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The ING Loan Agreement provides Zapata Protein with a revolving credit
facility that is due June 30, 1997. The ING Loan Agreement bears interest at a
variable interest rate that is adjusted periodically based on the prime
interest rate. Pursuant to the ING Loan Agreement, Zapata Protein agreed to
maintain certain financial covenants and to limit additional indebtedness,
dividends, dispositions and acquisitions. The amount of restricted net assets
for Zapata Protein at September 30, 1995 was approximately $47.7 million.
Zapata Corporation has guaranteed up to $10.0 million of the outstanding
balance of debt related to the ING Loan Agreement. Pursuant to the ING Loan
Agreement, Zapata Protein's ability to transfer funds to Zapata Corporation is
limited to $10.0 million. As of September 30, 1995, Zapata Protein had already
transferred the maximum amount of $10.0 million to Zapata Corporation. The
Company remains subject to a covenant in the Norex Agreement that requires
Zapata to maintain a consolidated tangible net worth as defined in such
agreement of at least $100 million. Effective September 30, 1995, the Company
was in compliance with all provisions governing its outstanding indebtedness.
RESULTS OF OPERATIONS
General
Reflecting the Company's decision to retain the marine protein operations and
to sell the natural gas compression and natural gas gathering, processing and
marketing operations, the Company's results from continuing operations include
the marine protein and oil and gas operations and results from discontinued
operations include the natural gas compression and natural gas gathering,
processing and marketing operations.
Fiscal 1995--1994
Zapata's fiscal 1995 net income of $4.2 million improved substantially from
the fiscal 1994 net loss of $8.3 million. The Company's discontinued natural
gas compression and natural gas gathering, processing and marketing operations
contributed net income of $1.2 million in fiscal 1995 and $1.4 million in
fiscal 1994. The discontinued operating results include pretax allocations of
interest on general corporate debt of $2.1 million and $4.3 million in 1995 and
1994, respectively. Fiscal 1995 discontinued operations also include net income
of $8.9 million reflecting the reversal of the estimated loss on the
disposition of the marine protein operations that was recorded in fiscal 1994.
The Company recorded a net loss from continuing operations of $5.8 million in
fiscal 1995 as compared to a net loss of $857,000 in 1994. Sales of the
Company's Tidewater common stock generated pretax gains of $4.8 million in
fiscal 1995 and $37.5 million in fiscal 1994. The fiscal 1995 results also
include a $12.3 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 $29.2 million associated with Company's oil and gas
operations in the Gulf of Mexico as a result of low gas prices and revision of
estimated future costs.
Revenues of $103.1 million and an operating loss of $9.2 million in fiscal
1995 compared to revenues of $109.2 million and an operating loss of $31.6
million in fiscal 1994. The operating losses are due primarily to the valuation
provisions recorded in both years. The 1994 operating loss also includes a $2.4
million expense related to a reduction in staff at the Company's headquarters.
Fiscal 1994--1993
Zapata's net loss of $8.3 million for fiscal 1994 compared unfavorably to net
income of $9.4 million in fiscal 1993. The Company's discontinued natural gas
compression and natural gas gathering, processing and marketing operations
contributed net income of $1.4 million in fiscal 1994 as compared to a $1.1
million net loss in fiscal 1993 from the natural gas gathering, processing and
marketing operations. Discontinued operating results include allocations of
interest on general corporate debt of $4.3 million and $968,000 in
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