<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6. DEBT--(CONTINUED)
Norex, along with accrued interest, and to pay a $3.5 million prepayment
premium. Also, Zapata wrote-off $3.3 million of previously deferred expenses
related to the origination of such indebtedness. In September 1994, Zapata
repaid the remaining balance of its 13% senior convertible indebtedness to
Norex and a required prepayment premium of $655,000 with proceeds from the
initial drawdown of $15 million from a $30 million bank credit facility that
Zapata arranged with Texas Commerce Bank National Association (the "TCB Loan
Agreement") for its natural gas compression operations, Energy Industries.
The TCB Loan Agreement provides Energy Industries with a $30 million
revolving credit facility that converts after two years to a three year
amortizing term loan. The TCB Loan Agreement bears interest at a variable
interest rate that may be adjusted periodically based upon prime or Eurodollar
interest rates. Pursuant to the TCB Loan Agreement, Energy Industries agreed to
maintain certain financial covenants and to limit additional indebtedness,
dividends, dispositions and acquisitions. The amount of restricted net assets
for Energy Industries at September 30, 1994 was approximately $65.0 million.
Additionally, Energy Industries' ability to transfer funds to Zapata
Corporation was limited to $5.0 million at September 30, 1994. The Company
remains subject to a covenant in the Norex debt agreement that requires Zapata
to maintain a consolidated tangible net worth as defined in such agreement of
at least $100 million. As of September 30, 1994, the Company was in compliance
with all provisions governing its outstanding indebtedness.
Annual maturities
The annual maturities of long-term debt for the five years ending September
30, 1999 are as follows (in thousands):
<TABLE>
<S> <C> <C> <C> <C>
1995 1996 1997 1998 1999
------ ------- ------- ------ ------
$2,478 $18,996 $20,622 $5,000 $5,000
</TABLE>
NOTE 7. CASH FLOW INFORMATION
For purposes of the statement of cash flows, all highly liquid investments
with an original maturity of three months or less are considered to be cash
equivalents.
Net cash provided (used) by operating activities reflects cash payments of
interest and income taxes.
<TABLE>
<CAPTION>
1994 1993 1992
------ ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash paid during the fiscal year for:
Interest...................................... $7,142 $12,836 $15,328
Income tax payments (refund).................. 4,507 (10) 158
</TABLE>
In fiscal 1994 and 1993, interest expense of $1.3 million and $1.7 million,
respectively, associated with the Norex senior secured and convertible notes
was deferred to the maturity date of such notes. As discussed in Note 6, these
notes were prepaid in full in fiscal 1994.
NOTE 8. PREFERRED, PREFERENCE AND COMMON STOCK
Preferred stock
Zapata has authorized two million shares of preferred stock issuable in one
or more series. On June 7, 1994, Zapata announced that it would redeem one-half
of the approximately 45,000 outstanding shares of the Company's preferred
stock. The preferred stock was redeemed at $100 a share. The Company will
redeem the balance of its outstanding preferred stock in January 1995. The
22,498 outstanding shares are entitled to vote on all matters submitted to
stockholders, are recorded at the involuntary liquidation preference of $100
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