (1,107) $ (1,760) $ (1,393)
                                      ========  =========  ========  ========
</TABLE>

                                             (Table continued on the next page)
 
                                       7

<PAGE>
 

<TABLE>
<CAPTION>
                                      THREE MONTHS ENDED    NINE MONTHS ENDED
                                           JUNE 30,             JUNE 30,
                                      --------------------  ------------------
                                        1995       1994       1995      1994
                                      ---------  ---------  --------  --------
<S>                                   <C>        <C>        <C>       <C>
Per share data:
Income (loss) from continuing
 operations:
  As previously reported............  $   (0.26) $   (0.34) $  (0.17) $   0.26
  As restated.......................      (0.24)     (0.31)    (0.11)     0.31
                                      ---------  ---------  --------  --------
Effect of correction................  $    0.02  $    0.03  $   0.06  $   0.05
                                      =========  =========  ========  ========
Income from discontinued operations:
  As previously reported............  $    0.32  $    0.03  $   0.34  $   0.05
  As restated.......................       0.30         --      0.28        --
                                      ---------  ---------  --------  --------
Effect of correction................  $   (0.02) $   (0.03) $  (0.06) $  (0.05)
                                      =========  =========  ========  ========
</TABLE>

 
NOTE 3. DISCONTINUED MARINE PROTEIN OPERATIONS SUBSEQUENTLY RETAINED
 
  Zapata has decided to retain the marine protein operations which had
previously been reported as a discontinued operation. In April 1995, the
Company announced the cancellation of the sale of the marine protein division.
Zapata had previously announced that an agreement to sell its marine protein
operations had been reached. However, the acquisition group failed to close
the transaction.
 
  The Company has concluded that the value of its marine protein operations
could be more effectively realized by retaining these operations as part of
Zapata's ongoing operations, rather than pursuing another sale transaction. As
a result, marine protein's net assets and results of operations for all
periods have been reclassified from discontinued operations to continuing
operations. Marine protein's results of operations from October 1994 through
March 1995 had previously been offset against an after-tax reserve of $8.9
million established in the fourth quarter of fiscal 1994 for the estimated
loss on disposition. As a result of the Company's decision to retain the
marine protein operations, the $8.9 million reserve has been reversed in the
current quarter. Marine protein revenues of $39.6 million and operating income
of $1.8 million for the first six months of fiscal 1995 have been reclassified
to continuing operations. Also, marine protein assets and liabilities of $80.7
million and $23.9 million, respectively, as of June 30, 1995 and assets and
liabilities of $100.2 million and $32.6 million, respectively, as of September
30, 1994 have been reclassified to continuing operations.
 
  As a result of adopting SFAS 121, Zapata recorded a $12.6 million pretax
provision for asset impairment to reduce its marine protein assets. The
provision was based on the estimated fair market value of the marine protein
assets. The fair market value of the marine protein assets was determined
based upon the highest third-party competitive bid which had been received by
the Company.
 
NOTE 4. RESTATED FISCAL 1995 RESULTS OF OPERATIONS
 
  Zapata's first and second quarter income statements for fiscal 1995 have
been restated as follows to reclassify the marine protein operating results to
continuing operations, amounts in thousands.
 

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED
                                                          ----------------------
                                                          DECEMBER 31, MARCH 31,
                                                              1994       1995
                                                          ------------ ---------
   <S>                                                    <C>          <C>
   Revenues..............................................   $65,551     $58,120
   Operating income (loss)...............................     2,064         699
   Net income............................................   $   748     $ 2,931
</TABLE>

 
                                       8

<PAGE>
 
NOTE 5. SUBSEQUENT EVENT
 
  In August 1995, Zapata completed the sale of its remaining U.S. offshore oil
and gas properties. The Company received cash, a production payment entitling
Zapata to a share of future revenues derived from the properties and other
contract consideration. No gain or loss was recognized from the sale.
 
  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.
 
