<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 3. DISPOSITION OF OIL & GAS ASSETS
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. Management of the Company estimates the sales
proceeds from the disposition of these assets will equal or exceed the net book
value of these properties.
The net book value of the domestic properties to be sold totalled $14.1
million at September 30, 1994. Following is a summary of the results of
operations of the Company's domestic oil and gas operations (amounts in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30, 1994
------------------
<S> <C>
Revenues............................................... $ 8,432
Expenses *............................................. (40,260)
--------
Loss before income taxes............................... $(31,828)
========
</TABLE>
- --------
* Expenses include a $29.2 million valuation provision.
NOTE 4. ACQUISITIONS
In November 1993, Zapata purchased the natural gas compression business of
Energy Industries, Inc. and certain other affiliated companies ("Energy
Industries"), as well as certain real estate used by the business. Energy
Industries is in the business of renting, fabricating, selling, installing and
servicing natural gas compressor packages. Total consideration paid for the
purchase of Energy Industries and certain real estate, and for a related
noncompetition agreement (collectively, the "Energy Industries Acquisition")
was $90.2 million consisting of $74.5 million in cash and 2.7 million shares of
Common Stock based on an assigned value of $5.80 per share which approximated
the average trading price prior to closing of the acquisition. Additionally,
the Company incurred approximately $2.0 million in fees associated with the
Energy Industries Acquisition. Zapata accounted for the acquisition using the
purchase method of accounting and recorded $19.3 million of goodwill in
connection therewith. The goodwill is being amortized over 40 years.
The following assets and liabilities were acquired in connection with the
Energy Industries Acquisition effective November 1, 1993 (in millions):
<TABLE>
<S> <C>
Cash............................................................... $ 3.5
Receivables........................................................ 9.3
Inventory.......................................................... 16.2
-----
29.0
Goodwill & other assets............................................ 19.7
Property & equipment, net.......................................... 49.6
-----
$98.3
=====
Current Liabilities................................................ $ 5.8
Long-term debt..................................................... .2
-----
$ 6.0
=====
</TABLE>
22
