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  In November 1993, Zapata purchased the natural gas compression businesses of
Energy Industries, Inc. and certain other affiliated companies as well as
certain real estate used by the business (collectively, "Energy Industries").
Energy Industries is engaged in the business of renting, fabricating, selling,
installing and servicing natural gas compressor packages. Energy Industries
operates the one of the ten largest rental fleets of natural gas compressor
packages in the United States. Its compressor fleet is located in Texas,
Louisiana, Arkansas, Oklahoma and New Mexico, as well as offshore in the Gulf
of Mexico. Total consideration paid for the purchase of Energy Industries and
for a related noncompetition agreement (collectively, the "Energy Industries
Acquisition") was $90.2 million. The purchase price consisted of $74.5 million
and 2.7 million shares of the Common Stock valued at $5.80 per share, which
approximated the average trading price prior to closing of the acquisition.
 
  Additionally, in November 1993 Zapata sold 3.75 million shares of its
Tidewater common stock for $77.8 million. In December 1993, $73.7 million of
the proceeds from the November sale of Tidewater common stock was used to
prepay $68.5 million of the 13% senior indebtedness to Norex, along with
accrued interest, and to pay a $3.5 million prepayment premium.
 
  In March 1994, Zapata sold 375,175 additional shares of its Tidewater common
stock for a net price of $21.34 per share generating $8.0 million. The Company
currently owns 673,077 shares of Tidewater common stock all of which are
reserved for the possible exchange, at the election of Norex, for the $17.5
million aggregate principal amount of 8.5% unsecured exchangeable notes of the
Company held by Norex.
 
  On April 27, 1994, Zapata's stockholders approved a one-for-five reverse
stock split of the Company's outstanding Common Stock effective May 3, 1994
that reduced the number of Common Shares outstanding from approximately 158.3
million to approximately 31.7 million. The number of authorized shares remained
at 165.0 million and par value of the Common Stock was unchanged. Zapata's
Board of Directors declared two quarterly Common Stock dividends in fiscal 1994
of $0.035 per share totalling approximately $1.1 million each that were paid in
July 1994 and October 1994.
 
  As of June 30, 1994, Zapata redeemed one-half of the approximately 45,000
outstanding shares of the Company's $6 Cumulative Preferred Stock (Preferred
Stock) at $100 per share. The Company will redeem the balance of its
outstanding Preferred Stock in January 1995. Under terms of the Preferred
Stock, Zapata can redeem a maximum of 22,500 shares of the stock in a calendar
year.
 
  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 Company's
financial statements were restated to reflect the marine protein operations as
a discontinued operation.
 
  In September 1994, Zapata announced that its Board of Directors had
determined that the Company should immediately undertake efforts to sell its
U.S. natural gas producing properties. The six properties in the Gulf of
Mexico, representing Zapata's domestic oil and gas producing operations, may be
sold individually or as a package depending upon the interest expressed by
prospective buyers. Zapata's Bolivian oil and gas operations will not be
impacted by this decision. Zapata's domestic natural gas reserves have been
declining for a number of years as no exploratory efforts have been undertaken
to offset gas production. The Board's decision to sell the properties is simply
an acceleration of the liquidation of the gas reserves currently occurring
through production. Sales proceeds are estimated to equal or exceed the net
book value of the properties.
 
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