                                       9

<PAGE>
 
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 

ITEM 2. BUSINESS
 
  In April 1995, Zapata announced that the Company was considering the sale of
its two natural gas services businesses: the natural gas compression operation
and the natural gas gathering and processing operation. The decision to
consider exiting the energy industry was based on the belief that businesses
outside the energy industry may provide better opportunities for the Company
to pursue. The decision to consider redirecting operations away from the
energy industry does not imply a decision to liquidate Zapata. The Company is
evaluating opportunities to reinvest the stockholders' capital.
 
  In August 1995, Zapata announced that it had acquired 31% of the outstanding
common stock of Envirodyne Industries, Inc. ("Envirodyne"), a manufacturer of
food packaging and food service supplies for $18.8 million. 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. Zapata is also looking at other opportunities in food-related
areas.
 
  In June 1995, Zapata announced that it had entered into an agreement to sell
the assets of its natural gas compression division for $130 million. The sale
is subject to stockholder approval and certain governmental approvals. Due to
the preliminary nature of the decision process regarding the possible sale of
the natural gas gathering and processing operation, the financial statement
impact of the ultimate disposition of this business cannot be determined at
this time.
 
  Zapata has decided to retain the marine protein operations which had
previously been reported as a discontinued operation. In April 1995, the
Company announced the cancellation of the sale of the marine protein division.
Zapata had previously announced that an agreement to sell its marine protein
operations had been reached. However, the acquisition group failed to close
the transaction. The Company has concluded that the value of the marine
protein operations could be more effectively realized by retaining these
operations as part of Zapata's ongoing operations, rather than pursuing
another sale transaction. As a result, marine protein's net assets and results
of operations for all periods have been reclassified from discontinued
operations to continuing operations.
 
  In August 1995, Zapata completed the sale of its remaining U.S. offshore oil
and gas properties. The Company received cash, a production payment entitling
Zapata to a share of future revenues derived from the properties and other
contract considerations. The Company currently plans to retain its Bolivian
oil and gas operations.
 
LIQUIDITY AND CAPITAL RESOURCES
 
  In April 1995, Zapata used the proceeds of $12.7 million from the sale of
its remaining 673,077 shares of Tidewater Inc. ("Tidewater") common stock to
reduce the Company's $17.5 million in notes due to Norex America, Inc.
Remaining mandatory principal payments for the next twelve months total $8.4
million. In July 1995, a subsidiary of the Company, Zapata Protein, Inc.,
arranged a $15.0 million bank credit facility.
 
  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.
 
                                      10

<PAGE>
 
  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
 
  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.
 
  Year-to-date, fiscal 1995 revenues of $179.7 million, an operating loss of
$6.7 million and net income of $5.4 million compared to fiscal 1994 revenues
of $241.9 million, an operating loss of $12.6 million and net income of $10.0
million.
 
  Marine Protein--As a result of the Company's decision to retain the marine
protein operations, the net assets and results of marine protein's operations
for all periods have been reclassified from discontinued operations to
continuing operations and the $8.9 million after-tax loss on disposition
recorded September 1994 has been reversed in the current quarter. As a result
of adopting SFAS 121, the Company recorded a $12.6 million pretax provision
for asset impairment to reduce its marine protein assets to their estimated
fair market value. The fair market value of the marine protein assets was
determined based upon the highest third-party competitive bid which had been
received by the Company. SFAS 121 requires companies to write down assets to
their estimated fair market value when assets are determined to be impaired.
 
  Reflecting the provision for asset impairment, revenues of $21.7 million and
operating loss of $10.4 million in the third quarter of fiscal 1995 compared
unfavorably to revenues of $19.7 million and operating income of $2.1 million
in the third quarter of 1994. Current quarter sales volume of fish oil was
double the prior-year period level while fish meal sales volume was 14% lower
in the current quarter as compared to the prior-year quarter. The average
price for fish oil increased to $349 per ton in the third quarter of fiscal
1995 from $302 per ton in the 1994 third quarter; fish meal prices averaged
$355 per ton in the 1995 period and $346 per ton in the 1994 period. The
fiscal 1995 fish catch is approximately 22% lower than the fiscal 1994 fish
catch due principally to inclement weather conditions that hampered fishing
during the current quarter.
 
