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  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.
 
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