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ITEM 3. LEGAL PROCEEDINGS
 
  From time to time, the Company is involved in litigation relating to claims
arising out of its operations in the normal course of its business. The Company
maintains insurance coverage against potential claims in an amount which it
believes to be adequate. The Company believes that it is not presently a party
to any litigation the outcome of which would have a material adverse effect on
its results of operations or financial condition.
 
  Debentures Action. 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
plaintiffs alleged that the defendants violated or aided and abetted violations
of various provisions of the federal securities laws and state law in
connection with tender offers initiated by Zapata on November 5, 1990 with
respect to its then-outstanding Debentures. The plaintiffs, acting on behalf of
themselves and purportedly all other persons who either tendered Debentures to
Zapata or sold Debentures in the market during the period from November 5, 1990
through December 31, 1990, claimed that the defendants made materially false
and misleading statements in connection with the tender offers, and sought
damages in an unspecified amount. In November 1991, the U.S. District Court in
Miami granted a motion filed by the defendants to transfer the lawsuit to the
U.S. District Court for the Southern District of Texas in Houston.
 
  In April 1994, the Court granted Zapata's and the individual defendants'
motion for summary judgment. In granting the motion for summary judgment, the
Court dismissed with prejudice all federal claims filed against Zapata and the
individual defendants. The plaintiffs did not appeal the judgment, which became
final in May 1994. Moreover the plaintiffs did not elect to re-file their state
law claims in the appropriate state courts.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
  No matter was submitted to a vote of Zapata's stockholders during the fourth
quarter of fiscal 1994.
 
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