                                      11

<PAGE>
 
  Reflecting the effects of the provision for asset impairment and the lower
fish catch, year-to-date fiscal 1995 revenues of $61.3 million and operating
loss of $8.6 million compared unfavorably to fiscal 1994 revenues of $62.3
million and operating income of $6.0 million. Fiscal 1995 sales volume of fish
oil was 6% higher than the fiscal 1994 sales volume while fiscal 1995 fish
meal sales volume declined 3% as compared to fiscal 1994. Year-to-date, fiscal
1995 fish oil prices have averaged $301 per ton versus $317 per ton in fiscal
1994. Likewise, fiscal 1995 fish meal prices have averaged $347 per ton versus
$353 per ton in fiscal 1994.
 
  Natural Gas Gathering, Processing and Marketing--Zapata's natural gas
gathering, processing and marketing operations are conducted through Cimarron
Gas Holding Company and its subsidiaries (collectively, "Cimarron"), which
were acquired early in fiscal 1993. As a division of Zapata, Cimarron's
operations involve two major categories of business activities: the gathering
and processing of natural gas and its constituent products and the marketing
and trading of natural gas liquids (NGL's).
 
  Revenues and operating results for the three-month and nine-month periods
ended June 30, 1995 and 1994 are presented in the following table by major
category, in thousands.
 

<TABLE>
<CAPTION>
                                     THREE MONTHS ENDED    NINE MONTHS ENDED
                                          JUNE 30,              JUNE 30,
                                     --------------------  -------------------
                                       1995       1994       1995      1994
                                     ---------  ---------  --------  ---------
<S>                                  <C>        <C>        <C>       <C>
REVENUES
Gathering & Processing.............. $   4,420  $   7,255  $ 14,010  $  18,458
NGL Marketing.......................     8,089     34,702    43,819    101,998
                                     ---------  ---------  --------  ---------
                                     $  12,509  $  41,957  $ 57,829  $ 120,456
                                     =========  =========  ========  =========
OPERATING RESULTS
Gathering & Processing.............. $     203  $    (164) $    357  $     148
NGL Marketing.......................        35        147        63        696
Selling & Administrative............      (277)      (456)     (902)    (1,540)
                                     ---------  ---------  --------  ---------
                                     $     (39) $    (473) $   (482) $    (696)
                                     =========  =========  ========  =========
</TABLE>

 
  For the third quarter of fiscal 1995, gathering and processing revenues were
lower than the prior year as a result of the negative impact of lower natural
gas prices, while operating results improved, reflecting increased processing
margins. However, marketing revenues and operating income have declined in
fiscal 1995 as compared to 1994, due to the Company's decision to reduce its
natural gas trading activities.
 
  A comparison of average daily volumes of gas, measured in millions of cubic
feet, gathered and processed during the three-month and nine-month periods
ended June 30, 1995 and 1994 is shown below.
 

<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED  NINE MONTHS ENDED
                                                JUNE 30,           JUNE 30,
                                           ------------------- -----------------
          AVERAGE DAILY VOLUMES
                  (MMCF)                     1995      1994      1995     1994
          ---------------------            --------- --------- -------- --------
<S>                                        <C>       <C>       <C>      <C>
Gathering.................................      57.0      47.7     53.5     44.9
Processing................................      26.5      25.0     26.6     21.9
</TABLE>

 
  In April 1995, Zapata announced that the Company was considering the sale of
its natural gas gathering and processing operation. Due to the preliminary
nature of the decision process regarding the possible sale of the natural gas
gathering and processing operation, the financial statement impact of the
ultimate disposition of this business cannot be determined at this time.
 
