<PAGE>
 
term debt of $52.6 million also compared favorably to working capital of $139.5
million and stockholder's equity of $154.5 million.
 
  In November 1993 Zapata sold 3.75 million shares of its Tidewater common
stock for $77.8 million. The proceeds were used to prepay $68.5 million of the
13% senior indebtedness to Norex, along with accrued interest, and to pay a
related $3.5 million prepayment premium. In September 1994, the Company prepaid
the remaining $17.3 million of its 13% senior convertible indebtedness to Norex
that was due in 1996. The prepayment was facilitated by the initial drawdown of
$15 million from a $30 million bank credit facility with Texas Commerce Bank
Association (the "TCB Loan Agreement") that Zapata arranged for Energy
Industries in September 1994. In connection with the Energy Industries Sale,
the TCB Loan Agreement was terminated and the outstanding indebtedness
outstanding thereunder was repaid.
 
  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
sold its remaining 673,077 shares of Tidewater common stock in March 1995 and
used the $12.7 million proceeds to reduce the Company's $17.5 million in notes
that are due to Norex in 1996.
 
  In fiscal 1994, Zapata redeemed one-half of the approximately 45,000
outstanding shares of the Company's $6 Cumulative Preferred Stock at $100 per
share. The Company redeemed the balance of its outstanding $6 Cumulative
Preferred Stock in January 1995 at $100 per share.
 
  In April 1995, Zapata repurchased 2.25 million shares of Common Stock from
Norex 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 fiscal 1995 and 1994, operating activities generated net cash flows of
$7.4 million and $9.9 million, respectively, as compared to the fiscal 1993
activities that consumed $22.3 million. The fiscal 1993 use of cash was
attributable to the combination of the following: higher interest expense,
expenses related to the Norex Refinancing and increased working capital
requirements.
 
  Fiscal 1995 investing activities provided $16.7 million as compared to the
fiscal 1994 activities that provided $74.9 million. The decrease in 1995 was
primarily attributable to a reduction in proceeds from sales of Tidewater
common stock.
 
  Due to the significant transactions that occurred during fiscal years 1994
and 1993, cash flow from investing activities is combined with financing
activities for the following analysis. On a combined basis, these activities
used $13.1 million during fiscal 1994 and $297,000 during fiscal 1993. The
increase usage in fiscal 1994 can be attributed to higher capital expenditures
and to the redemption of $6 Cumulative Preferred Stock. Capital expenditures
increased in 1994 due primarily to workover projects in certain U.S. oil and
gas operations.
 
  Net cash from financing activities consumed $31.4 million in fiscal 1995 as
compared to $88.0 million in fiscal 1994. The higher use of cash in fiscal 1994
was primarily attributable to the prepayments of Norex indebtedness.
 
  The Company's capital expenditures for fiscal 1996 are currently projected to
be approximately $4.4 million.
 
  Although Zapata currently has only one working capital facility, the Company
considers its current liquidity position to be adequate. A $15.0 million
working capital based loan agreement ("ING Loan Agreement") between
International Nederlanden (U.S.) Capital Corporation and two subsidiaries of
the Company, Zapata Protein, Inc. and Zapata Protein (USA), Inc. (collectively,
"Zapata Protein") provides the marine protein operation with financial
flexibility.
 
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