  Oil and Gas--Revenues of $2.5 million and operating income of $310,000 for
the third quarter of fiscal 1995 compared favorably to the corresponding
fiscal 1994 period's revenues of $3.0 million and operating loss of $18.7
million. The fiscal 1994 period loss included an $18.8 million property
valuation provision. Although
 
                                      12

<PAGE>
 
the Company's U.S. natural gas prices improved during the third quarter of
fiscal 1995, current quarter prices were lower than the prior-year quarter
prices. Zapata's domestic natural gas production for the third quarter of
fiscal 1995 approximated the level of production in the corresponding fiscal
1994 period. The Company's Bolivian operations contributed $399,000 to
operating income in the third quarter of fiscal 1995 as compared to $483,000
in the third quarter of fiscal 1994.
 
  Year-to-date, fiscal 1995 revenues of $7.5 million and operating income of
$528,000 compared favorably to the fiscal 1994 revenues of $9.3 million and
operating loss of $18.1 million due primarily to the 1994 property write-down.
Bolivian operations contributed operating income of $1.2 million in fiscal
1995 and $2.4 million in fiscal 1994.
 
  Natural Gas Compression--In April 1995, Zapata announced that the Company
was considering the sale of its natural gas compression operations. In June
1995, Zapata announced that it had entered into an agreement to sell the
assets of its natural gas compression division for $130 million to Enterra
Corporation. The sale is subject to stockholder approval and certain
governmental approvals.
 
  The major segments of Energy Industries' natural gas compression revenues
and operating results for the three-month and nine-month periods ended June
30, 1995 and the three-month and eight-month periods ended June 30, 1994, in
thousands, are identified below.
 

<TABLE>
<CAPTION>
                                                        NINE MONTHS EIGHT MONTHS
                                  THREE MONTHS ENDED       ENDED       ENDED
                                       JUNE 30,          JUNE 30,     JUNE 30,
                                  --------------------  ----------- ------------
                                    1995       1994        1995         1994
                                  ---------  ---------  ----------- ------------
<S>                               <C>        <C>        <C>         <C>
REVENUES
Compressor Rental................ $   4,403  $   5,163    $12,978     $12,066
Fabrication and Sales............     8,989      9,272     21,879      17,150
Parts & Service..................     4,731      5,187     14,919      14,123
Other............................     1,206      2,188      3,310       6,535
                                  ---------  ---------    -------     -------
                                  $  19,329  $  21,810    $53,086     $49,874
                                  =========  =========    =======     =======
OPERATING RESULTS
Compressor Rental................ $   1,175  $   1,336    $ 3,592     $ 3,686
Fabrication and Sales............       875      1,206      2,421       1,762
Parts & Service..................       850      1,152      2,818       2,760
Other............................       198        383        348         908
Selling & Administrative.........    (1,394)    (1,617)    (4,378)     (4,274)
                                  ---------  ---------    -------     -------
                                  $   1,704  $   2,460    $ 4,801     $ 4,842
                                  =========  =========    =======     =======
</TABLE>

 
  (The Other segment includes the results of the heat exchanger manufacturing
operation which was sold during the second quarter of fiscal 1995 and used
equipment sales.)
 
  Natural gas compressor package rental utilization is affected primarily by
the number and age of producing oil and gas wells, the volume of natural gas
consumed and natural gas prices. Rental rates are determined primarily by the
demand for compressor packages and vary by size and horsepower of a compressor
package. Energy Industries' utilization, rental rates and fleet size as of
June 30, 1995 and 1994 are compared in the following table.
 
                                      13

<PAGE>
 

<TABLE>
<CAPTION>
                                                     JUNE 30, 1995 JUNE 30, 1994
                                                     ------------- -------------
<S>                                                  <C>           <C>
FLEET UTILIZATION:
  Horsepower........................................       81.5%         77.8%
MONTHLY RENTAL RATE, BASED ON:
  Horsepower........................................   $  15.54      $  17.43
FLEET SIZE:
  Number of units...................................        771           701
  Horsepower........................................    129,467       107,494
</TABLE>

 
  Reflecting the effects of low natural gas prices, Energy Industries'
operating results continued to be negatively impacted during the third quarter
of fiscal 1995. As a result, Energy Industries' operating income during the
third quarter of fiscal 1995 compared unfavorably to the third quarter income
of fiscal 1994.
 

                           PART II OTHER INFORMATION
 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
 
  The Company held its 1995 Annual Meeting of Stockholders on July 27, 1995
(the "1995 Annual Meeting"). An aggregate of 29,505,034 shares of the
Company's equity securities were outstanding and entitled to vote at the 1995
Annual Meeting as follows: 29,502,407 shares of Common Stock and 2,627 shares
of $2 Noncumulative Convertible Preference Stock. At this meeting, the
stockholders voted on the following matters:
 
                        ELECTION OF CLASS III DIRECTORS
 

<TABLE>
<CAPTION>
                                                             FOR      AGAINST
                                                          ---------- ---------
   <S>                                                    <C>        <C>
   Robert V. Leffler, Jr................................. 23,515,741 1,523,931
   W. George Loar........................................ 23,510,424 1,529,248
</TABLE>

 
  In addition to the Class III Directors elected at the 1995 Annual Meeting,
Malcolm I. Glazer and Ronald C. Lassiter continue to serve as Class I
Directors until the 1996 Annual Meeting of Stockholders, and Avram A. Glazer
and Peter M. Holt continue to serve as Class II Directors until the 1997
Annual Meeting of Stockholders.
 
                        RATIFICATION OF THE APPOINTMENT
                        OF COOPERS & LYBRAND L.L.P. AS
                        INDEPENDENT PUBLIC ACCOUNTANTS
 

<TABLE>
<CAPTION>
                                                                                              BROKER
      FOR                  AGAINST                         ABSTAINED                         NON-VOTE
      ---                  -------                         ---------                         --------
   <S>                     <C>                             <C>                               <C>
   24,603,811              329,905                          108,067                           91,175
</TABLE>

 
  Subject to stockholder approval, the Board of Directors of the Company
appointed Coopers & Lybrand L.L.P. to serve as the Company's independent
public accountants for the year ending September 30, 1995.
 
                   STOCKHOLDER PROPOSAL ON CUMULATIVE VOTING
 

<TABLE>
<CAPTION>
                                                                                           BROKER
      FOR                 AGAINST                         ABSTAINED                       NON-VOTE
      ---                ----------                       ---------                       ---------
   <S>                   <C>                              <C>                             <C>
   1,874,627             15,385,521                        234,018                        8,250,338
</TABLE>

 
  Mr. Martin Glotzer, a stockholder of the Company, presented the stockholder
proposal to be voted on at the 1995 Annual Meeting in which he requested that
the stockholders of the Company amend the Company's Restated Certificate of
Incorporation, as amended, to provide for cumulative voting on the election of
directors of the Company.
 
                                      14

<PAGE>
 

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 
  (a) EXHIBITS:
 
  The exhibits indicated by an asterisk (*) are incorporated by reference to
the Zapata Corporation Annual Report on Form 10-K for the fiscal year ended
September 30, 1994. The exhibits indicated by double asterisk (**) were filed
on Form 10-Q for quarter ended June 30, 1995.
 

<TABLE>
 <C>     <S>
  3(a)*  --Restated Certificate of Incorporation of Zapata filed with Secretary
          of State of Delaware May 3, 1994 (Exhibit 3(a) to Current Report on
          Form 8-K dated April 27, 1994 (File No. 1-4219)).
  3(b)*  --Certificate of Designation, Preferences and Rights of $1 Preference
          Stock (Exhibit 3(c) to Zapata's Quarterly Report on Form 10-Q for the
          fiscal quarter ended March 31, 1993 (File No. 1-4219)).
  3(c)*  --Certificate of Designation, Preferences and Rights of $100
          Preference Stock (Exhibit 3(d) to Zapata's Quarterly Report on Form
          10-Q for the fiscal quarter ended March 31, 1993 (File No.
          1-4219)).
  3(d)*  --By-laws of Zapata, as amended effective August 17, 1994.
  4(a)*  --Second Amended and Restated Master Restructuring Agreement, dated as
          of April 16, 1993 between Zapata and Norex Drilling Ltd. (Exhibit 12
          to Zapata's Amendment No. 3 to Schedule 13D dated April 30, 1993).
  4(b)*  --First Amendment to Second Amended and Restated Master Restructuring
          Agreement dated as of May 17, 1993 between Zapata and Norex Drilling
          Ltd. (Exhibit 4(c) to Zapata's Registration Statement on Form S-1
          (No. 33-68034)).
  4(c)*  --Second Amendment to Second Amended and Restated Master Restructuring
          Agreement, dated as of December 17, 1993 between Zapata and Norex
          Drilling Ltd. (Exhibit 4(c) to Zapata's Annual Report on Form 10-K
          for the fiscal year ended September 30, 1993 (File No. 1-4219)).
  4(d)*  --Securities Liquidity Agreement, dated as of December 19, 1990, by
          and among Zapata and each of the securities holders parties thereto
          (Exhibit 4(b) to Zapata's Annual Report on Form 10-K for the fiscal
          year ended September 30, 1990 (File No. 1-4219)).
  4(e)*  --Consent Letter and Waiver dated as of March 7, 1995 by and between
          Norex America, Inc. and Zapata Corporation. (Exhibit 4(e) to Zapata's
          Quarterly Report on Form 10-Q for the quarter ended March 31, 1995
          (File No. 1-4219)).
 10(a)** --Letter Agreement dated June 29, 1995 by and between Enterra
          Corporation and Zapata Corporation.
 10(b)** --Assignment and Assumption of Consulting Agreement effective as of
          July 1, 1995 by and between Zapata Corporation and Zapata Protein,
          Inc.
 27      --Financial Data Schedule.
</TABLE>

 
    (b) REPORTS ON FORM 8-K
 
  Current Report on Form 8-K dated June 9, 1995 reporting event of May 30,
1995 (Item 5. Other events reported the election of Robert V. Leffler, Jr. and
W. George Loar to serve as Class III Directors, filling the vacancies left by
the resignations of Myrl S. Gelb and Luther W. Miller).
 
  Current Report on Form 8-K dated April 21, 1995 reporting event of April 13,
1995 (Item 5. Other events reported the repurchase by the Company of 2.25
million shares of its common stock and the resignation of Kristian Siem as a
director of the Company).
 
                                      15

<PAGE>
 

                                  SIGNATURES
 
  PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
 
                                          Zapata Corporation
 
November 13, 1995                         By: /s/ Joseph L. Von Rosenberg III
                                              ------------------------
                                              JOSEPH L. VON ROSENBERG III
                                              VICE PRESIDENT, GENERAL COUNSEL
                                              AND CORPORATE SECRETARY
 
November 13, 1995                         By: /s/ Lamar C. McIntyre
                                              ------------------------
                                              LAMAR C. MCINTYRE
                                              VICE PRESIDENT, CHIEF FINANCIAL
                                              OFFICER,
                                              TREASURER AND ASSISTANT
                                              SECRETARY
 
                                      16

<PAGE>
 

                                 EXHIBIT INDEX
 

<TABLE>
<CAPTION>
 NUMBER                                  EXHIBIT
 ------                                  -------
 <C>     <S>
  3(a)*  --Restated Certificate of Incorporation of Zapata filed with Secretary
          of State of Delaware May 3, 1994 (Exhibit 3(a) to Current Report on
          Form 8-K dated April 27, 1994 (File No. 1-4219)).
  3(b)*  --Certificate of Designation, Preferences and Rights of $1 Preference
          Stock (Exhibit 3(c) to Zapata's Quarterly Report on Form 10-Q for the
          fiscal quarter ended March 31, 1993 (File No. 1-4219)).
  3(c)*  --Certificate of Designation, Preferences and Rights of $100
          Preference Stock (Exhibit 3(d) to Zapata's Quarterly Report on Form
          10-Q for the fiscal quarter ended March 31, 1993 (File No.
          1-4219)).
  3(d)*  --By-laws of Zapata, as amended effective August 17, 1994.
  4(a)*  --Second Amended and Restated Master Restructuring Agreement, dated as
          of April 16, 1993 between Zapata and Norex Drilling Ltd. (Exhibit 12
          to Zapata's Amendment No. 3 to Schedule 13D dated April 30, 1993).
  4(b)*  --First Amendment to Second Amended and Restated Master Restructuring
          Agreement dated as of May 17, 1993 between Zapata and Norex Drilling
          Ltd. (Exhibit 4(c) to Zapata's Registration Statement on Form S-1
          (No. 33-68034)).
  4(c)*  --Second Amendment to Second Amended and Restated Master Restructuring
          Agreement, dated as of December 17, 1993 between Zapata and Norex
          Drilling Ltd. (Exhibit 4(c) to Zapata's Annual Report on Form 10-K
          for the fiscal year ended September 30, 1993 (File No. 1-4219)).
  4(d)*  --Securities Liquidity Agreement, dated as of December 19, 1990, by
          and among Zapata and each of the securities holders parties thereto
          (Exhibit 4(b) to Zapata's Annual Report on Form 10-K for the fiscal
          year ended September 30, 1990 (File No. 1-4219)).
  4(e)*  --Consent Letter and Waiver dated as of March 7, 1995 by and between
          Norex America, Inc. and Zapata Corporation. (Exhibit 4(e) to Zapata's
          Quarterly Report on Form 10-Q for the quarter ended March 31, 1995
          (File No. 1-4219)).
 10(a)** --Letter Agreement dated June 29, 1995 by and between Enterra
          Corporation and Zapata Corporation.
 10(b)** --Assignment and Assumption of Consulting Agreement effective as of
          July 1, 1995 by and between Zapata Corporation and Zapata Protein,
          Inc.
 27      --Financial Data Schedule.
</TABLE>

 
 * Incorporated by reference to the Zapata Corporation Annual Report on Form
   10-K for the fiscal year ended September 30, 1994.
**Filed with Form 10-Q for quarter ended June 30, 1995.
 
                                       17





<TABLE> <S> <C>


<PAGE>
<ARTICLE> 5
<LEGEND> 
This schedule contains summary financial information extracted from the
condensed consolidated balance sheet and the condensed consolidated statements
of earnings at the date and for the period indicated and is qualified in its
entirety by reference to such financial statements.  All amounts shown are in
thousands of dollars, except per share data.
</LEGEND>
<MULTIPLIER> 1,000
       
<S>                                         <C> 
<PERIOD-TYPE>                                  9-mos  
<FISCAL-YEAR-END>                         SEP-30-1995 
<PERIOD-START>                            OCT-01-1994  
<PERIOD-END>                              JUN-30-1995 
<CASH>                                          4,158  
<SECURITIES>                                        0  
<RECEIVABLES>                                  31,228  
<ALLOWANCES>                                        0  
<INVENTORY>                                    54,131  
<CURRENT-ASSETS>                               93,786  
<PP&E>                                        232,870  
<DEPRECIATION>                                108,972  
<TOTAL-ASSETS>                                269,586  
<CURRENT-LIABILITIES>                          45,122  
<BONDS>                                        61,948  
<COMMON>                                        7,376  
<PREFERRED-MANDATORY>                               0  
<PREFERRED>                                         3  
<OTHER-SE>                                    135,772  
<TOTAL-LIABILITY-AND-EQUITY>                  269,586  
<SALES>                                       179,708  
<TOTAL-REVENUES>                              179,708  
<CGS>                                         186,409  
<TOTAL-COSTS>                                 186,409  
<OTHER-EXPENSES>                               (6,794) 
<LOSS-PROVISION>                                    0  
<INTEREST-EXPENSE>                              4,872  
<INCOME-PRETAX>                                (4,779) 
<INCOME-TAX>                                   (1,316) 
<INCOME-CONTINUING>                            (3,463) 
<DISCONTINUED>                                  8,897  
<EXTRAORDINARY>                                     0  
<CHANGES>                                           0  
<NET-INCOME>                                    5,434  
<EPS-PRIMARY>                                     .17 
<EPS-DILUTED>                                     .17  
        


</TABLE>




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